IFMIS as a driver of change Gert van der Linde AFTFM
IFMIS as a driver of change Agenda Driver of what change? Financial Management Performance Linking Financial Management with Program Delivery Key Financial Management Business Processes Role of Financial Management Systems Critical issues for IFMIS to be a change enabler Frequent failures Implications for PFM capacity development
IFMIS - Driver of what change? Service delivery? Financial management performance? Audit, oversight, evaluation? Governance and accountability? May contribute to all of the above, but it is Merely a means to an improved end status Critically dependent on other factors, such as political demand for improvements, legal framework, standards, processes, staffing, incentives and sanctions Often key for improved FM performance
Financial Management Performance defined Financial management = the financial policies, processes, organizations, applications and services that facilitate stewardship fiscal integrity provide accountability of public funds at multiple levels of management Scope = Revenue, Expenditure, Assets, Liabilities
Financial Management Performance Goals Account for and support control program execution capture all transactions; ensure budgetary integrity by establishing financial control over funds, obligations, assets, and liabilities; safeguard and control resources to prevent fraud, waste and mismanagement; establish financial control over obligations and costs; and produce accurate, consistent and complete financial data to support reliable financial reporting Ensure the reliability of the government s reported financial performance and condition Ensure public confidence through effective financial management, stewardship and accountability, governance
Linking Financial Management with Program Delivery Provide management information that links financial and program performance Disclose the cost and performance of programs and activities Assure the integrity of information for decision-making Measure performance and facilitate stewardship and accountability
Key Financial Management Business Processes Budgeting Payments and Accounts Payable Collections and Receivables Cash Management and Financing Liability Management Asset Management Accounting and Reporting
Role of Financial Management Systems Financial management systems must ensure accountability and control of resources produce accurate, consistent, timely, and useful financial and program information to measure performance and inform decision makers at all levels To achieve this requires standardized financial management applications that support integrated business processes operating efficiently on common data technology that must link financial applications, data and information processes across the enterprise to make financial information readily available for decision support
Critical issues for IFMIS to be a change enabler Get the basics right Clear definition of the reporting entity manage conflicts between legal, IPSAS, GFS requirements Government-wide standard chart of accounts compliance to standards (IPSAS, GFS); donor reporting; management reporting Control over bank accounts Basic accounting controls staffing, segregation of duties, security, timely and accurate processing, reconciliations, control over source documents, audit trails One-time data entry to support integration, interfacing and reporting requirements Incentives and sanctions Scaleable and interoperable Evolve to meet changing business needs, policy, and technology. Ownership, political support and quick wins
Frequent failures IFMIS often oversold as a solution understand and communicate how it will help realize PFM objectives Weak government ownership and capacity to lead set-up and implementation The ability to show quick wins is lacking, perhaps because of a over complex implementation strategies Accountants must get the basic accounting framework, processes and controls conceptually right before set-up and implementation Don t complicate the procurement cycle, especially when packaged solutions are bought Accountants does not set up an IFMIS to support both cash and accrual reporting from accrual data lost benefits of improved stewardship over assets Lack of understanding of applicable accounting standards
Implications for PFM capacity development IFMIS as a change enabler - only when there is a clear business case with strong political support and government ownership Government must have in-house capacity to lead set-up and implementation project management, accounting, IT Qualified accountants to get the basic accounting framework, processes and controls conceptually right before set-up and implementation, including attention to benefits from accrual processes and data Disseminate standards to which governments need to comply Plan for quick wins in all project cycles, especially procurement, set-up and initial implementation phases Plans to attract and retain qualified / experienced accountants Change management incentives and sanctions Improved supervision / quality assurance role for the Bank
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