Implementation of Integrated Financial Management Systems Ghana’s Experience By. John Prempeh – Controller & Accountant General.

Implementation of Integrated Financial Management

Systems Ghana’s Experience

By. John Prempeh – Controller & Accountant General

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Key Areas:

Background Fundamental Objectives of BPEMS Design Process Infrastructure & Logistic Suppliers Key Benefits of BPEMS Design Transitional Arrangements-Budget Preparation,

Execution, Reporting and Reconciliation BPEMS Modules Acquired Implementation Strategy Progress to date Challenges

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Background In 1993 Government of Ghana carried out a comprehensive

review of its Accounting and Financial Management System which highlighted several weaknesses as:

Week budget formulation, preparation and lack of ownership.

Weak expenditure monitoring and control

Lack of proper accounting and monitoring system.

Lack of quality and timely data on Government resources

Outmoded regulatory framework

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Background

In view of these weaknesses, the Ghana Government decided to embark on an Integrated Financial Management Information System which is to incorporate 32 Ministries in 10 Regions and across140 Districts under an acronym – BPEMS - Budget and Public Expenditure Management System

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Fundamental Objective of BPEMS

The fundamental objective of BPEMS is to implement a reliable, scientifically developed, computerised, broad-based budget and public expenditure management system;

that is capable of providing accurate and up-to-date information on commitments, actual expenditure, budget allocations and financial reports from a common database.

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DESIGN PROCESS Re-engineer the whole business process. Restructure our Bank Accounts from 4000 to one

Treasury Main Account and 32 MDA accounts Develop a new Chart of Accounts from 15 Digits to 47

digit code. Build Capacity within the Public Sector Improve the Country’s Telecommunication Infrastructure

to support the Local Area Network and Wide Area Network by the Volta Com Systems’ fibre optic.

Review the existing Legal Framework to support the reforms

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Infrastructure and Logistics Suppliers

For smooth development and implementation of the BPEMS the following service providers were contracted:

- E&Y - study existing business process - HP – providers of the Hardware and

Software- Siemens – providers of the LAN, WAN and

Radio Link infrastructure- Oracle SA – set up and configuration of the Oracle

Financials in line with Government

re-engineered Business processes.

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Key Benefits of BPEMS Design:

Uniform and integrated infrastructure for deployment of common systems

Modified Accrual Accounting

Single Point of Data Entry

Electronic Authorisations and other automated workflow features

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Key Benefits of BPEMS Design:

Provides for enhanced Reporting Functionality – timely reporting of financial transactions at both National and Sub-national levels

Increased independence for MDAs

Increased monitoring capabilities for MoF

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Transitional Arrangements

While awaiting full deployment of BPEMS Government had decided to run some of the new business processes on existing application such as Activate, ACCPAC and NETS.

The areas covered by these arrangements include – Budget preparation, budget execution, reporting and reconciliation.

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Transitional Arrangements – Budget Preparation

The budget is prepared using 15 Digit Code. The budget is prepared under the Medium

Term Expenditure Framework (3 years rolling budget) using Activate Software as a transitional arrangement because the Oracle Public Sector Budget Module is not yet ready.

The budget is derived from the Ghana Poverty Reduction Strategic Paper (GPRS) with focus on poverty reducing activities using the 15 Digit code.

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Transitional Arrangements – Budget Preparation

Budgeting for Highly Indebted Poor Country (HIPC) expenditure are being centralized at MOFEP based on debt that crystallizes for relief and the availability of internal revenue to be allocated into the HIPC fund. Cabinet at the moment does the distribution of HIPC funds.

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Transitional Arrangements – Budget Execution

After the budget have been prepared using the 15 digit code, releases are made by mapping the 15 digit code into 47 digit COA.

Personal Emolument and Administration Expenses are covered with general warrant while Service and Investment Activities expenditures are made through specific warrants issued by MOFEP.

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Transitional Arrangements – Budget Execution

Because the BPEMS Cash Management System is not ready, manual cash management system now supports the budget execution process. Cash Ceilings are issued to MDAs. Obviously the cash ceiling is determined by the availability of funds; which itself is a function of total government receipts, planned expenditures and public sector borrowing.

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Transitional Arrangements – Budget Execution

Under the Old system, each of the one hundred and forty treasuries were making payment through one specific drawings account. Each treasury services more than one MDA and drawing ceilings were issued to control expenditures.

