Gert van der Linde, World Bank Nairobi, Kenya November 8, 2004

1. ASSURING EFFECTIVE DESIGN AND IMPLEMEMTATION OF INTEGRATED FINANCIAL MANAGEMENT INFORMATION SYSTEMS IN GOVERNMENTS Workshop Overview Gert van der Linde, World Bank Nairobi, Kenya November 8, 2004

2. Working for a worldfreeof poverty

3. Poverty Reduction: Global Challenge Of the 4.7 billion people who live in the 100 World Bank client countries: • 3 billion live on less than $2 a day and 1.2 billion on less than $1 a day. • Nearly 3 million children in developing countries die each year from vaccine-preventable diseases. • 113 million children are not in school. • 1.5 billion have no clean drinking water

4. Poverty Reduction: Africa Challenge • 300 of 600 million people are in absolute poverty • Low HD Indicators • HIV/AIDS: 20 million have died, 30 million are infected and 12 million children orphaned • Relatively Small Economies • 200 million directly affected by conflict and violence • Heavily Aid Dependent • Limited Capacity

5. Four Pillars of AFR Strategy IMPROVE GOVERNANCE AND RESOLVE CONFLICTS INVESTIN PEOPLE IMPROVE COMPETIVENESS AND DIVERSIFY ECONOMIES IMPROVE DEMAND FOR GOOD GOVERNANCE AND TRANSPARENCY POST-CONFLICT ASSISTANCE MODELS (DRC, LICUS) HIV/AIDS AND MAP EDUCATION FOR ALL (13 OF 23 COUNTRIES) DECENTRALIZED SERVICE PRODUCTION AND TRACKING BUSINESS CLIMATE, AGRIBUSINESS, SUPPLY CHAINS INFRASTRUCTURE TRADE AND EXPORT FOCUS BUILD ON NEW PROCESSESS (HIPC, CDF/PRSP, NEPAD) GET RESOURCES TO PEOPLE (CDD AND EXPENDITURE TRACKING) SLASH TRANSACTION COSTS OF AID! REDUCE AID DEPENDENCE & STRENGTHEN PARTNER- SHIPS Source: Can Africa Claim the 21st Century?

6. The need for reliable information systems • Information is the currency of accountability • Need to cover- • Revenue • Expenses • Assets • Liabilities • Characteristics • Timely • Complete • Accurate • Reliable and audited

7. Budget Management Comprehensiveness 1. Composition of the budget entity 2. Limitations to use of off-budget transactions 3. Reliability of budget as guide to outturn 4. Data on donor financing Formulation Classification 5. Classification of budget transactions 6. Identification of poverty-reducing expenditure Projection 7. Quality of multi-year expenditure projections Internal Control 8. Level of payment arrears 9. Quality of internal audit Execution 10. Use of tracking surveys Reconciliation 11. Quality of fiscal/banking data reconciliation Reporting 12. Timeliness of internal budget reports Reporting 13. Classification used for budget tracking Final Audited Accounts 14. Timeliness of accounts closure 15. Timeliness of final audited accounts HIPC, CFAA and PER Assessments Benchmark Description "Close-fit or better" to GFS definition of general government Extra (or off) budget expenditure is not substantial Level and composition of outturn is "quite close" to budget Both capital and current donor funded expenditures included Functional and/or program information provided Identified through use of classification system (e.g., a virtual poverty fund) Projections are integrated into budget formulation Low-level of arrears accumulated Internal audit function (whether effective or not) Tracking used on regular basis Reconciliation of fiscal and monetary data carried out on routine basis Monthly expenditure reports provided within four weeks of end of month Timely functional reporting derived from classification system Accounts closed within two months of year end Audited accounts presented to legislature within one year

8. Conclusions & Results, March 2002 Board Paper (Percent of 24 countries not meeting each benchmark) 100% 90% 80% 70% 60% 50% 40% Timely functional reporting from class system Audited accounts to legislature within 1 year Projections integrated into budg. formulation Quality of internal audit (effective or not) Accounts closed within two months of y/e Close fit or better to GFS definition 30% Fiscal & monetary data reconciled Extra (off) budget expend. Pov. Red. Exp. Identified 20% Data on donor financing Classification of budget Low level of arrears Regular tracking Month reports Outturn close? 10% 0% Benchmark number: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Formulation Execution Reporting Source: “Actions to Strengthen the Tracking of Poverty Related Public Spending in Heavily Indebted Poor Countries (HIPCs), World Bank and IMF, March 22, 2002. See http://www.worldbank.org/hipc/hipc-review/tracking.pdf

9. Why so bad? • Information systems • Lack of well designed computerized systems • Often not integrated, badly implemented • Also weak accounting and reporting basics: • Uncontrolled bank accounts • Weak reconciliation • Weak audit trails and source document management • Lack of trained staff • Reporting entity not well defined • Incomplete accounting, e.g donor funds, etc. • Audit cycle may also not be timely

10. Workshop Overview (1) Objective The workshop intends to share experiences amongst policy makers in Treasuries, government financial managers, government auditors and other stakeholders in the political, institutional, functional and technical aspects of the design and implementation of an IFMIS. Expected results The most important targeted benefit is to assist stakeholders to identify key barriers to the successful implementation of IFMIS projects and to define potential solutions.

11. Workshop Overview (2) • Day 1 – Business case for an IFMIS • IFMIS Overview: Design, development and implementation in African countries Ali Hashim, Lead Informatics Specialist, World Bank. • IFMIS presentation(Zimbabwe) • Key policy questions for the development and implementation of an IFMIS Plenary and panel discussion • IFMIS presentation(Tanzania) • Establishing successful IFMIS projects - Group work • Day 2 – Design issues • Day 3 – Implementation Issues • Day 4 – Project Management and Governance Issues • Day 5 – IFMIS Management Challenges