Download PFMP Financial Management Information System

Integrated Public Financial Management Systems
(PFMS)
Cem Dener
ECSPE






June 2006
Definitions
Evolution of Treasury Systems
Design and Implementation
Information & Communication Technology
PFMS Projects in ECA
Recommendations
PFMS
1
Definitions
Public Financial Management System (PFMS)
is designed to

support all financial operations,

collect accurate, timely, complete, reliable and consistent
information on all public financial events,

provide adequate management reporting,

support government-wide and agency policy decisions,

produce auditable financial statements.
June 2006
PFMS
2
Public Financial Management Cycle
Policy Development
and Review
0
Budget
Preparation
Budget Execution
1
8
7
Audit and
Evaluation
Mgmt of Budget
Authorizations
Budget Review
& Fiscal Rep.
Commitment of
Funds
FMIS
Web Publishing
6
3
Procurement/
Purchasing
Debt and Aid
Management
Payments and
Receipts Mgmt
5
Cash
Management
June 2006
2
PFMS
4
Asset /
Inventory Mgmt
Payroll Calcs
HR Mgmt
3
Components
Core Treasury System includes the following components:
2

4

5

7

8

4

Budget Execution and Monitoring
Accounting (general ledger, management of payments and receipts)
Cash Management
Financial Reporting
Purchasing / Commitment
Asset / Inventory Management

Operational support for Spending Units
Other Public Financial Management System components:
1

1

6

4

8

7

Macro Economic Forecasting
Budget Preparation and Approval
Debt and Aid Management
HR Management /Payroll Calculations
Support for Financial Control and Auditing
Web publishing
7

Financial Management Information System
The combination of above components is referred to as integrated PFMS
June 2006
PFMS
4
Evolution of Treasury Systems
Treasury development process:
(Treasury Reference Model)
1. Establishment of legal and institutional frameworks
2. Definition of coverage
3. Definition of system functionality
4. Design and implementation of Information Systems
June 2006
PFMS
5
Evolution of Treasury Systems
1. Establishment of legal and institutional frameworks
 Legal : Approval and implementation of the organic budget law
 Organization : Establishment of a countrywide MoF / Treasury
organization
 Personnel : Allocation of adequate qualified staff for MoF /
Treasury management and operations
June 2006
PFMS
6
Evolution of Treasury Systems
2. Definition of coverage
 Treasury control over government financial resources
(Treasury Single Account)
 Coverage of central budget
(all government transactions are routed through treasury)
 Coverage of extra budgetary funds and off-budget funds
 Coverage of local (sub-national) governments
June 2006
PFMS
7
3. Definition of System Functionality










PFMS Module
Macroeconomic Forecasting
Budget Preparation
Core Treasury System
+ General Ledger
+ Management of payments
+ Management of receipts
+ Purchasing / Commitment
+ Cash / Fund Management
+ Financial reports
+ Asset / Inventory Management
Operational support for SUs
Internal Debt management
External Debt and Aid mgmt.
Personnel database (HR mgmt)
Payroll calculations
Support for Auditing
Management Information System
Common Implementation Options
Existing Models / LDSW
LDSW / COTS
COTS
Interface
Interface
Interface
Interface
banking system (TSA)
revenue collection
procurement agency
banking system (TSA)
Interface for spending units (LDSW)
LDSW / Interface with Debt Mgmt System
Interface with Debt Mgmt System
LDSW / COTS
LDSW / COTS
Locally developed reports
COTS
[ COTS : Commercial Off-The-Shelf Software
June 2006
with
with
with
with
PFMS
LDSW : Locally Developed Software ]
8
Evolution of Treasury Systems
4. Design and implementation of information systems
 Secure countrywide network infrastructure
 Development of web-based application software
 Central servers and data storage/backup units
 Standard field hardware
 System and network management tools
 Technical maintenance and support systems
 System safety / security and business continuity solutions
 Web publishing (web portal)
June 2006
PFMS
9
Design and Implementation
Treasury System Project Lifecycle
A. Design phase (9-18 months)
 High Level Functional Design: Legal and institutional framework
 Detailed Functional Design: Coverage, functionality, scope, budget
execution, budget classification, chart of accounts, reporting
 Technical System Design: Technical architecture, software,
hardware and networking requirements, implementation plan
 Component sizing and preparation of procurement specifications
B. Procurement phase (9-18 months)
 International Competitive Bidding (ICB) for the development of
application software (usually two-stage)
 ICB for the installation of hardware and network equipment
C. System integration and implementation (18-36 months)
June 2006
PFMS
10
Design and Implementation
C. System integration and implementation (18-36 months)















