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The iBAS in Bangladesh

The iBAS in Bangladesh

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E-governance for Enhanced Accountability and Transparency in Public Expenditure Management
Good Public Financial Management Practices During a Period of Global Adjustment

The iBAS in Bangladesh
December 12, 2012

Ranjit Kumar Chakraborty Additional Secretary, Finance Division, Ministry of Finance Bangladesh

Subprime and weakened financial systems

Collapse of banking systems on tax payers’ safety nets Governments bailing out banks at the expense of higher taxes

Higher fiscal deficit Countries
E-governance for Enhanced Accountability and Transparency in Public Expenditure Management
Good Public Financial Management Practices During a Period of Global Adjustment

The iBAS in Bangladesh
December 12, 2012

Ranjit Kumar Chakraborty Additional Secretary, Finance Division, Ministry of Finance Bangladesh

Subprime and weakened financial systems

Collapse of banking systems on tax payers’ safety nets Governments bailing out banks at the expense of higher taxes

Higher fiscal deficit Countries

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E-governance for Enhanced Accountability and Transparency in Public Expenditure Management

Good Public Financial Management Practices During a Period of Global Adjustment

The iBAS in Bangladesh
December 12, 2012

Ranjit Kumar Chakraborty Additional Secretary, Finance Division, Ministry of Finance Bangladesh

Subprime and weakened financial systems

Collapse of banking systems on tax payers’ safety nets Governments bailing out banks at the expense of higher taxes

Higher fiscal deficit Countries in debt

2

GLOBAL ROLE OF IFMIS IN PUBLIC FINANCIAL MANAGEMENT
• The global financial crisis (GFC) has heightened the importance of accountability in public expenditure management
• Globally, lapses in governments’ capacity to manage fiscal discipline during the GFC has pointed to the need for improved comprehensiveness and transparency with fiscal data • The role of Integrated Financial Management Systems (IFMIS) has therefore become more important for budgeting, accounting, authenticating and facilitating public funds

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IMPORTANCE OF IFMIS IN PUBLIC EXPENDITURE MANAGEMENT
• • IFMIS has been promoted as a core component of public financial reforms in many developing countries since early 1980s. IFMIS can help boost fiscal discipline by ( Anticorruption resource center o providing a robust tool to improve budget planning and execution through timely and accurate data seeking to enhance credibility of the budget through greater comprehensiveness and transparency of information

http://www.u4.no/publications/the-implementation-of-integrated-financial-management-systems-ifmis/IFMIS projects tend to):

o

o
o

minimizing exposure to corruption by increasing the risks of detection
help detect excessive payments, fraud and theft by matching asset inventories with equipment purchase, identification of ghost workers, payment authentication, automated payment reducing human interference etc.
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GLOBAL POPULARITY OF IFMIS
• Globally there were 94 IFMIS Number of completed IFMIS Projects projects with 55 completed ones Latin America spanning over 1984-2010 as of 2010. and the Caribbean • The World Bank alone, being the lead Africa development partner for IFMIS 3 2 5 globally, has invested over US $2.2 Europe and billion. 25 Central Asia 7 • Latin America and the Caribbean had South Asia 13 the largest number of IFMIS projects globally whilst the Middle East and East Asia and North Africa had the lowest in 2010. the Pacific
Financial Management Information Systems: 25 Years of World Bank Experience on What Works And What Doesn’t, 2012; http://wwwwds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2012/04/20/000 356161_20120420013749/Rendered/PDF/616400REPLACEM00505020110Box361495B.pdf
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Middle East and North Africa

The case of Bangladesh

INTEGRATED BUDGET AND ACCOUNTING SYSTEM (IBAS)

6

MILESTONES OF 17 YEARS OF PEM REFORM IN BANGLADESH
1993 – 2002: Reforms in Budgeting and Expenditure Control (RIBEC) Technical improvements
• Consolidation of financial data; • Streamlined budget administration; • Effectiveness of external audit etc.

