The Role of the Federation of Central American Municipalities (FEMICA) in the Promotion of Municipal Integrated Financial Management Systems (IFMS)

1
The Role of the Federation of Central American
Municipalities (FEMICA) in the Promotion of
Municipal Integrated Financial Management Systems
(IFMS)
Miami, Florida, USA April 19-21, 2004
2

• Contents
• What FEMICA is and what it does to promote
  transparency
• Overall situation of Transparency and Probity in
  Central America
• Assessment on Integrated Financial Management
  Systems (IFMS) in Central American Local
  Governments

3
What is FEMICA?

• Central American local government organization,
  founded in 1991
• Main organs Central American Mayors
• Executive Secretariat based in Guatemala City
• Regional Section for Central America of the
  International Union of Local Authorities (IULA)
  and the new World Organization of United Cities
  and Local Governments
• www.femica.org

4
National Associations of Municipalities
affiliated to FEMICA
5
FEMICAS MISSION

• Non profit, non partisan organization
• Goals
• Support municipal development in the Region by
  inter-municipal cooperation, research, analysis
  and the promotion of decentralization and
  municipal strengthening processes
• Support promotion of international cooperation
  and technical assistance for Central American
  local governments
• Basic source of information and documents on
  local development, the betterment of the public
  image of local governments and the dissemination
  of their achievements and progress

6
Relationship between Municipal IFMS and FEMICAs
Agenda

• Prioritized Areas in FEMICAs Action Plan
• Local Economic Development
• Local Risk Management
• Citizen Security
• Municipal Finance
• Transparency y Probity social audits,
  participatory budgeting, Web portals and
  municipal IFMS

7
Recent FEMICA Transparency Related Activities

• Research for the Inter-American Development Bank
  (IDB) Formal Mechanisms for Improved
  Transparency in Central American Local
  Governments
• Project for a System of Municipal Performance
  Indicators, financed by IDB
• Assessment of Municipal IFMS, carried out by
  Casals Associates and FEMICA, and financed by
  USAIDs Americas Accountability, and
  Anticorruption Project

8
1. Current Situation on Transparency

• National Contexts Bright spots and Dark
• Progress and achievements
• But, in some countries it is believed that in
  some aspects the situation has deteriorated
• In others, such as Nicaragua and Honduras, the
  situation has tended to improve due to a greater
  political will of governments and an important
  support from international donors
• Still incipient efforts need to be strengthened

9
TIs Corruption Perception Index (2003)
10 Highly transparent 0 Highly corrupt
10

• Laws being promoted
• New laws on probity and responsibility of public
  employees, including municipal employees
• New crimes have been defined, such as illicit
  enrichment and political patronage
• Laws to promote transparency (information access)
• Other Reforms
• Penal and Procedural Codes are being modernized
  and more transparent systems put in place
• Public Prosecution and/or Anticorruption Offices
  have been created or strengthened

11
Characteristics of the laws

• New institutional framework is as yet fruitless,
  in part because resources are insufficient for
  effective operation
• Most have been created recently and their
  relevance and future impact are unknown
• Changes have not been necessarily positive, and
  have been criticized by civil society
  organizations, that have denounced that contrary
  to what was expected, some of the new laws
  actually are backward movements

12

• Control Systems
• Audit Offices are being restructured as a result
  of new laws that in some cases have substantially
  changed the way these institutions are structured
  and their degree of independence from other
  public offices
• In some countries, internal audit offices are
  being organized in some local governments, and in
  some cases audits are being carried out by
  specialized independent firms

13

• Quality of the Audits
• In general, audit offices do not have manuals,
  standards, laws or specific instructions to
  supervise municipal finances. This creates a
  discretionary problem in the work being carried
  out by public auditors
• In some cases, it has been reported that audits
  are only carried out in local governments that
  are not members of the governing political party

14

• International Cooperations Responsibilities
• All international donors should agree on a common
  agenda to promote probity and transparency in
  local governments
• Integrity Plans for local governments should be
  promoted, including concerted efforts so as to
  have impact
• These actions would include both those with a
  national applicability and those that are
  specifically municipal

15
2. Municipal Performance Indicators System
Project (SIDEMU)

• Design and implement the system in 4 Central
  American countries and in 5 areas
• Finance
• Human resources management
• Planning
• Services management
• Environment and natural resources
• 40 local governments and 50 indicators
• Current situation about to start execution of
  the first phase

16
3. Assessment on municipal IFMS

• Strategic alliance between the Americas
  Accountability, and Anti-corruption Project,
  carried out by Casals Associates, and FEMICA
• Initial idea Specific recommendation of the
  International Workshop Strengthening
  Transparency in Municipal Management with
  Participatory Mechanisms (Tela, Honduras,
  February 2003)

17
IFMS Benefits Key Instruments for Municipal
Management

• Public exposure of reliable and timely government
  information
• Foment a culture of accountability
• Promote consistency and coherence
• Promote standardized formats
• Audits with verifiable and certifiable
  information
• Allows reporting of data and information and
• Publicly known information sources that
  facilitate widespread dissemination and access

18
Impact of IFMS on Municipal Transparency

• Disseminate information of purchases, procedures
  and municipal services
• Inform on suppliers, municipal revenue and public
  debt, infrastructure projects and social
  programs, the mayors, councilors and officers
  wages
• Make public media expenditure
• Given citizens a better service and
• Reveal activities in key areas
• Source Based on the Auditing and Development
  Department. Administrative/International
  City/County Management Association (ICMA) y
  USAID. Municipios Transparentes. México
  SECODAM/ICMA, 2002.