Application Software (SW) design to meet functional requirements
SW customization and parameterization + locally developed SW
Communication infrastructure
Network (NW) equipment, and cabling
Hardware (HW) installations – central and field offices
Security solutions (incl. support for digital signature)
Pilot implementation
Training
Countrywide implementation (replication)
Data entry and migration
Backup and recovery solutions
Business continuity solution
Technical support and maintenance
Call Center / Help Desk operations
Documentation and manuals + web publishing
June 2006
PFMS
11
Design and Implementation (contd.)
Technical Assistance (TA) requirements vary depending
on the existing institutional capacity
 Development of the legal, regulatory and operational framework
 Review/revision of existing budget classification and chart of accounts
 Development of GFS / IPSAS compliant financial reports
 Development of PFMS functional requirements
 Design of technological architecture
 Preparation of the technical specifications and bidding documents
 Technical support during the implementation of Treasury/PFM system
 Data conversion and interfaces with other systems
 Training
 Project management
June 2006
PFMS
12
Information and Communication Technology
 Modern integrated PFM systems are designed and implemented as
web-based applications
 Implementation of the PFMS includes the following ICT components:
[0] Establishment of countrywide network connections (communications lines) as
Government contribution
[1] Development of
web-based Application Software (ASW) as a combination of
customized package + locally developed software
[2] Installation of central servers (database & application servers) and data storage
units (fiber disk arrays) at the main system center & business continuity center
[3] Installation of standard field hardware (domain servers, user workstations and
peripherals) in central and field offices
[4] Installation of network equipment, system and user management and engineering
support solutions
 Completion of countrywide network (physical) connections [0] by the
Government is a precondition for signing the contracts with suppliers.
June 2006
PFMS
13
Technology Architecture
3-Tier Web-Based
1
Database
Server(s)
[2]
Central
Servers
2
Application
Servers
[0]
[1]
Wide Area
Network
PFMS
Application
Software
Internet
Web
Server
PFMS DB
Firewall
MoF / Treasury
District Offices
[3]
Field
Hardware
Special DU lines
for towns
Collection
Point
(city center)
FR line
Local
Server
3
FR
line
Virtual Private Network
Encryption
Tunnelling
District
Offices
PCs / Thin Clients
MSC : Main System Center
BCC : Business Continuity Center
June 2006
[4]
Network Equipment
District Offices
Spending Units
Spending
Units
PFMS
14
Web Based PFMS Model
Application Servers
Database Server
1
2
3
Web Server
Users
System Center
PFMS
COTS
Internal Access
Budget Preparation
COTS
DB
PFMS DB
Core Treasury
System
•
•
•
•
•
VPN
General Ledger
Purch./Commit.
Accts Pay/Rec
Cash/Fund Mgmt
Fin. Reports
MoF, TDOs,
Central Line Ministries
and Gov Agencies
Asset/Invent Mgmt
Org/Workflow Mgm
External Access
Web Portal
LDSW
Opr sup for locals
HR Mgmt/Pers DB
LDSW
DB
User Terminals
Payroll Calcs.
Internal Audit
Internet
Local finance
directorates, local public
authorities,
municipalities
Interfaces
Internal + External
June 2006
LDSW : Locally Developed Software
COTS : Commercial Off-The-Shelf SW
PFMS
15
PFMS Functional Modules and Beneficiaries
Integrated PFMS model proposed for Ukraine
Integrated PFMS
External Users
Line
Ministries &
Departments
Ministry of Finance
P, R
Reports
KRU
Internet
&
Intranet
Treasury IT Dept
MoF IT Dept
I
T, P
State Tax
Administration
PFMS Mgmt.
Center
FMIS + Business
Continuity Center
I
T, P
State Customs
Service
Treasury / PFMS
BCC + Data
Warehouse
I
T, P
State Property
Fund
Core Treasury
System
Macro Econ Forec
I
T
Main Civil Service
Department
General Ledger
Purch./Commit.
Accts Pay/Rec
Cash/Fund Mgmt
Fin. Reports
Acct for localities
Budget Formul.
I
T, C
MoE - Public
Procurement Dept
I
P, R
Statistics Institute
I
P, R
Other Gov
Agencies/Depts
Reports
Reports
PFMS
Web Portal
Reports
National Bank
of Ukraine
•
•
•
•
•
•
TSA
27 Oblast
Treasury Dept
Spending Units
Local finance directorates,
public authorities,
municipalities, public
institutions
[ ~50,000 ]
T,P,C,A
I
640 Rayon
Treasury Div
AS Kazna
June 2006
PFMS
Debt Mgmt
Asset/Invent Mgmt
HR Mgmt/Pers DB
Payroll Calcs.
Internal Audit
Financial Reports
T
P
C
A
R
I
TSA
Transactions
Plans
Contracts
Accounts
Reports
Interface
Treasury Single Acct
16
Typical PFMS Network Infrastructure
Treasury
MoF
F/O
conn.
PFMS
System
Center
FMIS
+
Business
Continuity
Center
Internet
access
Internet
Backup
Backup
ISDN-PA
F/O
conn.
PoP
Line Ministries
& Departments
MAN
State Tax
Administration
Kiev
Metropolitan
Area Network
State Customs
Service
KRU
(Internal Audit)
Main Civil Service
Department
PoP
Internet
Line Ministries and
Gov Agencies in Kiev
PoP
Dedicated line
PoP
Dedicated lines
(online connections)
[e.g. Frame Relay]
Other Related
Gov Agencies
Backup line
District #1
District # 1
TC
PSTN
District #2
District #2
TC
June 2006
Statistics Institute
Countrywide VPN
PoP
All regional
offices
Regional
Treasury Office
HRMIS
MoE - Public
Procurement Dept
PoP
Regional / District
Treasury Office
State Property
Fund
F/O
conn.
IP Network
Budget
Process
Revenues
Treasury / PFMS
Procure-Payroll-IA
FMIS
+
Business
Continuity
Center
FMIS / Data
Warehouse + BCC
Data Exc
PFMS
System
Center
District #n
PFMS
TC
TC
District #n
On demand lines
(online/offline)
[e.g. Dial-Up or ADSL]
17
Information and Communication Technology
Central Servers and Field Hardware

