Objective of this briefing is two fold: Provide awareness/understanding of the FMR, its major components and the key changes associated with it; and To get yourselves prepared to take on the implementation of FMR/FMIS
Outline of Presentation
Financial Management and its key elements Problems with current Financial Management FMR Focus & Components Why FMIS for Whole of Government? Benefits of FMIS Key Issues in FMIS
What Is Financial Management?
Definition: Financial Management is management of finances of an organisation in order to achieve its objectives.
Problems in the Current Financial Management for Government
Poor planning Lack of performance focus Input based Poor distribution of limited resources Unclear linkages of outputs to national policy objectives
Cont’…d
Inadequate financial controls Poor budgetary controls & financial management practices Untimely and inaccurate reports Poor recording of commitment Reports lack useful data Centralized control vs. CEO accountability
Financial Management Reform (FMR) Focus
FMR seeks to put in place a better performing budget and financial management system that addresses the problems identified through: adopting a performance focus strengthening accountability
What Does FMR Bring About?
Financial Management Act 2004 Finance Manual Consequential amendments to: Audit Act Public Service Act statutory authority Acts Finance Instructions 2004 Finance Manual Finance Manual Finance Regulations 2004 (apply to budget sector agencies) (apply to other state entities) New Legislation
Cont’…d
A move from cash accounting and gradual transition (shift) to accrual accounting
Cont’…d
A move from traditional line item budgeting to performance/output budgeting Activities/ Processes Budget Entity
Link between FMR and FMIS
A new Financial Management Information System will support the changes in the FMR
What is FMIS?
The Financial Management Information System (FMIS) is an integrated database system and will be used to support the government’s purchasing, accounting, payment, sales and receipting functions.
Why an FMIS for the WOG?
FMIS provides public sector decision makers and managers a set of tools to: Ensure accountability e.g. The CEO will be held accountable for any over spending in his/her ministry.
Cont’…d
Supports decentralization of accounting processes e.g. LPOs would be issued from Cost Centres all over the country but the head office would still have controls over expenditure.
Cont’…d
Improve effectiveness and efficiency e.g. FMIS will enable faster processing of payments as well as receipts.
Why move?
Major problems in the manual system are: Slow processing of payments Slow processing of transaction Inaccurate & untimely financial information and reports i.e. information is not recorded on real time
Benefits of FMIS
Processes large number of transactions in limited periods of time across a country wide network of offices
Cont’…d
Easy retrieval of financial information for decision making e.g. financial information can be viewed where transactions are generated
Cont’…d
Availability of basic data required for economic management in a timely manner
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