Government Integrated
Financial Management
Information System
Dr. Jesse Hughes, CPA, CIA, CGFM
Professor Emeritus of Accounting
Old Dominion University
Email—[email protected]
1
INTRODUCTION
Stages for System Development
Best Practices
Assessments
Government Operations
Economic Enterprises
Whole-of-Government
Coding Structure
Information Technology
Training
Action Plan
Strategies
2
STAGES FOR SYSTEM
DEVELOPMENT
Assessment
Design
Procurement
Implementation
3
BEST PRACTICES
International Public Sector Accounting
Standards (IFAC)
Government Finance Statistics Manual
(IMF)
Other Country Experiences
4
SPECTRUM FOR ACCOUNTING
SYSTEM DEVELOPMENT
CURRENT
TRANSITION PHASE
1 - 2 Years
3 - 5 Years
INTERNATIONAL
BEST PRACTICES
Over 5 Years
•Single Entry
•Double-Entry
•Double-Entry
•Double-Entry
• Cash System
•Enhanced
Cash System
•Partial
Accrual
System
•Full Accrual
System
•Budget Only
•Cash and
Budgetary
Control
•Financial
Resources
•Economic
Resources
GOVERNMENT OPERATIONS
Cash Based System for Budgetary Control
Accrual Based System for Financial
Statements
Links to Other Systems
Procurement
Personnel
Pensioners
7
GOVERNMENT OPERATIONS
Standard Chart of Accounts
Statement of Financial Position
Statement of Financial Performance
Statement of Changes in Net Assets
Statement of Cash Flows
Eliminate Intra-Group Transactions to
Prevent Double-Counting during
Consolidation
8
ECONOMIC ENTERPRISES
Standard Chart of Accounts
Balance Sheet
Income Statement
Statement of Changes in Equity
Statement of Cash Flows
Eliminate Intra-Group Transactions to
Prevent Double-Counting during
Consolidation
9
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
10
CODING STRUCTURE
Transaction Code
Fiscal Year
Fund
Organization
Program or Function
Geographic
Chart of Accounts
11
PROPOSED FUND STRUCTURE
Consolidated
Whole-of-Government
Fiduciary
Consolidated Governmental
(Full Accrual Accounting)
Non-Current
Assets
Consolidated Proprietary
(Full Accrual Accounting)
(Full Accrual Accounting)
Non-Current
Liabilities
(Partial Accrual Accounting)
Capital
Projects
Debt
Service
Governmental
General/
Special
Revenue
Internal
Services
Economic
Enterprises
Proprietary
Agencies
Trusts
Fiduciary
CHART OF ACCOUNTS
Budgetary Accounts
Expenditures
Economic (8 major classes)
•
•
•
•
•
•
•
•
Compensation of Employees
Use of Goods and Services
Consumption of Fixed Capital
Interest
Subsidies
Grants
Social Benefits
All Others
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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
14
CHART OF ACCOUNTS
(CONTINUED)
Revenues (4 major classes)
Taxes
Social Contribution
Grants
All Others
Assets
Liabilities
Net Assets
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Integrated Financial Management Information
System (IFMIS)
Other Government Information
Systems
IFMIS
IFMIS
Purchasing
Physical Resource Management
Project
Accounting
Asset
Management
Inventory
Management
Accounts
Payable
Purchasing
Cash/Debt
Management
Budget
Preparation
Human Resource Management
Personnel
Payroll
General
Ledger and
Budget
Control
Revenue Management
Accounts
Receivable
Tax Collection and
Management
Financial Management
Information
(Consolidated Reporting)
MINISTRY OF FINANCE
LEGEND
IFMIS Module Full Integration
System Interfaces/Full Integration with IFMIS
IFMIS On-line Access
Budget
Control
Budget
Preparation
Financial
Management
Information
OTHER
MINISTRIES/
COST CENTERS
Government Business Enterprises
Information Systems
Financial
Institutions
Manufacturing
Companies
Other
Enterprises
16
NETWORK INFRASTRUCTURE 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)
17
18
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
19
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
20
ACTION PLAN
Steps to Implementation
Short-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
21
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
22
PACKAGED SOFTWARE
CONSIDERATIONS
Goodness of Fit
System Scalability
Size
Speed
Workload
Transaction Cost
Outside Consulting Support
23
STRATEGIES FOR
IMPLEMENTATION
Appoint Steering Committee (for policy) and fulltime Project Team (for procedures)
Identify specific software and hardware needs
during design phase
Prepare Users’ Manuals
Conduct training programs
Pilot test programs
Implement throughout MOF
Roll out to other ministries
24
POST-IMPLEMENTATION
REVIEW
Accuracy of Time, Cost, and Benefit
Estimates
Adequacy of System Design
Accountable
Controllable
Transparent
Sustainable
25
INTEGRATED FINANCIAL MANAGEMENT INFORMATION SYSTEM FRAMEWORK
C
Data
PA FA
WHERE DOES YOUR COUNTRY FIT?
Process
Interfaces
C
PA FA
A
B
P
HR FR
Geography
LG OM PE
Decision Maker
(Scope)
User
(Requirements)
Designer
(Specifications)
B-Budgeting
PProcurement
HR-Human
Resources
FR-Physical
Resources
LG-Local
Government
OM-Other
Ministries
PE-Public
Enterprises
A-Auditing
C-Cash
PA-Partial
Accrual
FA-Full
Accrual
C-Cash
PA-Partial
Accrual
FA-Full
Accrual
Builder
(Components)
GLOBAL IMPLICATIONS
27