This publication was produced for review by the United States Agency for International Development. 

It was prepared by The Louis Berger Group, Inc. and Development Alternatives, Inc. under the Fiscal 

Reform and Economic Governance Task Order, GEG-I-00-04-00001-00 Task Order No. 06 

JANUARY 2008 

A PRACTICAL GUIDE 

INTEGRATED FINANCIAL 

MANAGEMENT INFORMATION 

SYSTEMS 

INTEGRATED FINANCIAL 

MANAGEMENT 

INFORMATION SYSTEMS 

A PRACTICAL GUIDE 

 ACKNOWLEDGEMENTS I

The authors’ views expressed in this publication do not necessarily reflect the views of the United 

States Agency for International Development or the United States Government. 
ACKNOWLEDGEMENTS 

This paper was prepared by Edwin Rodin-Brown for the Fiscal Reform and Economic Governance 

project, a Task Order under the SEGIR Macro II IQC funded by USAID’s Bureau of Economic 

Growth, Agriculture and Trade. The project would like to thank Judith Payne, Bernard Mazer, Bob 

Otto, Ali Rammal and Jim Elliott for their invaluable comments and suggestions. 

Steve Rozner and Mark Gallagher made final edits and formatting to the paper. 
TABLE OF CONTENTS 

ACKNOWLEDGEMENTS................................................................................................................................II

TABLE OF CONTENTS..................................................................................................................................III

LIST OF TABLES AND FIGURES ..................................................................................................................V

ABBREVIATIONS ..........................................................................................................................................VII

EXECUTIVE SUMMARY...............................................................................................................................IX

INTRODUCTION................................................................................................................................................1

PART 1: UNDERSTANDING IFMIS ................................................................................................................2

IFMIS: WHAT IT IS .............................................................................................................................................2

IFMIS: WHAT IT DOES.........................................................................................................................................2

BASIC COMPONENTS OF A GOVERNMENT IFMIS.................................................................................................5

A COMMERICAL SOLUTION, WITH GOVERNMENT CHARACTERISTICS...................................................................6

A PANDORA’S BOX .............................................................................................................................................7

Legal Framework...........................................................................................................................................8

Business Process Re-engineering ..................................................................................................................8

The Chart of Accounts...................................................................................................................................9

Change Management...................................................................................................................................10

CENTRALIZED TREASURY MANAGEMENT: THE TREASURY SINGLE ACCOUNT ...................................................10

“OFF-THE-SHELF” OR BUILD-YOUR-OWN?........................................................................................................13

A PHASED APPROACH TO IFMIS IMPLEMENTATION ..........................................................................................14

PART 2: COUNTRY CASES............................................................................................................................16

SLOVAK REPUBLIC ...........................................................................................................................................16

KOSOVO............................................................................................................................................................18

KAZAKHSTAN ...................................................................................................................................................20

UGANDA ...........................................................................................................................................................20

IRAQ .................................................................................................................................................................21

VIETNAM ..........................................................................................................................................................22

PART 3: BEST PRACTICES............................................................................................................................23

STEP 1 – THE NEEDS ASSESSMENT....................................................................................................................23

Change management ...................................................................................................................................24

Capacity building and training....................................................................................................................24

Legacy Systems and data migration ............................................................................................................25

STEP 2 – CREATE A ROADMAP...........................................................................................................................25

STEP 3 – THE MODIFIED TENDER APPROACH .....................................................................................................26

STEP 4 – IMPLEMENTATION...............................................................................................................................26

Implementation team ...................................................................................................................................27

Steering Committee......................................................................................................................................28

Start small, think big....................................................................................................................................28

Testing the system........................................................................................................................................28

CONCLUDING REMARKS....................................................................................................................................29

REFERENCES AND FURTHER READING .................................................................................................30

ANNEX 1: CHECK LIST..................................................................................................................................31

 TABLE OF CONTENTS III 

LIST OF TABLES AND FIGURES 

Tables

Table 1. Basic checklist for IFMIS implementation.............................................................................31

Figures

Figure 1. IFMIS and the public financial management cycle.................................................................3

Figure 2. Components of a typical IFMIS..............................................................................................5

Figure 3. State budget execution process with TSA.............................................................................12

Figure 4. Example of system architecture – Slovak Republic..............................................................17

Boxes

Box 1. Double-entry bookkeeping and modern financial management .................................................4

Box 2. IFMIS and cash vs. accrual accounting ......................................................................................9

Box 3. Centralized treasury management in the commercial world.....................................................10

