PIFRA1

PIFRAproject to improve financial reporting and auditing

PIFRAPIFRAproject to improve financial project to improve financial reporting and auditingreporting and auditing

Khuram Farooq, PMPKhuram Farooq, PMPnn Director PIFRADirector PIFRA

khuramf@pifra.gov.pkkhuramf@pifra.gov.pkDecember 2, 2007December 2, 2007

PIFRA2

1 Context

2 Vision

3 NAM- New Accounting Model

4 Technology

AgendaAgendaAgenda

5 Progress

6 Next Challenges

7 Lessons

PIFRA3

1 Context

2 Vision

3 NAM

4 Technology

AgendaAgendaAgenda

5 Progress

6 Next Challenges

7 Lessons

PIFRA4

Good Governance-A new ParadigmGood GovernanceGood Governance--A new ParadigmA new Paradigm

Good Governance

Civil Services Reforms•Professionalism•Pay and remuneration•Executive Development

Legal,Judicial Order•Action for Justice•Judicial Independence•Judicial Strengthening

Financial Management Reforms•Accurate,Timely reporting, Improvedaudit systems, Strengthened controls•MTBF•Devolution Support Program

Economic Policy•Deregulation•Tax Admn Reforms•Liberalization

PIFRA5

1 Context

2 Vision

3 NAM

4 Technology

AgendaAgendaAgenda

5 Progress

6 Next Challenges

7 Lessons

PIFRA6

MODIFIED CASH BASISACCOUNTING

CASH BASED ACCOUNTING

ACCRUAL ACCOUNTING

International Public Sector Accounting Standard (IPSAS II) Compliance

IPSAS IICASH BASIS ACCOUNTING

PIFRA7

ObjectivesObjectivesObjectives

Strengthened internal controls- Increased trust and confidence

Audit: risk-based approach, better quality- Improved support for legislative oversight through PAC- Strengthened accountability framework- Increased confidence in audit process

R/3 other

nnFinancial informationFinancial information--Accurate,TimelyAccurate,Timely--Efficient resource management/Efficient resource management/Timely input for policy makersTimely input for policy makers

----Improved fiscal spaceImproved fiscal space--Increased international credibilityIncreased international credibility--Improved Investor ConfidenceImproved Investor Confidence

International Standards ComplianceInternational Standards Compliance•• IPSAS II and GAAPIPSAS II and GAAP••IASIAS••GFSGFS

‘‘Compliance to international Compliance to international standards reduces corruptionstandards reduces corruption’’

John Hopkins University Research John Hopkins University Research 20072007

PIFRA8

PIFRA II: DesignPIFRA II: DesignPIFRA II: Design

PIFRA II

$ 94 m

FABS

(Financial Accounting and

Budgeting System)

NAM

Capacity Building

Of

OAG

(Office of the Auditor General)

FAM

Capacity Building of

CGA

Controller General

Of Accounts

Project Management

Support

AGP/CGA/MOF

PIFRA9

Process- New Accounting/Auditing Model/Internal Audit

ImplementationImplementation-- Technology and Capacity BuildingTechnology and Capacity Building

RestructuringRestructuring

Separation of Audit and Accounts

Basic ConceptBasic ConceptBasic Concept

CGA and AGP Ordinance 2001

PIFRA10

Financial Accountability Cycle and PIFRAFinancial Accountability Cycle and PIFRA

Fundsauthorization

AuditReport

AG

P Line D

epartments

MOF/Legislature

CGAFinancial Reporting

Execution

Process Technology PoliciesPeople

PIFRA11

Vision- Financial Reporting by CGAIntegrated, On-line, Real-Time, Govt-wide, multi-tieredVisionVision-- Financial Reporting by CGAFinancial Reporting by CGAIntegrated, OnIntegrated, On--line, Realline, Real--Time, Time, GovtGovt--wide, multiwide, multi--tieredtiered

