1

Government Integrated Financial Management

Information System

Dr. Jesse Hughes, CPA, CIA, CGFM

Professor Emeritus of Accounting

Old Dominion University

Email—jhughes@odu.edu

2

INTRODUCTIONStages for System DevelopmentBest PracticesAssessments

Government OperationsEconomic EnterprisesWhole-of-GovernmentCoding StructureInformation TechnologyTraining

Action PlanStrategies

3

STAGES FOR SYSTEM DEVELOPMENT

Assessment

Design

Procurement

Implementation

4

BEST PRACTICES

International Public Sector Accounting Standards (IFAC)

Government Finance Statistics Manual (IMF)

Other Country Experiences

SPECTRUM FOR ACCOUNTING SYSTEM DEVELOPMENT

•Single Entry

• Cash System

•Budget Only

•Double-Entry

•Enhanced Cash System

•Cash and Budgetary

Control

•Double-Entry

•Partial Accrual System

•Financial Resources

•Double-Entry

•Full Accrual System

•Economic Resources

CURRENT TRANSITION PHASE INTERNATIONAL BEST PRACTICES

1 - 2 Years 3 - 5 Years Over 5 Years

Accounting System Needs Accounting System Needs AnalysisAnalysis

Government Business

Enterprises

Government Operations

Whole of Government+ =

IASs(IASC - London)

IPSAS(IFAC - NY)

GFS(IMF - DC)

CommonCommonDatabaseDatabase

CommonCommonDatabaseDatabase

ConsolidatedConsolidatedStatementStatement

+ =

7

GOVERNMENT OPERATIONS

Cash Based System for Budgetary Control

Accrual Based System for Financial Statements

Links to Other SystemsProcurement

Personnel

Pensioners

8

GOVERNMENT OPERATIONS

Standard Chart of AccountsStatement of Financial PositionStatement of Financial PerformanceStatement of Changes in Net AssetsStatement of Cash FlowsEliminate Intra-Group Transactions to Prevent Double-Counting during Consolidation

9

ECONOMIC ENTERPRISES

Standard Chart of AccountsBalance SheetIncome StatementStatement of Changes in EquityStatement of Cash FlowsEliminate Intra-Group Transactions to Prevent Double-Counting during Consolidation

10

WHOLE-OF-GOVERNMENT

Standard Chart of Accounts

Consolidated Statement of Financial Position

Consolidated Statement of Financial Performance

Consolidated Statement of Changes in Net Assets

Consolidated Statement of Cash Flows

Eliminate Intra-Group Transactions to Prevent Double-Counting during Consolidation

11

CODING STRUCTURE

Transaction Code

Fiscal Year

Fund

Organization

Program or Function

Geographic

Chart of Accounts

12

PROPOSED FUND STRUCTURE

ConsolidatedWhole-of-Government

Consolidated Governmental Consolidated Proprietary

Fiduciary

Capital Projects

Debt Service

General/ SpecialRevenue

(Full Accrual Accounting) (Full Accrual Accounting)

(Full Accrual Accounting)

Non-Current Liabilities

Non-Current Assets

Internal Services

Economic Enterprises

Agencies Trusts

Governmental Proprietary Fiduciary

(Partial Accrual Accounting)

13

CHART OF ACCOUNTSBudgetary AccountsExpenditures

Economic (8 major classes)• Compensation of Employees• Use of Goods and Services• Consumption of Fixed Capital• Interest• Subsidies• Grants• Social Benefits• All Others

14

CHART OF ACCOUNTS (CONTINUED)

Expenditures (continued)Functional (10 major classes)

• General Public Services• Defense• Public Order and Safety• Economic Affairs• Environmental Protection• Housing and Community Amenities• Health• Recreation, culture, and religion• Education• Social Protection

15

CHART OF ACCOUNTS (CONTINUED)

Revenues (4 major classes)TaxesSocial ContributionGrantsAll Others

AssetsLiabilitiesNet Assets

16

IFMISIFMIS

OTHERMINISTRIES/ COST CENTERS

IFMISIFMIS

MINISTRY OF FINANCE

Integrated Financial Management Information System (IFMIS)

