IFMIS - The Indian Experience
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Transcript of IFMIS - The Indian Experience
Modern Integrated Financial Management Modern Integrated Financial Management Information SystemsInformation Systems
Dipankar SenguptaDipankar Sengupta
Director (Tech.), NICDirector (Tech.), NIC
Modern Integrated Financial Management Systems 27th February 2009
Overview of presentationOverview of presentation
• Concept of an Integrated Financial Management Information System (IFMIS)
• Public Financial Management (PFM)• IFMIS in context of PFM• IFMIS architecture• IFMIS costs, benefits and risks• IFMIS – The Indian Government Experience• Lessons Learnt
Modern Integrated Financial Management Systems 27th February 2009
What is an IFMIS?What is an IFMIS?• An IFMIS is a tool to support Public Financial Management• National Government level• An IFMIS is a computer software (ICT) application– Off the shelf package or– Custom developed
• Provides core public financial management functions, e.g.– Budget– Accounting
• Key feature - Integration between modules
Public Financial ManagementPublic Financial Management
The system served by an IFMIS
Modern Integrated Financial Management Systems 27th February 2009
Public Financial Management - National LevelPublic Financial Management - National Level
Fiscal planning &
management
Budget preparation
& enactment
Budget execution –
revenue raising,
expenditure, loans
Transaction accounting,
recording and
reporting
External audit and external review
Information feedback
Modern Integrated Financial Management Systems 27th February 2009
PFM boundariesPFM boundaries
Public sector
Financialinstitutions
Non financialpublic sector
Centralbank
Other public and private
sector banks
PublicCorporations &other entities
Government
UnionGovernment
Sub-nationalState Government
Boundaries of national government for PFM
Modern Integrated Financial Management Systems 27th February 2009
Six critical goals of PFMSix critical goals of PFM• Fiscal Management:
– Aggregate fiscal position and risk are monitored and managed.• Budget Realism:
– The budget is realistic and implemented as intended in a predictable manner.
• Comprehensive, Policy-based Budget: – The budget captures relevant fiscal transactions, and is prepared
with due regard to government policy. • Information:
– Adequate fiscal, revenue and expenditure records and information are produced, maintained and disseminated to meet decision-making, control, management and reporting purposes.
• Control: – Arrangements are in place for the exercise of control and
stewardship in the use of public funds.• Accountability and Transparency:
– Arrangements for external transparency and scrutiny of public finances.
Modern Integrated Financial Management Systems 27th February 2009
PFM – from framework to IFMISPFM – from framework to IFMIS
Level 1 – fiscal management
Level 2 – resource allocation
Level 3 – value for money
Proper use resources
Transparency Accounta-bility
Goals Criteria
Budget Realism
Comprehen-sive, Policy-
based Budget
Fiscal Management
Information ControlAccounta-bility
and Transparency
IFMIS can
provide
Budget preparation
within framework of sound model & ability to
test scenarios
Up to date information
Use of automated
controls
Reduce costs of transaction
processing
Modern Integrated Financial Management Systems 27th February 2009
How IFMIS can contribute to PFM goalsHow IFMIS can contribute to PFM goals
Goal Benefit IFMIS How realised
Fiscal management
1. Enhanced ability to manage cash, debt and liabilities
2. Better management of fiscal risk
1. Up to date and predictive disaggregated information on monitory flows and balances
2. Information on current and predicted contingent liabilities
Resource allocation
1. Historic information on expenditures & impact
2. More realistic budget modelling process - impact decision alternatives can be assessed
1. Up to date information on expenditures analysed as required so as to link to outcomes
2. Budget prepared using a tool that realistically models relationships, is based on reliable information on starting points, and enables alternative scenarios to be modelled
Value for money
1. Reduced financial transaction cost
2. Management decisions made more efficiently
3. Comparison of costs between units/activities and performance targets leading to greater efficiency
1. Provision to managers of up to date financial information enables them to use resources more efficiently
2. Disaggregated information linked to performance targets enables improved performance measurement and comparison between units/activities
Modern Integrated Financial Management Systems 27th February 2009
The IFMIS balanceThe IFMIS balance
Costs and risks
• Financial cost – US$12 m
• Time and effort – 5 – 9 years
• Risk – - implementation failure- inadequate functionality- lack of sustainability
