Implementation of Integrated Financial Management Systems Ghana’s Experience By. John Prempeh – Controller & Accountant General

2 Key Areas:  Background  Fundamental Objectives of BPEMS  Design Process  Infrastructure & Logistic Suppliers  Key Benefits of BPEMS Design  Transitional Arrangements-Budget Preparation, Execution, Reporting and Reconciliation  BPEMS Modules Acquired  Implementation Strategy  Progress to date  Challenges

3 Background  In 1993 Government of Ghana carried out a comprehensive review of its Accounting and Financial Management System which highlighted several weaknesses as:  Week budget formulation, preparation and lack of ownership.  Weak expenditure monitoring and control  Lack of proper accounting and monitoring system.  Lack of quality and timely data on Government resources  Outmoded regulatory framework

4 Background In view of these weaknesses, the Ghana Government decided to embark on an Integrated Financial Management Information System which is to incorporate 32 Ministries in 10 Regions and across140 Districts under an acronym – BPEMS - Budget and Public Expenditure Management System

5 Fundamental Objective of BPEMS The fundamental objective of BPEMS is to implement a reliable, scientifically developed, computerised, broad-based budget and public expenditure management system; that is capable of providing accurate and up-to-date information on commitments, actual expenditure, budget allocations and financial reports from a common database.

6 DESIGN PROCESS  Re-engineer the whole business process.  Restructure our Bank Accounts from 4000 to one Treasury Main Account and 32 MDA accounts  Develop a new Chart of Accounts from 15 Digits to 47 digit code.  Build Capacity within the Public Sector  Improve the Country’s Telecommunication Infrastructure to support the Local Area Network and Wide Area Network by the Volta Com Systems’ fibre optic.  Review the existing Legal Framework to support the reforms

7 Infrastructure and Logistics Suppliers For smooth development and implementation of the BPEMS the following service providers were contracted: -E&Y - study existing business process -HP – providers of the Hardware and Software -Siemens – providers of the LAN, WAN and Radio Link infrastructure - Oracle SA – set up and configuration of the Oracle Financials in line with Government re-engineered Business processes.

8 Key Benefits of BPEMS Design: Uniform and integrated infrastructure for deployment of common systems Modified Accrual Accounting Single Point of Data Entry Electronic Authorisations and other automated workflow features

9 Key Benefits of BPEMS Design: Provides for enhanced Reporting Functionality – timely reporting of financial transactions at both National and Sub-national levels Increased independence for MDAs Increased monitoring capabilities for MoF

10 Transitional Arrangements  While awaiting full deployment of BPEMS Government had decided to run some of the new business processes on existing application such as Activate, ACCPAC and NETS.  The areas covered by these arrangements include – Budget preparation, budget execution, reporting and reconciliation.

11 Transitional Arrangements – Budget Preparation  The budget is prepared using 15 Digit Code.  The budget is prepared under the Medium Term Expenditure Framework (3 years rolling budget) using Activate Software as a transitional arrangement because the Oracle Public Sector Budget Module is not yet ready.  The budget is derived from the Ghana Poverty Reduction Strategic Paper (GPRS) with focus on poverty reducing activities using the 15 Digit code.

12 Transitional Arrangements – Budget Preparation  Budgeting for Highly Indebted Poor Country (HIPC) expenditure are being centralized at MOFEP based on debt that crystallizes for relief and the availability of internal revenue to be allocated into the HIPC fund. Cabinet at the moment does the distribution of HIPC funds.

13 Transitional Arrangements – Budget Execution  After the budget have been prepared using the 15 digit code, releases are made by mapping the 15 digit code into 47 digit COA.  Personal Emolument and Administration Expenses are covered with general warrant while Service and Investment Activities expenditures are made through specific warrants issued by MOFEP.

14 Transitional Arrangements – Budget Execution  Because the BPEMS Cash Management System is not ready, manual cash management system now supports the budget execution process. Cash Ceilings are issued to MDAs. Obviously the cash ceiling is determined by the availability of funds; which itself is a function of total government receipts, planned expenditures and public sector borrowing.