DAO/TMAs

DAO/TMAs

DAO/ TMAs

District/Sub District/Sub districtdistrict

ProvincialProvincial

FederalFederal

DAOsDAOsDAOs

AG

AGPR

CGA

Roll up

and

Roll up

and

aggr

egati

on

aggr

egati

on110

4

PIFRA12

PIFRA13

Vision and System Landscape-Financial ReportingVision and System LandscapeVision and System Landscape--Financial ReportingFinancial Reporting

Finance Department, Punjab

Ministry of Finance Islamabad

CGA

AG Punjab

DAO’s

PIFRA14

Vision- Online reports (PSDP)VisionVision-- Online reports (PSDP)Online reports (PSDP)

130

286

127

154

94

18 90

20

40

60

80

100

120

140

Sites

OB Exp Release OB Exp

KPP

Tax

Ref

orm

s Pr

ojec

t

PIFR

A

PIFRA15

EAD

NBP/SBP

DefenseDistrict Government

Accounts

CBR

Self Accounting

Entities

Planning

Line Ministries

•Finance (Budget)•DAO/AG/CGA

Scope and ContextScope and ContextScope and Context

Railways

•District Government Accounts

District Finance Offices

PIFRA16

Vision – Govt. wide IFMISVision Vision –– Govt. wide IFMISGovt. wide IFMIS

CBR

Public Administration

Justice

PublicUtilities

EAD

Education

Interior

Public Security

BANK

PIFRA FABSSystem

Health

PC

SAE

Public Broadcasting

140 Line Ministries

PIFRA17

Volumetric ChallengeVolumetric ChallengeVolumetric Challenge

140 Line Ministries

5000 SAP users

2.5 Million Payroll

110 DAO

110 EDO Finance

600 plus Banks

29000 DDOs

4 Interfaces(SBP, CBR, PC, EAD)

IT Support Centers- 5SAP CC

Rs. 1.8 trillionTo track

PIFRA18

1 Context

2 Vision

3 NAM

4 Technology

AgendaAgendaAgenda

5 Progress

6 Next Challenges

7 Lessons

PIFRA19

2 Receipts

3 General Ledger Adjustments

4 Budgeting

5 Aggregation and Reporting

6 Fixed Assets

8 Cash Forecasting

1 Commitments and Payments

Business Process-FinancialBusiness ProcessBusiness Process--FinancialFinancial

9 Development Projects

7 Banking

PIFRA20

10 Payroll

11 General Provident Fund

12 Pension

13 Staff Expenses

Business Process-HRBusiness ProcessBusiness Process--HRHR

PIFRA21

DG HealthDG HealthPurchase of Medicine 100,000Purchase of Medicine 100,000

Entity

Object

Fund (Grant)

Function

Five Dimensional Chart of Accounts

Program

GFS Compliant GFS Compliant Reports through mapping

Constitution

PIFRA22

Single Entry System

2 Commitments No Commitments

3 Fixed Asset No fixed Asset

No liabilities

1 Double Entry System

New Accounting ModelNew Accounting ModelNew Accounting Model

4 Liabilities

New Accounting Model

5 New Chart of Account Old Chart of Account

6 Integrated System Isolated Systems

Old System (Legacy)

PIFRA23

1 Context

2 Vision

3 NAM

4 Technology

AgendaAgendaAgenda

5 Progress

6 Next Challenges

7 Lessons

PIFRA24

Technology to Support the NAMTechnology to Support the NAMTechnology to Support the NAM

nn ERP TechnologyERP Technologynn SAP R/3SAP R/3nn Functional specifications, Technology architectureFunctional specifications, Technology architecture-- Evaluation Evaluation

CriteriaCriteriann International Competitive BiddingInternational Competitive Bidding-- Two stage bidTwo stage bidnn Technically compliant, lowest Technically compliant, lowest

nn ERPERP-- WhatWhatnn Enterprise Resource PlanningEnterprise Resource Planningnn Integrated Functional EnvironmentIntegrated Functional Environment

PIFRA25

Payments

HR/Pay Roll

Integrated Information SystemIntegrated Information SystemIntegrated Information System

Special and TechnicalInformation (incl. Data Fusion)

MangementInformation

Accounts

Fiscal Reporting

Finance

Management-relevantInformation

PIFRA26

1 Context

2 Vision

3 NAM

4 Technology

AgendaAgendaAgenda

5 Progress

6 Next Challenges

7 Lessons

PIFRA27

Rapid Implementation to cover delaysRapid Implementation to cover delaysRapid Implementation to cover delays****

Jan Jan 0202

May May 0505

Num

ber o

f N

umbe

r of

Pro

duct

ive

Site

sP

rodu

ctiv

e S

ites

Jul Jul 0303

0

3030

7070

SepSep0606

470470......