Benefits
• Must outweigh costs/risks
IFMIS architectureIFMIS architecture
Modern Integrated Financial Management Systems 27th February 2009
Overview of IFMIS architectureOverview of IFMIS architecture
Budget executionCash collection
PaymentsDebt & grant flows
Cash & liability management
AccountingTransaction and
balance recording
Budget management &
reportingFiscal/outturn management
Macro Economic ForecastsInformation
support system
Central Bank systems
Revenue management
systems
External audit
Agency accounting
systems
Debt management
systems
HR and payroll
Core financial management functions
Procurement systems
Budget preparation system
Medium Term Expenditure Framework
Annual budgets
Agency budget
preparationResource ceilings
Enacted budgetDonor support
Information systems to
manage loans & grants
Modern Integrated Financial Management Systems 27th February 2009
What to acquireWhat to acquire• IFMIS could potentially embrace whole of architecture• Wonderful vision of a totally integrated system• BUT for most countries– Would be unacceptably high risk and cost, take a long
time to implement• Best to focus initially on core PFM areas– Only add other modules if essential– Acquire a system that can be extended to other modules– Keep it simple
• Essential to develop clear vision of IFMIS at an early stage
Modern Integrated Financial Management Systems 27th February 2009
Degree of integrationDegree of integration
• Integration is fundamental to concept of an IFMIS• IFMIS potentially comprises many
functions/modules– All may be fully integrated, or– Some may be integrated and others interfaced
• Need to make choice when specifying system requirements
Modern Integrated Financial Management Systems 27th February 2009
Integration IFMIS functions - definitionIntegration IFMIS functions - definition• Data:
– Data entered once, used many times– Common data model, data naming, data dictionary
• Software application– Shared business rules– Sharing of code– Derived values in one module used by other modules
• Presentation– All modules same look and feel, common navigation rules, screen
headers and footers• Operation
– Common security module– Single authentication point for all modules– Consistent external interface, e.g. with spreadsheets, XML
Modern Integrated Financial Management Systems 27th February 2009
Conclusion on integrationConclusion on integration
• Core modules must be integrated• Integration of other modules a matter of balance• If separate systems– Ensure interfaces & ability to exchange data– Common coding and classification structure essential
IFMIS – The Indian Government ExperienceIFMIS – The Indian Government Experience
Modern Integrated Financial Management Systems 27th February 2009
Organization of the Controller General of AccountsOrganization of the Controller General of Accounts
Strength 9500+ No. of PAOs 325 Geographical spread 78 Locations Payments volume Rs. 583386 Crores (2006-07) Receipts volume Rs. 552850 Crores (2006-07) Mandate / Allocation of Business Prescribe general principles of Government Accounting relating to Union and
State Governments. Oversee maintenance of adequate standards of accounting. Consolidation of monthly accounts, preparation of annual accounts and
compilation of Union Government Finance Accounts. Reconciliation of cash balances of the Union Government with the RBI. Administration of Central Government (Receipt & Payment) Rules. Coordination and assistance in the introduction of management accounting
system in ministries. Reporting – Annual, Monthly and Flash (provision for over 200 reports as per the Civil Accounts Manual)
Modern Integrated Financial Management Systems 27th February 2009
Need for an IFMISNeed for an IFMIS
• Non-integrated processes.
• Multiplicity of data entry.
• Data inconsistency and non-integrated.
• Limited accounting information availability.
• Rigid Reporting system.
• Decentralized information / database.
• No transparency of accounting processes.
• Disparate IT systems.
• Redundancy of output.
Modern Integrated Financial Management Systems 27th February 2009
Comprehensive DDO Package
(CDDO/DDO)
Long/ short term advanceOutward claimDDS&R broadsheetAdvance RegisterAsset, loan & guarantee registerCheque InventoryClassification - sub object level
ACCREDITED
BANK
RESERVE BANK OF
INDIA
PAY & ACCOUNTS
OFFICE
CONTROLLER GENERAL OF ACCOUNTS
Centralized e-support system
NIC ACID DIV.
SUPPORT GROUP/ COORD.
CTSCommitments captureCash ManagementComprehensive Audit Traile-payment/ receipt
CPFM
CPAO
CGAITD
Monthly ConsolidationAppropriation AccountsFinance AccountsCentralized Banking Database
Personal Database Web based online access
to GPF, Pension & bills status
Development & Support Mechanism USER Groups
Users PAO, PR AO, CGA
Individual users at Any
Ministry/ Department
Ministry / Department
Financial Advisors of
Ministry
CCA / CA of Min/
Deptt.
