1. Design and Implementation of Financial Management Information Systems (FMIS) Cem Dener June 14, 2011 Washington, DC Design and Implementation of Financial Management Information Systems (FMIS) Cem Dener June 14, 2011 Washington, DC

2. FMIS June 2011 1Design and Implementation of FMIS

3. What is FMIS? June 2011 2Design and Implementation of FMIS

4. Definitions June 2011 3Design and Implementation of FMIS

5. B O O T What is FMIS? Asset / Inventory Mgmt Procurement/ Purchasing Mgmt of Budget Authorizations Commitment of Funds Payments and Receipts Mgmt Cash Management Debt and Aid Management Fiscal Reports & Budget Review Audit and Evaluation Budget Preparation Policy Development and Review Payroll Calcs HR Mgmt Publishing Web Portal Public Investments Tax and Customs FMIS: F = B + T (+ O) Treasury System (Budget Execution) The World Bank has financed 92 completed/active projects in 53 countries totaling over US $2.42 billion since 1984 (total project cost: $3.58 billion). Accounting Daily operations June 2011 4Design and Implementation of FMIS

6.  Modern integrated FMIS systems are designed and implemented as centralized web-based applications, supporting decentralized operations  Implementation of the FMIS includes the following ICT components: [1]Establishment of countrywide network connections (communications lines) usually as a Government contribution. [2]Development of web-based Application Software (ASW) as a combination of customized COTS package + locally developed software (hybrid solution). [3]Installation of central servers (database & application servers) and data storage units (fiber disk arrays) at the Main System Center & Business Continuity Center. [4]Installation of standard field hardware (domain servers, user workstations and peripherals) in central and field offices. [5]Installation of network equipment, system security and user management tools and engineering support solutions. FMIS ICT Solutions June 2011 5Design and Implementation of FMIS

7. B C C 12 M S C Local Server Firewall Database Server(s) MoF / Treasury District Offices Spending Units Application Servers Web Server Collection Point (city center) Dedicated line Spending Units Internet Virtual Private Network Tunnelling Encryption On-demand lines for towns PCs / Thin Clients [ 3 ] Central Servers [ 4 ] Field Hardware [ 1 ] Wide Area Network District Offices 3 [ 5 ] Network Equipment [ 2 ] FMIS Application Software FMIS DB MSC : Main System Center BCC : Business Continuity Center Technology Architecture June 2011 6Design and Implementation of FMIS

8. User Terminals System Center Database ServerApplication Servers Users Web Server FMIS modules Web Portal Customized COTS LDSW Internal / External FMIS Locally Developed Software modules COTS DB PFM Organizations (MoF Units, Treasury Offices,Line Ministries) Spending Units, Local Finance Directorates, Local Public Authorities, Municipalities, etc. Internal Access External Access LDSW DB LDSW : Locally Developed Software COTS : Commercial-off-the-Shelf SW VPN Internet 1 2 3 Interfaces Integrated FMIS DB Core Treasury System Web-based FMIS Model June 2011 7Design and Implementation of FMIS

9. FMIS FunctionsCommon Implementation Options  Macroeconomic Forecasting LDSW / Existing Models  Budget Preparation and Approval LDSW / COTS (including MTBF/MTEF, PBB, PIM)  Core Treasury System COTS (customized)  Expenditure Management + Interface w banking system (TSA)  Revenue Management + Interface w revenue collection  Commitments / Purchasing + Interface w procurement agency  Cash / Fund Management  Asset / Inventory Management  Accounting (General Ledger)  Financial Reports  Operational Support for SUs LDSW for Spending Units (via Web Portal)  Internal Debt Management LDSW / Interface with Debt Mgmt System  External Debt and Aid Mgmt. Interface with Debt Mgmt System  Personnel Database / PayrollLDSW / COTS  Support for Auditing Custom developed reports  Web Publishing (Web Portal)LDSW [ COTS : “customized” Commercial-off-the-Shelf Software LDSW : Locally Developed Software TSA : Treasury Single Account ] FMIS Functionality June 2011 8Design and Implementation of FMIS

10. All TDO local bank accounts closed NO local transit accounts CT has only one integrated TSA account NO Extra Budgetary Funds Document/info flow Financial transactions MoF Central Treasury MoF Central Treasury Central Bank Treasury Province/ District Offices Comm. Bank #1 Branch Offices Treasury Network ACH RTGS Secure VPN >> EFT (batch files; XML) Payment Order and Invoice submitted FMIS TSA HQ Commercial Bank #1 HQ Commercial Bank #X Spending Units Details of all Payments (and Revenues) received from the Central Bank daily 1 Approved Payment Request 2 Payment Instructions 3 Comm. Bank #X Branch Offices Payment Message 4 Direct payment to beneficiary account 5 TSA Statements 6 SWIFT << Statements Banking System Network Comm Bank #X Network Comm Bank #1 Network Automatic Reconciliation 7 Individuals Tax PayersSuppliers Treasury Single Account June 2011 9Design and Implementation of FMIS

11. Findings of FMIS Study June 2011 10Design and Implementation of FMIS

12. FMIS Prerequisites June 2011 11Design and Implementation of FMIS

13. Recommendations June 2011 12Design and Implementation of FMIS

14. FMIS Development Methodology Years > 0 1 2 3 4 5 6 7 8 9 10 Advisory support for PFM reforms Assess existing ICT skills & resources 1. Identify the PFM reform needs of the government (What? Why?) Assess PFM capacity & practices Assistance in PFM capacity building Technical Specifications [ ICB docs ] Develop ICT/e-Gov Strategy System Design 2. Develop customized solutions (How? Where? When?) Develop PFM Reform Strategy Conceptual Design 3. Strengthen capacity and implement project (Who?) Project Mgmt Group (PMG) and PIU Coordination with other donors Preparation Assist in technical capacity building Coordinate w/ other e-Gov initiatives Procurement of ICT solutions [ ICB ] FMIS implementation Monitoring & Evaluation Capacity building & change mgmt Warranty Establish a countrywide network Implementation FMIS take off Approval Flying Solo Support & Maintenance Post Warranty FMIS design and implementation may take at least 6-7 years, despite advances in technology Images: jscreationzs / FreeDigitalPhotos.net Recommendations - I June 2011 13Design and Implementation of FMIS

15. Recommendations - I June 2011 14Design and Implementation of FMIS

16. Recommendations - I June 2011 15Design and Implementation of FMIS

17. Recommendations - II June 2011 16Design and Implementation of FMIS

18. Recommendations - III June 2011 17Design and Implementation of FMIS

19. June 2011 Conclusions 18Design and Implementation of FMIS