An Introduction to the Digital Budget and Accounting...
Transcript of An Introduction to the Digital Budget and Accounting...
An Introduction to the Digital Budget and Accounting System
Integrated National Fiscal Information System
Sang Rock Bae
Ministry of Strategy and Finance
Republic of Korea
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Table of Contents
I. OVERVIEW: FMIS & dBRAIN
II. History of dBrain
III. Components and Features
IV. Evaluation
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What is FMIS(Financial Management Information System)?
Overview: FMIS & dBRAIN
Definition of FMIS by World Bank
• A set of automation solutions that enable governments to plan, execute, and monitor the budget by assisting in the
prioritization, execution, and reporting of expenditures, as well as the custodianship and reporting of revenues.
Core FMIS
• A combination of budget and treasury systems aiming at
– Budget planning and formulation
– Medium-term frameworks
– Program-based budgeting
– Key functions of treasury FMIS
Treasury FMIS
• A system that supports key budget execution functions such as
– Budget authorization and releases
– Commitment of funds
– Payment/receipts management
– Accounting and reporting
WB
Reference
Model
Integrated FMIS
• An integration of FMIS and other public finance management systems
– That share the same central database to record and report financial transactions
– That offers reliable consolidated results for decision support, performance
monitoring, and web publishing
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What is FMIS?
FMIS: F = B + T (+ O)
Treasury System
(Budget Execution)
Policy Development and Review
Budget Preparation
Public Investments
Asset / Inventory Mgmt
Procurement/ Purchasing
Mgmt of Budget Authorizations
Commitment of Funds
Payments and Receipts Mgmt
Cash Management
Debt and Aid Management
Fiscal Reports & Budget Review
Audit and Evaluation
Payroll Calcs HR Mgmt
Publishing Web Portal
Tax and Customs
B
O
O
T
Overview: FMIS & dBRAIN
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dBrain exceeds core FMIS with preparatory reform of related institution and integration of and connection to other systems
Overview: FMIS & dBRAIN
B
(Budget)
T
(Treasury)
F
(FMIS)
P (Preparatory)
O (Others)
Digital Budget and Accounting System (DBAS-“dBrain”) - IFMIS
• Integrated Fiscal Management Information System (IFMIS) in Korea that was designed to manage overall national
fiscal cycle systemically
dBrain’s merits in comparison to the reference model
• Gone through budget and accounting reform prior to system development
– Implementing program budgeting
– Adopting double entry bookkeeping and
accrual- basis accounting
• Integration of other systems
– Asset and inventory management system
– Credit and debt management system
• Connection to other systems
– External systems such as E-procurement, Tax
and Customs system
– Settlement systems of Bank of Korea and Korea
Financial Telecommunications and Clearings
Institute
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Classification Function DBAS unit systems
B
Budget Preparation Budget Management
Public Investment Project Management (Investment plan)
Budget Management (National Fiscal Management Plan)
T
Mgmt of Budget Authorizations Budget Management (Allocation)
Commitment of Funds Payment and EFT(Electronic Funds Transfer)
Payments and Receipts
Management
Revenue and EBPP(Electronic Bill Presentment and Payment) system
/ Payment Management
Cash Management Fund Management
Fiscal reports and Budget Review Accounting / Settlement Management
Project Management / Statistics Analysis System
O
Procurement &Purchasing Linking System (with e-Procurement system)
Tax & Customs Linking System (with Tax&Customs system)
Asset/ Inventory Management Asset / Inventory Management
Payroll Calculation &
HR management Linking System
Debt & Aid management Credit&Debt Management
Audit & Evaluation Linking System (with e-Audit system)
Web Publishing Home page
Comparison: WB reference model and dBrain
Overview: FMIS & dBRAIN
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Table of Contents
I. Overview: FMIS
II. HISTORY OF dBRAIN
III. Components and Features
IV. Evaluation
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Central and local government had designed and run their own public finance management systems, leaving room for improvements
History of dBrain
NaFIS
• National Finance Information System
implemented in 2002 by MOFE1)
– Treasury system focused on revenue,
expenditure and accounting
settlements management
FIMsys
• Fiscal Information Management
System implemented in 2000 by MPB2)
– Budget system focused on budget
request, formulation
Local gov.
