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


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


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


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


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.


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


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


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


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


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


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


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


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


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)


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.


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


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.


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.


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.


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


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 ]


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


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.


COMPACT :: Implementation WormCOMPACT :: Implementation Worm

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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.


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.


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.


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.


Implementation Worm :: Implementation Worm :: e-Lekhae-Lekha

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Daily Uploads Monthly Uploads Controllers


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.


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.


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".


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


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


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


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


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


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

End of presentationEnd of presentation

Dipankar SenguptaDipankar Sengupta

[email protected]@nic.in

Documents

IFMIS - The Indian Experience