Box 4. An indication of total cost.........................................................................................................21

Box 5. The ideal IFMIS assessment team ............................................................................................24

LIST OF TABLES AND FIGURES V 

ABBREVIATIONS 

ADB Asian Development Bank 

ADB African Development Bank 

BPR Business process re-engineering 

CIDA Canadian International Development Agency 

CoA Chart of Accounts 

COFOG UN Classification of the Functions of Government 

COTS Commercial Off-the-Shelf software packages 

ERP Enterprise Resource Planning systems 

EU European Union 

GFS Government Finance Statistics 

IAS International Accounting Standards 

IFMIS Integrated Financial Management Information Systems 

IFRS International Financial Reporting Standards 

IMF International Monetary Fund 

IPSAS International Public Sector Accounting Standards 

ODA Official Development Aid 

PFM Public financial management 

SIDA Swedish International Development Agency 

SU Spending Units 

TSA Treasury Single Account 

UK GAPP United Kingdom Generally Accepted Practices and Principles 

UN DPKO United Nations Department of Peace Keeping Operations 

UNMIK United Nations Mission in Kosovo 

USAID United States Agency for International Development 

US GAAP United States Generally Accepted Accounting Principles 

WB World Bank 

 FOREWORD VII 

EXECUTIVE SUMMARY 

This paper discusses the subject of “best practices” for designing and implementing Integrated 

Financial Management Information Systems (IFMIS) and how to put them into place in specific 

environments: namely, in developing and transitional countries as well as in conflict and post-conflict 

situations. The IFMIS provides a critical financial management solution for countries whose 

administrative and economic infrastructure is obsolete, or has been destroyed through war and years 

of conflict. 

There is broad agreement that a fully functioning IFMIS can improve governance by providing realtime financial information that financial and other managers can use to administer programs 

effectively, formulate budgets, and manage resources. Sound IFMIS systems, coupled with the 

adoption of centralized treasury operations, can not only help developing country governments gain 

effective control over their finances, but also enhance transparency and accountability, reducing 

political discretion and acting as a deterrent to corruption and fraud. 

Obstacles should not be underestimated. The road to implementing successful IFMIS in developing 

countries is paved with difficulties, such as resistance from the bureaucracies involved; lack of 

decision-making from the top; weak human capital; corruption and fraud; and, in the case of conflictridden countries, the instability and violence that impair any efficient long-term work. Moreover, 

IFMIS systems are complicated, expensive, and difficult to manage and maintain. Indeed, a 2003 

review of 34 IFMIS projects supported by the World Bank over 15 years estimated that only few of 

the systems were likely to be sustained after donor support ceased. 

Obstacles notwithstanding, the task is still feasible. The technology exists and aid agencies can play a 

very important role in helping the decision-makers choose the most adaptable and appropriate tools 

for their environments. The choice of a step-by-step, or phased approach offers the best chances for 

successful implementation as a project can be carefully monitored and reviewed regularly. Given the 

cost of such exercises, it is important to aim first for a sound “entry level” system, which, once 

functioning effectively, can then be extended to support additional functions. Indeed, the simple 

demonstration effect of effective entry-level systems can generate the necessary demand for more 

comprehensive systems. 

Political will is crucial to this process. Once the decision has been made to implement an IFMIS, the 

battle is half won. Garnering support from those who will use the new system, and overcoming 

resistance from those who stand to lose from its implementation, can be an equally daunting 

challenge. Change management is therefore an important part of any IFMIS project. 

On a more practical level, selecting the right tools, equipment and technology requires a good deal of 

shopping around. All too often, it is discovered only after procurement of new systems that those 

systems do not meet the specific conditions and needs of the project, leading to costly delays and 

unplanned outlays. To avoid these types of hiccups, a variety of experts should be called on to test, 

monitor and guide the implementation process. 

Above all, IFMIS implementation requires patience. The full project life cycle—from definition of 

objectives, to system specifications, to system procurement, configuration, testing, and rollout—can 

easily take seven to ten years, or longer, to complete. This type of time horizon is usually well beyond 

the attention span of donors, which is why it is advisable to divide IFMIS implementation into clearly 

defined stages with clear objectives and milestones. As each stage is completed, stakeholders should 

carefully assess project progress and ensure that the system under development still meets the needs 

of the government, and that government commitment to the IFMIS is still there. The ultimate goal 

should be to put in place sound systems that are well understood and embraced by counterparts and in 

the end will be self-sustaining. 