NON CIVIL MINISTRIES PRINCIPAL ACCOUNTS
OFFICE
PRINCIPAL ACCOUNTS
OFFICE
CONTROLLER GENERAL OF ACCOUNTS
e-Lekha
The Indian ApproachThe Indian Approach
Modern Integrated Financial Management Systems 27th February 2009
IFMIS MandateIFMIS Mandate
• Automate the processes at various accounting levels.
• Maintain Chart of Accounts and other Administrative Codes.
• Enable Expenditure Control.
• Accounts Consolidation.
• Statutory Reporting Requirements.
• Management Reporting.
Modern Integrated Financial Management Systems 27th February 2009
Strategic Planning for IFMISStrategic Planning for IFMIS• Enable one time data capture: reducing manual work, data
redundancy and reconciliation issues – increasing data accuracy and timeliness.
• Seamless Integration of various processes ensuring final audited accounting data can be drilled down to lowest level / point of capture.
• Stand Alone Processing Centralised Processing.
• PAO-based Accounting Classification Master Accounting Code Directory validation.
• Reporting against Budgets Both DDO-wise and DDG-wise Reporting.
• Enable system for cash control and management.
Modern Integrated Financial Management Systems 27th February 2009
Critical AreasCritical Areas• Top level Management Commitment and Driving Force.
• Enhancement of Skill Level of Workforce, especially Field Offices.
• Bringing on-board all stakeholders – field offices, users, Banks, RBI, etc.
• User requirement based prioritisation.
• Putting in place sustainable systems – Core teams, Development teams.
• Extensively Tested Software – certified by STQC agency.
• Change – processes and people orientation.
• Sound Internal Control System – software based and inspections.
Modern Integrated Financial Management Systems 27th February 2009
COMPACT - An e-governance tool for Pay and Accounts OfficesCOMPACT - An e-governance tool for Pay and Accounts Offices
ServerServer
Client AClient A
Client BClient B
Client CClient C
Client DClient DServer : MS Windows 2000/2003 Server : MS Windows 2000/2003 with MS SQL Server 2000/2005with MS SQL Server 2000/2005 Clients : Windows 98SE & aboveClients : Windows 98SE & above
Modern Integrated Financial Management Systems 27th February 2009
MAJOR MODULES OF COMPACTMAJOR MODULES OF COMPACT
• Pre-check [ Pre-audit of Bills / Valuables & Cheque Preparation ]
• Compilation [ Post Audit, Compilation & Bank Reconciliation ]
• GPF [ GPF Accounts Management of subscribers ]
• Pension [ Processing of Pension Cases of Employees]
• Budget [ Budget Management & Expenditure Control ]
• Masters [ Maintenance of Accounting and other codes ]
Modern Integrated Financial Management Systems 27th February 2009
COMPACT (Process Flow in GoI)COMPACT (Process Flow in GoI)
COMPACT
Line Ministries NCDDOs
Bank Pr. AO CPAOCDDO
Budget Allocation
ECR
Bills/Valuables
Voucher/ Valuables
Cancelled ChequesTE & Challans
Passed bills / cheques
PPO
GPF Voucher, challans schedules
Scrolls (receipt & payment)
Vouchers/ Challans
Monthly Accounts
NCDDO : Non Cheque Drawing & Disbursing Officer Pr. AO : Principal Accounts Office of Ministries / Deptts.CDDO : Cheque Drawing & Disbursing Officer CPAO : Central Pension Accounting OfficeECR : Expenditure Control Register PPO : Pension Payment OrderGPF : General Provident Fund
Modern Integrated Financial Management Systems 27th February 2009
COMPACT – Major FeaturesCOMPACT – Major Features
• Introductory step for e-governance in finance sector at the basic accounting level.
• Integration of Payment and Accounting Functions.
• Generation of MIS for effective Financial control.
• Compilation & Consolidation of Accounts with speed & more accuracy.
• Effective Budget vs Expenditure monitoring and control.
• Capture of all kinds of bills like Salary, GPF, Pension, etc.
• Automated Printing of Cheques.
• Reduction of Human Errors in processes.
• Increased Reporting & Querying Capabilities.
