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Financial Management System in Albania. Anila Çili Central Harmonization Department on Financial Management Albanian Ministry of Finance

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financial management system in albania
Financial Management System in Albania

Anila Çili

Central Harmonization Department on Financial Management

Albanian Ministry of Finance

overall aim of the ministry of finance
Overall aim of the Ministry of Finance

The Ministry of Finance is leading the public finance reforms and recognize that it is important for Albania to move closer to the best practices applied by other member states and closer to international standards, which will in turn help to improve both accountability and to enhance transparency of where the taxpayer’s money is being spent on.

key achievements to date
Key achievements to date

Over the last few years the Ministry of Finance together with the support from external donors have managed to achieve the following key outputs:

  • New Law on the Management of Budgetary System in Albania;
  • Internal Audit Law and Training Internal Auditors with the technical skills and further development of setting up a structured training program for Internal Auditors;
  • New legislation on State and Local Government Loans;
  • Introduced a centralized computerized system for budget planning and execution- AMoFTS.
  • In light of moving to the new PIFC environment two Central Harmonization Departments were created recently.
the objective of implementing amofts in albania
The objective of implementing AMoFTS in Albania
  • Full integration of budget and budget execution data, thereby allowing greater financial control.
  • Improved planning for cash as well as close and timely monitoring of the government’s cash position.
  • Provision of adequate management reporting at various levels of budget execution.
  • Improvement of data quality for the preparation and execution of the budget.
  • Increase the effectiveness and efficiency of state financial management and facilitate the adoption of modern public expenditure management practices in keeping with international standards.
  • Ability to decentralize functions and processes yet maintain overall control by Ministry of Finance
centralized model
Centralized model

Ministry of Foreign


Ministry of Foreign


Ministry of Foreign


Line Ministries &

Local Government


All General Government Units

Min of Finance

Cash forecast/budget allocations

Treasury Department

Treasury system

request forpayment

Money transfer


payment orders




Central Bank


System Functionality

 Functionality                               Common Implementation Options1-  Macroeconomic forecasting         LDS    2-  Budget Preparation               LDS / COTS

+Performance Program Budgeting LDS/ COTS   3-  Budget Execution and Monitoring (Core Treasury System)   COTS                             + New budget classification

      + Purchasing / Commitment     Interface with procurement agency

        + Accounts Payable           Interface with banking system (TSA)

+ Accounts Receivable Interface with revenue collection

   4- Cash Flow Management Interface with banking system (TSA)

   5- Accounting (General Ledger)  

+ Unified Chart of Accounts

+ Modified Accrual Accounting (AMoFTS allows implementation of IPSAS)

+ Org. Structure / Workflow Mgmt.

+ Financial reports (compliance with GFS 2001)

6- Fixed Assets / Inventory Management  COTS/LDS

  7- Operational support for SUs Interface for spending units (LDS) 8-  Internal debt management     LDS   6-  External debt and aid mgmt.     Interface with DMFAS   7-  Personnel database (HR mgmt) LDS / COTS

8- Payroll calculations   LDS  9- Support for Auditing                       Locally developed reports 10- Management Information System COTS

LDS : Locally Developed Software

COTS: Commercial Off-The-Shelf Software

amofts is not yet fully functional
AMoFTS is not yet fully functional
  • No dedicated full time project team (functional + IT experts);
  • No awareness/ seminars/ trainings of the Political level/ MoF Top management/ Coordinators/Key users before the project starts.
  • Legal and institutional framework –not prepared on time. LOB approved on 2008; still under review FMC framework;
  • National Elections at the beginning of Implementation process (Solution Design approval);
  • Change from decentralized to centralized payment model (FMC) during the implementation of AMoFTS (Still under testing the interface with Bank of Albania);
amofts is not yet fully functional10
AMoFTS is not yet fully functional
  • Communication between MoF staff and Implementing Company during the parameterisation phase (Implementing Process) - direct impact in recurrent costs;
  • High turnover of IT and Treasury Staff during the implementation of AMoFTS;
  • Accountability issues: Treasury Director fully accountable for implementation of AMoFTS but IT department and administration of TDOs (recruitment, budget management, etc) under Service Department;
  • Still under discussion the system maintenance: Out sourcing or in MoF.
the implementation approach should be compatible with the government environment
The implementation approach should be compatible with the Government environment

The implementation should:

  • Comply with the priorities of the Government and the

management of MoF: Government commitment and management support at the highest levels is necessary to ensure that the change process is completed smoothly

  • Be undertaken when MoF will have skilled and motivated project functional and IT team for sustainability of implemented systems and ensure that users effectively cope with new technologies, methods and processes: Start building institutional capacity and technical skills during preparation phase
  • Be aligned to available resources
the ministry of finance is taking the lead in the following areas
The Ministry of Finance is taking the lead in the following areas
  • Financial Management and Control (FMC)across the public sector. This will put more clarity on the roles and responsibilities, ownership, accounting and monitoring of public funds. A new law and manual on FMC is under development;
  • A new Inspection lawis under development.
  • Decentralized Implementation Systems (DIS).In preparation for Albania to apply for candidateship status, it is necessary to have proper structures in place to account for projects that are funded by the European Commission and National Budgets too;
  • Move to International Public Accounting Standards as approved by the Albanian Parliament. As the first measure the standards have been translated into Albanian Language and the trainers are trained with the aid of international consultants. The Ministry of Finance in collaboration with international consultants have prepared a draft strategy document which shows how the standards will be implemented.
future developments
Future developments

Better and more transparent accounts –

  • The first step is to introduce the Cash based IPSAS. This will be done in three phases over a period of 6 years:
    • The first phase will be to prepare a consolidated Cash Receipts/Payments Statement for the general government as required by Part 1 of the Cash IPSAS.
    • The second phase will be to prepare a full set of consolidated financial statements (including the balance sheet) for a selected group of government institutions. The major components within this phase will be completeness of assets and liabilities and reevaluation of assets to bring them to market value (part 2 of Cash IPSAS).
    • The third phase will be to produce a full set of consolidated financial statements for the whole of government.
    • During all phases a number of training courses/seminars will be delivered by the MoF to relevant financial officers of government institutions.
  • The implementation of cash based IPSAS is an enormous task and technical support will be required during this process, in particular on training of financial officers, the preparation of the financial statements, revaluation of assets and monitoring the whole process.
future developments con t
Future developments (con’t)

Expansion of the Treasury computerized system

  • A study is shortly going to be carried out SIGMA on the current responsibilities under the Treasury computerized system. This study will consider
    • the cost-benefits of various approaches to expansion, as well the  maintenance and capacity building cost of the preferred option  to the Albanian state and local government budget for a 10-15 year period, amongst others:
  • After SIGMA has carried out the feasibility study a project will start on the expansion of the treasury system in some selected government institutions. Further technical support will be required to extend the same system to more government institutions.
What gets measured, gets done…!

Thank you for your attention!