Ahmad, Ehtisham, Mercedes García-Escribano, Joseph Keeley, and Mario Pessoa, 2007, Mexico: Selected Treasury Reforms for a Modern Hacienda, IMF Technical Assistance Report (Washington: International Monetary Fund).
Dener,Cem, May 2007, Implementation Methodology of the Integrated Public Financial Management Systems in Europe and Central Asia.
DFID, 2006, Guide for Integrating Records Management Requirements into Financial Management Information Systems, International Records Management Trust.
Diamond,Jack, and Pokar Khemani, 2005, Introducing Financial Management Information Systems in Developing Countries, IMF Working Paper 05/196 (Washington: International Monetary Fund).
Khan, Abdul, and Stephen Mayes, 2009, Transition to Accrual Accounting, IMF Technical Notes and Manuals (Washington: International Monetary Fund).
This note has benefited from useful contributions from Mr. Michel Lazare, Mr. Richard Allen, Mr. Eivind Tandberg, Mr. Pokar Khemani, Mr. Ian Lienert, and Mr. Holger van Eden (all FAD), and Ms. Eileen Browne (advisor).
Integrated Financial Management Information Systems: A Practical Guide, USAID (January 2008).
According to Diamond and Khemani (2005) a GFMIS usually refers to the computerization of PFM processes with the help of a fully integrated system for the financial management of line ministries and other spending agencies. The full system should also secure integration and communication with other relevant information systems.
Functional requirements is sometimes included as part of what is referred to as “system design," that may also include technology architecture and implementation methodology. (See Implementation Methodology of the Integrated Public Financial Management Systems in Europe and Central Asia, by Cem Dener (2007).)
A USAID study suggests that a rough guideline for estimating the cost of installing the complete hardware and software platforms for a comprehensive GFMIS is to estimate about US$6 per capita. Ancillary costs such as training and reorganization can double these base costs. As an example, the study cites the case of the Slovak Republic which had incurred a base cost of US$30 million, and a total cost of US$60 million for a GFMIS. The cost to implement a GFMIS in Latin America has ranged from US$35 to US$100 million. The State of California is considering the implementation of a Financial Information System for California (FI$Cal) that, it is estimated, will cost US$1.6 billion over a period of 10 years (2008/9 to 2017/18).
GAO, Financial Management Systems: Additional Efforts Needed to Address Key Causes of Modernization Failures (2006).
Alternatively, a steering committee could be set up for the whole GFMIS project, and this committee would also be responsible for the CD.
For example, in Argentina and Brazil the main modules include the general ledger, payables, receivables, debt management, and cash management, including the treasury single account. In the Dominican Republic, Peru, and Turkey the GFMIS also includes the budget preparation module. Liberia has proposed to implement the basic budget execution modules (general ledger, accounts payable, accounts receivable, and cash management) plus payroll. Egypt reversed the usual sequence and started with the budget preparation module and is now implementing the basic budget execution modules.
The issue here is not so much the overall capability of the system which, in case of most COTS, will almost always exceed the requirements, but rather how to sequence the implementation and the evolution path.
For the purpose of the GFMIS, “integration” means sharing the same database or a set of standardized databases. Using the same database avoids duplication and increases the reliability of information. When the modules are not integrated, they may still be “interfaced.” It means that systems store data in different databases, but one system has the capacity to access and download data in a specified manner. Since part of the information is duplicated, it is important to compare the information to avoid inconsistencies. It represents an additional effort of reconciliation, and could be a source of errors.
Both cash- and accrual-based IPSAS require consolidated reporting of all entities, including public corporations controlled by a particular level of government, e.g., central government. GFSM 2001 requires reporting of general government and public sector activities.
The general ledger is the principal record of an entity which uses double-entry accounting. It will usually include accounts for systematically recording such items as assets, liabilities, revenues, and expenses. The general ledger is a summary of all the transactions that occur in any entity. The transactions are usually recorded in detail first in other accounting records (sometimes referred to as books of prime entry), and then summarized in the general ledger as a series of debit or credit entries. Many governments use the term general ledger but do not maintain a general ledger as defined above.
The purchase and accounts payable modules would normally handle the functions associated with making commitments, receiving goods, and making payments. Some commentators use the term “payments system” to describe this part of the GFMIS.
In contrast, the Swiss federal government uses a common COTS FMIS package based system for all departments and offices.
Canada uses a central data bank approach (as an alternative to the traditional consolidation system), where relevant data from diverse sources, including departments, are stored. The information can be extracted by a user of the system, whether it is a department or a central agency, by specifying what data are to be selected from the data bank and the format, sequence, amount of detail, and totals in which they are to be reported.
Some jurisdictions are considering options under which the GFMIS would record transactions of the MoF, but would only record summary data (monthly reports) from other line ministries and departments to generate consolidated reports of the budget. Line ministries and departments usually have manual systems. Such a system would usually not generate the benefits of an automated financial management information system for the budget sector as a whole and is not recommended.
In Peru, the GFMIS encompasses all entities in central, provincial, and local governments, although some data at the regional and local levels is entered after the fact, by hand, and has no automated reconciliation. In Argentina and Brazil, the central and local governments run independent GFMIS systems.
IPSASB defines cash basis as a basis of accounting that recognizes transactions and other events only when cash is received or paid. This contrasts with the accrual basis of accounting under which transactions and other events are recognized when they occur, regardless of the timing of the related cash transactions. For an explanation of the concepts of cash and accrual accounting see Khan, Abdul and Mayes, Stephen (October 2007) Transition to Accrual Accounting, IMF Technical Guidance Note.
For example, the opening and closing net assets or equity must be reconciled with movements in the income and expenditure statement.