19
Seven Fundamental Principles for Municipal IFMS

• Systemic approach
• Institutional focus
• Centralized Rules and Decentralized Operations
• Internal Integration
• Horizontal and Vertical Integration
• Legal Framework
• Political Will
• Source Margaret Bartel. Integrated Financial
  Management Systems for Municipalities. Americas
  Accountability Anti-Corruption Project (AAA),
  March 26, 2000

20
Scope of the Assessment

• Four countries Guatemala, El Salvador, Honduras
  and Nicaragua
• Sample Municipal IFMS in 17 municipalities
• Does not compare or qualify experiences
• First general assessment
• Carried out by a multidisciplinary team of 5
  persons and coordinated by an Executive Committee
  conformed by Casals, FEMICA and USAID

21
Criteria for Selection of Municipalities

• Preparatory activity revision of available
  bibliography on IFMS theoretical and technical
  inputs
• Demographic criterion medium-sized
  municipalities
• Technical criterion existence or experience with
  IFMS
• Accessibility by land
• Availability of resources
  
  
  
  
  
  
  
  
  
  

22
(No Transcript)
23
Research Process

• Fieldwork visits to 17 local governments between
  September and October 2003
• 200 interviews to key people
• Government entities (national level)
• Mayors, local development experts, municipal
  technical staff
• NGOs and civil society representatives
• Community organizations
• International cooperation (IFMS financing)
  
  
  
  
  
  
  
  
  
  

24
Main Findings of the Assessment

• None of the IFMS have completed process of
  internal, horizontal or vertical integration
• Most local governments have more than one IFMS
  (or parts of it) operating that are not
  integrated
• In some cases IFMS processes have developed
  isolated modules
• Weak appropriation by users and beneficiaries,
  due to little municipal participation in
  development
• To bring down a national IFMS to the municipal
  level is a complex process, due to municipal
  diversity
• In some cases, IFMS are only a formality towards
  the national government or a response to donor
  demands

25
Findings on Municipal Management

• Public perception that IFMS can facilitate
  administrative procedures and promote
  transparency
• Favorable effect of IFMS on revenue, recovery of
  arrears and availability of information
• Frequently, existing IFMS were product of
  individual analysis and assessments
• IFMS-generated information is under appreciated
• Gap between assigned competencies and effective
  capacity to carry them out

26
Findings on Actors

• Overall coordination is minimal, although
  currently there are ongoing efforts to improve it
• National entities do not always have the
  capacity to provide technical assistance to
  municipalities
• Audit offices are not in general a part of
  Municipal IFMS processes, and the few
  participating lack the required municipal and
  technological expertise
• Municipal associations have not had an active
  role in the development of municipal IFMS
• Civil society has not assumed the responsibility
  of requiring accountability and few know the
  virtues and limitations of IFMS

27
Findings on Legal Aspects

• Despite the legal framework for Municipal
  Financial Management, there does not exist a
  common and explicit strategy to avoid dispersion,
  promote integration and replace basic existing
  guidelines with a coherent concept
• One of the fundamental principles of municipal
  IFMS, which is centralized rules, is almost
  inexistent in practice
• The private provision of IFMS to municipalities
  is not regulated

28
Findings on Technical and Functional Aspects

• IFMS have not been conceived with an adequate
  technological focus, which implies high-cost
  changes later
• Technological infrastructure for IFMS that use
  advanced technology is not adequate
• Connectivity infrastructure to allow easy
  communication with municipalities and the
  government is lacking
• It is common to find hybrid methodologies that do
  not promote efficiency, reliability and
  transparency
• Outdated technology that will have to be replaced

29
Sustainability

• Empowerment and appropriation by users and
  beneficiaries is necessary in all phases of IFMS
  process
• Little information on investment on Municipal
  IFMS due to dispersion of efforts
• Few cases financed with own local funds
• An explicit national or municipal strategy to
  replicate best practices and strengthen
  sustainability does no exist
• A systematic dissemination of municipal IFMS, and
  training, has not been carried out
• National governments do not have an office in
  charge of coordinating Municipal IFMS
• Dependence on technicians that install and
  maintain IFMS reflects little transferal of
  technical knowledge

30
Diffusion of the Assessment Necessary Dialogue

• FEMICAs and Casals web portals
• Workshops in each Central American country, under
  the leadership of national municipal associations
  and with the participation of all the actors
  involved in IFMS development and deployment

31
Thank you!!