description of the FreeBalance process for aligning government needs and objectives with public financial management reform and government resource planning technology (or integrated financial management information systems)

1. Version 7 section
• brief discussion
Public Financial Management
Governance Valuation Methodology
2012-03-19
Doug Hadden
VP Products

2. Version 7 section
Where’s the Software?
• brief discussion
not talking software today, it’s
process that drives our success in
PFM and drives the product

3. Typical Software Vendor Viewpoint
Software
Technology
Public Financial Management
Government Modernization
Government Objectives

4. Reality
Government Objectives
Government Modernization
Public Financial Management
Technology
Software

5. Version 7 section
3+qM Process
FreeBalance i
Country
Domain Research
Research
• brief discussion
Product
A. Public
Financial
Development
Management
Steering
Committee
Customer Governance
Sustainability
Valuation
Implementation B. Budget 2.0
Solution C. Performance
Blueprint Management
5

6. Version 7 section
success
• brief discussion
6

7. PEFA scores
A. PFM-OUT-TURNS: Credibility of the budget
B. KEY CROSS-CUTTING ISSUES: Comprehensiveness and
Transparency
C(i) Policy-Based Budgeting
C(ii) Predictability and Control in Budget Execution
C(iii) Accounting, Recording and Reporting
Latest PEFA Average
ODI 2008 PEFA Study
Latest from FreeBalance Customers
C(iv) External Scrutiny and Audit
Prior to Using FreeBalance

8. PEFA scores
1)Governments that were using FreeBalance software [in green] have
above average “accounting, recording and reporting” when compared
to the latest public PEFA scores, recognizing that many countries with
unfavourable assessments have not made assessments public. This
average is also higher than the average calculated by the Oversees
Development Institute in 2008 that included unpublished assessments
2)This reporting, enabled by FreeBalance software also has helped
improve external scrutiny
3)There are 3 areas that need improved controls and process to enable
our customers to exceed the average
4)Policy-based budgeting seem to be below average as well, although
the prior to using FreeBalance software, is close to the current
average.

9. In Context
Public PEFA Average Average HDI Nearest HDI HDI Nearest
PEFA Score Category PEFA
FreeBalance
2.47 0.482 Cameroon Low HDI Indonesia
Customers
*Countries
do not use 2.35 0.569 Cape Verde Medium HDI Ghana
FreeBalance
*Latest PEFA from countries, only national governments, not including
countries that acquired FreeBalance after the last assessment.
Shows that average (using ODI method) FreeBalance assessment greater
than average even with low HDI – averages Cameroon while the rest
averages as Cape Verde. The closest PEFA average to 2.47 is Indonesia,
closest to 2.35 in Ghana

10. Version 7 section
COTS Market
Version 7 section
• brief discussion

11. Governance
Version 7 section
Formula?
• brief discussion
It is generally
accepted that there
is no formula for
sequencing public
financial
management reform

12. Version 7 section
Current diagnostics are
not “prescriptive”
• brief discussion

13. Version 7 section
• brief discussion
PDM diagnostics rarely provide
technology
13

14. Evaluation Methods
Version 7 section
Evaluation Method Scope Back-Office Technology Front-Office Technology
Public Expenditure and Financial Accountability Comprehensive PFM No technology guidance although PEFA assessments attribute some
(PEFA) assessment achievements to the use of technology
A3: Use of IFMIS
Commonwealth Public Financial Management Comprehensive PFM
B2: Use of Debt Management
Self-Assessment Toolkit (CPFM-SAT) assessment
software
No technology guidance for publishing
The Chartered Institute of Public Finance & Comprehensive PFM O7: Financial management
• brief discussion
information
Accountancy (CIPFA) Whole Systems Approach assessment information systems
Extractive Industries
Revenue Watch Institute Index
transparency
Use of country systems for PFM and procurement does not specify use of
Paris Declaration and Accra Agenda for Action Aid effectiveness
technology
International Budget Partnership Open Budget Budget preparation and Internet publishing of budget documents
Index (OBI) reporting transparency gains higher rating for many categories
Gartner Group Open Government Maturity Provides open government technology
Open government
Model insight
Institute for Electronic Government e-
E-Democracy Use of e-mail systems
Democracy Model
Andersen & Henriksen E-Government Maturity E-Government Use of web technology
Horizontal and vertical integration
Layne and Lee Framework of E-Government E-Government
within government
Meta collection of 3rd party
World Bank World Governance Indicators
indicators
No technology guidance
Governance and anti-
Global Integrity Report
corruption

15. PFM Component Map
Public Financial
Management
Component Map
Performance &
Core Government Expenditure and Civil Service Governance and
Commitment
Financial Management Revenue Management Management Service Delivery
Management
Government
Public Financials Public Expenditure Civil Service Transparency &
Performance
Management Management Management Accountability
Management
Budget & Commitment Government Treasury Government Receipts
Service Delivery
Management Management Management