finance system
• Implemented from mid-2000s
without linked to central gov. system
– Covers both treasury and budget
system
• NaFIS is loaded with double entry bookkeeping and
accrual-basis accounting but had never been used
• FIMsys is based on line-item budgeting rather than
program budgeting
• Local government’s financial management systems
are developed separately from central government’s
1) Ministry of Finance and Economy
2) Ministry of Planning and Budgeting
• Without overhaul of NaFIS and other related
systems, it was almost impossible to reflect reforms
in budget and accounting systems such as program
budgeting
• Integration of fragmented public financial
management system was crucial to process
meaningful fiscal information
Public finance mgmt systems before dBrain
Areas for Improvement
Main Characteristics
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With full support of then-president, development of dBrain kicked off in 2004, and went through BSP, BPR/ISP, system development consecutively
BSP, BPR/ISP
History of dBrain
Brief history of dBrain development
• Establishment of integrated fiscal
information system was set as National
Agenda
• Launched joint study project named
“Path toward successful introduction of
program budgeting in Korea” with WB
• For establishment of integrated fiscal
information system, consecutively drew
up
2004~2005
•Developed the
system with
$60Mn
•Conducted test
operation
2006
• Launched the
system
2007
• On average, 58,000 users
make 300,000 transactions
worth $5.8 Bn a day
2011
Details
BSP (Business Strategy Planning)
• With analysis of policy environments, demonstrates the object and major
strategy of fiscal innovation
BPR (Business Process Reengineering)
• Optimize and streamline the existing procedure in accordance with information
system to maximize the effect of adopting new system
ISP (Information Strategy Planning)
• Computerization of given work process
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Even difficulties in adopting new system couldn’t deter Korea from introducing new paradigm of fiscal management
History of dBrain
Three major obstacles Solutions
Opposition
• Local governments and the Ministry of Education were against the idea of disclosing and integrating their financial information
–Concerns over possible undermining of their autonomy
Resistance
• Users of newly adopted financial information system were reluctant to adapt themselves to new system
– In the early 2000’s, they’ve already gone through the process when Korean government first introduced NaFIS and FIMSys
• Strict internal control process built in dBrain made users even harder to become familiar with the system
Allowed them to maintain their own system with
requirement of submission of financial information
Provided effective user education throughout the
years
Placed dBrain under control of MPB while let
employer of MOFE to take charge of certain parts1)
Competition
• Two ministries competed fiercely to take control of the dBrain
–As NaFIS(ran by MOFE) and FIMsys(ran by MPB) were main pillars of former financial information systems, both ministry wanted to take charge
1) The competition eventually waned when those two ministries merged into one in 2008
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Table of Contents
I. Overview: FMIS
II. History of dBrain
III. COMPONENTS AND FEATURES
IV. Evaluation
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System Integration: dBrain has 10 modules including Project Mgmt, Budget, Accounting in one system
Components and Features
Project Mgmt
• Project Information Mgmt
Revenue
• Revenue Mgmt • Integrated
Notification • Credit
Fiscal Analysis
• OLAP • EIS • GFS
Expenditure
• Expenditure • Tax mgmt
Cash Mgmt
• Cash flow planning • Loan • Fund Mgmt • Cash Balance • Debt
Property
• National Property • Goods • Procurement
Mgmt
Accounting/ Settlement
• Budget Settlement • Financial
Settlement • Auto Journalizing
Administration
• User Account Mgmt
Budget
• Mid-term planning • Formulation • Execution • Public investment • Preliminary
feasibility test
Performance Mgmt
• Performance Mgmt
dBrain
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Connection to external systems enables dBrain to see public finance at a glance
Components and Features
Housing Fund
Pension Fund
Credit guarantee Fund
Employment Insurance
Agencies with independent systems
Ministry of Defense
Defense Financial Information System
Ministry of Knowledge Economy
Management Information System
Bulk collection Agencies
Bank of Korea
Financial Network
Ntl. Property
Korea Asset Mgmt. Corporation
G2B
Public procurement
E-Inspection
Board of Audit and Inspection
Financial Telecommunications &
Clearings
Ntl. Tax Service
Customs Service
Police Agency
Local Gov. system
Local Gov. Finance
Local Gov. Education Korea Forest Service
Central Financial Information System
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Main characteristics of dBrain: a full-scale integration, adoption of Project Management System, and a complete computerization of fiscal process
• Reflecting their purposes, all government activities are aligned into 700 programs
–Hierarchical structure of budget prevents overlapping and waste
• Information such as budget execution and procurement status are gathered in a project basis
–Managers at each ranks can simply log in and check every project they are dealing with
Project Management System
A mounted private secretary
for decision makers
• EBPP2) computerized all the steps of government revenue from notification to final payment
– Even fines are reflected in the database of dBrain at the very moment a police imposes it
• EFT3) transfers money directly to a vendor’s bank account for any government expenditure
– Public employees need not to deal with case
A complete computerization
A silver bullet for rooting out
corruption
Components and Features
• Users are free from repetitive
input of the same or related
information
–Once entered, budget data are traceable throughout entire budget process from formulation to execution
– The system automatically keeps ledgers for goods, national properties, settlement, etc.1)
• No need for manual input of
information , ensuring accuracy
of information in dBrain
A full-scale integration
Unprecedented convenience
with exceptional accuracy
1) For instance, if done accordingly, an officer in charge of acquisition of goods or services doesn’t have to keep ledgers independently, as the auto journalizing function will systemically manage it
2) Electronic Bill Presentment and Payment
3) Electronic Funds Transfer
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dBrain is integrated with and connected to many different systems, enabling Single Sign On (SSO) and One Stop Service (OSS)
What is the difference between integration and connection?
