Title: Bruce Lazenby President
1Bruce LazenbyPresident CEOblazenby_at_FreeBalance
.com
Building the Foundation for e-Government in
Developing Nations
2Agenda
- E-Government and Anti-Corruption
- Observations
- Key Challenges
- FMIS Overview
- International Case Studies
- Immediate Impact and Results
- Lessons Learned
- Critical Success Factors
- Conclusions
3E-Government
- E-Government refers to the use of information
and communications technologies to improve the
efficiency, effectiveness, transparency and
accountability of government. - (The World Bank Group)
4Anti-Corruption
The reduction of corruption is the result of two
underlying premises
- Committed desire to change
- Use of appropriate tools to affect change
5Observations
- Management of Funds
- Before a government can develop sustainable
sources of financing, they need a means of
managing, accounting for, and reporting on the
funds entrusted to the government (build trust
and confidence). - Urgency
- Given the international economic slowdown and
repeated crisis, countries have an urgent need to
better manage money in order to create and
operate an effective government - Window of Opportunity
- Narrow window of opportunity to establish
credibility in the eyes of its citizens, donors,
creditors, trading partners and foreign investors - International Standards
- Software must meet multiple accounting and
reporting needs WB TRM, IMF COFOG, IAS, GAAP,
IFAC, best-practices, donors, creditors,
unique-to-country
6Key Challenges
- Complexity of System
- The complexity of the solution must be
appropriate. All governments require
sophisticated government-focused functionality
nothing less and nothing more - Modern System
- All government financial management solutions
should be based on proven, first-world software
applications. The system must operate on-line in
real time, and be affordable, sustainable and
upgradeable - Localization and Capacity Building
- System must be delivered and localized rapidly,
and be understandable and easy to use - Sustainability
- Customization will accelerate system
obsolescence, cost and likelihood of failure
proven audit support - In-country support
7Core FMIS Elements
8Fiscal Cycle
APPROPRIATIONS MODULEEntry of allotments,
original and forecast budgets, and
commitments/obligations
1. Budget Authorization Management
8. Budget Preparation
2. Commitment of Funds
7. Audit and Evaluation
GENERAL LEDGER ANDCONTROLS MODULESUse of
general ledger reportsand system audit trails
3. Payments and Receipts Management
EXPENDITURE MODULEUse of approvals and account
processing
6/1. Budget Reviewand Fiscal Reporting
4. Cash Management
APPROPRIATIONS MODULEModification of revised
and forecast budgets
Use of Banks andCash Allocation
5. Debt and AidManagement
9System Overview
FreeBalance eFinancials
- Public Sector Financial, Accounting, Treasury
Material Management System - Budget and Manager-Centric
- Best in Class
- Government Design Ensures Ease of Use,
Comprehension - Proven Rapid Deployment Methodology
- Parameterization Reduces Maintenance and
Support Costs - Post-Deployment Sustainability
10Critical Success Factors
- Deliverable
- Understandable
- Affordable
- Sustainable
- Extensible
-
11Case Studies
- Focus on three key international projects
- Kosovo
- East Timor
- Afghanistan
12Setting the Stage
"The task before the international communityis
to help the people in Kosovo to rebuildtheir
lives and heal the wounds of conflict."UN
Secretary-General Kofi Annan
13FreeBalance in Kosovo
- Key Kosovo Requirements
- Financial management system to help democratic
development and economic liberalization - Technology to ensure sound fiscal management and
strengthen transparency and good governance - Protect the integrity of the revenue raising and
expenditure process (donor confidence) - User training and implementation support
- Local capacity building and sustainability
- Translation of system into Albanian and Serbian
- URGENCY
14FreeBalance in Kosovo
Pictures taken in Pristina by FreeBalance in May
2001
Serbian Police Station 5 blocks from FreeBalance
offices
Restaurant in Pristina 2 blocks from FreeBalance
offices
15FreeBalance in Kosovo
- Rapid Deployment of FreeBalance eFinancials
- Install the system 8 May 2000
- Configure the Chart of Accounts
- Configure the Financial Coding Blocks
- Enter supporting table elements (vendors, bank
accounts, etc.) - Configure the management rules
- Enter test transactions, produce test reports
- Enter live transactions, produce live reports
- Prove live system to donors on 3 June 2000
(26 days prep to proof)
16FreeBalance in Kosovo
17FreeBalance in East Timor
- FreeBalances software brings along with it
internationally approved accounting practices and
transparency, which otherwise take a long time to
develop in such economies.
