FINANCIAL MANAGEMENT INFORMATION SYSTEMS:

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• FINANCIAL MANAGEMENT INFORMATION SYSTEMS
• ESSENTIAL TOOLS FOR GOVERNMENTS EVERYWHERE
• PRESENTED BY
• MICHAEL VLAISAVLJEVICH
• MANAGING DIRECTOR - BARENTS GROUP
• TO THE
• INTERNATIONAL CONSORTIUM OF
• GOVERNMENTAL FINANCIAL MANAGEMENT
• APRIL 2, 2003

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• MICHAEL VLAISAVLJEVICH
• MANAGING DIRECTOR
• BARENTS GROUP
• 1676 International Drive, Suite 7275
• McLean, Virginia 22102
• E-mail mvlaisavljevich_at_bearingpoint.net
• Website www.bearingpoint.com
• Phone [phone] Fax
  703.747.3813

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FMIS

• Technology enables reform
• Critical tool for proper expenditure control
• Processes all transactions
• Records and accounts revenues and expenditures
• Essential for transparency and accountability

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FMIS PACKAGES ARE FEASIBLE NOW

• Packages have been tested and implemented in
  countries at all levels of development
• Tailored to the processes of the government
  sector
• Project budgets should be carefully matched to
  project scope and size
• Capable client project management is a key to
  success

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• KAZAKHSTAN TREASURY MODERNIZATION PROJECT

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PROJECT FUNDED BY WORLD BANK

• To assist the government in strengthening the
  budget execution system by
• Supporting the establishment of computerized
  treasury system
• Training of personnel
• Overall aim is to enhance the capacity of the
  government for
• Effective use of cash resources
• Monitoring budget execution
• Production of timely and accurate financial
  information

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PHASED APPROACH

• BearingPoint was selected to assist the
  government of Kazakhstan to manage the Project
• Designed the Project for implementation through
  Phased Approach
• Phase 1 - Development of a functional design for
  the Treasury system
• Phase 2 - Development of computerized Treasury
  system and testing at pilot sites
• Phase 3 - Replication of the system throughout
  the country

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PROJECT DESIGN

• Treasury Ledger Focal point of the government
  financial management
• Commitment Accounting Essential tool for
  expenditure control
• Accounts Payable Mechanism for paying
  government expenditures in coordination with
  Commitment System
• Revenue Management Captures all sources of
  revenues for consolidation
• Payroll Regional system for paying government
  employees
• Cash Management System for reconciliation of
  Treasury Single Account and managing cash
  resources
• Asset Management System to register all
  government assets in broad categories

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PHASE 1

• Prepared a functional design for the new Treasury
  system and developed related procedures and
  manuals
• Assisted the government in establishing the new
  budget classification system based on IMR GFS
  classifications
• Established Standard Chart of Accounts
• Assisted the government to upgrade the in-house
  technical capacity
• Trained Treasury personnel on the new Treasury
  system and procedures
• Developed hardware and software specifications
  for the technology platform required to set up
  the Treasury information system
• Developed hardware and software specifications
  for the technology platform required to set up
  the Treasury information system
• Assisted the government in the procurement of the
  required HW and SW
• Preparation of RFP
• Tendering
• Evaluation of Proposals and selection of the most
  preferred bidder
• Contracting

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PHASE 2 BEARINGPOINT MANAGED

• HP/ORACLE Implemented
• Treasury Ledger
• Commitment Accounting
• Accounts Payable
• Revenue Management
• Cash Management
• Asset Management
• Using the standard features of ORACLE Financials
• No customization of functionality Developed few
  custom reports
• The government decided to put Payroll
  implementation on hold

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IMPLEMENTATION

• Developed detailed functional specifications for
  individual modules of the Treasury system
• Performed as technical advisor to the government
  of Kazakhstan on hardware, software, training and
  project management areas
• Provided technical advice to ORACLE team in
  mapping the Kazakhstan Treasury requirements with
  the features of ORACLE applications
• Assisted in the development of training program
  and materials
• Performed as medium between the contractor and
  the government of Kazakhstan in dealing with the
  day-to-day matters relating to the project
• Assisted in pilot-testing the system at Central
  Treasury, 2 ministries, 2 oblast treasury offices
  and 20 rayon treasury offices

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PHASE 3 SYSTEM REPLICATION THROUGHOUTTHE COUNTRY

• The involvement of BearingPoint completed after
  successful testing of the system at pilot sites
• The government of Kazakhstan, HW Supplier Hewlett
  Packard and SW Supplier ORACLE performed the
  system roll-out to the remaining oblasts and
  ministries

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GENERAL REMARKS ABOUT THE PROJECT

