Business News of 2014-06-30

GIFMIS tackles public sector financial challenges

Reform of the country’s financial system was a sign post hanging on the challenges attributed to the public sector.

Thank God the worrying signs were made obvious by Ghana’s development partners, leading to the birth of Ghana Integrated Financial Management Information System (GIFMIS).

In September 2009, GIFMIS was launched, as part of the Public Financial Management Reforms in Ghana.

The major stakeholders were Controller and Accountant General's Department (CAGD) and Ministry of Finance (MoF).

The reforms are being funded by World Bank, Department for International Development, UK, European Commission and Danish International Development Agency.

It involves using an Enterprise Resource Plan (ERP), which is a centralised electronic platform, with various components designed to facilitate the flow of information amongst national institutions, to facilitate decision making.

The system is yielding positive results as the 33 Ministries, Departments and Agencies (MDAs) and the 10 Regional Treasuries have been connected to the GIFMIS system.

The system facilitates the processing of government business on the consolidated fund by the MDAs, in an attempt to improve transparency in the management of public finance. Also, payments from the MDAs and treasury to government suppliers are now done through Electronic Funds Transfer.

The public sector Payroll system at the CAGD has been upgraded and is being integrated onto the GIFMIS system, as part of measures to help manage the public sector wage bill.

Inventory of Government assets comprising property, plant and equipment is underway, which will be loaded onto the GIFMIS system to help keep record and also ensure transparency in the management of government properties, starting with five MDAs as the pilot phase.

New electronic platform called the Oracle Hyperion, has also been acquired and is being installed at the Budget division of MoF, as part of the budget reforms; when completed, it is expected to integrate seamlessly with GIFMIS System to ensure continuity from budget preparation, budget execution and financial controls.

An ERP, Oracle Financials, has been procured and installed at the CAGD, an intranet platform with many models that will be used to process government businesses. This will amongst others, prevent the problem of budget overruns by MDAs and Government.

The 2014 Budget prepared in a Programme Based Budgeting (PBB) format has been uploaded onto the GIFMIS System and the Human Resource Management Information System (HRMIS) on the platform has been activated, with nine MDAs being selected for a pilot phase, scheduled from September 1, 2014 –August 31, 2015.

The MDAs are the Public Service Commission, Ghana Statistical Service, Office of the Head of Civil Service, Ghana Education Service, Local Government Secretariat, Ghana Health Service, Ministry of Food and Agriculture, Ghana Police Service and Ghana Prisons Service.

Mr. Hayford Baah-Adade, Project Coordinator of GIFMIS says it is necessary as there is a lack of timely, accurate and current information on budgetary allocations, commitments and actual revenue and expenditures, as well as delays in Payment Processing and Financial Reporting.

He said there is also poor feedback mechanism for assessing Budgetary Performance and lack of a uniformed Chart of Accounts, which make the comparison of the performance of various budgets difficult.

GIFMIS is being implemented by a number of public institutions such as the CAGD, which is responsible for Reforms in Financial Management and Control, the Budget Division of MoF, which handles the PBB and the Public Service Commission, which is in charge of human resource management and information system.

Reforms of Financial Management and Control involves reforms in government business processes, including the replacement of the manual system with a centralised integrated ICT assisted financial system, which is connected to the MDAs to the CAGD.

Mr Baah-Adade said, the Reforms of Financial Management and Control would also cover Metropolitan, Municipal and District Assemblies (MMDAs), and some of the targeted major public funds to be captured under GIFMIS include the Consolidated Fund, Internally Generated Funds, Donor Funds and Statutory Funds.

“Presently, all the 33 MDAs and 10 regional Coordination Councils/Treasuries have been connected to the GIFMIS system and the plan is to streamline all these funds onto the GIFMIS system. Also, connected are seven metropolitan assemblies.

“Currently, the consolidated fund has been rolled onto GIFMIS, so no funds from the consolidated funds can be disbursed by any MDA outside GIFMIS. This will ensure transparency and accountability in the disbursement of public funds,” he said.

Mr Baah Adade said, as part of the reforms, the 2014 budget was prepared by MDAs, using the Programme Based Budgeting module to simplify the process of budget preparation and allow MDAs to be more strategic in their approach to budget management while MMDAs are expected to use the PBB from 2015.

He said performance indicators would also be introduced to ensure performance measurement and assessment.

“The Programme Based Budgeting will be done on an electronic platform, which will be integrated on the GIFMIS platform.

“In simple terms, all expenditure from the consolidated funds that are based on the 2014 budget can only be spent on the GIFMIS system, meaning activities that have not been captured on 2014 budget cannot be spent from the consolidated funds.

“This is because the GIFMIS system will not allow that, since no provision has been made for such expenditure, that will help to reduce budget overruns in the country,” he said.

Mr. Baah-Adade said, the HRMIS, an intranet application that runs on the same platform with the GIFMIS financials would also integrate with the payroll management system at the CAGD, which is also being upgraded as part of the reforms for efficient management of public funds, salaries and other public service employee benefits.

He said there are also other notable reforms under GIFMIS, which include Fixed Asset Reforms; electronic modules to be used to capture and record all public assets in the country.

“At the institutional level, the system will afford public organisations to manage their fixed assets, categorise them by type and depreciating value.

“The institutions will also be able to track where these assets are located, and who is responsible for them. Focus will be on property, plant and equipment, with priority being given to vehicles. This will protect public assets,” he said.

He said, various MDAs and MMDAs have several bank accounts, some containing huge public funds that are lying idle, which they pay huge bank charges on, yet government, unable to know of such idle funds also goes borrowing at huge rate.

Mr. Baah-Adade said as part of the reforms, a cash management with a single Treasury Account is being introduced to streamline the accounts to the barest minimum.

“The GIFMIS system will interface with other key systems being used by other government institutions such as Ghana Revenue Authority, Bank of Ghana and the Ministry of Finance as well as some legal reforms to be carried out to ensure that some of the changes are in consonance with the law and have legal backing.”

When completed, the GIFMIS system will serve as the single source system for official budget creation and management, cash and treasury management, financial control and reporting for the country as a whole.

The overreaching benefits of GIFMIS will be an accountable, more effective and transparent management of public resources, with the attendant results of prevention of corruption and promotion of good governance. It however requires more resources to sustain and achieve the desired outcome.