 EXECUTIVE SUMMARY IX 

INTRODUCTION 

Over the past decade, developing, transition and post-conflict countries have increasingly embarked 

on efforts to computerize their government operations, particularly with respect to public financial 

management (PFM). Most common among these have been efforts to introduce integrated financial 

management information systems (IFMIS) that computerize and automate key aspects of budget 

execution and accounting operations across the institutions of government. IFMIS can enable prompt 

and efficient access to reliable financial data and help strengthen government financial controls, 

improving the provision of government services, raising the budget process to higher levels of 

transparency and accountability, and expediting government operations. Donors and international 

institutions like the International Monetary Fund (IMF), the World Bank, and USAID have played a 

critical role, and will continue to do so, in supporting and shaping developing countries’ financial 

management systems through projects that provide a combination of technical assistance, training, 

financial resources and procurement support to partner governments. 

The recent literature on IFMIS has addressed various aspects of IFMIS design, systems development, 

implementation and sustainability, but no one study has effectively synthesized all of these elements 

with actual country experiences to identify the most appropriate strategies with respect to IFMIS 

project design, management, monitoring and evaluation. This Best Practices paper will catalogue and 

discuss good or “best” practices around the world in the design, development, and implementation of 

government IFMIS, drawing on the relevant literature and practical examples of country experiences 

with introducing IFMIS. 

The paper is divided into three parts and is written to provide USAID Officers with enough 

information to understand not only what an IFMIS is in practical terms, but also to provide sufficient 

examples of project successes and failure to understand what is involved in putting an IFMIS into 

place. Further, this paper is intended to equip USAID Officers with sufficient knowledge to evaluate, 

monitor and assure progress in IFMIS implementation, with an understanding of what should be 

taking place during design, implementation and the final stages of “going live.” It will address some 

of the major pitfalls, traps, and common mistakes, the things to look out for, and the resources that 

should be made available to ensure positive results. At all times the objective is to be pragmatic and 

realistic. 

The first part of this paper covers the conceptual aspects of IFMIS: 

 What IFMIS are and what they do; 

 Why they are useful and indeed critical for sound economic governance; and 

 Some of the key aspects of any well designed IFMIS project. 

This will require explanation of some basic accounting, finance and treasury management concepts. 

The second part of the paper touches upon several country examples to demonstrate different 

approaches, some of the common features and problems faced, and how these kinds of problems can 

be avoided or resolved. 

The third part of the paper lays out a series of good or best practice steps and options that experience 

has shown to deliver best results. These recommendations are based on actual situations where IFMIS 

have been successfully installed and implemented. 

Finally, Annex 1 presents a checklist of the main steps that need to be covered when managing IFMIS 

implementation. This checklist, coupled with the examples and recommendations highlighted 

throughout the paper, should help inform future programming related to implementing government 

IFMIS systems, and to strengthening public financial management more broadly. 

 INTRODUCTION 1
PART 1: UNDERSTANDING IFMIS 

IFMIS: WHAT IT IS 

A financial management information system, or integrated financial management information system 

(IFMIS), is an information system that tracks financial events and summarizes financial information. 

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. 

Generally, the term “IFMIS” refers to the use of information and communications technology in 

financial operations to support management and budget decisions, fiduciary responsibilities, and the 

preparation of financial reports and statements. In the government realm, IFMIS refers more 

specifically to the computerization of public financial management (PFM) processes, from budget 

preparation and execution to accounting and reporting, with the help of an integrated system for 

financial management of line ministries, spending agencies and other public sector operations. 

The principal element that “integrates” an IFMIS is a common, single, reliable platform database (or a 

series of interconnected databases) to and from which all data expressed in financial terms flow.1

Integration is the key to any successful IFMIS. In a nutshell, integration implies that the system has 

the following basic features: 

 Standard data classification for recording financial events; 

 Internal controls over data entry, transaction processing, and reporting; and 

 Common processes for similar transactions and a system design that eliminates unnecessary 

duplication of data entry. 

Integration oftentimes applies only to the core financial management functions that an IFMIS 

supports, but in an ideal world it would also cover other information systems with which the core 

systems communicate, such as human resources, payroll, and revenue (tax and customs). At a 

minimum, the IFMIS should be designed to interface with these systems. 

IFMIS: WHAT IT DOES 

An IFMIS stores, organizes and makes access to financial information easy. It not only stores all the 

financial information relating to current and past years’ spending, but also stores the approved 

budgets for these years, details on inflows and outflows of funds, as well as complete inventories of 

financial assets (e.g., equipment, land and buildings) and liabilities (debt). 

