Version 7 section

• brief discussion

Public Financial Management Governance Valuation Methodology
2012-03-19 Doug Hadden VP Products

Version 7 section Where’s the Software? not talking software today, it’s process that drives our success in PFM and drives the product
• brief discussion

Typical Software Vendor Viewpoint
Software

Technology
Public Financial Management
Government Modernization
Government Objectives

Reality
Government Objectives

Government Modernization
Public Financial Management
Technology
Software

Version 7 section 3+qM Process FreeBalance i
Domain Research
Country Research

• brief discussion Product
Development

A. Public Financial Management

Steering Committee Customer Sustainability
Implementation

Governance Valuation
B. Budget 2.0

Solution Blueprint

C. Performance Management
5

Version 7 section success
• brief discussion

6

PEFA scores
A. PFM-OUT-TURNS: Credibility of the budget B. KEY CROSS-CUTTING ISSUES: Comprehensiveness and Transparency

C(i) Policy-Based Budgeting

C(ii) Predictability and Control in Budget Execution

C(iii) Accounting, Recording and Reporting

Latest PEFA Average ODI 2008 PEFA Study

C(iv) External Scrutiny and Audit

Latest from FreeBalance Customers Prior to Using FreeBalance

PEFA scores
1)Governments that were using FreeBalance software [in green] have above average “accounting, recording and reporting” when compared to the latest public PEFA scores, recognizing that many countries with unfavourable assessments have not made assessments public. This average is also higher than the average calculated by the Oversees Development Institute in 2008 that included unpublished assessments 2)This reporting, enabled by FreeBalance software also has helped improve external scrutiny

3)There are 3 areas that need improved controls and process to enable our customers to exceed the average
4)Policy-based budgeting seem to be below average as well, although the prior to using FreeBalance software, is close to the current average.

In Context
Public PEFA FreeBalance Customers Average PEFA Score 2.47 2.35 Average HDI Nearest HDI HDI Category Low HDI Nearest PEFA Indonesia 0.482 Cameroon 0.569 Cape Verde

*Countries do not use FreeBalance

Medium HDI Ghana

*Latest PEFA from countries, only national governments, not including countries that acquired FreeBalance after the last assessment. Shows that average (using ODI method) FreeBalance assessment greater than average even with low HDI – averages Cameroon while the rest averages as Cape Verde. The closest PEFA average to 2.47 is Indonesia, closest to 2.35 in Ghana

Version 7 section COTS Market Version 7 section
• brief discussion

Governance Version 7 section Formula?
• brief discussion

It is generally accepted that there is no formula for sequencing public financial management reform

Version 7 section Current diagnostics are not “prescriptive”
• brief discussion

Version 7 section
• brief discussion

PDM diagnostics rarely provide technology

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Evaluation Method

Evaluation Methods Version 7 section
Scope Back-Office Technology Comprehensive PFM assessment Comprehensive PFM assessment Comprehensive PFM assessment Extractive Industries transparency Aid effectiveness Budget preparation and reporting transparency Open government

Front-Office Technology

Public Expenditure and Financial Accountability (PEFA) Commonwealth Public Financial Management Self-Assessment Toolkit (CPFM-SAT) The Chartered Institute of Public Finance & Accountancy (CIPFA) Whole Systems Approach

Revenue Watch Institute Index

• brief discussion

No technology guidance although PEFA assessments attribute some achievements to the use of technology A3: Use of IFMIS B2: Use of Debt Management software No technology guidance for publishing O7: Financial management information information systems

Paris Declaration and Accra Agenda for Action International Budget Partnership Open Budget Index (OBI) Gartner Group Open Government Maturity Model Institute for Electronic Government eDemocracy Model Andersen & Henriksen E-Government Maturity

Use of country systems for PFM and procurement does not specify use of technology Internet publishing of budget documents gains higher rating for many categories Provides open government technology insight

E-Democracy
E-Government

Use of e-mail systems
Use of web technology

Layne and Lee Framework of E-Government
World Bank World Governance Indicators Global Integrity Report

E-Government
Meta collection of 3rd party indicators Governance and anticorruption

Horizontal and vertical integration within government
No technology guidance

PFM Component Map
Public Financial Management Component Map

Performance & Commitment Management

Core Government Financial Management

Expenditure and Revenue Management

Civil Service Management

Governance and Service Delivery

Government Performance Management

Public Financials Management

Public Expenditure Management

Civil Service Management

Transparency & Accountability

Budget & Commitment Management

Government Treasury Management

Government Receipts Management

Service Delivery

Version 7 section What’s changed?

