Integrated Financial Management Information Systems (IFMIS)

According to both Dorotinsky (2003) and Rozner (2008), an IFMIS is an

information system that tracks financial events and summarises financial
information. It supports adequate management reporting, policy decisions,
fiduciary responsibilities and the preparation of auditable financial
statements. In its basic form, an IFMIS is little more than an accounting
system configured to operate according to the needs and specifications of
the environment in which it is installed (Rodin-Brown 2008:2). In general
terms, it refers to the automating of financial operations.

Integrated Payroll and Personnel Information System (IPPIS)

IPPIS is a web-based Human Resources Management System (HRMS) that

has Personnel records and Payroll administration modules. The HRMS runs on
an internet that connects the data centres of the MDAs including Uganda
Police Formations to the main server at the Office of the Accountant General,
who are the custodian of the system. The system covers the administration
of FGNs human resource i.e. recruitment, promotion, discipline, transfers,
career movements, training and development, performance management,
disengagement and all the financial transactions related to personnel
emoluments. It aims to promote the effectiveness and efficiency in storage
of personnel records and administration of monthly payroll in such a way to
enhance confidence in staff emolument costs and budgeting.

Objectives of the IFMS

The IFMS was set up for four main objectives.

To improve fiscal management in order to achieve more timely, and accurate

information for both local and central government.

To ensure transparency and accountability in the handling and use of public

resources.

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To strengthen the Government financial management processes and provide
better expenditure controls.

To enhance operational effectiveness by improving quality of data and

making it available for use and sharing.

To standardize and automate Government financial management processes

to reduce redundant and unnecessary tasks and activities

To maximize the cost effectiveness of the expenditure of public funds.

To improve revenue management.

Objectives of the IPPS

The process aims to:

Centralize payment and payroll system.

Ascertain actual personnel emoluments and workforce of Federal

Government.

Facilitate planning.

Aid Budgeting.

Monitor the monthly payment of staff emoluments.

Ensure Database integrity so that personnel information are correct and

intact.

Eliminate payroll fraud.

Facilitate easy storage, updating and retrieval of personnel records for

administrative and pension processes.

Provide a good working environment that is innovative and technologically

driven

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Benefits of IFMS

Management tool

According to Hove and Wynne (2010:8), an IFMIS assists management in

ensuring accountability for the deployment and use of public resources and
in improving the effectiveness and efficiency of public expenditure
programmes. By tracking financial events through an automated financial
system, management is able to exercise improved control over expenditure
and to improve transparency and accountability in the budget cycle as a
whole.

Provision of nonfinancial and financial information

An IFMIS provides decision-makers and public-sector managers with the

information they need to perform their managerial functions. Rodin-Brown
(2008:3) states that an IFMIS provides timely, accurate and consistent data
for management and budget decision-making. By computerising the budget
management and accounting system for a government, an IFMIS aims at
improving the quality and availability of information necessary at various
stages of public financial management, such as budgeting, treasury
management, accounting and auditing.

A system

The scope and functionality of an IFMIS can vary from a basic general ledger
accounting application to a comprehensive system covering budgeting,
accounts receivable or payable, cash management, commitment control,
debt, assets and liability management, procurement and purchasing,
revenue management, human resource management and payroll (Rozner
2008). Its role is to connect, accumulate, process and then provide
information to all parties in the budget system on a continuous basis

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(Diamond & Khemani 2006). It is therefore imperative that the system should
be able to provide the required information timely and accurately, because if
it does not it will not be used and cease to fulfil its central function as a
system.

Impact on corruption

One of the major benefits of an IFMIS is the impact that it can have on
corruption, by increasing the risk of detection. According to Chne (2009), a
well-designed IFMIS can provide a number of features that may help detect
excessive payments, fraud and theft. These include, for example, automated
identification of exceptions to normal operations, patterns of suspicious
activities, automated cross-referencing of personal identification numbers for
fraud, cross-referencing of asset inventories with equipment purchase to
detect theft, automated cash disbursement rules and identification of ghost
workers.

Challenges of IFMS

Proliferation of parallel system

Various ministries and agencies were already implementing, or were

planning to implement, a system to support their financial management
operations. This slowed the process of transition to the IFMS. The Ministry of
Finance, evoking its mandate over financial management systems under the
law, wrote to all MALGs informing them about the planned introduction of the
IFMS and barring them to invest further in similar systems.