Other Government Information Systems

Human Resource Management

Cash/ DebtManagement

Accounts PayablePhysical Resource Management

Revenue ManagementAccountsReceivable

Tax Collection and Management

Asset Management

Inventory Management

Project Accounting

Personnel Payroll

Government Business EnterprisesGovernment Business EnterprisesInformation SystemsInformation Systems

ManufacturingCompanies

OtherEnterprises

Financial Institutions

Financial Management Information

(Consolidated Reporting)

BudgetControl

FinancialManagement Information

Budget Preparation

BudgetPreparation

LEGEND

System Interfaces/Full Integration with IFMISIFMIS Module Full Integration

IFMIS On-line Access

Purchasing Purchasing

General Ledger and

Budget Control

17

NETWORK INFRA-STRUCTURE STRATEGY

Servers (backbone of the infra-structure)

Software (glue that holds all the pieces together)

Storage (groups storage systems on their own high-speed networks)

18

Other Ministries/Cost Centers

MoF (Central)

MoF (Other Provinces)

Technical Architecture

GIFMIS Application(Internet based applications)

FallbackServer

Centralizedand Unified Databases

Virtual PrivateVirtual PrivateNetworkNetwork

(VPN)(VPN)

Other GovernmentInformation Systems

LEGEND

On-Line Connection

19

TRAINING

Develop Core Group of Trainers

Acquire additional computers for training room

Expand financial library to include accounting standards desired by international accounting oversight bodies

20

TRAINING (CONTINUED)

Accrual Accounting

International Public Sector Accounting Standards

International Accounting Standards

Government Finance Statistics Manual

IFMIS Coding Structure

Network Architecture

Links to Other Systems

21

ACTION PLAN

Steps to ImplementationShort-Term (1-2 Years)

• Continue Design Phase to develop detailed specifications

• Revise applicable laws to permit use of accounting standards desired by international accounting oversight bodies

• Modify existing software to implement double-entry cash accounting system

Mid-Term (3-5 Years)• Acquire additional software and hardware to implement

double-entry partial accrual accounting system for financial assets and liabilities

22

ACTION PLAN (CONTINUED)

Steps to Implementation (continued)Long-Term (Over 5 Years)

• Implement double-entry full accrual accounting system for non-financial assets and long-term debt

Packaged Software

Technical Architecture

23

PACKAGED SOFTWARE CONSIDERATIONS

Goodness of Fit

System ScalabilitySize

Speed

Workload

Transaction Cost

Outside Consulting Support

24

STRATEGIES FOR IMPLEMENTATION

Appoint Steering Committee (for policy) and full-time Project Team (for procedures)Identify specific software and hardware needs during design phasePrepare Users’ ManualsConduct training programsPilot test programsImplement throughout MOFRoll out to other ministries

25

POST-IMPLEMENTATION REVIEW

Accuracy of Time, Cost, and Benefit Estimates

Adequacy of System DesignAccountable

Controllable

Transparent

Sustainable

C PA FA C PA FA A B P HR FR LG OM PEDecision Maker(Scope)

User(Requirements)

Designer(Specifications)

Builder(Components)

C-C

ash

PA

-Par

tial

Acc

rual

FA

-Ful

l A

ccru

al

C-C

ash

PA

-Par

tial

Acc

rual

FA

-Ful

l A

ccru

al

A-A

uditi

ng

B-B

udge

ting

P-

Pro

cure

men

tH

R-H

uman

R

esou

rces

FR

-Phy

sica

l R

esou

rces

LG-L

ocal

G

over

nmen

tO

M-O

ther

M

inis

trie

sP

E-P

ublic

E

nter

pris

es

INTEGRATED FINANCIAL MANAGEMENT INFORMATION SYSTEM FRAMEWORK

WHERE DOES YOUR COUNTRY FIT?Data Process Interfaces Geography

27

GLOBAL IMPLICATIONS