2003 – 2008: Financial Management Reform Project (FMRP) Strategic improvements

2009 – 2014: Strengthening Public Expenditure Management Program (SPEMP) Consolidation and deepening

• Macro modelling & Debt management; • Strengthening the linkage between policy, planning and budgeting through introduction of MTBF; • Devolution of responsibility for planning • Long term strategic planning and policy development; and budgeting to the line ministries; • Institutionalization and deepening of the MTBF approach; • Increased focus on monitoring and • Improvement of the linkages between procurement, planning and budgeting; evaluation; • Integration of budgeting, accounting, and monitoring of functions at the LM on PFM • Comprehensive training program level; etc. • Consolidation of iBAS towards a modern integrated budget and accounting 7 system etc.

REFORMS ON AUDIT AND LEGISLATIVE OVERSIGHT ON PEM
Enhancement of mechanisms to tighten Ex-post accountability
Separation of Accounts and Audit function – Accounts under MOF, not the Auditor General Establishment of Financial Management Academy (FIMA)

Formal Comptroller and Auditor General (C&AG) system for supporting Public Accounts Committee (PAC) functions

PAC chaired by a Member of Parliament, not by Minister
Audit review backlog reduced by above 90%
8 8

ROLE OF IBAS IN THE PEM REFORM AGENDA
In support of PEM reforms for greater accountability, System for budgeting and accounting was developed and is being enhanced Computerization of the budgeting system in the Finance Division. Financial Management Information System (iBAS): facilitating faster transfer of information and data for greater accuracy and timeliness Computerized accounts consolidation Introduction of new classification structure
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EVOLUTION OF THE USE OF ICT IN PUBLIC SECTOR BUDGET AND ACCOUNTS IN BANGLADESH

1995: Introduction of IT in government budgeting and accounting

1996: first IT based budget was prepared using MS Excel in 1996

Late 1996: home-made standalone budgeting and accounting software developed using FoxPro.

1997: LAN established to connect Finance Division and Controller General of Accounts

1998: All regional Accounting Offices were computerized and some ministries were connected

2005: Transaction Accounting System introduced

2006: WAN established and iBAS developed

2012: Electronic Fund Transfer and Electronic Receipt Voucher verification developed. iBAS++ i.e. IFMIS being developed

Committee on Reforms in Budgeting (CORBEC)

Reforms in Budgeting and Expenditure Control (RIBEC) Project

Financial Management Reform Project (FMRP
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INTEGRATED BUDGET AND ACCOUNTING SYSTEM IN BANGLADESH
The Integrated Budget and Accounting System (iBAS): • has been developed by local engineers and customized with local requirements • is the official public sector budgeting and accounting system in Bangladesh • is a bilingual system that provides reports in Bangla and English • Connects Finance Division, 35 line ministries under the budget module and the Controller General of Accounts (CGA), 49 Chief Accounts Offices (CAO), 6 Divisional Controller of Accounts Offices (DCA) 58 District Accounting Offices (DAO), and 13 Upazila Accounting Offices (UAO) under the accounting module using the largest WAN in Bangladesh

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USE OF IBAS IN BUDGET PREPARATION AND EXECUTION
The iBAS: • conveys budget ceilings to line ministries, allows online budget estimates submission from them • allows preparation of budget under MTBF allows Budget Variance Analysis at Various Levels and with a wide range of parameters • facilitates Bill Processing Workflow Capturing through Electronic Tokens and recording of all bill and cheque payments down to district levels • has a new ‘add on’ module: Electronic Fund Transfer • has Extensions for Treasury Banks for capturing government cheque payments and receipt vouchers • contains optional facility for fund checking
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USE OF IBAS IN ACCOUNTING AND FINANCIAL REPORTING
The iBAS: • has interface with banking systems for electronic import of debit scrolls and credit scrolls • has automated bank reconciliation • allows generation of: o Finance Reports o Appropriation Reports o Management Reports

