Integrated Financial Management Information Systems (IFMIS)

Presented by:

Rio Agung

Rohmad Adi Siaman

Roid Taufan

Susanto Eko

Vita Apriliasari

• 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 Indonesian Government Experience –SPAN (Sistem Perbendaharaan dan Anggaran Negara)

• Problems and Issues

• An IFMIS is a tool to support Public Financial Management

• 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

Generally, the term “IFMIS” refers to the use of information and communications technology in financial operations to support

management and budget decisions, fiduciary responsibilities, and the preparation of financial reports and statements.

In the government realm, IFMIS refers more specifically to the computerization of public

financial management (PFM) processes, from budget preparation and execution to accounting

and reporting, with the help of an integrated system for financial management of line

ministries, spending agencies and other public sector operations.

The system served by an IFMIS

Public Financial Management - National Level

Fiscalplanning & management

Budgetpreparation & enactment

Budget execution –revenue raising, expenditure, loans

Transactionaccounting, recording and reporting

Externalaudit and external review

Information feedback

PFM boundaries

Public sector

Financialinstitutions

Centralbank

Other public and private

sector banks

Non financialpublic sector

PublicCorporations &other entities

Government

UnionGovernment

Sub-nationalState

Government

Boundaries of national government for PFM

Goals Criteria

Level 1 – Fiscal management

• Flows – revenues, debt, transfers, capital and recurrent expenditure

• Balances – internal & external debt, assets

• Risk – contingent liabilities

Proper use of public resources

• In accordance with constitutional, legal & regulatory requirements

• Avoidance of corrupt practices

Level 2 – Resource allocation

• Optimal resource allocation

• In accordance with government policies

Transparency

• Information for stakeholders in a format that facilitates understanding and analysis

Level 3 – Value for Money

• Management of public resources in order to achieve efficiency, economy and effectiveness in expenditure

Accountability

• Those responsible for the use of public resources made accountable for their actions and stewardship

• 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.

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-bilityand 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

How 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

The 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

• Legal framework

• Business/functional processes

• Organizational arrangements

• Budget classification structures

• Chart of accounts

• Change Management

• Systems requirements/specifications

• Systems development

• Procurement/tender of software and hardware

• Configuration of software and hardware

• Data conversion/migration

• Testing and training

• Corruption

• the roles and responsibilities of the treasury, ministry of finance and other agencies involved in controlling and managing public finances,

• provisions on the receipt and custody of government funds, the annual process, submission and approval of estimates and procedures for release of funds,

• the basis of accounting and the form and procedures for presentation of annual accounts, and

• provisions on asset management, borrowing and investment.

Overview of IFMIS architecture

Budget executionCash collectionPaymentsDebt & 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 preparation

Resource ceilings

Enacted budgetDonor support

Information systems to manage loans & grants

• 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

• Centralized Architecture: The Application software runs on a central server and Treasury offices connect to this server in an online mode to process their transactions

• Distributed Architecture: Copies of the software run on multiple servers across the network. Work stations at a site connect to the local/ designated server to process transactions

Treasury Systems- Centralized Architecture- All Transaction processing carried out at the Center. Remote offices are

linked to center via a direct communication link or via a web based interface

Central Treasury

Remote Treasury

Office

RemoteTreasury Office

TSA Bank

Internet

Access

Direct Access

SpendingUnit

SpendingUnit

MOF/BudgetAdministrators

SpendingMinistry

HQ

Treasury Systems - Distributed Architecture. Transaction Processing carried out at Regional and

District Treasury offices

Central Treasury

Regional Treasury Office

District Treasury Office

TSA Bank

Regional Budget

AdministratorsSpending

Unit

SpendingUnit

MOF/BudgetAdministrators

SpendingMinistry

HQ

Local Bank

RegionalBranch

of TSA Bank

• Integration is fundamental to concept of an IFMIS – key of successful

• 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

• Standard data classification for recording financial events;

• Internal controls over data entry, transaction processing, and reporting; and

• Common processes for similar transactions and a system design that eliminates unnecessary duplication of data entry.

• 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

• Provide timely, accurate, and consistent data for management and budget decision-making;

• Support government-wide as well as agency-level policy decisions;

• Integrate budget and budget execution data, allowing greater financial control and reducing opportunities for discretion in the use of public funds;

• Provide information for budget planning, analysis and government-wide reporting;

• Facilitate financial statement preparation; and

• Provide a complete audit trail to facilitate audits.

• 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

Basically, corruption is moved at the following factors:

1. Competency/ Ability2. Trusty3. Accessibility4. Internal Control

An Asumption when IFMIS is applied then Corruption declines

Latar Belakang Pemerintah Indonesia dalam hal ini Departemen Keuangan

sedang melakukan modernisasi sistem informasi pengelolaankeuangan negara melalui Program Reformasi Penganggarandan Perbendaharaan Negara (RPPN).

Sebagai bentuk pelaksanaan Program RPPN, dilakukanPenyempurnaan Sistem Perbendaharaan dan Anggaran Negara(SPAN) atau biasa dikenal “SPAN Project” dibawah payungGovernment Financial Management SPAN Project dibawahpayung Government Financial Management and RevenueAdministration Project (GFMRAP)

SPAN ProjectSebagai upaya untuk menciptakan “a Modern

and Integrated Financial ManagementInformation System (IFMIS)” di Indonesia

SPAN Project bertujuan untuk mengatasi “theoutdated and fragmented Existing IT Systems”

Tujuan SPAN Project Meningkatkan fungsi perbendaharaan (treasury) dengan sistem

pengelolaan keuangan yang terintegrasi, yaitu SPAN Mendukung terciptanya sistem manajemen kas yang handal Mendukung terciptanya pelayanan keuangan yang efisien kepada

seluruh sektor melalui sistem perbankan Menciptakan kontrol yang efektif atas alokasi anggaran dan belanja Menciptakan comprehensive and centralized database untuk semua

transaksi keuangan pemerintah pusat Menciptakan sistem pelaporan yang comprehensif dengan

memanfaatkan Teknologi Informasi yang tersedia untuk semua stakeholder

Menyediakan kemampuan on line sistem pada setiap kementerian dan instansi pengguna lainnya

Mengakomodasi accrual based accounting system

Gambaran SPAN Project

SPAN Project akan menghasilkan sistem pengelolaan keuangan negara terintegrasi dan modern dengan

proses yang tersentralisasi yang akan menghubungkan secara on-line/batch melalui teresterial, satelit, dial-

up, dan sistem jaringan lainnya antara: DJA, DJPBN, 30 Kanwil DJPBN 178 KPPN, dan kementerian/ lembaga

Gambaran SPAN Project (2)

Diagram SPAN Project

Tahapan Pengembangan SPAN Project

Penyempurnaan Teknologi Informasi untukmembangun “IFMIS” di Indonesia, secara garisbesar, SPAN Components dapat dibedakandalam dua kelompok besar, yaitu :

A. Supply & Installation of New Hardwareand Software (2009-2012)

B. Maintenance (2012 – 2017)

Critical IssueTerdapat banyak stakeholder yg terlibat,

termasuk PUSINTEK di Setjen Depkeu, DJA,DJPB, Satker K/L, perbankan dan institusilainnya

Perlu kejelasan tanggung jawab dan wewenangmasing-masing pihak yang terlibat

Usaha-usaha pembinaan SDM dan aspekkelembagaan baik dilingkup Dep. Keuanganmaupun K/L perlu terus dilakukan