Transparency, access to more • brief discussion information makes diagnostics more prescriptive

Version 7 section Country PFM Context
• brief discussion

A. Public Financial Management

Version 7 section PFM Domain
Government Performance Management

A. Public Financial Management

• brief discussion Expenditures

Data from Government Operations Revenue Budget formulation Budget execution

Treasury

Human Resources

Data from Government Operations Government Performance Management

Core Government Financial Management
Government Performance Management

Version 7 section
Data from Government Operations Revenue Budget formulation Budget execution Treasury

A. Public Financial Management

• brief discussion Expenditures

Human Resources

Data from Government Operations Government Performance Management

Version 7 section Expenditures & Procurement
Government Performance Management

A. Public Financial Management

• brief discussion Expenditures

Data from Government Operations Revenue Budget formulation Budget execution

Treasury

Human Resources

Data from Government Operations Government Performance Management

Version 7 section Revenue Management
Government Performance Management

A. Public Financial Management

• brief discussion Expenditures

Data from Government Operations Revenue Budget formulation Budget execution

Treasury

Human Resources

Data from Government Operations Government Performance Management

Version 7 section Human Resources
Government Performance Management

A. Public Financial Management

• brief discussion Expenditures

Data from Government Operations Revenue Budget formulation Budget execution

Treasury

Human Resources

Data from Government Operations Government Performance Management

Version 7 section Treasury
Government Performance Management

A. Public Financial Management

• brief discussion Expenditures

Data from Government Operations Revenue Budget formulation Budget execution

Treasury

Human Resources

Data from Government Operations Government Performance Management

Version 7 section Transparency
Government Performance Management

A. Public Financial Management

• brief discussion Expenditures

Data from Government Operations Revenue Budget formulation Budget execution

Treasury

Human Resources

Data from Government Operations Government Performance Management

Version 7 section Performance
Government Performance Management

A. Public Financial Management

• brief discussion Expenditures

Data from Government Operations Revenue Budget formulation Budget execution

Treasury

Human Resources

Data from Government Operations Government Performance Management

What do we mean by Budget 2.0?
• brief discussion
Budget 1.0 Back-office centric functions and technology Transitional Back-office centric functions deployed on the web – “egovernment” Budget 2.0 Network-centric functions for citizen interaction – “government 2.0”

Version 7 section

B. Budget 2.0

26

What do we mean by Budget 2.0?
Government Performance Management

Version 7 section
Data from Government Operations Revenue Budget formulation Budget execution Treasury

B. Budget 2.0

• brief discussion Expenditures

Human Resources

Data from Government Operations Government Performance Management

27

Budget 1.0 Transition

Budget execution Version 7 section
2 1.8 1.6

B. Budget 2.0

Budget 2.0 Transparency mechansism

1.4

Budget comprehensiveness

1.2

“Budget 2.0”
Oversight

• brief discussion

1

0.8

0.6

0.4

0.2

0

Timeliness

Policy management

International standards

Budget formulation

Transparency Mechanisms
Budget 1.0 Published Documents Narrative Centric Transitional Web Publishing Visualization Centric Citizen Centric Interactive Data Open Data Budget 2.0

B. Budget 2.0

Oversight
Budget 1.0 Transitional Parliamentary Oversight Audit Audio Visual Performance Audit Press & NGO Access to Information Cooperative Planning Expert Networks Citizen Oversight Budget 2.0

Policy Management
Budget 1.0 Macro-Fiscal Frameworks Transitional Performance Management Policy Outreach Budget 2.0

B. Budget 2.0

Policy-Budget Linkages

Participatory Policy

Budget Formulation
Budget 1.0 Budget as Ceremony Transitional Budget Books Budget 2.0 Participatory Budgeting

Budget & Commitment Controls

Performance Management

Program Budgeting

Accrual Budgeting

Standards
Budget 1.0 National Standards IMF GFS Transitional IPSAS Cash Budget 2.0 IPSAS Accrual

B. Budget 2.0

XML-based IATI, EITI, XBRL
MTEF

Timeliness
Budget 1.0 Annual Reports In-Year Execution Audit Reports Pre-Budget Statement Interactive Data Transitional Unaudited Reports Open Data Budget 2.0