• The first Treasury Reform project in the former
  USSR that successfully implemented a government
  accounting system using off-the-shelf package
• The first project of its kind in the region that
  systematically implemented Treasury Single
  Account in conjunction with a treasury system

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• NATION BUILDING RAPID PUBLIC SECTOR FINANCIAL
  SYSTEMS
• IMPLEMENTATION IN WAR TORN KOSOVO

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THE MANDATE SECURITY COUNCIL RESOLUTION 1244

• Establish in Kosovo an interim Civilian
  Administration with
• Legislative and Executive powers
• Administration of the Judiciary
• Promote the establishment of substantial autonomy
  and self-government

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THE CHALLENGE FOR FINANCIAL MANAGEMENT

• Build a Financial Management process and system
  from nothing
• No laws or regulations
• No people or infrastructure
• No banking system
• Protect the integrity of the revenue raising and
  expenditure process
• Issue of donor confidence

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GOOD GOVERNANCE

• Clarity of roles and responsibilities of levels
  of government and public entities
• Open decision processes particularly for budget
  preparation, execution, and reporting
• Public availability of information
• Independent assurances of integrity through
  external audit
• Source IMF Code of Good Practices on Fiscal
  Transparency

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CENTRAL FISCAL AUTHORITY

• Manage the Kosovo Consolidated Budget (KCB)
  consisting of
• General government
• Municipalities
• Public enterprises
• Formulate overall fiscal strategy based on
  sustainability
• Develop revenue and expenditure policies
• Develop revenue raising programs
• Determine procurement framework
• Conduct internal audit
• Manage the Kosovo Consolidated Fund
• Responsible for financial reporting

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CENTRAL FISCAL AUTHORITY ORGANIZATIONAL CHART
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TREASURY OPERATIONS

• Expenditure and revenue controls
• Banking arrangements
• Banking and payment authority of Kosovo (BPK)
• Commerzbank Frankfurt
• Micro Enterprise Bank Pristina
• Instruct agencies
• Funds management
• Accounting for expenditures and revenues

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IT SYSTEM DEVELOPMENT AND SUPPORT

• Key Issues
• Develop System to meet
• Kosovo requirements
• Simple Maintenance

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IT SYSTEM DEVELOPMENT AND SUPPORT

• Accounting application specifications
• Meet sound internal expenditure control
  procedures
• Provide management reporting for accountability
• Satisfy international reporting requirements
  under GFS
• Complex mix relating to donations for budget
  funding and reconstruction project financing
• Expandable to cover requirements of lower tiers
  of government
• FreeBalance system implemented

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• AFGHANISTAN GOVERNMENT TREASURY SYSTEM

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FINANCIAL MANAGEMENT AGENT

• PROJECT LAUNCHED AUGUST 22, 2002
• To immediately develop a centralized expenditure
  recording, payment processing and reporting
  system for budget expenditures
• A full computerized accounting system for
  expenditures and revenues and financial reporting
  for the government

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RAPID RESULTS

• Reviewed processes
• Developed chart of accounts
• Redesigned forms
• Determined reporting requirements
• Computerized the current manual system tracking
  using the facilities of FreeBalance accounting
  package
• Commenced live operations October 23, 2002

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FUNCTIONS OF THE SYSTEM

• Check expenditure data for payment
• Print checks
• Update treasury ledger
• Maintain banking information
• Maintain complete expenditure data of central
  agencies
• Maintain payroll expenditure data of provinces

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STANDARD CHART OF ACCOUNTS

• Source of funds
• General budget
• Designated grants
• Organization
• Location
• Economic classification

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REPORTING

• Expenditure reports of central agencies
• General budget
• Donor grant
• Reports by source of funding
• Reports by ministry/organization
• Reports by location
• Reports by economic classification
• Reports by individual payments

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TRAINING AND LOCALIZATION EFFORTS

• Basic computer skills training
• FreeBalance package training
• Applications
• System administration
• Technical
• On-going support from software vendor
• Daily operations performed by local staff

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PLAN FISCAL YEAR 1382 (DARI CALENDAR)

• Budget management
• New chart of accounts for enhanced reporting
  GFS compliant
• Complete revenue and expenditure information
• Explore possibilities for system extension to
  provinces
• Provincial budget execution information
• System interface in Dari
• Reorganization of treasury bank accounts
• Suitable payroll system

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HOW BARENTS GROUP OPERATES

• Leading provider of financial management services
  in countries in transition
• 400 professionals based in more than 65 countries
  around the world
• Extensive experience in systems implementation
  around the world
• Emphasis on knowledge transfer and collaboration
  with government clients as partners