PIFRA28

Productive Sites- Province WiseProductive SitesProductive Sites-- Province WiseProvince Wise

28 28

39

20

37

9

30

50

5

10

15

20

25

30

35

40

Sites

NWFP Punjab Sindh Baluchistan

NW

FP

Punj

ab Sind

h

Bal

uchi

stan

PIFRA29

PIFRA Pilot SitesPIFRA Pilot SitesPIFRA Pilot SitesA

A

B

C

C

BAC

A

B

B

BE

A

CB

CGAMoFAGPR

AG PeshawarFD PeshawarAGPR-SO PeshawarDAO AbbottabadAAO GhalanaiDAO SwatDAO Gilgit

AG PunjabFD PunjabDAO Faisalabad

AG BalochistanFD Balochistan

AG SindhFD SindhDAO HyderabadDAO Uthal

D

D

E

PIFRA30

Rollout and Replication SitesRollout and Replication SitesRollout and Replication Sites

B

C

B

C

A

A

B

C

C

BAC

A

B

B

BE

A

CB

B

BBB

B

B

B

B

B

B

C

CC

C

C C

C

C

CC

C

C

C

C

C

C

C

C

D

DDD

D

D

D

D

D

D

D

D

D

DD

D

D

DD D

D

D

D

D

DD

D

D

D

D

D

D

D D

D

DDD

D

D

D

E

E

EE

EEE

E EE

E

EE

EE

E E EE

E

E

E E

E E

E

E

E

E

D

E

E

E

E

Missing:

D Bunair / DaggarE Tank

E

PIFRA31

Outcome Indicators FABS-Roadmap Outcome Indicators FABSOutcome Indicators FABS--Roadmap Roadmap

May 2005PIFRA I

30 Sites

25 sites

Aug 06 Nov 06 Dec 07

All NWFP +30 % Punjab)

All Punjab/Sindh

Baluchistan….

Dec 08?

PIFRA32

Resource Person/Cou

nterpart

End Users Site 1

PIFRA/Consultants

Sustainability, Ownership, Support Sustainability, Ownership, Support Sustainability, Ownership, Support

End Users Site 2….n

Knowledge transfer of consultants through our own qualified personnel to field offices

PIFRA33

Training Training Training

nn Over 80 Master TrainersOver 80 Master Trainersnn Training on New Chart, NAMTraining on New Chart, NAMnn Over 29,000 Over 29,000 DDOsDDOs TrainedTrainednn Training labs at provincial HQ for system trainingTraining labs at provincial HQ for system trainingnn Training NAM/SAP for SitesTraining NAM/SAP for Sites--2000 SAP Users2000 SAP Usersnn Roll Out Training continuing through master trainersRoll Out Training continuing through master trainers

PIFRA34

1 Context

2 Vision

3 NAM

4 Technology

AgendaAgendaAgenda

5 Progress

6 Next Challenges

7 Lessons

PIFRA

SAP IntroductionSAP IntroductionCreative Usage

Creative Usage

ResistanceResistanceBoycottBoycottR

esul

ts /

Suc

cess

/ P

erfo

rman

ceR

esul

ts /

Suc

cess

/ P

erfo

rman

ce

q Organizational Structureq Workflowq Cooperation / Communicationq Qualification / Competencies

Old SystemsOld Systems

Stagnation IntegrationChange

Management

Goal: Creative Usage via constant Change ManagementGoal: Creative Usage Goal: Creative Usage via constant Change Managementvia constant Change Management

