USAID Public Sector Accounting Project

1
USAID Public Sector Accounting Project

• Bosnia and Herzegovina

2
Who We Are

• Emerging Markets Group
• Twenty years providing consulting services into
  the donor agency and development market
• Over 120 in-house development consultants
• Leveraging a network of 140 national offices
  around the world
• EMG offices in Washington, London, and Brussels

3
Basics

• Project period Oct/1999 to Jun/2004
• Project value 13.8 million
• Offices in Sarajevo and Banja Luka
• Scope included Federation of BiH, Republic of
  Srpska, State of BiH, and the 10 Cantons of the
  Federation
• Installed Oracle Financial Applications 11i GL,
  AP, AR, PO, and CE on Linux SUSE 7 and Red Hat.
  Currently upgrading to 11.5.9 and migrating off
  of Red Hat
• Deployed 330 PCs, four servers,
  telecommunications lines and infrastructure,
  printers

4
Topics

• History and Political Structure
• Reform Challenges
• Goals and Objectives of the International
  Community
• Legal Framework
• The Public Sector Accounting Project
• Outlook

5
Bosnia-Herzegovina
6
BiH History and Political Structure

• Dissolution of the SFRY 1992
• War concluded in Dayton 12/95
• State of BiH
• Entities/Cantons
• Municipalities

7
Reform Challenges

• Destruction of vital infrastructure
• High unemployment
• Brain drain
• Legacy of SFRY
• Arrears

8
Goals and Objectives of the International
Community

• Reduce public sector expenditures
• Decrease current accounts deficit
• Improve revenue collection
• Decrease domestic and external arrears
• Strengthen the ability of the government to
  provide needed services

9
Legal Framework

• Treasury Law
• Provides for TSA under Treasury control
• Stipulates all public revenue flow through TSA
• Grants Treasury control over ALL public sector
  funds
• Provides for adoption of standard COA
• Grants Treasury authority to create and maintain
  FIMS
• Grants Treasury oversight of budget prep
• Provides for creation of internal controls

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USAID Public Sector Accounting Project Goals

• Efficient management of all financial resources
• Transparency of all financial transactions

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USAID Public Sector Accounting Project Objectives

• Strengthen the ability of public sector managers
  to track and manage budgets.
• Improve the quality and reach of financial
  management information and provide easy access to
  that information.
• Provide consolidated financial information to
  higher levels of government and external
  entities.
• Capture financial information where financial
  transactions are initiated thereby reducing error.

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USAID Public Sector Accounting Project Objectives

• Strengthen the ability of managers to provide
  services to the public within allocated budgets
• Automate functions previously performed manually
• Build the capacity of Treasury staff through the
  introduction of financial accounting best
  practices which are encapsulated in the Treasury
  system
• Ensure sustainability

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Overview of Treasury System
Single-Point Data Entry
Printed Reports
Online Queries, Spreadsheets, Web Sites
External Systems
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Treasury System Functional Scope

• General Ledger
• Single Chart of Accounts across BiH
• Budgetary Controls by organization and account
  and month
• Introduce concept of accounting periods
• Accounts Payables
• Vendor invoice entry and approvals
• Electronic payment through commercial transaction
  banks
• Complete transparency of expenditures

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Treasury System Functional Scope

• Purchasing
• Planning of purchases, controls
• Registers suppliers
• Automatic encumbrance of budgetary funds
• Cash Management
• Electronic interface with transaction banks
• Automatic reconciliation of cleared payment
  transactions
• Accounts Receivable
• Capture information on revenue sources/types

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Treasury System Features

• Budgetary Control
• Budgets in GL established by Spending Unit,
  Economic Classification Code, Month
• 01-15010001-611100-000000-0000-0000000
• Hard budgetary control
• Purchases and invoices not accepted if funds are
  not available
• Funds Available calculated as
• Monthly Budget
• Less Expenditures to Date
• Less Purchasing Encumbrances

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Treasury System Features

• Budgetary Control
• Approved Purchasing Documents encumber related
  budget lines in Treasury General Ledger
• Funds checking performed prior to PO approval
• Available funds reduced by amount of PO
• Two-way matching of invoices and purchasing
  documents
• Additional control layer
• Relieve encumbrances
• Funds checking performed prior to invoice
  approval
• All payments made through TSA

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Treasury System Worksteps

• Methodology
• Installation of Hardware and Software
• Implementation Analysis
• System tailoring and enhancements
• Interface Development
• Data Conversion
• Documentation and Training
• Testing
• Implementation
• Post-implementation support

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Treasury System Worksteps

• Installation of Hardware/Software
• Servers
• Size
• Scalability
• Compatibility
• Telecommunications
• Desktop computers
• Printers
• Third-party software

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Treasury System Worksteps

• Implementation Analysis
• Analysis of existing business functions
• Comparison with package functionality
• Identification of and solution for gaps
• Solutions for key cost drivers
• Focus should be adapt to the package