16. Version 7 section
What’s changed?
Transparency, access to more
• brief discussion
information makes diagnostics
more prescriptive

17. A. Public
Version 7 section
Financial
Management
Country PFM Context
• brief discussion

18. A. Public
Version 7 section
Financial
Management
PFM Domain
Government Performance Management
Data from Government Operations
• brief discussion
Expenditures Revenue
Budget
formulation
Budget
execution
Human
Treasury Resources
Data from Government Operations
Government Performance Management

19. A. Public
Version 7 section
Financial
Management
Core Government Financial Management
Government Performance Management
Data from Government Operations
• brief discussion
Expenditures Revenue
Budget
formulation
Budget
execution
Human
Treasury Resources
Data from Government Operations
Government Performance Management

20. A. Public
Version 7 section
Financial
Management
Expenditures & Procurement
Government Performance Management
Data from Government Operations
• brief discussion
Expenditures Revenue
Budget
formulation
Budget
execution
Human
Treasury Resources
Data from Government Operations
Government Performance Management

21. A. Public
Version 7 section
Financial
Management
Revenue Management
Government Performance Management
Data from Government Operations
• brief discussion
Expenditures Revenue
Budget
formulation
Budget
execution
Human
Treasury Resources
Data from Government Operations
Government Performance Management

22. A. Public
Version 7 section
Financial
Management
Human Resources
Government Performance Management
Data from Government Operations
• brief discussion
Expenditures Revenue
Budget
formulation
Budget
execution
Human
Treasury Resources
Data from Government Operations
Government Performance Management

23. A. Public
Version 7 section
Financial
Management
Treasury
Government Performance Management
Data from Government Operations
• brief discussion
Expenditures Revenue
Budget
formulation
Budget
execution
Human
Treasury Resources
Data from Government Operations
Government Performance Management

24. A. Public
Version 7 section
Financial
Management
Transparency
Government Performance Management
Data from Government Operations
• brief discussion
Expenditures Revenue
Budget
formulation
Budget
execution
Human
Treasury Resources
Data from Government Operations
Government Performance Management

25. A. Public
Version 7 section
Financial
Management
Performance
Government Performance Management
Data from Government Operations
• brief discussion
Expenditures Revenue
Budget
formulation
Budget
execution
Human
Treasury Resources
Data from Government Operations
Government Performance Management

26. Version 7 section
B. Budget 2.0
What do we mean by Budget 2.0?
• brief discussion
Budget 1.0 Transitional Budget 2.0
Back-office centric Network-centric
Back-office centric
functions deployed on functions for citizen
functions and
the web – “e- interaction –
technology
government” “government 2.0”
26

27. Version 7 section
B. Budget 2.0
What do we mean by Budget 2.0?
Government Performance Management
Data from Government Operations
• brief discussion
Expenditures Revenue
Budget
formulation
Budget
execution
Human
Treasury Resources
Data from Government Operations
Government Performance Management
27

28. Budget 1.0
Version 7 section
B. Budget 2.0
Budget execution
Transition 2
1.8
Budget 2.0 Transparency 1.6
Budget
mechansism comprehensiveness
1.4
1.2
1
• brief discussion
“Budget 2.0”
0.8
0.6
0.4
0.2
Oversight 0
Timeliness
Policy management International standards
Budget formulation

29. Transparency Mechanisms B. Budget 2.0
Budget 1.0 Transitional Budget 2.0
Published Documents Web Publishing
Narrative Centric Visualization Centric Open Data
Citizen Centric
Interactive Data
Oversight
Budget 1.0 Transitional Budget 2.0
Parliamentary Oversight
Audit Audio Visual
Performance Audit Citizen Oversight
Press & NGO
Access to Information
Cooperative Planning Expert Networks

30. Policy Management B. Budget 2.0
Budget 1.0 Transitional Budget 2.0
Macro-Fiscal
Frameworks Performance
Policy-Budget Management Participatory Policy
Linkages
Policy Outreach
Budget Formulation
Budget 1.0 Transitional Budget 2.0
Budget
Budget as Ceremony
Books Participatory Budgeting
Performance
Budget & Commitment Controls Management
Accrual Budgeting
Program Budgeting

31. Standards B. Budget 2.0
Budget 1.0 Transitional Budget 2.0
IPSAS Cash IPSAS Accrual
National Standards
IMF GFS
XML-based IATI, EITI, XBRL
MTEF
Timeliness
Budget 1.0 Transitional Budget 2.0
Annual Reports Unaudited
In-Year Execution Reports
Audit Reports Open Data
Pre-Budget Statement
Interactive Data