Central servers (database and application servers) and main networking
equipment located at System Center (SC).

A disaster recovery solution is highly recommended. Treasury head office
(system center) can be connected to the Business Continuity Center (BCC)
through a separate fiber optic line.

BCC servers can be used to host the Data Warehouse (FMIS) to avoid
overloading of operational servers at system center.

Central network and system management tools.

Workstations, servers and peripherals for treasury district offices.
June 2006
PFMS
18
Information and Communication Technology
Typical System Centers and Central Servers
Business
Continuity
Center
Treasury Head Office
1000 Mbps
Fiber
Disk
Array
DB
Server
Sys Mgmt
Security
Admin
Application
Servers
AS
100 Mbps
Sys Mgmt
Support
DB
Tape
Backup
10/100/1000
Switch
Cluster
Tape
Backup
FDA
Firewall
Sys Admin
F
Router
Load director
Director
SDH
Call Center
LAN
Backbone
100
Mbps
F
10/100/1000
Switch
F/O
Ring
F
WAN
Backbone
VPN
Router
June 2006
F/O Ring
Router
SDH
PFMS
SDH
SDH
IP network
19
ICT - Network
Treasury/PFM System Network Infrastructure
Network solution for a web-based system [on-line operation]




All Treasury District Offices (TDOs) are connected to the central Treasury office
located at the center (usually within the MoF).
A Virtual Private Network (VPN) is established to form a secure intranet in which all
public financial data can be transmitted in encrypted format.
This VPN is also used as the main communication platform of the Treasury/MoF
offices by providing e-mail services, internet access and other utilities.
Voice over IP (VoIP) services can be utilized to reduce internal telecommunication
costs of the Treasury/MoF offices.
Solution for the spending units of line ministries and local gov [off-line / on-demand]

Selected spending units and local gov units can be connected to nearest TDO
through off-line or on-demand [e.g. Dial-Up (DU) or Asymmetric Digital Subscriber
Line (ADSL)] connections to enter transactions and to get their financial reports.
June 2006
PFMS
20
Information and Communication Technology
Typical Central Network Equipment
100 Mbps
NW management
system
DB and Application Servers
MoF HO internal users
LAN
Backbone
10/100/1000
Switch
Web &
security server
WWW, FTP, Mail
Firewall
Network
Security
H.323
WAN
Backbone
Dial Backup
Server
Router
AAA
Server
VoIP System
HS Modem
PBX
Router
Router
VPN
Router
2 x PRI
Digital Voice
Router
Tel
Fax
Internet
Router
Router
PSTN
SDH
THO
F/O Ring
Business
Continuity
Center
SDH
BCC
IP Network
June 2006
Gatekeeper
(VoIP)
PFMS
SDH
SDH
Router
21
Observations

Development of the core treasury system is an important milestone for the
implementation of a countrywide Public Financial Management System
(PFMS), which enables integration and exchange of information available in
various systems (e.g. Treasury, Tax, Customs, Central Bank) developed by
different agencies.

The Financial Management Information System (FMIS), as the main decision
support and monitoring system for public finance, is based on centrally available
information gathered from all important components of the PFMS.

Development time for a fully functional treasury system in some transition
economies and developing countries varies between 3 to 5 years. Large scale
implementations of the treasury systems may take even longer.

Total cost of ownership of treasury system implementation depends on a
number of factors, such as institutional capacity, scope, desired functionality,
number of users and implementation method.
June 2006
PFMS
22
PFMS Projects in ECA
June 2006
PFMS
23
PFMS Projects in ECA
June 2006
PFMS
24
PFMS Projects in ECA
June 2006
PFMS
25
Recommendations
Development of modern integrated PFMS according to the best practices is a
complex task, which should be designed as a separate project.
Implementation of such wide spread changes would require:

Government commitment and management support at the highest levels to
ensure that the change process is completed smoothly

Inter-agency coordination and user involvement in system design

Building institutional capacity and technical skills starting from the
preparation phase

Development of project management and technical support units within the
MoF/Treasury for implementation and sustainability of new systems
June 2006
PFMS
26