Modern Integrated Financial Management Systems 27th February 2009
COMPACT :: Implementation WormCOMPACT :: Implementation Worm
287288288278
270273
259256
254
170
206221213
196
102
166
0
50
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250
300
350
Sep2005
Oct2005
Nov2005
Dec2005
Jan2006
Feb2006
Mar2006
Apr2006
May2006
Jun2006
Jul2006
Aug2006
Sep2006
Oct2006
Nov2006
Dec2006
Modern Integrated Financial Management Systems 27th February 2009
Overview: What is e-Lekha?Overview: What is e-Lekha?
• Integrated web-based solution.
• Expenditure and Revenue reporting.
• Accounts processing.
• MIS reporting.
• Single source data capture ensuring data consistency –
COMPACT data (tamperproof) from Pay and Accounts
Offices.
Modern Integrated Financial Management Systems 27th February 2009
Objectives of e-Lekha project - 1Objectives of e-Lekha project - 11. Enable online submission of accounts of PAOs to Controllers.
2. Facilitate consolidation of Controller accounts.
3. Enable capability of daily accounts compilation for Civil Ministries of the Government of India.
4. Ensure accuracy of accounts through online validation of PAO accounts - online accounts code directory with valid code combinations as per Detailed Demand for Grants (DDG).
5. Capture and provide online Budget information as per DDG and DDO-wise allocations.
6. Ensure that CGA-level audited published accounts can be tracked / rolled down to PAO accounts.
7. Enable Grant Controllers to access bookings made by other controllers against authorisations.
Modern Integrated Financial Management Systems 27th February 2009
Objectives of e-Lekha project - 2Objectives of e-Lekha project - 28. Enable Annual Accounts (Appropriation and Finance) to be
compiled using online data submission.
9. Provide capability of MIS reports generation to Controllers using dynamic, user-defined templates as per Ministries requirements.
10. Provide tool for scheme-wise reporting for Controllers.
11. Enable Controllers to monitor PAOs functioning through availability of operational reports like bill pendency, pension cases, maintenance of GPF records etc.
12. Build on existing system (hardware and software) at field offices to consolidate skills developed and familiarity – focus development at higher levels (Controllers and CGA) where training and management is better possible.
Modern Integrated Financial Management Systems 27th February 2009
e-Lekhae-Lekha Prudent Financial Prudent Financial ManagementManagement
For any Period selected Pendency of Bills, Compiled Payment and Receipt Data Major Head wise Expenditure & Receipts. Budget Vs Expenditure Summary of Instruments Cheque Reconciliation Pension Cases Processed GPF Credits and Debits Suspense figures
Central Database Server Updated with PAO data
from COMPACT
Central Database Server Updated with PAO data
from COMPACT
Web ServerWeb
Server
I N T E R N E T ( Web Browser Interface ) I N T E R N E T ( Web Browser Interface )
CGA
CCA,Finance
CCA,Urban Dev.
CCA,Agriculture
…………………………
Controller Integration
Data Access through user authorisation. DATA VIEW allowed only for the particular Ministry
Govt. of India Integration
DATA ACCESS through User Authorisation.
DATA VIEW allowed for the entire data set to facilitate viewing of both consolidated as well as Ministry wise figures.
Modern Integrated Financial Management Systems 27th February 2009
Implementation Worm :: Implementation Worm :: e-Lekhae-Lekha
284281280277
241240236
153
198
117
736057
294290285280
248256251
206
187
166
91
114108
43424241414140333230
221312
0
50
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Jan,06 Feb,06 Mar,06 Apr,06 May,06 Jun,06 Jul,06 Aug,06 Sep,06 Oct,06 Nov,06 Dec,06 Jan,07
Daily Uploads Monthly Uploads Controllers
Modern Integrated Financial Management Systems 27th February 2009
e-Lekha e-Lekha : Major Benefits: Major Benefits• Centralisation of all Masters – Account Code Directory, Grants,
Object Heads and Category and their relationships, Controller Codes, Department Codes, PAO Code and DDO Code Directory.
• Improve efficiency in the compilation of monthly Union accounts by 10-15 days.
• Rejection of erroneous and invalid data at the lowest level.
• Data Integrity – through a single database at the Controller and CGA Level and having interoperable interface with COMPACT at PAO level.