Budget Comprehensiveness
Budget 1.0 National Government Transitional Sub-National Parastatal Accrual Extensions Budget 2.0

B. Budget 2.0

Information Completeness

Budget Execution & Accounting Methods
Budget 1.0 Cash Modified Cash Transitional Modified Accrual Full Accrual Budget 2.0

Budget & Commitment Controls Cash & Liquidity Management

Performance Discipline

Budget Forecasting

Version 7 section Government Performance Management
Government Performance Management

C. Performance Management

• brief discussion Expenditures

Data from Government Operations Revenue Budget formulation Budget execution

Treasury

Human Resources

Data from Government Operations Government Performance Management

33

C. Performance Management

Version 7 section Politics
• brief discussion

C. Performance Management

Version 7 section Policy
• brief discussion

C. Performance Management

Version 7 section Platform
• brief discussion

C. Performance Management

planning: Version 7 section budget – controls - monitoring
• brief discussion

C. Performance Management

Version 7 section
• brief discussion

C. Performance Management

public service performance

public: transparency drives Version 7 section accountability
• brief discussion

C. Performance Management

private sector: value for money and Version 7 section development
• brief discussion

C. Performance Management

PEFA/PFM Alignment

Sample Factors Version 7 section Version 7 section Resource dependency – revenue management & revenue
transparency

• Government employment as %, size – civil service • brief discussion management • Debt and deficits – expenditure management and procurement • Population, regional disparities, ethnic issues – decentralization • Democracy, freedom, stability, income disparity – budget and performance transparency

Version 7 section Calculates?
• brief discussion
Country Conditions PFM Priorities Technology Priorities

Version 7 section Anchor
• brief discussion Country
Conditions PFM Priorities Technology Priorities

Benchmark

Priority Gaps

Sequencing

Version 7 section Sequenced

Country briefConditions discussion PFM Priorities Technology Priorities

Benchmark

Priority Gaps

Sequencing

capacity

Governance Valuation

4 visualization examples from different countries follow

Visualized Governance Opportunity

Leapfrog and good practice opportunities at a glance

High Level Blueprint

Platform approach to sequencing customized to government needs

Government Objectives Alignment
1. Build Capacity 1.Public safety Improves stability 2. Youth programs National Plan 3. Social Inclusion 4. Employment Improvements 5. Service Delivery 6. Anti-corruption 1. Civil Service Reform Key deliverable Key deliverable Key deliverable Key deliverable Improves accountability, reduces corruption 2. Improve Budget Execution 3. Improve Transparency 4. Improve Performance Improved performance = improves effectiveness of government programs Key deliverable Key deliverable Key deliverable

Improved civil service capacity = improves ability to achieve objectives

Executing on budget plan = spending on objective

Demonstrates improvement

State Reform

2. Financial Management Controls
3. Devolution 4. Fiscal Transparency

Aligned with government objectives

Performance Schedule
Private sector Revenue Integration Budget Transparency Audit Purchasing & Procurement e-Procurement Public Change Management program Social Media integration Open Data Particpatory Budgeting

Planning

Financial Dashboards
Human Resources

Program Budgeting

Sector Dashboards

Balanced Scorecard

People

Performance Talent & Succession Capacity Building & Appraisal Consolidation Training Employee Self-Service

E-Recruitment

Foundation

Infrastructure upgrade

Improved Controls

Process reengineering

Change management Progressive Activation

For more advanced countries, sequenced use of “performance” technology

Version 7 section 3+qM Process FreeBalance i
Domain Research
Country Research

• brief discussion Product
Development

Steering Committee Customer Sustainability
Implementation

Key additional advantage of process: Customer implementation experience goes into product & there is an emphasis on sustainability
Solution Blueprint

A. Public Financial Management

B. Budget 2.0

C. Performance Management
52

Is “time Version 7 section on my side”?
• brief discussion
Process requires 2-4 weeks depending

53

The process is an7 section anchor, Version excellent but not foolproof
• brief discussion

54

FreeBalance is a global provider of government resource planning software (GRP) for public financial management (PFM) • brief discussion – Canadian software company ISO-9001/2008 certified – Strong domain expertise in government financial management, 100% focus on government – Integrated technology for budget formulation and public expenditure management: entire budget cycle – De facto standard for fast implementations – Global presence, 18 countries, in every World Bank region

Version 7 section Who is FreeBalance?

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