15 Transitional Arrangements – Budget Execution  Under the Old system, each of the one hundred and forty treasuries were making payment through one specific drawings account. Each treasury services more than one MDA and drawing ceilings were issued to control expenditures.  A new banking arrangement was instituted. Under this arrangement, one operational bank account was opened for each Ministry into which monthly cash transfers are made from the Treasury Main Accounts based on cash ceilings issued by MOFEP

16 Transitional Arrangements – Reporting  As already indicated the budget is prepared using 15 digit code but mapped up into 47 digit code at the time of release of resources while the accounts are prepared using 15 digit COA.  The Cash Transcripts serves as source document for the preparation of the Accounts. Two cash transcripts are prepared. One on 15 digit and the other on 47 digit. The 15 digit transcript is captured into ACCPAC General Ledger Software for the preparation of the financial statements, while the 47 digit transcript is capture into the Oracle General Ledger Module to facilitate parallel running.

17 BACKGROUND – Budget Execution  The Accounts are prepared with ACCPAC and National Expenditure Tracking System (NETS) using stand alone computers.  The structure of the old and new COA is as follows:

18 The Old 15 Digit COA ExpRevB/S Head333 Sub Head2-- Ord/Subv.111 Region111 District111 Objective111 Item111 Sub Item111 Sub Sub Item133 Source of Fund3-- Station Code-33

19 The New 47 Digit COA  Fund Type2  Fund Source3  Authorization1  Organization8  Location4  Objective4  Output4  Activity4  Accounts7  Sector4  Spare6

20 Transitional Arrangements –Reconciliation  Because of inadequate capacity in the MDAs reconciliation is centralized at the Treasury Headquarters.  In the interim, bank reconciliation are performed manually because the cash management module which incorporates the automated bank reconciliation system is not yet deployed.

21 BPEMS - Modules  Essentially, the following Modules of the Oracle Financials were acquired to meet the re- engineered business processes: Public Sector Budgeting, General Ledger Purchase Ordering Accounts Payable Accounts Receivables, Cash Management Note however that Fixed Assets and Inventory Modules are being negotiated for.

22 BPEMS Line Item Account Balances to GL Key Interfaces with BPEMS IPPD Revenue Agencies Aid & Debt Mgmt Existing Systems Direct Interface to BPEMS Fixed Assets Proposed Systems Inventory Management Fiscal Decentralisation Project Tracking  A key factor which integrates the system is a common, reliable, unified database to and from which all financial data flows and which is shared by all the financial users: CASH MANAGEMENT ACCOUNTING AND REPORTING BUDGET IMPLEMENTATION BUDGET PREPARATION (MTEF)

23 Pilot Implementation Sites  The financial reforms are broadly targeted for all of GoG.  However, in terms of roll-out of the Software and Infrastructure, 8 MDAs, the Regional Administrations, Office of the President and Parliament (Public Accounts & Finance Committee) were selected for the pilot phase.

Progress

25 Progress to Date  Customisation and Set up of the Core Application modules of the Oracle Financials have been completed and fully deployed to 5 out of the 8 Pilot MDAs.  Functional Training on the Oracle Application are being provided to all Users in the 5 MDAs  Core Team made up of 21 GoG Staffs have been fully trained on Oracle applications to provide support to the MDAs functional users.

26 Progress to Date  Financial Information Centre: FIC required to house the Servers is completed and now ready for relocation of the Interim Data Centre;  Back ups security Two off site locations are being prepared to serve as back ups to the Main Financial Information Centre.

Challenges

28 Challenges  Managing the Change Process and building capacity in the Public Sector.  Commitment to the Project - Ability to sensitise Public Servants and the Politicians to appreciate, accept and use the new system.  Bureaucracy - Overcoming bureaucratic bottlenecks in the whole implementation plan to avoid delays in service delivery.  Building IT Capacity – GoG ability to build IT Capacity in the shortest time to sustain the project.

29 Challenges  Connectivity – need to modernise the current poor Communication Infrastructure to strengthen the network connectivity.  Future Cost of Maintenance – the need to forecast at least for 5 years, the future cost implication of implementation within the overall GoG resources.  Cost Benefit – the need to calculate cost benefits analysis at each stage of implementation to determine the necessity to continue the program.

30 Challenges  Power Fluctuation - GoG ability to provide stable power both at the data centre and every part of the country.  Security for the Web Services – ability to build enough security mechanism to forestall any virus infections and breakthrough form outside.  Standardisation of Strategic Planning Activities.

Thank You