• Single source of all data capture and modification (at the PAO level through COMPACT)
• Online up-to-date Budget Vs Expenditure Monitoring.
• Online MIS for better management of Pay & Accounts Offices.
Modern Integrated Financial Management Systems 27th February 2009
Impact of ProjectImpact of Project Full integration of payment and accounting functions
Timeliness of accounts preparation and submission – adhered to SDDS and annual accounts prepared within same calendar year
Accuracy of Accounts – online validation, no audit qualifications
Transparency of Payment Process – bill pendency, tracking of bills, cheques
Management and online availability of Chart of Accounts of GOI (over 1 Lakh heads of accounts and their interrelationships, over 70 Controller Codes, Over 500
PAO codes and over 6000 DDO codes )
Transparency in Accounts – expenditures and revenues (27 Lakh Vouchers, 8 Lakh Valuables excluding Tax Revenue)
Automation of Provident Fund Accounts – 5.16 Lakh GPF subscribers
Computerisation of Pension Cases – 72000 cases in 2007-08
Single database for all Detailed Demand for Grants of GOI - at all tiers, against over 100 Demand for Grants and associated DDO wise allocations
Scheme monitoring – 1250 Plan Schemes of GOI
Effective shared grants management – pension, public works etc
Efficient Bank reconciliation – agency banks and RBI - suspense balances reduction from Rs. 972.34 Crores in 2000-01. to Rs. 338 Cr. in 2006-07.
Modern Integrated Financial Management Systems 27th February 2009
Software AssessmentSoftware Assessment• Continuous development and certification.
• Tested for Compliance by Standardization, Test and Quality Control (STQC), Department of Information Technology, GOI 18th May, 2008.
• COMPACT system users – Sound Internal Control System – software based and inspections with guidelines for self assessment.
• e-Lekha - Best IT Implementation of the year 2007 by PCQuest Magazine, Cybermedia Group of Publications.
• Winner of the Silver Award for the National Awards for e-governance 2008-09 in the category "Exemplary Horizontal Transfer of ICT based Best Practice" for the project "e-Lekha - Stride towards Core Accounting Solution".
Modern Integrated Financial Management Systems 27th February 2009
Support and TrainingSupport and Training
• Intensive customized (week-long) programs at training institute –INGAF
• Around 4500 staff trained
• Website provides support and FAQs
• Support group – including testing, support, training and version planning
• Continuous development and skills enhancement
Modern Integrated Financial Management Systems 27th February 2009
Present FocusPresent Focus
• Core Accounting Solution
• e-Payments
• Central Plan Scheme Monitoring System
• Interconnectivity across PAOs
• Automated reconciliation with banks
• Web-enabled GPF system for government employees
Modern Integrated Financial Management Systems 27th February 2009
Lessons LearntLessons Learnt• Account code directories in COMPACT needed to be rectified
and frozen to prevent incorrect coding blocks at point of origin.
• Complete involvement of field offices is an absolute MUST – Coordinator system introduced ands weekly meetings conducted to monitor the progress.
• Regular monitoring by Controllers is ESSENTIAL to enable DDG certification, rectification of coding errors and adhering to timelines.
IFMIS – lessons from experiencesIFMIS – lessons from experiences
Modern Integrated Financial Management Systems 27th February 2009
IFMIS acquisition:IFMIS acquisition:high risk, high cost, long time framehigh risk, high cost, long time frame
• World Bank survey of experience of IFMIS implementation in 27 countries indicates:– Between 5 and 9 years to complete– Average Bank funded cost US $12 million– Only 21% delivered on time, on budget and as specified
• In general experience of procurement of large system in public and private sectors is bad– High failure rate, with many systems abandoned before
completion
Modern Integrated Financial Management Systems 27th February 2009
Some comments from experienceSome comments from experience• Keep it simple• Time spent on detailed planning in advance reduces
costs and risks• Acquisition must be driven by system users and
beneficiaries– Not by IT staff, vendors, donors or consultants– Need for organisation wide support
• Structured project management approach• Need to ensure that sustainability issues are
addressed– Do not leave until the end of the project
Modern Integrated Financial Management Systems 27th February 2009
Critical success factorsCritical success factors• Management commitment and involvement• Financial management users must drive the process• Broad support and involvement by all concerned
agencies• Suitable institutional structures• Human resources with appropriate skills– Capacity Building
• Strong project management team with skills and experience