• System integration: Incorporation of various functions into a single system or user interface, which can be described
as a composition of many sub-systems
• System connection: While leaving two or more different systems as independent entities, allow them to share,
exchange or connect financial information to enhance efficiency of fiscal activities
SSO
• A security solution that makes single log-on to the information system capable of dealing with diverse responsibilities
–Helping users minimize the number of user accounts
– Provide user-friendly environment
–Reduce security risks and cost of managing several identification solutions
OSS
• Any data or information generated from financial transactions in one information system should be shared throughout the whole system
–Once budget has been executed for acquiring goods, ledgers for goods management is kept automatically
– Ensure data congruency and user convenience
Enhanced
Efficiency and
Convenience
Components and Features
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EBPP system enhances convenience and transparency of payments
Work flow of national tax collection
1 Notice information
National Tax Service
dBrain Payer
Commercial Banks
Bank of Korea
1 Notice
1 Notice information
2 Payment 3 Cash (batch/daily)
3 Payment Results
4 Payment Results
(batch/daily)
5 Payment Results
• EBPP(Electronic Bill Presentment and Payment) allows payers to choose among various means of payment including:
– E-banking, ATM(Automated Teller Machine), etc
– It automatically transfers money from commercial banks to the treasury account, eliminating potential threat of fraud
Components and Features
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Requests payment
Request Transfer
Transfers/ Withdrawals
approval of expense
Request Transfer
Transfer result
• EFT : Electronic Funds Transfer
Transfer result
Transfer result
(SMS message)
Transfer result
EFT system enables users to transfer government funds to private company’s account electronically.
Work flow of national tax collection
Components and Features
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New functions of dBrain: Performance management system and central control system
Performance Management System
• Performance management : One of the four national fiscal schemes in 2003
– In 2011, the function of performance management was developed. –Reflecting the three axis of performance management: “Performance evaluation”, “Self-evaluation”, “In-dept evaluation”
• A central control system was established aiming to conveniently monitor all the system errors.
– “Infra central control system” , “Connection control system” , “Log management system”
Central Control System
To build public trust, to offer more efficient services, and to have more secure future plan for IT operation
Components and Features
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Central Control System
Main screen
Details
Increase in the number of transfer cases
between the BOK and the KFTC (difference)
Status of server, network and DB by group
The number of users connected to dBrain
in real time and call duration
Result of batch work and backup
Errors of external systems
connected to dBrain
Monitor the overall status of system operation, such as server, network and DB,
as well as main indexes
Components and Features
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Central Control System
Connection control system
Details
Monitor the infrastructure that is connected to dBrain as well as detect any errors incurred in the external infrastructure promptly
Status of the external system linked to dBrain
Status of server of the systems linked to dBrain
Status of the systems of the BOK and the KFTC
Components and Features
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Central Control System
Log management system
Check out prospective system load by looking at the number of log events in the past and at present
Components and Features
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Table of Contents
I. Overview: FMIS
II. History of dBrain
III. Components and Features
IV. EVALUATION
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Evaluation
dBrain has been initiated by government and developed, operated by private corp., indicating that it’s a triumph of a concerted effort
Successful development
and operation of dBrain
Development
Gov’
Private SIs
• Initiated the system
• Invested $60Mn
• Created a whole new system in 16 months
Operation
Gov’
Private SMs
• Overall management
• Decision making for significant incidents
• System operation
• Daily upgrade and user support
# of users # of transactions Overall size of
transactions # of inquiry calls
# of questions
posted online
58,302 300,000 / day $ 5.8Bn / day 1,257 / day 101 / day
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Evaluation
An index for service quality
Numbers of System disorder
User Satisfaction rate1) (%)
Now, six years into operation, dBrain has entered into a stabilized phase, and will strive for further reforms
Further reforms
• dBrain was designed in modular structure to
strengthen its expandability
• Through call centre and online bulletin boards
users’ opinions are accepted, resulting in 73 monthly upgrades on average
2008 2009 2010
52.6
55.9
62.4
2011
64.5
2007 2008 2009 2010 2011
17
11 10
3 1
1) The rate is marked on a scale of 1~7, and can be converted to 64.5 out of 100, indicating users were “quite satisfied”
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dBrain has been upgraded gradually with a complete maintenance plan.
Cost • Development: 60billion Korean won (55million US dollar)
Staff involved • Development: A total of 300
• Maintenance (present) : 110 (operation and maintenance) + 30 (help desk)
Outsourcing • Korean IT companies (Samsung and LG, etc.)
• Maintenance and operation: 12billion Korean won / year (11million US dollar)
Service Level • Incl. system error, defect, security and user satisfaction
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Some Difficulties in Adopting from Other Systems What will work, what will not?
Many countries face difficulties in adopting, e.g., OECD best practices. Several factors seem to be relevant:
• Different type of budget or accounting system may be in order.
The needs are different, and therefore the nature of budget and accounting systems needs to be tailored to the particular situation of each country
• Different type of political system affects decision-making
• Different type of legal culture affects both decision-making and implementation
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감사합니다 !
Thank you very much for
attention!