1. IFMIS, PEM & Corruption Bill Dorotinsky, PRMPS January 28, 2003 World Bank E-Government Workshop

2. IFMIS Defined  Automation of financial management system  Integration of subcomponents  General ledger, accounts payable, receivable  Cash, debt management  Payroll, human resources  Asset management  Budget formulation

3. Why IFMIS  Reduce errors of multiple data entry  Accelerate reporting  Enable data-matching, error detection  Enable more analysis  Accelerate auditing, exception reports  Enable better oversight, management

4. Nexus of IFMIS and Corruption  Improved internal reporting, improved detection  Data-matching, improved detection  Improved analysis, improved trend detection  Automated audit trail, better follow-up  Improved external reporting, higher probability of detection

5. Assumptions underlying the nexus  comprehensive public finance system  accuracy of records  integrity of database  internal controls functional  reconciliation of bank, fiscal records  corruption within FMS domain  other soft systems functional

6. Public corruption Public AssetsNon-public Assets Political Officials  Theft of public goods, funds  contract steering  Nepotism  Bribery/influence peddling Career Officials  Theft of goods, funds  Contract steering  Nepotism  Abuse of office  Bribery

7. Cases  Yugoslavia  Peru  Dominican Republic  Argentina - SYNTYS  U.S. Food and Drug Administration Generic Drug Approval Process

8. … and Counter-pressures Public AssetsNon-public Assets Political Officials  Free and active media  Civil society monitoring  Active opposition parties  Free & fair elections  Independent Judiciary  Whistleblower protection  Free and active media  Civil society monitoring  Active opposition parties  Free & fair elections  Independent Judiciary Career Officials  Professional civil service  Transparent, timely, accurate, complete finance, management information  Internal controls  Active audit (internal/external)  Media  Transparent management information  Effective tax compliance  Asset declarations  Citizen reporting/education

9. Other soft systems  Internal audit  External Audit  Timely, comprehensive reports to legislature/public  Internal controls

10. Summary  IFMIS/technology enabling tool for transparency and anticorruption  But not substitute for  attention to institutional environment ( ‘ soft systems ’ )  underlying factors (e.g. comprehensiveness)  May not target prime areas of corruption  May not be optimal investment for anticorruption

11. The HIPC Expenditure Tracking Source: “Actions to Strengthen the Tracking of Poverty Related Public Spending in Heavily Indebted Poor Countries (HIPCs), World Bank and IMF, March 22, 2002. See http://www.worldbank.org/hipc/hipc-review/tracking.pdfhttp://www.worldbank.org/hipc/hipc-review/tracking.pdf 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 123456789101112131415 (Percent of countries not meeting each benchmark) Benchmark number: Note: Based on 24 countries’ Final Assessments Meets GFS definition of general government Data on donor financing Classification of budget Pov. Red. Exp. Identified Projections integrated into budg. formulation Low level of arrears Quality of internal audit (effective or not) Regular tracking Fiscal & monetary data reconciled Month reports Timely functional reporting from class system Accounts closed within two months of y/e Audited accounts to legislature within 1 year Outturn close? Extra (off) budget expend. Reporting ExecutionFormulation

12. Bank IFMIS Projects  34 projects from 1996 through 2002  15 completed  Of those completed  Average 7 years to complete  Average Bank-financed cost was $12.3 million  50 % had cost over-runs; average 15 % over-run