STRENGTHENING GOVERNMENT FINANCE & ACCOUNTING FUNCTIONS-KENYA

1. STRENGTHENING GOVERNMENT FINANCE & ACCOUNTING FUNCTIONS-KENYA

2. Financial Problems • Poor Control – Overspending • Unrealistic Budgets – Revenue & Expenditure • Focus on inputs rather than outputs • Growing Pending Bills Problem • Spending Not Aligned to Priorities…. Poverty, etc. • Fraud, Corruption Lack of Transparency & Good Governance • Poor Management of transactions/documents • Lack of effective auditability • Procurement – Poor Value for Money • And many more leading to poor delivery of Public Services

3. System Problems • Fragmented PC Systems and Mainframe System • Duplication of Data Capture • Information Locked Away in Systems • Lack of Real Flexible Reporting – Lack of Analysis • Limited Support to Operations • Use of Runners to Collect Data Diskettes • No One Overall System…. • Need for Truly INTEGRATED SYSTEM • And many more………

4. REVISED REGULATIONS UPDATED LEGISLATION Project Structure Effective Financial Management Tighter Controls & Strong Audit Trails Improved Resource Allocations Overspending Curtailed Improved Revenue/AIA Management Platform for MTEF Transparency on Procurement Fraud Detection & Deterrence Timely reliable information EIS for Senior Managers TRANSPARENCY COMPLIANCE ACCOUNTABILITY GOVERNANCE IFMIS Oracle Financials Best Practice Business Project - NOT IT Project New Processes New procedures IPSAS Effective Controls Modern Efficient Staff Development Training Professionalism of Cadre Organisational Alignment New Schemes of Service Driving New Changing Roles New Skills sets IFMIS Enabling New Procedures And Processes

5. IFMIS Project - Status • Software: • Contract for Oracle Financials Mobilised Jan’03 • Oracle Financials – Leading ERP Package • Horizontal Implementation – 5 Core Modules Initially… • To All Ministries and Districts • Purchasing, Accounts Payable, General Ledger, • Cash Management and Public Sector Budgeting • Consolidation Platform for Future Modules

6. IFMIS Project - Status • Data Centre Established: • 1 Training Development Server • 2 (Clustered) Production Servers • PCs to Ministries/Districts - Ongoing • Also Ultra Thin Client Dumb Terminals • Future Plans for Disaster Recovery Site • Networking & Connectivity – Ongoing • IFMIS Operations & Training Room Set Up • GOK Implementation Team (25) Fully Trained up

7. IFMIS Project - Status • Configuration & Piloting Completed • Roll Out to Ministries Ongoing to May ‘05 • Roll Out to Districts to be completed July ‘05 • Planning to Roll Out to 300 Users • Next Phases: 500-1,000 Users & Other Modules

8. IFMIS Modules Linkages/Interfaces With Other Systems Public Debt IPPD Other Systems KRA, CBK, etc. Procure Goods & Services Public Sector Planning & Budgeting MTEF Financial Modelling Budgetary Control Output based Prioritised Objectives Dissemination to Districts Purchasing & AP Control at Commitment & pre Commitment RFQs, orders, invoices, Payments, etc. Transactions part of System process General Ledger Cash Management Financial Management Expenditure Control Cash Flow M’gement Compliance, Transparency Online access to Information Audit controls Implement Activities/Progs Activities, Programmes, Outputs, Impact Revised Priorities Revised Activities Revised Resource Allocations Budget Monitoring Reporting & Feedback Financial, physical and process, etc.

9. LPO & LSO Purchase Orders Evaluation Details & Evaluation Report Award of Contract Attached Against Order Quotations & Tenders Invitation To Tender Request for Quotes Receive Goods Services Suppliers’ Invoices Cheque Payment Cheque Cleared Bank Rec Bank Statement FULL AUDIT TRAIL THROUGHOUT WHOLE PROCESS All details entered in system. Approvals at each stage, including MTC. Procurement method validated Against thresholds & regulations Evaluation Reports, Contracts and other important documents available online

10. Planning Districts RCS Ministries Audit (& Anti-Corruption) BSD Debt Management Central System FMAD AGD ERD Revenue Management Other Policy Makers Procurement Dept Donors System VisionOne Financial SystemFor All Stakeholder Needs

11. Oracle Financials - Modules • Phased (Horizontal) Implementation • Future - Widening Vertical Implementation • Other Modules? • E-Procurement • Asset Management, Estate Management, Fleet Management • Plant & Equipment Management • Human Resource Management • Treasury Management • Inventory • Accounts Receivable & Revenue Management • E-Government IFMIS PLATFORM UPON WHICH GOK CAN CONSOLIDATE ALL ITS APPLICATIONS

12. Cash Management Purchasing E-Procurement Public Sector Budgeting Accounts Payable General Ledger Core Accounting & Reporting Inventory Asset Management Accounts Receivable Fleet Management Treasury Management Reporting Tools HRMS & Payroll Reporting and Analysis Thro’ Reporting tools

13. Challenges & Issues • Changing Attitudes – Getting Buy In • Numbers of People to Be Trained • Infrastructure • Resistance to Change • Disaster Recovery • Funding • Capacity for Implementation & Support • Retention/Reward of Trained Staff • Engagement of ALL Stakeholders

14. Challenges & Issues • Other Reform Initiatives • Lengthy (Government) Procurement • Getting Top (Political) Level Support Other Issues • “Not Just an Accounting System……” • Full/Total Resource Management • Role For Wider Stakeholder Group Needs to be Understood

15. Other Issues • Strategic Visioning • IFMIS Needs to be Priority • Looking Forward to Future Not Past (Firefighting)….. • IFMIS - Hard Work, Huge Management Effort • But all Work Throughout Budget Cycle Easier in IFMIS • IFMIS - Enabler for Effective Working – Easier in Long Run • Steering Committee Vital Role to Ensure IFMIS Meets All Stakeholder Needs

16. Other Issues • Commitment, Ownership & Participation • Continuity of Right People in the Teams • Institutional Linkages/Arrangements • Strong Communications to All Levels

17. Benefits • To All: • Users of System • Service Delivery Officers • All Stakeholders & Managers • All Civil Servants • Kenyan Citizens

18. Benefits • Strong Audit Trails (for all Financial Transactions) • Visibility of all Transactions…leading to TRANSPARENCY • Secure, Robust and Reliable Systems • Best Practice • Full Expenditure Control at Commitment Level • Improved Revenue Analyses…Targets, Trends, Improved Revenue Management • Management, Analysis and Control of Pending Bills • Treasury Management, Issuing and Redemption of T’ Bills

19. Benefits • Support to Procurement Reforms and Effective Procurement • Support to MTEF – Costing Activities • Fully Integrated System – More Efficient and Effective • High levels of automation - Bank Recs, Expenditure Returns • Linkages and Information Sharing with Other Systems • Flexible Information, Analysis & Reporting – Financial and Process • TRANSPARENCY, ACCOUNTABILITY, COMPLIANCE GOOD GOVERNANCE

20. Benefits • Value For Money, Effective Procurement • ….More Resources Available • More effective utilisation of funds • Spending Aligned to Priorities & Policies • Eliminate Un-authorised/Over spending • Reduction of Pending Bills • Effective Flow of Funds.. Districts • Improved Delivery of Public Services • Reduced Poverty • Lives Saved