IMPLEMENTING FINANCIAL AND ACCOUNTING SYSTEMS FOR GOVERNMENT

IMPLEMENTING FINANCIAL AND
ACCOUNTING SYSTEMS
FOR GOVERNMENT
CHRISTIAN T. SOTTIE
THE CONTROLLER AND ACCOUNTANT-GENERAL
GHANA


INTRODUCTION

• 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


introduction
• 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


Definition
•
•
•

•
•

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


DEFINITION
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


INTEGRATED PUBLIC FINANCIAL MANAGEMENT
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



Operational support for Spending Units







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
6


Cycle for Public Fin Mgt
Policy Formulation
and Review

1

Budget
Preparation

Budget Execution

2
9

8

Audit and
Evaluation

Budget
Authorizations

3

Implementation
Commitment of
Funds

Budget Review
& Accounting

4

Purchasing

7

Debt and Aid
Mgt

Payments and
Receipts Mgt

6
Cash Mgt

5

Asset /
Inventory Mgt
Payroll/
HR Mgt
7


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:


Government commitment and management support at the highest levels to ensure that the change
process is completed smoothly



Inter-agency coordination and user involvement in system design



Building institutional capacity and technical skills starting from the preparation phase



Development of project management and technical support units within the Treasury for
implementation and sustainability of new systems



Donors support usually turns to dictate the passé beyond the capability of the user or set standards
that are not achievable



Dream big but start small. The “big bang “ approach may take forever to complete. Eg Ghana started
with 76 sites and 10 years later, the pilot sites were reduced to 8 sites



Incentive schemes should accompany the implementation since such project demand more efforts
and commitment than the regular job requirement of the public servant.