1. Program Overview and Updates April 2013

2. Session Scope Current PFM Situation Why the reform? PFM Reform Roadmap and Executive Order 55 What do we want to achieve? Project accomplishments and Updates How do we achieve it?

3. Why the reform?

5. A system of rules, procedures and practices for government to manage public finances in the areas of  budgeting  accounting  auditing  cash management  management of public debt  revenue generation  public reporting on financial operations

6. budget not results-based lack of funding predictability weak budget oversight by Congress and the public weak cash management system no common budgetary and accounting classification weak monitoring of contingent liabilities lack of budget credibility PREPARATION EXECUTION EXECUTION ACCOUNTABILITY ACCOUNTABILITY PFM Cycle and Gaps AUTHORIZATION

7. What do we want to achieve?

8. PFM Policy Bases  Master plan for modernizing the financial management system of the government  Executive Order 55 (s. 2011) directs the integration and automation of PFM systems  Improve efficiency, accountability and transparency of public fund use  Contribute to good governance and fiscal discipline as a strategy for inclusive growth and poverty reduction

9. Reform Objective Clarify, simplify, improve and harmonize financial management processes and information systems in the whole of government and as necessary reengineer and integrate relevant systems in COA, DBM, DOF and implementing agencies

10. Desired Outputs A Government Integrated Financial Management Information System (GIFMIS) and a Treasury Single Account (TSA) by 2016  Real-time on-line monitoring and control of obligations and direct links to cash disbursements  Consolidated financial management reporting requirements using harmonized classification of budgetary, treasury & general ledger accounts  A single treasury account for more effective cash management, reconciliation of bank balances and to remove revenue/expenditure floats  A predictable and streamlined allotment and cash release program  Regular in-year reports on budget execution, and timely year-end audit reports  Systematic recording and reporting of all liabilities including guaranteed and contingent liabilities

11. How do we achieve the reform?

12. PFM Projects GIFMIS Budget Reporting & Performance Standards Accounting and Auditing Capacity Building Liability Management Treasury Cash Management Operations Improvement Generate real-time, reliable, accurate financial info and reports for policy decision making Harmonize and consolidate data structures and apply consistent set of budget and accounting rules for reporting Enhance government accounting & auditing systems & standards & strengthen external and participatory audit capacity Professionalize the PFM workforce and build stakeholder (Congress and civil society) support for reforms Improve management of government’s contingent liabilities and financial exposure Improve cash management for operational efficiency

13. What have we done so far?

14. Unified Accounts Code Structure (UACS) New Revised Chart of Accounts Online Submission of Budget Proposal System Treasury Single Account Conceptual Design 2012 Key Milestones GIFMIS Conceptual Design

15. Messy Traffic of Financial Reporting Activities 15 This is now… In the long run, the Philippine PFM needs this kind of information system

16. U nified A ccounts C ode S tructure Provides a harmonized budgetary and accounting classifications and codes for identifying aggregating budgeting accounting auditing reporting of financial transactions of government UACS enables comparison of allotment releases vs. appropriations, obligations vs. releases, and actual disbursements vs. obligations for programs of spending agencies 2012 Key Milestones

17. Online Submission Of Budget Proposal System (OSBPS) 2012 Key Milestones

18. Treasury Single Account (TSA) Conceptual Design Assessed Gaps Agency budgets are under executed Proliferation of bank accounts Idle cash balances often fail to earn income Unnecessary borrowing costs to cover perceived cash shortage Idle cash balances in the public banks used to extend credit to the public sector, or to buy bonds 2012 Key Milestones Actions Taken Inventory of agency bank accounts Conceptual design to implement a TSA to provide a unified structure of govt bank accounts enable consolidation and optimum utilization of government cash resources centralize revenue collections and payments process at the Treasury

19. GIFMIS GIFMIS is an integrated web-based financial management information application: Automate financial functions and operations – financial planning and budgeting, treasury and accounting Collect and organize financial information in a central database Generate real-time, reliable and accurate financial info and reports for policy decision making

20. Harmonized Financial Accountability Reports (Joint Circular 2013-1) Exposure of the Phil Public Sector Accounting and Auditing Standards and Manuals Inventory of Agency Bank Accounts for TSA readiness Database for GOCC Debt Ongoing Initiatives

21. Internal Audit and Internal Control Training IEC activities and PFM Competency Model Initiative Rollout of UACS, Revised CoA and OSBPS GIFMIS Functional and Technical Requirements Gathering Ongoing Initiatives