A new banking arrangement was instituted. Under this arrangement, one operational bank account was opened for each Ministry into which monthly cash transfers are made from the Treasury Main Accounts based on cash ceilings issued by MOFEP

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Transitional Arrangements – Reporting

As already indicated the budget is prepared using 15 digit code but mapped up into 47 digit code at the time of release of resources while the accounts are prepared using 15 digit COA.

The Cash Transcripts serves as source document for the preparation of the Accounts. Two cash transcripts are prepared. One on 15 digit and the other on 47 digit. The 15 digit transcript is captured into ACCPAC General Ledger Software for the preparation of the financial statements, while the 47 digit transcript is capture into the Oracle General Ledger Module to facilitate parallel running.

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BACKGROUND – Budget Execution

The Accounts are prepared with ACCPAC and National Expenditure Tracking System (NETS) using stand alone computers.

The structure of the old and new COA is as follows:

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The Old 15 Digit COAExp Rev B/S

• Head 3 3 3• Sub Head 2 - -• Ord/Subv. 1 1 1• Region 1 1 1• District 1 1 1• Objective 1 1 1• Item 1 1 1• Sub Item 1 1 1• Sub Sub Item 1 3 3• Source of Fund 3 - -• Station Code - 3 3

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The New 47 Digit COA Fund Type 2 Fund Source 3 Authorization 1 Organization 8 Location 4 Objective 4 Output 4 Activity 4 Accounts 7 Sector 4 Spare 6

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Transitional Arrangements –Reconciliation

Because of inadequate capacity in the MDAs reconciliation is centralized at the Treasury Headquarters.

In the interim, bank reconciliation are performed manually because the cash management module which incorporates the automated bank reconciliation system is not yet deployed.

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BPEMS - Modules Essentially, the following Modules of the Oracle

Financials were acquired to meet the re-engineered business processes: Public Sector Budgeting, General Ledger Purchase Ordering Accounts Payable Accounts Receivables, Cash Management

Note however that Fixed Assets and Inventory Modules are being negotiated for.

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BPEMS Line Item Account

Balances to GL

Key Interfaces with BPEMS

IPPD

Revenue Agencies

Aid & Debt Mgmt

Existing Systems

Direct Interface to

BPEMS

Fixed Assets

Proposed Systems

Inventory Management

Fiscal Decentralisation

Project Tracking

A key factor which integrates the system is a common, reliable, unified database to and from which all financial data flows and which is shared by all the financial users:

CASH MANAGEMENT

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BUDGET PREPARATION

(MTEF)

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Pilot Implementation Sites The financial reforms are broadly targeted for

all of GoG.

However, in terms of roll-out of the Software and Infrastructure, 8 MDAs, the Regional Administrations, Office of the President and Parliament (Public Accounts & Finance Committee) were selected for the pilot phase.

Progress

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Progress to Date Customisation and Set up of the Core Application

modules of the Oracle Financials have been completed and fully deployed to 5 out of the 8 Pilot MDAs.

Functional Training on the Oracle Application are being provided to all Users in the 5 MDAs

Core Team made up of 21 GoG Staffs have been fully trained on Oracle applications to provide support to the MDAs functional users.

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Progress to Date

Financial Information Centre: FIC required to house the Servers is completed

and now ready for relocation of the Interim Data Centre;

Back ups securityTwo off site locations are being prepared to serve as back ups to the Main Financial Information Centre.

Challenges

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Challenges Managing the Change Process and building capacity

in the Public Sector. Commitment to the Project - Ability to sensitise Public

Servants and the Politicians to appreciate, accept and use the new system.

Bureaucracy - Overcoming bureaucratic bottlenecks in the whole implementation plan to avoid delays in service delivery.

Building IT Capacity – GoG ability to build IT Capacity in the shortest time to sustain the project.

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Challenges Connectivity – need to modernise the current poor

Communication Infrastructure to strengthen the network connectivity.

Future Cost of Maintenance – the need to forecast at least for 5 years, the future cost implication of implementation within the overall GoG resources.

Cost Benefit – the need to calculate cost benefits analysis at each stage of implementation to determine the necessity to continue the program.

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Challenges

Power Fluctuation - GoG ability to provide stable power both at the data centre and every part of the country.

Security for the Web Services – ability to build enough security mechanism to forestall any virus infections and breakthrough form outside.

Standardisation of Strategic Planning Activities.

Thank You