Manual processes

Manual processes pose the biggest threat to efficiency and effectiveness of

automation under the IFMS. For example, commitments made off the system
and only regularized after the fact, or revenue receipts and budgetary

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expenditures that may not be captured on the system, will limit its
effectiveness for fiscal control and reporting. The system will only be good to
the extent to which off system processes and controls are aligned with it. To
the extent possible, the IFMS should be enabled to capture all financial
transactions to minimize off system transactions. At the same time, the
Ministry, supported by internal and external audits, needs to continually
exercise vigilance to check on transactions that may be carried out outside
the system and to ensure appropriate sanctioning of irregular behaviour.

Evolving with Public Finance Management reforms and analytical processes

Some new PFM reforms pose a challenge to the IFMS. Uganda has recently
adopted output oriented budgeting, requiring Government to track physical
performance in addition to expenditures. However, the IFMSs capability is
limited to financial transactions and it has been unable to adjust to this new
requirement. Therefore, it was necessary to develop a supplemental system
(the Output Budgeting Tool) to track and report on the physical performance.

A similar challenge relates to the budget planning process which is inherently

highly analytical. Previous efforts to automate its processes (using the Oracle
financial analyser) have not been successful. It was decided that there was
little benefit in covering highly iterative and analytical processes. Therefore,
these processes remain off the IFMS.

Changes in technology

Changes in technology pose a major challenge to sustaining the IFMS.

Hardware needs to be periodically replaced, particularly as software (both
system and application software) advances. This is most apparent for the
data centre. A second element of this challenge relates to institutions whose
interfaces are implemented and have a separate procurement decision
process. Specifically, URA has continually changed its technologies even

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with open technologies (discussed in Section 1). This has constrained the
smooth implementation of the interfaces

Reliability of the WAN

Given the centralised nature of the IFMS, the reliability of the connection
between the MALGs and the data centre over the WAN is critical. The
Government opted to outsource the infrastructure for the WAN, asking local
telecommunication suppliers to provide the connection. Two suppliers, one
backing up the other, were contracted. However, the WAN continues to be
unstable with significant outages affecting the reliability of the IFMS.

Maintaining the IFMIS

Despite the meticulous planning, maintaining the IFMS has posed challenges.
These include: high staff turnover, requiring continuous skills development;
recurrent costs covering (among other things) licenses, technical support and
the maintaining of equipment. Maintenance budgets have to be made
available within MALGs and the Ministry of Finance. Importantly, the Ministry
of Finance has to continue to provide leadership to ensure maintenance is
done when it is due and to ensure the system continues to function at a
satisfactory level, including in the wake of new reforms.

Conclusions

The IFMS offers tremendous benefits to the Governments in the budget

cycle. Traditional IFMS application solutions tend to be better at supporting
budget execution, accounting and reporting processes than the planning
phase of the budget cycle. This is because of the present limitation to handle
the demands for analysis. Implementing the IFMS is a complex undertaking.
The IFMS has to be tailored to the specific needs of each country: one
implementation will not fit every country. Accordingly, the design and the
choice of technologies must be selected carefully to fit the needs of each
government. There are other factors which are also important and to which

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attention must paid to ensure successful implementation of the IFMS. This
includes high levels of commitment from key government officials,
appropriate project management arrangements, as well as the development
of the right skills and attitude to the IFMS among government institutions
and staff. Due to its complex nature, challenges will emerge throughout the
implementation process. These challenges will often vary from one
implementation to another. Readiness to address these emerging challenges
is essential to ensuring success in implementing an IFMS.

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References:

Brar, P., 2010, IFMIS in Africa: Some key issues, viewed 11 April 2011,
fromhttp://www.eastafritac.org/images/uploads/documents_storage/IFMIS_Wo
rkshop_Day_1_Presentations.pdf

Chne, M., 2009, The Implementation of Integrated Financial Information

Management Systems (IFMS), viewed 06 April 2011,
from http://www.u4.no/helpdesk/helpdesk/query.cfm?id=196

Cooper, D.R. & Schindler, P.S., 2006, Business Research Methods, 9th edn.,
McGraw Hill, Boston.

Diamond, J. & Khemani, P., 2006, Introducing financial management

information systems in developing countries, OECD Journal on
Budgeting 5(3), 97132. http://dx.doi.org/10.1787/budget