(East Timor Ministry of Finance)
18FreeBalance in East Timor
- Brief Background
- Decades of violence and civil unrest due to
struggle for independence - UNTAET was established in October 1999 to
administer the Territory
- As of April 2002, UNTAET strength was 7,687 total
uniformed personnel, including 6,281 troops,
1,288 civilian police and 118 military observers
UNTAET also included 737 international civilian
personnel and 1,745 local civilian staff.
19FreeBalance in East Timor
- The UNTAET Mandate
- Provide security and maintain law and order
- Establish an effective administration
- Assist in the development of civil and social
services - Ensure the coordination and delivery of
humanitarian assistance, rehabilitation of
humanitarian assistance, rehabilitation and
development assistance - Support capacity-building for self-government
- Assist in the establishment of conditions for
sustainable development
20FreeBalance in East Timor
- FreeBalance Project
- FreeBalance provided financial management
software and related services (Dili, East Timor) - Funded by the World Bank and delivered to the
Central Fiscal Authority of East Timor (CFA) - FreeBalance eFinancials implementation began in
September 2000 (Foundation) - System went live in less than 45 days
- Phase II extended the CFA project to Agencies and
Departments of the East Timor Transitional
Administration - East Timor celebrated Independence Day on May
20th 2002 - Additional modules being rolled out
21FreeBalance in Afghanistan
- If FreeBalance can help bring fiscal stability
to Afghanistans beleaguered government, it will
have accomplished not just a business coup, but a
kind of miracle.
(Canadian Business Magazine, December 2002)
22FreeBalance in Afghanistan
- Financial management software and services for
the Transitional Islamic Government of
Afghanistan - Arrived in Country 9 October 2002 system live
and first check cut 24 October 2002 (15 days prep
to proof) - Project to be rolled out in two phases over the
course of five months - FreeBalance and BearingPoint will implement
FreeBalance eFinancials and provide associated
professional services
23FreeBalance in Afghanistan
Pictures taken in Kabul in October 2002
Views from Ministry of Finance office
24Immediate Impact and Results
Pre-Implementation
Post-Implementation
1. System
- Microsoft Access
- Entirely paper-based
- None
- Homegrown
- Custom built
-
- FreeBalance eFinancials
- Modern
- Proven
- Supported
-
2. Cash Management
3. Donor/Taxpayer Confidence
4. Expenditure Management
5. Integration and Connectivity
6. Capacity Building
7. Grants Management
25Immediate Impact and Results
Pre-Implementation
Post-Implementation
1. System
- Cash advances to enable the procurement of
essential goods and services. - Transactions executed at the municipal level
could only be reviewed after the fact - Analysis of expenditures was extremely limited
- Alarming price variances for common goods were
identified across the municipalities - Eliminated via expenditure analysis and
reporting, the use of commitment recording prior
to expenditures, and oversight - Reduced requirements for cash advances
2. Cash Management
3. Donor/Taxpayer Confidence
4. Expenditure Management
5. Integration and Connectivity
6. Capacity Building
7. Grants Management
26Immediate Impact and Results
Pre-Implementation
Post-Implementation
1. System
- Donors were threatening to freeze funds and
discontinue additional funds unless they received
credible, timely and accurate financial reports.
