Integrated Financial Management System 24 November 2015 National Academy of Audit & Accounts Shimla

Presentation Outline About IFMS Objectives of IFMS Components and Functions of IFMS Implementation Strategy for IFMS Impact of IFMS on functioning of AG (A&E) Business Process Reengineering Strategic Decisions

Objectives of IFMS One of the 33 ‘Mission Mode’ projects under National e-Governance Program: computerize treasuries and link them with other relevant systems so as to capture data on all transactions; Objectives include: Improving efficiency of treasury functions, Enhancing transparency in financial administrative systems, Better cash flow management & control on state finances, Better accounting of receipts and payments, Improving accuracy and speed in accounts and budget preparation.

Objectives of IFMS Perfecting cash management system on real time basis is the unstated objective; Objectives to be achieved through: Integrated operating platform for all stakeholders involved in financial management, Capturing transaction level details for expenditure and receipts, Introducing business process re-engineering to facilitate paperless transactions and information sharing, Adoption of ‘single source of truth’ principle in development of system.

Components and Functions of IFMS Recognises that the treasuries are at different levels of computerization; Project is structured as a ‘menu of components’; Menu includes: Up-gradation and expansion of existing treasury computerisation systems; Development of interfaces of treasury systems with other related systems for implementing ‘single source of truth’ for all transactions; Electronic settlement of receipts and expenditure; Re-engineering of existing accounting processes;

Components & Functions of IFMS Development of online budget module capable of preparing, operationalizing and monitoring budgets; Development of accounts module for both consolidated and detailed accounts; Development of personnel & pay roll management module and pension module; Development of fund management module to provide cash flow details on near real time basis; Development of online audit module; System based validations.

Components & Functions of IFMS Operation of a single electronic platform by all stakeholders consisting of: Drawing and Disbursing officers, Departments of State government, Treasuries and sub-treasuries, Agency banks and RBI, Pay and Accounts Offices of Government of India (CPSMS) Offices of Accountants General (A&E) and (Audit), and Citizens consisting of suppliers, tax payers, beneficiaries of government schemes and government employees.

Components & Functions of IFMS Integration with external IT systems: Central Accounting Office of Reserve Bank of India; Pension and GPF Accounting systems of Accountant General (A&E); Central Plan Scheme Monitoring System; Core Banking Systems of agency banks.

Integration with External Systems IFMS RBI / Banks Departmental Systems UIDAI HRMS CPSMS Accountant General

Stakeholders of IFMS KHAJANE-II Secretaries to Government Pensioners Online Fund releases from the Secretariat to all levels up to DDOs, would be online. Funds and schemes of the GoI outside the State Budget can be monitored. Finance Department Availability of Daily Accounts and Cash Position. Reconciliation of accounts and its monitoring would be greatly facilitated. Pensioners The centralized pension database should help in timely payment and revision of pension, and in addressing the pensioners’ grievances HOD’s/ Controlling Officers Release funds to their subordinate officers in online mode. View scheme wise budget, funds released, expenditure incurred and balance available. Citizens Creating facility for electronic payment in IFMS Online payment system and ‘any-bank’ payment system would help citizens in paying their dues to the Government. KHAJANE-II DDO’s Prepare all types of bills through IFMS, and submit those bills online. DDOs will be able to reconcile the figures online. Treasuries The reconciliation and account generation would be streamlined. Submission of bills online by the DDOs would obviate the need for data entry in the treasuries. Accountant General AG can communicate all Sanction orders of Pension, GPF, etc. online to IFMS. RBI & Agency Banks Payment authorizations from treasuries will be sent online to Agency Banks.

Implementation Strategy of IFMS Part financed by Government of India; Flexibility for states in implementation; States at varying stages of implementation; Systems envisaged by different states vary in scope; Limited scope consists of one or more of following: Online approval of bills by DDO and transfer to treasury, Online transfer of accounting data from treasury to VLC system of AG (A&E), Adoption of e-receipts and e-payments, Online preparation, operation and monitoring of budget, and Online reconciliation of accounts

Impact on functioning of AG (A&E) Impact dependent on: Scope of proposed IFMS, Nature of compilation process of VLC system i.e. whether from vouchers or from primary compiled accounts sent by treasuries,

Need for Business Process Reengineering in IA&AD Need for BPR due to more granular transaction level accounting: Voucher based VLC systems should have facility for online real time flow of accounting data from treasuries; VLC systems based on compiled accounts from treasuries will need changes to capture voucher level accounting data; Lay down validation checks on accounting data to be carried out before clearing the data for compilation; Facility of drilling down from aggregate figures to underlying vouchers and challans required in all VLC systems;

Need for Business Process Reengineering in IA&AD Availability of transaction level details can change Existing reconciliation procedures Subsidiary Register maintenance procedures Personal ledger maintenance procedures for loans and deposits Can facilitate capturing voucher level information on the proposed ‘49-digit-7-segment’ classification system, if and when implemented;

Need for Business Process Reengineering in IA&AD Compilation procedures require changes due to: Real time flow of data can impact choice of control totals, Integration with budget module affect procedures for appropriation accounts, Integration of primary accounting transactions of AG, Enhanced number of Accounts Rendering Units Impact of electronic settlement of transactions: Impact of Paperless transactions on audit; One treasury- One bank dependency removed; Availability of challan-wise details through recipient banks;

Need for Business Process Reengineering in IA&AD Impact on primary accounting responsibility of AG (A&E) for: Dependent on role assigned to Reserve Bank of India ; Inter-governmental transactions with Union and other States; Need for routing inter governmental transactions though suspense heads of accounts; Powers for correction of accounts; Accounting of periodical adjustments; Integration with other transactions for compilation process

Need for Business Process Reengineering in IA&AD Impact on other IT systems in use in IA&AD: Need to modify GPF Accounting systems for online transfer of data on GPF recoveries and payments; Need for online interface between SAI Pension system in use in AG (A&E) and IFMS; Possibilities of issue of entitlement authorisations online to banks; Pay Slips availability and authorisations online to gazetted Officers/DDO and treasury where GE function exists

Revision of Business Processes in AG (A&E) Accounts Validation Daily Accounting Control through cash Daily Adjustments Seamless transfer Transaction Details Digital Authorization System Reconciliation Online Auditing Sub Treasuries Accounts compilation Monthly Accounting Control through Control Accounts Periodical Adjustments Manual Data input Plus, Minus Memoranda Manual Authorization Annual Reconciliation Manual Auditing Treasuries

“No one can stop an idea whose time has come” - Victor Marie Hugo

Strategic Decision Areas for IA&AD How do we overcome redundancy of accounting and entitlement functions? How do we restructure Offices of AG (A&E)?

Possible Solutions Introduce value adding services and products; Reposition offices of AG (A&E) as auditors of accounts and of entitlement payments; Restructure in a phased and incremental manner Long term Plan for change management involving people, procedures and technology.

Thanks!