IMPLEMENTING FINANCIAL AND ACCOUNTING SYSTEMS FOR GOVERNMENT

IMPLEMENTING FINANCIAL AND ACCOUNTING SYSTEMS FOR GOVERNMENT CHRISTIAN T.. • We are in an era of increased demand for accountability and transparency • the "stakeholders" of the public

IMPLEMENTING FINANCIAL AND

ACCOUNTING SYSTEMS

FOR GOVERNMENT

CHRISTIAN T SOTTIE THE CONTROLLER AND ACCOUNTANT-GENERAL

GHANA

• Today, strong financial management in the public sector is not a luxury but a necessity

• We are in an era of increased demand for accountability and transparency

• the "stakeholders" of the public sector are demanding more effective and

efficient use of public resources

• Accountability – the ability of public officials (politicians and

technocrats)

– to answer for their actions and inactions and

– to show evidence that public funds were utilised for public Interest

• Transparency- ready access to reliable, comprehensive,

timely, understandable, and internationally comparable information on government activities

• Predictability – procedures laid down by laws, regulations and administrative instructions that are:

– clear and known in advance (documented),

– uniformly and effectively enforced

• Participation decentralization and allowing participation in

decision making all levels of govt through representation, voting etc

• Integrated Financial mgt System (IFMS) aims at improving accountability

by enhancing transparency and oversight in govt operations

• IFMS applies high technology to enhance financial mgt and reduce mismanagement and corruption

• It is widely acknowledged that fully functioning IFMS contributes to improved governance, by providing real-time financial information that financial and other managers can utilize to effectively administer programs, develop budgets and manage resources.

• During the past decade, IFMS has been implemented in Africa with varying degrees of success.

• Where IFMS has been introduced successfully, it has increased public sector legitimacy, produced timely and efficient accounting of public resources, increased government accountability and transparency and made it possible to audit public accounts and strengthen internal control

in government units

Public Financial Management System (PFMS) is designed to

 support all financial operations,

 collect accurate, timely, complete, reliable and consistent information on all public financial events,

 provide adequate management reporting,

 support government-wide and agency policy decisions,

 produce auditable financial statements

Core Treasury System includes the following components:

 Budget Execution and Monitoring

 Accounting (general ledger, management of payments and receipts)

 Cash Management

 Financial Reporting

 Purchasing / Commitment

 Asset / Inventory Management

INTEGRATED PUBLIC FINANCIAL MANAGEMENT

Other Public Financial Management System components:

 Macro Economic Forecasting

 Budget Preparation and Approval

 Debt and Aid Management

 HR Management /Payroll Calculations

 Support for Financial Control and Auditing

 Web publishing

 Financial Management Information System

The combination of above components is referred to as integrated PFMS

 Operational support for Spending Units

Cycle for Public Fin Mgt

Asset / Inventory Mgt

Purchasing

Budget Authorizations

Implementation Commitment of

Funds

Payments and Receipts Mgt

Cash Mgt

Debt and Aid Mgt

Budget Review

& Accounting

Audit and Evaluation

Budget Preparation

2

3

4

5 6

7 8

9

Policy Formulation

and Review

1

Budget Execution

Payroll/

HR Mgt

implementation of information

systems

 Put up a system implementation team (user driven project)

 Secure network infrastructure (countrywide if necessary)

 Develop application software based on user requirement

 Choose servers , data storage and backup units depending on software

 System and network management tools

 Technical maintenance and support systems

 System safety / security and business sustainability/continuity solutions

 Ensure user involvement in system design, configuration, testing and accepatance

Important points to note

 Development of the core treasury system is an important milestone for the implementation

of a countrywide Public Financial Management System (PFMS), which enables integration

and exchange of information available in various systems (e.g IRS, CEPS, Central Bank)

developed by different agencies

 The Financial Management Information System (FMIS), as the main decision support and

monitoring system for public finance, is based on centrally available information gathered from all important components of the PFMS.

 Development time for a fully functional treasury system in some transition economies and developing countries varies between 3 to 5 years Large scale implementations of the

treasury systems may take even longer Eg Ghana started since 1996

 Total cost of ownership of treasury system implementation depends on a number of factors,

such as institutional capacity, scope, desired functionality, number of users and

implementation method.

Lessons learnt

Development of modern integrated PFMS according to the best practices is a complex task, which should

be designed as a separate project.

Implementation of such wide spread changes would require:

process is completed smoothly

implementation and sustainability of new systems

that are not achievable

with 76 sites and 10 years later, the pilot sites were reduced to 8 sites

and commitment than the regular job requirement of the public servant