Government of Guyana

1
Government of Guyana

• Integrated Financial Management and Accounting
  System
• FreeBalance Case Study
• ICGFM, April 2004

2
Agenda

• Organization Overview
• Project Organization
• Key Players
• Project Mandate Goals
• Business Challenge
• FreeBalance Solution
• Lessons Learned
• Conclusion

3
Organization Overview

• System to be implemented across the Government of
  Guyana
• 46 Agencies
• Most located in Georgetown 90 of Expenditure
• 10 Regions
• 300 Users

4
Project Organization

• GEMP office act as project leader and advisor
• Ministry of Finance is the prime client
• Decision making via a Steering Committee chaired
  by high official from the MoF
• Management Charter in place establishing
• Roles and responsibilities
• Decision-making process
• Resources requirements
• Timeline
• Risks assessment and conditions for success

5
Key Players

• Ministry of Finance
• Office of the Budget
• Accountant General
• State Planning Secretariat
• Office of the President
• Representatives from selected agencies
• GEMP-3 office (CIDA)
• GEMP-3 and IFMAS steering committee
• Selected vendor- FreeBalance Inc.

6
Project Mandate

• To implement a robust integrated budgeting and
  accounting system across all agencies of the
  Government of Guyana in support of the Guyana
  economic reform program, and to further the
  modernization of the public finance management
  system of the country.

7
Project Goals

• Increase transparency of Government operations
• Better and more timely information
• Elimination of multiple banks accounts across the
  Government
• Streamlining of cheque processing and issuance
• Integration of budget components (Capital and
  Recurrent) for planning/review, information and
  management purposes
• Facilitate linkage of resources to results and
  poverty reduction program goals
• Support responsible spending
• Conformity to provision of new legislation (e.g.
  3 year Forward Estimates)

8
Business Challenge

• Difficult environment (HPIC country,hardship)
• Current operations were manual based, antiquated,
  and not the most efficient
• Numerous observations by Auditor General
• Lack of available information
• Many gaps following best practices benchmarking
• Low level of computer literacy
• Employee motivation, low salary
• Lack of proper infrastructure - organization
• Poor physical facilities
• High level of reticence to change
• Limited funding
• Limited human resources
• Decision-making culture

9
FreeBalance Solution

• FreeBalance Foundation (initial package) - go
  live January 2004 consisting of
• Appropriation and Budget Control
• Expenditure Management, Payment and Revenue
  Recording
• General Ledger
• System Controls, Access Management and Audit
  trail
• Reporting Management and Statutory

10
FreeBalance SolutionTransaction and Control
Architecture
Annual Budget (Allotment 1)
Monthly Release (Allotment 2)
Agency Budgets (Financial Budgets)
General Ledger
Liability(Commitments)
Payment Voucher(Expense Vouchers)
Revenue(Cash Sales)
Cash Book(Cheque Register)
Journal Vouchers
11
FreeBalance SolutionTransaction and Control
Architecture
The Chart of Accounts is the key toprocessing
and reportingChart of Accounts Groups
Fund
Organization
Program
Project
Location
Object
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FreeBalance SolutionTransaction and Control
Architecture
Annual Budget (Allotment 1)
Monthly Release (Allotment 2)
Agency Budgets (Financial Budgets)
General Ledger
Liability(Commitments)
Payment Voucher(Expense Vouchers)
Revenue(Cash Sales)
Cash Book(Cheque Register)
Journal Vouchers
13
FreeBalance SolutionAppropriation and Budget
Control

• Annual Budget
• Use this field to set Annual Budget Not To Exceed
  limit
• Monthly Release
• Used for Monthly cash release(or Quarterly) Not
  To Exceed limit
• Agency Budgets
• Used by Budget Entities to control expenditures
  by program/activities within releases and limits

14
FreeBalance SolutionTransaction and Control
Architecture
Annual Budget (Allotment 1)
Monthly Release (Allotment 2)
Agency Budgets (Financial Budgets)
General Ledger
Liability(Commitments)
Payment Voucher(Expense Vouchers)
Revenue(Cash Sales)
Cash Book(Cheque Register)
Journal Vouchers
15
FreeBalance SolutionExpenditure Management and
Payment

• Liabilities/Commitments
• Record Liabilities and Commitments
• Payment Voucher
• Confirm previous commitment or liability
• Confirm Not To Exceed Budget controls
• Generate Payment by Cheque (or other means)
  MICR coding included
• Update General Ledger
• Journal Voucher
• Make controlled General Ledger adjustments