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iBAS for Electronic Receipt Voucher Verification and Electronic funds transfer for enhanced e-Governance

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ELECTRONIC RECEIPT VOUCHER VERIFICATION

• •

System for online receipt voucher verification ready for implementation in Dhaka City and is soon to begin Through this, an additional module of iBAS will help verify whether a particular receipt confirming payment to government through a bank by a citizen or vendor is valid Given a large number of government contracting and fees to government for various services, all currently based on manual receipts and no verification, this feature is likely to add significant value in preventing pilferage or public resources resulting in: o Concerned departments will be able to verify receipt vouchers in the next working day through Internet o Improved fiscal management o Improved cash management o Reduced gap in single treasury cash management o Help avoid unnecessary borrowing

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E-RECEIPT VOUCHER
• Eventually with smart cards, the e-receipt voucher verification system is envisaged to be like this: Verification by Citizen

Citizen Pays Government

Web Portal for ePayment

Smart Cards

Nationalized Commercial Bank (NCB) receiving government payment Bangladesh Bank (Central Bank)

Web Portal
Finance Division (CGA) Web Service

NCB Counter

Bangladesh Bank Counter

Verification by Government Departments
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ELECTRONIC FUNDS TRANSFER
• Electronic Fund Transfer (eFT) successfully piloted in 16 CAOs allowing electronic transfer of civil servant salaries of the pilot ministries • All CAOs will come under eFT by end of 2012, covering salary payment of all civil servants • eFT is expected to include: o pensions in 2013 o Government subvention for private school teachers’ salaries, social safety-net beneficiaries etc. at a future stage • eFT is expected to benefit about 10 million citizens at a future stage

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EFT
• Eventually with smart cards, the eFT system is envisaged to be like this: Citizens Submit Bills to Accounting Offices
CGA Bangladesh Bank
Client’s Bank

Accounting Office

Client’s Bank

Accounting Office

eFT
iBAS Client’s Bank

Accounting Office

Client’s Bank

Citizens Receive Payment in Their Bank Accounts

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EFT
eFT is expected to lead to: • Improved, timely service for beneficiaries – no stress or time required for cheque collection and deposit • Timely monthly salary preventing demotivation due to lack of basic facilities such as being paid on time • Reduced human intervention • Beneficiaries notified through SMS and can view payment details online • Staff time saved through elimination of printing, writing and distributing cheques can used for improving quality of accounts • Improved fiscal and cash management – no outstanding cheques

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THE REASONS FOR DEVELOPING IBAS++
• The iBAS has evolved from being a transaction accounting system in early 2000s but is yet to become a fully integrated system to take the shape of an IFMIS o Budget and accounting data are maintained in separate modules and not well integrated Real time exchange of data is not possible between the CAO, CGA and the DAOs Capacity issues emerge as the iBAS attempts to cater to advanced functionalities based on evolving needs
Bangladesh attempts to mitigate the above challenges through the iBAS++, Consolidation of iBAS towards a modern, integrated budget and accounting system, currently in design phase, to be implemented during 2012-14
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• •

IBAS++
Features of the iBAS++ include the following: • Centralized server/databases • Web-based with access to all • At par with international Government Financial Management Information System (GFMIS) • General Ledger with Drill-Down Capability • Treasury Accounting System for Self Accounting Entities • Appropriations, re-appropriations, revisions, supplementary grants, (at various authority levels • Full Integration between Budget and Accounts • IPSAS, cash based financial statements, including disclosures • Automated reconciliation of departmental cheques and receipt vouchers
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IBAS++
• Cash Management and Forecasting • Access by Foreign Aid project accountants from various project implementation units to enter data (DPA and RPA) • Interface input from Debt Management Financial Accounting System (DMFAS) for disbursement projections on foreign aid • Based on Chart of Accounts structured in accordance with budget classification, COFOG and GFS requirements

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Thank you

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