Download PowerPoint Presentation - World Bank

The World Bank Brown Bag Seminar
Automating Financial Management Information
Systems
in Post-Conflict Environments:
Lessons from Kosovo
(12 January 2005)
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Agenda
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Welcome and Introductions
Kosovo – The Context
Specific Challenges
The Goal
Key FMIS Requirements
Why FreeBalance
Overview of Current Financial Management
Framework in Kosovo
Future Plans
Lessons Learned and Reasons for Success
Panel Discussion / Q & A
FreeBalance Demo
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Kosovo
•30 municipalities – 25 majority
Albanian, 5 majority Serbian
Serbia
Montenegro
•Estimated Population 1.7 million
•Ethnic mix 88% Albanian; 7%
Serbian; 5% Other
•2004 Estimated GDP 1895 million
euro
•Estimated 2.06 billion euro of
donor investment to date since
1999
•Budget Revenues exceeding 600
million euro per year
Albania
Macedonia
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Centuries of Struggle
1389
Serbs defeated by Turks in Kosovo. Serbia ruled by
Turkey for next 500 years. Kosovo takes its place at
the heart of Serbian nationalist history.
1974
Kosovo established as an autonomous province of
Serbia.
1989
Autonomy is revoked by Serbian President Slobodan
Milosevic.
1992
Ethnic Albanians establish a shadow government.
1999
A cease-fire is broken. NATO war planes begin an air
campaign against military targets throughout
Yugoslavia. UNMIK established by Resolution 1244.
2001
First election of provincial institution of self
governance. Government ministries established.
2005
UN to initiate review of Kosovo’s “Standards Before
Status”
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International Mandate
"The task before the international community
is to help the people in Kosovo to rebuild
their lives and heal the wounds of conflict."
UN Secretary-General Kofi Annan
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Specific Kosovo Challenges
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Post-Conflict
Physical infrastructure
badly damaged or nonexistent before conflict
began; further deteriorated
during and post conflict
Government organizational
structures, policies, and
processes needed from
ground up
Human capacity needed
strengthening
Urgent need for process to
receive, allocate, and
control donor funds
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The Goal
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Establish a Central Fiscal Authority to manage Kosovo’s
fiscal issues, including Treasury; Budget; Fiscal Policy;
Tax Administration; Customs; Macroeconomic Analysis
and Reporting; Internal Audit.
 Form a team of experienced international advisors to
ensure best practice design and implementation
 Recruit, train and mentor local staff
 Select and implement a financial management
methodology to underpin the operations of the Central
Fiscal Authority
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Options Considered
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Paper ledgers (manual system)
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Excel / Access
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Locally-developed software
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Commercial Off-The-Shelf (COTS) software
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Key FMIS Requirements
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Financial management system to help control
government financial processes
Protect the integrity of the revenue raising and
expenditure process (donor confidence)
Transparency and accountability
Must comply with multiple accounting and reporting
requirements – WB TRM, IMF GFS, IPSAs, bestpractices, donors, creditors, local rules, and regulations
Local capacity building and sustainability
Multi-language capability (Albanian, Serbian and
English)
URGENCY
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The Early Days
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Late 1999 meeting with WB and IMF about challenges
in transition governments.
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Early 2000 – FB arrives in Kosovo
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26 days later FB Foundation installed – original
configuration – six months of data captured - reports to
CFA and donors
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No custom code – configuration regularly modified
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Procurement
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World Bank / IMF TRM - FreeBalance Alignment
Banking Systems
Debt Management
Systems
Interfaces
Interfaces
Payment Systems
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The BearingPoint / FreeBalance Solution
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FreeBalance is designed specifically for government
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Rapid deployment
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Flexible configuration
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Processes not over engineered (intuitive – easy to learn)
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Scaleable
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Expandable solution (core system can be extended via
modules)
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Overview of Fiscal Management Framework
Process Flow
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System/electronic processing of transactions
Central database system with direct access
connectivity to municipalities and regional
offices enabling processing of transactions,
and real-time access to the information for
reporting needs
Revenues collections posted to G/L
Daily back-ups of the database to ensure no
data is lost
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Overview cont.
Process Flow cont.