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Treasury System Worksteps

• System Tailoring Enhancements
• Configurations
• Application extensions
• Customizations
• Integration (i.e. Best of Breed solutions)

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Treasury System Worksteps

• Interface Development
• Identify legacy system candidates
• Determine interface specifications
• Build interface
• Test
• Implement

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Treasury System Worksteps

• Data Conversion
• Assess manual vs. programmatic conversion options
• Develop cross-walks for conversion
• Build conversion routines
• Test
• Implement

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Treasury System Worksteps

• Documentation and Training
• Build implementation specific users guides
• Focus on user involvement in analysis and setup
• Train, train, train, and train some more
• Train the trainer
• Post-implementation support

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Treasury System Worksteps

• Testing
• Avoid full parallel testing
• Test workflow, document life cycle processes, new
  procedures

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Treasury System Worksteps

• Implementation
• Timing is key End of year, end of quarter
• Precede with change management efforts
• Provide excessive support

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Treasury System Worksteps

• Post-Implementation Support
• Expect disruption for at least a quarter
• Be prepared to provide significant additional
  formal and on-the-job training

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Setup Tasks - GL

• Define Chart of Accounts
• Account structure
• Calendar
• Currency
• Define account types as required
• Suspense
• Inter-company
• Summary
• Open an accounting period

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Setup Tasks - AP

• Define Lookups (i.e. Invoice types)
• Define Locations
• Define Employees
• Define Inventory Organization
• Define Payment Terms
• Define Banks
• Open AP Accounting Period

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Setup Tasks - PO

• Define Inventory Categories/Items
• Define Units of Measure
• Define Workflow
• Define use of account generator
• Define Approvals
• Define Buyers
• Open PO and Inv Accounting Periods

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Example of Setup Tasks - BiH

• Bank Names/Accounts Transaction, Deposit
• Bank interface development
• Chart of accounts finalization
• Treasury organization chart/codes
• Trainee names
• Approved budget/budget upload
• System user profiles/responsibilities
• Vendor info/banks/accounts/sites

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Sample Workplan

• January 1 Project kickoff
• January 15 Hardware installation
• March 1 Complete software setup
• March 1 Approved Business Process
• April 1 Configured BPL/CRP
• June 1 Complete BPL/CRP scenarios
• June 1 Complete key user training
• July 1 Complete Interfaces, conversions,
  reports
• August 1 Complete BPL/CRP

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Sample Workplan

• September 1 User acceptance testing
• September 1 Complete documentation/ manuals
• October 1 Application user training
• November 1 End user training
• December 1 Go live
• March 1 Complete first year-end close

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Lessons Learned

• Insist on active executive sponsorship
• Implement on a proven platform
• Minimize customizations
• Minimize data conversions
• Involve key users early and continuously
• Train, train, train, and train some more
• Sell the change
• Keep focus on post-live

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ERP Market

• Top 3 are SAP, Oracle, Peoplesoft
• Top 3 Lawson 80 ERP market
• Oracles acquisition of Peoplesoft in question
• SAP and Oracle have best global coverage
• Best of breed Siebel (CRM), Best (HR)
• SAP Oracle 1 and 2, respectively

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ERP Market

• Expect deep discounts on licenses 50 not
  uncommon
• Ask for free training credits.
• Negotiate out-year maintenance percentage.
  Typically 20 to 25 of license fees. Look for 10
  t0 15.
• 3rd party reporting, data warehousing packages
  should give very steep discounts to make you a
  customer

37
BiH Results

• Live operation at the Federation and RS since
  Jan/2002 State since Apr/2002 6 Cantons in
  2003 final 4 Cantons by Mar/2004
• 4000 person/days of training
• FBiH avoided unbudgeted spending of 27 million
  KMs (16.7 million) in 2002
• Tuzla reporting first ever budget surplus of 13
  million KMs (8 million) for 2003
• By end of 2003, over 1.6 million transactions
  disbursing 4.6 billion KMs all auditable.
• Sarajevo reporting first ever budget surplus of
  46 million KMs (28.4 million) for 2003

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Outlook for the Future

• System implemented at State, Entities, and 10
  Cantons
• Pilot projects underway in RS to bring
  municipalities in expecting activity in FBiH
• Continued savings through cost avoidance
• Better budget planning and preparation
• Better equipped internal audit at all levels
• Shift to automated payroll accounting and
  interface with Treasury system
• First year end closes for four Cantons in 2005

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For further information

• Scott Vickland
• 1001 G St. N.W.
• Washington, D.C. 20001
• 202 572 7364
• svickland_at_deloitte.com
• Veronica Gilbert
• 1001 G. St. N.W.
• Washington, D.C. 20001
• 202 572 7075
• vegilbert_at_deloitte.com