June 28, 2009Doug Hadden
Government financial management needs differ from the private sector. Government financial management is budget-driven and is often known as commitment accounting. Effective government financial management requires a technology design that respects these unique needs. This section begins by describing the fundamental functional design that resulted in the technology of the FreeBalance Accountability Platform. Design follows need. Government needs should determine the technical design of software designed exclusively for Public Financial Management (PFM).
Government Budget Cycle
Governments across the world are modernizing or reforming public PFM systems. PFM reform is a complex process enabled by integrated information technology. Government financial reform is essential for economic growth and successful competition in the global economy. The government budget is the key mechanism for government financial management.
Integrated Financial Management Information Systems (IFMIS) automate all public finance transactions often called the budget cycle: budget preparation, budget execution, expenditure controls, government accounting, procurement, revenue, government audit, assets, inventory, civil service management and reporting. Integrating government revenue and expenditure information systems improves fiscal controls and improved transparency throughout the budget cycle.
FreeBalance provides software solutions for PFM. The FreeBalance Accountability Suite is a commercial off-the-shelf (COTS) IFMIS.
FreeBalance Design Methodology and the PFM Component Map
FreeBalance analyzed current and future customer PFM requirements regardless of whether FreeBalance provided solutions in that category. Many customers and PFM experts were consulted and provided detailed analysis. Workshops on long-term government priorities were held at meetings of the FreeBalance International Steering Committee. This “outside-in” approach ensured that internal FreeBalance viewpoints did not dominate the functional design of the Platform.
It was also important to retain what worked in the previous design. The functional design for the previous FreeBalance Accountability Suite had many advantages for governments. The design supported more rapid implementations than most COTS applications and custom development. Governments were able to adapt FreeBalance software to support on-going PFM modernization. Information Technology (IT) costs were sustainable. Unlike other COTS vendors, all FreeBalance customers in emerging countries are actively using and sustaining the IFMIS implementation.
Comprehensive Vision for Public Financial Management
FreeBalance developed a PFM Component Map to articulate IFMIS functional needs. The Component Map also enables governments to effectively determine functional needs and priorities. The FreeBalance PFM Component Map provides a high level view to all government financial functions. It is a target for determining the characteristics of an IFMIS. Governments can identify which components are needed and the level of importance. Government can map current systems against the component map to determine gaps. It enables determining the needed portfolio for automation, reform and improvement.
The PFM Component Map is FreeBalance proprietary information and cannot be used for the development of software without permission. Governments are free to use the PFM Component Map for planning purposes. The detailed map is available from FreeBalance on request.
A component is a defined piece of functionality that could operate stand-alone. The FreeBalance PFM Component Map enables drilling into detail to identify rich functional requirements.