- FreeBalance reports provided donors with the
confidence that finances were being managed
properly - Facilitated access to donor funding and
independent financial reports for each donor now
available
2. Cash Management
3. Donor/Taxpayer Confidence
4. Expenditure Management
5. Integration and Connectivity
6. Capacity Building
7. Grants Management
27Immediate Impact and Results
Pre-Implementation
Post-Implementation
1. System
- Inability to track payments and account for
expenditures
- Payroll system helped administration identify
hundreds of people who were receiving multiple
salaries (in some cases, as many as six salaries
for the same person), as well as hundreds of
ghost employees. - Full audit trail capabilities
- Minimization of cash transactions
2. Cash Management
3. Donor/Taxpayer Confidence
4. Expenditure Management
5. Integration and Connectivity
6. Capacity Building
7. Grants Management
28Immediate Impact and Results
Pre-Implementation
Post-Implementation
1. System
- De-centralized environment
- Ministries and municipalities existed in
isolation from the central authority
- Access to commitment management functionality
enabled proactive management of finances - Empowered employees with a sense of control and
of being part of the solution - Now more accountable for financial management
decisions
2. Cash Management
3. Donor/Taxpayer Confidence
4. Expenditure Management
5. Integration and Connectivity
6. Capacity Building
7. Grants Management
29Immediate Impact and Results
Pre-Implementation
Post-Implementation
1. System
- Lack of sufficient resources and financial
management expertise to adequately manage public
sector finances
- Centralizing the financial management database
enabled skilled personnel to oversee financial
management and accounting practices - Able to identify areas in which needed
assistance and training were needed - Proper accounting and financial management
techniques demonstrated online for decentralized
users
2. Cash Management
3. Donor/Taxpayer Confidence
4. Expenditure Management
5. Integration and Connectivity
6. Capacity Building
7. Grants Management
30Immediate Impact and Results
Pre-Implementation
Post-Implementation
1. System
- Required extensive manual processing or
individual cash grants/bank accounts - Such arrangements are not only inefficient, but
much more open to abuse
- Comprehensive, multi-dimensional FreeBalance
capabilities deployed (multi-fund/program/project
) - Commitment/expenditure processes within a
framework where funds allocated downwards and
easily tracked/reported from the centre - Funds allocations, decision-making, and
implementation now occur at the lowest level
using standard processes
2. Cash Management
3. Donor/Taxpayer Confidence
4. Expenditure Management
5. Integration and Connectivity
6. Capacity Building
7. Grants Management
31Lessons Learned
- Think big but start small
- Go live fast and scale up
- Solve problems and show progress
- Get people and systems into production quickly
- Improve donor coordination for leverage
- Success breeds success
- Parameterization is key
- Avoids costs and creates sustainability in the
longer term - Local ownership and capacity building
- What is doable for sustainability?
32Critical Success Factors
- Deliverable
- Understandable
- Affordable
- Sustainable
- Extensible
-
33Critical Success Factors
- Deliverable
- The system must scale down for a rapid start and
scale up for a complete solution to multiple
Departments and multiple levels. - A truly integrated modular approach.
- Go live in 60 days with a configured-for-you
solution (not vanilla) -
34Critical Success Factors
- Understandable
- Full Government functionality requires hundreds
of tables and rules, not 10 and not 10,000 - Managers must be able to understand and actually
use, maintain, and leverage its functionality to
develop and enforce sound, effective, efficient
government financial management practices across
ministries and functions, at all levels -
35Critical Success Factors
- Affordable
- Every customer is different and the software
needs to reflect this reality - Parameterization is key. Not custom work.
- Downstream costs associated with customization
and unnecessary processes can be debilitating and
risky for any institution -
36Critical Success Factors
- Sustainable
- An enduring solution must be supported and
maintained by local solution providers for first
and second level support services - The system must be a long-term solution
-
37Critical Success Factors
- Extensible
- The solution must be able to grow as government
requirements evolve and new eGovernment
technologies emerge (eGrants, ePermits,
eLicenses) -
38Critical Success Factors
- Deliverable
- Understandable
- Affordable
- Sustainable
- Extensible
-
39Conclusion
- Both internal stakeholders (political
decision-makers, taxpayers) and external
stakeholders (lending agencies, donor nations)
demand ever increasing control, audit and
reporting - These days you cannot achieve the standard
required without some sophisticated software, but
you also cant afford 10s of millions and a
2-year installation schedule - Solution must be purpose-built software that is
designed exclusively for Government - URGENCY
40Conclusion
- Not only is E-Government efficient, it is a major
contributor to anti-corruption - Effective and modern systems, starting with FMIS,
are critical components to meet the objectives of
accountability, transparency, and anti-corruption
41Bruce LazenbyPresident CEOFreeBalance
Inc.blazenby_at_FreeBalance.com