Implementation of Integrated Financial Management Systems Ghana

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Implementation of Integrated Financial Management
Systems Ghanas 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 Countrys 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
• - EY - 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 COA

• Exp 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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Key Interfaces with BPEMS

• 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

Existing Systems
BPEMS
Revenue Agencies
BUDGET PREPARATION (MTEF)
IPPD
Aid Debt Mgmt
ACCOUNTING AND REPORTING
BUDGET IMPLEMENTATION
Proposed Systems
Direct Interface to BPEMS
Fiscal Decentralisation
Project Tracking
CASH MANAGEMENT
Inventory Management
Fixed Assets
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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.

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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 security
• Two off site locations are being prepared to
  serve as back ups to the Main Financial
  Information Centre.

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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.

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Thank You