16
FreeBalance SolutionTransaction and Control
Architecture
Annual Budget (Allotment 1)
Monthly Release (Allotment 2)
Agency Budgets (Financial Budgets)
General Ledger
Liability(Commitments)
Payment Voucher(Expense Vouchers)
Revenue(Cash Sales)
Cash Book(Cheque Register)
Journal Vouchers
17
FreeBalance SolutionRevenue Management and
Recording

• Revenue
• Record and classify Receipts through Journal
  Voucher
• Update General Ledger

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FreeBalance SolutionOther System Considerations

• Integration with External Systems
• Payroll/HRM systems
• Interface to Existing SmartSteam payroll system
• Budget preparation and release
• Implementation of BPRS module- May/July 2004
• Payment and other systems interfaces
• Cheque payment through PayStation MICR coding
• Reconciliation
• Financial Reporting
• Management -- Standard detailed reports
• Statutory -- Custom reports
• External Audit

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InfrastructureIssues and Resolution

• No Communication connection network
• Implementation of a point-to point micro wave
  system to connect all sites except 4 regions
• 3 regions via dial-up
• 1 region still un-connected
• Inadequacy of equipment inventory
• Procurement of 80 PCs
• Servers
• Communications hardware and software component
• Inadequate facilities
• Re-fit of office space
• Acquisition of workstation and related equipment
• Capacity building
• Training (managing resources and budget training
  program-600 participants)
• Coaching

20
FreeBalance SolutionIFMAS 2 Future Activities

• More hardware
• Purchasing Module
• Revenue system interface (ASYCUDA)
• Revenue management
• Inventory Control and Asset Management
• Budget Preparation and Reporting System (BPRS)
• Automated bank reconciliation
• Third party reporting (Cognos PowerPlay)
• Version upgrade

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Lessons Learned

• Unavailability of staff
• Degree and timing of commitment by key officials
• Lengthy decision making process. Key staff not
  empowered
• Low interest in taking initiative
• Product must address true local requirements
• A cash strapped countrys priority is on cash
  availability and release
• Because of weak accountability structure, the
  culture is heavy on detailed control
• Must assure an extended presence from product
  provider -- extensive support required
• Essential to build confidence in the solution,
  from day 1

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Lessons Learned

• Still privileging the bang approach. If too
  long to implement it will go stale very rapidly,
  lose interest and project will never see daylight
• Even if you have verbal and written assurance of
  support, commitment and leadership, the reality
  is not based on words and paper
• Need to have a dedicated champion from the
  government. Fully empowered
• Sometimes its called a challenge and other
  times its called a burden. If no champion to
  pick-up the challenge, then it can easily becomes
  a burden for all.

23
Related Concerns

• Coming into force of a modern Law- Fiscal
  Management and Accountability Act Impact on
  IFMAS
• HR issues related to implementing technologies
• Organizational structure needs to be reviewed
• Workflow needed to be address along best
  practices before, during and after
  implementation
• Knowledge transfer not easy- big gap, (i.e before
  and after)
• Physical facilities to upgrade
• Capacity building -- a critical element for
  sustainability. Need counterpart to assume the
  responsibilities, from the beginning
• Systemic training requirements.(train,train and
  train)
• Audit function strengthening (computerized
  environment)
• CHANGE MANAGEMENT

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Conclusion

• Overall, IFMAS is becoming a day-to-day reality
  in Guyana and acceptance is growing
• Communication and decision-making process is one
  of the most critical area for the success of
  such initiative
• Attitude and uncertainty. It is hard to imagine
  what you have never seen before.
• Easy to be nervous, uncertain and..to make wrong
  decisions
• Need to create an environment that reassure the
  clients
• Requires a good knowledge of risk factors and
  mitigation
• Learning curve- never assume anything

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Conclusion

• Good points on the strategy adopted
• Start with a limited scope-the essentials
• Risk assessment process
• Aggressive timetable-different environment leads
  to different rules
• See how it goes, and if conducive then go to next
  steps
• Some thoughts
• Try to make it work as trouble free as
  possible,especially at the beginning. So its
  important to have a reliable and proven product
• Need a product that is flexible and with which
  you can grow, as you are ready.

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Government of Guyana

• Integrated Financial Management and Accounting
  System
• FreeBalance Case Study
• ICGFM, April 2004