Conservative UsageConservative Usage

PIFRA36

Domains of ChangeDomains of ChangeDomains of Change

Technology

Business Process Change (adopt

new processes)

Re-structuring

Coverage

Capacity Building

The human dimension

PIFRA II

PIFRA37

Next Challenges: Leverage IT InvestmentsNext Challenges: Leverage IT InvestmentsNext Challenges: Leverage IT Investments

Data Data

Adopt New ProcessesAdopt New Processes

Use the system Use the system –– Continuous TrainingContinuous Training

PIFRA38

Next Challenges: DataNext Challenges: DataNext Challenges: Data

Budgeting data at spending levelBudgeting data at spending level

Project wise dataProject wise data

GP Fund RecordsGP Fund Records

Pensioner DataPensioner Data

Debt wise detailed dataDebt wise detailed data

PIFRA39

Next Challenges: Adoption of new processessNext Challenges: Adoption of new Next Challenges: Adoption of new processessprocessess

Project Accounting Project Accounting RsRs. 520 B (370+150). 520 B (370+150)

Debt Accounting Debt Accounting RsRs. 1186 un. 1186 un--reconciled! reconciled!

CBR Treasuries and receipt accounting CBR Treasuries and receipt accounting RsRs. 1 trillion. 1 trillion

Commitment AccountingCommitment Accounting

MTBFMTBF

Bank reconciliationBank reconciliation

BER (Budget Execution Report)BER (Budget Execution Report)

PIFRA40

Monitoring and Evaluation:Business BenefitsMonitoring and Evaluation:Business BenefitsMonitoring and Evaluation:Business Benefits

Defined Benefits TargetDefined Benefits Target-- BenchmarksBenchmarks

Benchmarks linked to specific strategic objectivesBenchmarks linked to specific strategic objectives

Measured baseline in key PFM areasMeasured baseline in key PFM areas

Assigned Benefits owner to major benefit areaAssigned Benefits owner to major benefit area

Tracking benefits through constant updatesTracking benefits through constant updates

Defined strategic objectivesDefined strategic objectives

M & E Framework: Consistent FrameworkM & E Framework: Consistent Framework

PIFRA41

1 Context

2 Vision

3 NAM

4 Technology

AgendaAgendaAgenda

5 Progress

6 Next Challenges

7 Lessons

PIFRA42

Lessons LearntLessons LearntLessons LearntProject Culture vs Bureaucracy

Change ManagementChange Management-- Executive Led/Executive SponsorExecutive Led/Executive Sponsor

Buy-in of power users and stakeholders- involvement

Measure BaselineMeasure Baseline

Project Management teamProject Management team--Professional, PM mindsetProfessional, PM mindset

Align HRM policies (career, rewards) with ProjectAlign HRM policies (career, rewards) with Project

Continuous support without getting into political debateContinuous support without getting into political debate

Governance Structure to monitor business benefits

PIFRA43

SummarySummarySummary

70 FABS sites productive through ERP solution

2000 End Users trained on SAP R/32000 End Users trained on SAP R/3

Federal, provincial, district Federal, provincial, district govtsgovts on new COAon new COA

29000 DDOs trained on New Chart of Accounts

All NWFP onAll NWFP on--lineline

Separation of Audit and Accounts

Development of New Accounting/Auditing Model

Plan for onPlan for on--line reporting of all Punjab, line reporting of all Punjab, SindhSindh Dec 07Dec 07

PIFRA44

Thank Thank YouYou

PIFRA45

Break Up PIFRA II

Goods36%

Training15%

Unallocated7%

O & M10%

TA17%

Civil Works15%

PIFRA46

PIFRA IIPIFRA IIPIFRA II

FABS, 48.742OAG, 19.345

CGA, 18.471PM, 6.446

Total $ 94 m (WB $ 84; GOP $ 10 m)

PIFRA47

PIFRA IIPIFRA IIPIFRA II

FABS, 48.742OAG, 19.345

CGA, 18.471PM, 6.446

Total $ 94 m (WB $ 84; GOP $ 10 m)