32. Budget Comprehensiveness B. Budget 2.0
Budget 1.0 Transitional Budget 2.0
National Government Sub-National
Parastatal
Accrual Extensions
Information Completeness
Budget Execution & Accounting Methods
Budget 1.0 Transitional Budget 2.0
Modified
Cash Modified Accrual Full Accrual
Cash
Budget & Commitment
Controls
Performance Discipline
Cash & Liquidity
Management
Budget Forecasting

33. C. Performance
Version 7 section
Government Performance Management
Management
Government Performance Management
Data from Government Operations
• brief discussion
Expenditures Revenue
Budget
formulation
Budget
execution
Human
Treasury Resources
Data from Government Operations
Government Performance Management
33

34. C. Performance
Management

35. C. Performance
Version 7 section Management
Politics
• brief discussion

36. C. Performance
Version 7 section Management
Policy
• brief discussion

37. C. Performance
Version 7 section Management
Platform
• brief discussion

38. planning:
Version 7 section
C. Performance
Management
budget – controls - monitoring
• brief discussion

39. C. Performance
Version 7 section Management
• brief discussion
public service performance

40. C. Performance
public: transparency drives
Version 7 section Management
accountability
• brief discussion

41. C. Performance
Version 7 section
private sector: value for money and Management
development
• brief discussion

42. PEFA/PFM
Alignment

43. Version 7 section
Sample Factors
• Version 7 section
Resource dependency – revenue management & revenue
transparency
• Government employment as %, size – civil service
• brief discussion
management
• Debt and deficits – expenditure management and
procurement
• Population, regional disparities, ethnic issues –
decentralization
• Democracy, freedom, stability, income disparity – budget
and performance transparency

44. Version 7 section
Calculates?
• brief discussion
Country PFM Technology
Conditions Priorities Priorities

45. Version 7 section
Anchor
• brief discussion
Country PFM Technology
Conditions Priorities Priorities
Priority
Benchmark Sequencing
Gaps

46. Version 7 section
Sequenced
Country PFM Technology
• briefConditions
discussion Priorities Priorities
Priority
Benchmark Sequencing
Gaps
capacity

47. Governance Valuation
4 visualization examples from different
countries follow

48. Visualized Governance Opportunity
Leapfrog and good practice
opportunities at a glance

49. High Level Blueprint
Platform approach to
sequencing customized to
government needs

50. Government Objectives Alignment
2. Improve Budget 3. Improve 4. Improve
1. Build Capacity
Execution Transparency Performance
1.Public safety
Improves stability Improved
2. Youth programs performance =
improves
3. Social Inclusion Improved civil effectiveness of
National service capacity = Executing on government
Plan 4. Employment improves ability to budget plan = Demonstrates programs
Improvements achieve objectives spending on improvement
objective
5. Service Delivery Key deliverable
6. Anti-corruption Key deliverable
1. Civil Service Reform Key deliverable Key deliverable
Improves
2. Financial Management
Key deliverable accountability,
Controls
State Reform reduces corruption
3. Devolution Key deliverable
4. Fiscal Transparency Key deliverable
Aligned with government
objectives

51. Performance Schedule
Private Revenue Purchasing &
sector Integration Procurement
Open Particpatory
e-Procurement
Data Budgeting
Budget Social Media
Public
Change Transparency integration
Manage- Audit
ment
Financial program Program
Planning Sector Dashboards Balanced Scorecard
Dashboards Budgeting
Performance Talent &
Human Capacity Building & Appraisal Succession
People Consolidation E-Recruitment
Resources Training
Employee Self-Service
Infrastructure Process re-
Foundation Improved Controls Change management Progressive Activation
upgrade engineering
For more advanced countries,
sequenced use of “performance”
technology

52. Version 7 section
3+qM Process
FreeBalance i
Country
Domain Research
Research
• brief discussion
Product
A. Public
Financial
Development
Management
Key additional
Steering advantage of process:
Committee Customer
Customer implementation
Sustainability
experience goes into
Implementation product & there is an B. Budget 2.0
emphasis on
sustainability
Solution C. Performance
Blueprint Management
52

53. Version 7 section on my
Is “time
side”?
• brief discussion Process requires 2-4
weeks depending
53

54. The process is an7 section anchor,
Version excellent
but not foolproof
• brief discussion
54

55. Version 7 section
Who is FreeBalance?
FreeBalance is a global provider of government resource
planning software (GRP) for public financial management
(PFM)
• brief discussion
– Canadian software company ISO-9001/2008 certified
– Strong domain expertise in government financial management,
100% focus on government
– Integrated technology for budget formulation and public
expenditure management: entire budget cycle
– De facto standard for fast implementations
– Global presence, 18 countries, in every World Bank region