Local Governments-Regional Workshops

1. Ministry of Finance, Planning and Economic Development (MOFPED) Public Sector Financial Management (PFM) Reforms in Local Governments BudgetConsultative Workshops for FY 2019/20 Local Governments-Regional Workshops Accountant General’s Office

2. Structure of the Presentation • Introduction • PFM Reforms in Uganda – Background • TSA Deeping and IFMS rollout • Warranting and releases of Local Revenue, donor and other CG transfers • Emerging Issues – Areas of Improvement for LGs • Comments and Discussion and way forward MoFPED - Accountant General's Office

3. Introduction • Government of Uganda (GoU) recognizes that undertaking prudent Public Sector Financial Management (PFM) reforms is a critical success factor in improving service delivery, stimulating economic transformation and eradicating household poverty. • Since the early 1990s, GoU has implemented wide ranging PFM reforms aimed at; • Maintaining a robust and stable macroeconomic environment. • Enabling efficient resource mobilization and management. • Improving aggregate fiscal discipline. • Strengthening resource allocative and operational efficiency. • Facilitating transparent and accountable use of public resources. • Improving internal and external oversight functions. MoFPED - Accountant General's Office

4. Key PFM Reforms Undertaken Automation of PFM Processes • IFMS rollout to MDAs and Local Governments to improve transparency, accountability and reporting. • 102 Local Governments , FY19/20 more 25 LGS will be added and balance FY20/21 of 69 Hybrid votes will be added on FY20/21 • Implementation of Single Treasury Holding Account • Integrated Personnel & Payroll System (IPPS) rolled out to all Local governments to improve timeliness, quality and accuracy of the Government payrolls. • Integration of PFM Systems – IFMS/IPPS/e-Reg/PBS/DMFAS. MoFPED - Accountant General's Office

5. Key PFM Reforms Undertaken Further IFMS roll out and TSA Deeping All IFMS Votes process all transactions through the system & the Single Treasury Holding Account (TSA): Business process has been automated to allow seamless flow of information; • All budgets will be prepared on PBS and submitted for to parliament for approval • Budgets through the PBS-IFMS interface will be uploaded into IFMS to start budget execution • Grant of credit issued by the Auditor General on IFMS MoFPED - Accountant General's Office

6. Further IFMS Roll out & TSA Deeping • Ministers Warrant Issued on IFMS • Cash limits for both Central Government grants , Local revenue and Donor Funds issued through IFMS • Accounting Officers initiate warrants and submit them to Budget Directorate for approval • Local Governments transfer funds to Lower Local Governments, Schools and Health Centre's • Votes begin expenditure commitments • All financial reports generated from IFMS MoFPED - Accountant General's Office

7. Further IFMS Roll out & TSA Deeping Warranting of Local Revenue, Donor and Other CG Transfers • Revenue Accounts for each respective Vote have been opened at Bank of Uganda (BoU) • Votes/LGs will send funds by RTGS to the above accounts in Bank of Uganda (BoU) • BoU will sweep funds in the Revenue accounts to the LG TSA on a weekly basis. • Accountant General will issue Cash limits on the basis of funds receipted into the LG TSA • The Accounting Officer should ensure that funds are properly warranted inline with source of funding and approved budget MoFPED - Accountant General's Office

8. Key PFM Reforms – Planned/Ongoing Ongoing PFM Reforms • Implementation of the E-procurement system in 10 pilot entities to improve efficiency, transparency, compliance and value for money • Full rollout of the IFMS Fixed Assets management module • Integration of PFM Systems to consolidate investments in ICT infrastructure and minimize operational costs • Transition to modified accrual accounting to improve transparency, accounting and reporting • Harmonisation of payment processing with CG Votes • E-cash implementation to minimize huge cash advances MoFPED - Accountant General's Office

9. Emerging Issues and Areas of Improvement for Local Governments Inconsistences in the PFM and Local Government Legal and Regulatory framework • Inconsistences in the PFMA 2015 and Local Government Act 1997 as amended. Interventions/Expectation • Active participation of LGs in the technical workgroup setup to review and harmonize the PFMA 2015 and the LG act 1997. MoFPED - Accountant General's Office

10. Emerging Issues and Areas of Improvement for LGs Continued Issues in Budgeting and Release of Funds • Improper categorization of expendituresresulting into many requests for budget adjustment • Incomplete Budgets resulting many supplementary requests • Delays in remitting local revenues and processing warrants • Inaccurate master information - bank account information Interventions/Expectation • Clear identification and categorization of expenditures • Timely transfer of local revenues to Bank of Uganda • Timely processing of warrants • Timely update of supplier master data MoFPED - Accountant General's Office

11. Emerging Issues and Areas of Improvement for LGs Cont’d Asset Management • Poor asset management • Delays in submitting Boards of Survey • Non implementation of Board of Survey recommendations Interventions/Expectation • Rollout of IFMS Fixed Assets Management module • Build capacity in quality assurance and compliance monitoring • Development of Asset Management policy • Budget appropriately for asset maintenance MoFPED - Accountant General's Office

12. Emerging Issues and Areas of Improvement for LGs Continued Sub-optimal use of PFM Systems • Inability to use PFM systems beyond payment processing (planning) • Inadequate capacity within LGs to effectively use PFM systems • Inadequate maintenance of PFM systems infrastructure • System security risks – Lack of awareness/sharing passwords • Failure to report system related issues in a timely manner Interventions/Expectation • Enhanced training materials (visual audio manuals) • On site support by Systems Accountants • Continuous system training for staff – main/alternate users • Understand system security policies and procedures in place • Contact Treasury Support Center incase you need assistance MoFPED - Accountant General's Office

13. Emerging Issues and Areas of Improvement for LGs Continued Non-compliance to Policies and Procedures • Local TSA sub accounts are not reconciled on time • Local revenue funds are not remitted to Bank of Uganda on time • Failure to meet statutory reporting timelines • Mischarge of expenditures/warranting in the wrong periods • Delays in processing salary and pension payments Interventions/Expectation • Timely and regular bank account reconciliations (TSSAs) • Timely transfer to Local Revenue to Bank of Uganda to enable processing of cash limits and warrants • Timely processing of salaries and pension payments MoFPED - Accountant General's Office

14. Concluding Remarks • PFM reforms are not an end in themselves. It’s the effective use of these reforms to improve accountability, transparency and service delivery that is most critical. • Accounting officers, Heads of Finance and Planners are at the center of PFM reforms in LGs and the success of these reforms is dependent on their commitment and support. • You are also expected to support effective implementation and monitoring of the reforms at your respective entities. MoFPED - Accountant General's Office

15. Thank you for listening Feedback/Discussion Comments/Questions MoFPED - Accountant General's Office