22. Is government ready for change? GIFMIS will improve transparency and accountability in their agencies High need of both the managers and technical groups for proper training to adapt to the new systems

23. PFM Capacity Building PFM Competency Framework Awareness Briefings and Consultations and Business Process Reviews with Stakeholders INPUT LEARNING AND DEVELOPMENT PROCESSES Global Better Practices Reengineered Business Processes GIFMIS Systems Functional Users Training Reengineered Business Processes GIFMIS Systems IT Technical Users Training Reengineered Business Processes GIFMIS System Professional Development Courses Productivity Tools, Financial Analysis, Ethics and Accountability, PFM Competency Based Education & Training l eading to certification, diploma or master’s degree in PFM Informed and educated PFM executives, managers, employees, public, CSO stakeholders, etc. Professional, competent PFM workforce in budgeting accounting, internal audit, treasury management, revenue management, govt IT audit, etc. Transparent and accountable PFM systems, etc. DESIRED OUTPUT/OUTCOME Monitoring and Evaluation PFM 2012

24. Critical Path to GIFMIS Political Leadership Executive Order 55 Institutional Structures and Plans PFM Roadmap PFM Governance Program Management Office Change Management Capacity Building Communication Policy Decisions GIFMIS concept Business process changes Functional assignments Development Functional Design System design Procurement Business Changes Harmonized accounts Treasury Single Account Centralized payments Management/Organizational Policies, Processes, Systems People/ResourcesFinances/Budget GIFMIS

25. “To ensure both the adequacy of public resources and the results per peso spent, we need a stable and enabling PFM system… comprehensive enough to cover the moment when taxes are collected to the point where suppliers of government are paid, and up to that point when the auditor takes stock of how these funds were used. This PFM system shouldn’t be purely financial, for it has to take into account the actual, concrete results on the ground brought about by the use of public resources.” “There’s more to PFM than merely installing a new ICT system or shutting down bank accounts… through PFM we ultimately want greater accountability to be embedded in how we in government use the people’s hard-earned taxes.” -- DBM Secretary Florencio B. Abad PFM Roadmap Briefing 8 March 2012

26. Thank you! www.pfm.gov.ph

27. Revised Chart of Accounts COA Circular 2013-002, 30 Jan 2013 Revised the NGAS chart of accounts to provide new accounts for adoption of the Philippine Public Sector Accounting Standards (PPSAS) Major component of the Unified Accounts Code Structure (UACS) to ensure comparability of financial information from budgeting and accounting systems Government-wide training on the revised CoA and exposure of the new PPSAS expected to begin in May 2013 2012 Key Milestones

28. Fiscal Simulation Budget Preparation Budget Management Budget Execution Commitment Management Payments Management Receipts Management Cash Management Accounting & Fiscal Reporting Asset Management Procurement (PhilGEPS) Debt Mgmt (DMFAS) Human Resources Management Payroll (NPS) Plantilla (GMIS) Revenue Management Customs (BOC) Internal Revenue (BIR) Auditing Mgmt (IRRBAS) Securities Management GIFMIS Data Warehousing Business Intelligence Government EIS (GEIS) Central Bank & Government Servicing Banks (TSA) Commercial Banks Creditor Vendor/ Supplier Public Employee Portal User UACS

29. GIFMIS Conceptual Design (The “To Be”) Blueprint for the GIFMIS system Business Process to be supported (SCOPE) Public Sector Units to be covered (COVERAGE) Nature and extent of support (FUNCTIONALITY) 2012 Key Milestones

30. Fiscal Simulation Budget Preparation Budget Management Budget Execution Commitment Management Payments Management Receipts Management Cash Management Accounting & Fiscal Reporting Asset Management Procurement (PhilGEPS) Debt Mgmt (DMFAS) Human Resources Management Payroll (NPS) Plantilla (GMIS) Revenue Management Customs (BOC) Internal Revenue (BIR) Auditing Mgmt (IRRBAS) Securities Management GIFMIS Data Warehousing Business Intelligence Government EIS (GEIS) Central Bank & Government Servicing Banks (TSA) Commercial Banks Creditor Vendor/ Supplier Public Employee Portal User

31. GIFMIS Timelines Functional & technical specificati ons (Apr2013) Bidding & Selection (Jul2013) Business process review (Aug2014) System devt configuration & customization & testing (Apr2015) User training (Sep2015) Phase 1 Go Live for Pilot (Oct2015)

32. GIFMIS Pilot Implementation 32