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Multi-language system capabilities (in two
local languages) to support cultural and
ethnic diversity and integrity in accordance
with laws and regulations
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System forms enable standardization of forms
used by all budget spending units - helps
prevent corruption and data entry mistakes
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Timely processing of government payroll
(70,000+)
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Overview cont.
Financial Internal Control
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Central Fiscal Authority functioning as Ministry of
Finance and Economy with competence in budget,
treasury, and taxation; budget classification and planning
system implemented; internal audit and control system
implemented; and a transparent and rigorous
procurement system established.
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Financial Legal Framework underpinned by KFMIS by
integrating key processes and decisions into KFMIS commitments, approving and spending public monies
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Overview cont.
Financial Internal Control cont.
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Enhanced internal controls within budget spending units
by creating separate roles (functional classes) and
groups of users (user groups) with access to the system
in accordance with budget spending unit’s position
hierarchy
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High quality certification program for the budget
spending units and their staff, to ensure the correctness
of data and reduce errors during transaction processing
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Overview cont.
Capacity Building
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Specialized training program in budget planning and
execution and procurement processes for Cabinet of
Ministers, Provincial Assembly, CFA, line ministries,
and municipal staff
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Help Desk is established to provide daily support and
advise to all users from all budget spending units for a
better transaction work flow
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Extensive ongoing training and certification program –
no independent certification, no access to the system
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Overview cont.
Transparency
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Comprehensive public information and consultative
program to disseminate information on new budget
planning and execution system
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Increased transparency in all areas of expenditures
and revenue collection
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Timely Monthly, Quarterly, and Annual Reports all
produced from KFMIS
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Overview cont.
Additional Functionality
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BPK interface – 95% of all payments transmitted
electronically to central bank
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5000 Vendors entered in and stored in system linked
to unique bank accounts
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Upgrade of key software and hardware –this will
commence large rollout of new functions in 2005
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Future Plans
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VPN and network connections to 80 new Central Agency
Users
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Procurement Module to underpin new Procurement Law
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Assets Module to be piloted in 2 municipalities in early
2005
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Further utilization of the Revenues Module to improve
cash management
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Future Plans cont.
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Automation of Bank reconciliations
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Creation of multiyear commitments and appropriations to
underpin MTEF implementation
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Targeting MFE paperless interface with all clients
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Lessons Learned
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The Kosovo environment was unique, the fiscal
management requirements were NOT
System implementation can be achieved in a matter
of weeks, financial management reform takes years
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Success breeds success – donor funding flows to
successful projects – gov is energized by progress
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Donor cooperation and coordination was essential
(our thanks to World Bank, USAID, CIDA, Sida)
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Donor funding is time sensitive and need driven
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Ongoing buy-in from key stakeholders is critical for
long-term success (there are winners and losers in
change – external encouragement)
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Reasons for Success
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Think big, start small, scale up
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Phased implementation to allow absorption of key
reforms
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Achieve high-profile wins early to ensure buy-in
Ownership within the government
Comprehensive Training Program and mentoring of
local staff - some are still with Treasury after five
years
High quality team of international budget planning
and execution, procurement, and FMIS experts are
necessary to ensure best-practice design and
implementation
Long-term sustainability - total cost of ownership
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Conclusions
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Automated FMIS is an early building block in creating
good governance – transparency, accountability and
anti-corruption.
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This is a Team Effort
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Core of best-practices experts in the real issues and
challenges of these countries
Software solutions that are effective, affordable and
understandable
A few key sponsors in the government
A supportive community – donors and others (WB IMF).
The right team can dramatically increase the
probability of success
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Thank You
For more information
Please contact:
Mr. Bruce D. Long – Bearing Point
Email: [email protected]
Tel:
+1.703.747.5564
Mr. Ken McDonald - FreeBalance Inc.
Email: [email protected]
Tel:
+1.613.236.5150 ext 129
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Acronyms in This Presentation
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MFE (Ministry of Finance and Economy
MTEF (Medium Term Expenditure Framework)
KFMIS (Kosovo Financial Management System)
CFA (Central Fiscal Authority)
BPK ( Bank Public Kosovo)
US AID (U. S. Agency for International Development)
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CIDA (Canadian International Development Agency)
SIDA (Swedish International Development Agency)
BE (Bearing Point)
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FB (FreeBalance)
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