The scale and scope of an IFMIS can vary, from simple General Ledger System to a comprehensive 

system addressing Budget, Revenue, Expenditure Control, Debt, Resource Management, Human 

Resources, Payroll, Accounting, Financial Reporting, and Auditing processes across central 

government or even including local government and other public sector and quasi-governmental 

agencies and operations. 

A more comprehensive, well integrated system will: 

 

1

 Source: Transparency International Source Book 2000, in Casals and Associates, “Integrated Financial 

Management Systems Best Practices: Bolivia and Chile,” funded under USAID Contract AEP-I-00-00-

00010-00, Task Order No. 01 Transparency and Accountability, 2004. 

2 INTEGRATED FINANCIAL MANAGEMENT INFORMATION SYSTEMS: A PRACTICAL GUIDE 
 Provide timely, accurate, and consistent data for management and budget decision-making; 

 Support government-wide as well as agency-level policy decisions; 

 Integrate budget and budget execution data, allowing greater financial control and reducing 

opportunities for discretion in the use of public funds; 

 Provide information for budget planning, analysis and government-wide reporting; 

 Facilitate financial statement preparation; and 

 Provide a complete audit trail to facilitate audits. 

By recording information into an integrated system that uses common values, IFMIS users can access 

the system and extract the specific information they require to carry out different functions and tasks. 

All manner of reports can be generated: balance sheets, sources and uses of funds, cost reports, 

returns on investment, aging of receivables and payables, cash flow projections, budget variances, and 

performance reports of all types. Some systems have libraries consisting of hundreds of standard 

reports. Managers can use this information for a variety of purposes: to plan and formulate budgets; 

examine results against budgets and plans; manage cash balances; track the status of debts and 

receivables; monitor the use of fixed assets; monitor the performance of specific departments or units; 

and make revisions and adjustments as necessary, to name a few. Reports can also be tailored to meet 

the reporting requirements set by external agencies and international institutions like the IMF. 

Figure 1 illustrates the complex set of functions a government IFMIS can be called on to support. 

These include the typical functions that make up the PFM cycle, from budget formulation to budget 

execution and review, to audit and evaluation of financial performance and results. 

Figure 1. IFMIS and the public financial management cycle 

 PART 1: UNDERSTANDING IFMIS 3
Box 1. Double-entry bookkeeping and modern financial management 

Financial management information systems are not a new phenomenon. On the contrary, the recording of financial 

information is the oldest known form of record keeping, dating back thousands of years. Yet financial information 

has long presented problems, particularly since the invention of money. It was only late in the 15th century when 

Luca Pacioli, an Italian mathematician, set out to codify the “double-entry” accounting system that modern 

financial management began to develop. 

All modern financial management information systems—including those used in the private sector and in the 

public sector—are based on Pacioli’s technical innovation. The system is called “double-entry” because each 

transaction involves an exchange between two accounts: debits and credits. For every debit, there is an equal and 

opposite credit; the sum of all debits must therefore equal the sum of all credits. This balancing requirement is 

critical, as it makes it easier to detect errors or discrepancies in the recording of transactions. Moreover, because it 

provides a full picture of the financial situation of an organization, double-entry accounting also facilitates the 

preparation of financial reports directly from the accounts. 

To illustrate the double-entry concept, consider a simple transaction involving the purchase of a laptop computer 

on January 1 for a cash payment of $1,000. In a “single-entry” bookkeeping system, the buyer would simply enter 

the $1000 in his books as an “expense”. The vendor would record the same $1,000 in its books, but as “revenue.” 

Here, only the change in income (money coming in, or money going out) is reflected. 

By contrast, the double-entry method considers the entire financial position of an entity—that is, not only changes 

in cash balances, but also the change in assets and liabilities (e.g., accounts receivable, accounts payable, 

inventory, debt, etc.). Accordingly, in a double-entry system the buyer would enter the transaction as follows: 

Date Accounts Debit Credit

Jan 1 Expense 1,000.00 

 Cash 1,000.00 

Note: Purchased one laptop computer 

The vendor would record the same transaction (from its perspective) with the same values, but in reverse: 

Date Accounts Debit Credit

Jan 1 Revenue 1,000.00 

 Cash 1,000.00 

Note: Sold one laptop computer 

This example demonstrates a simple cash transaction. Had the buyer not paid cash but instead was extended credit, 

he would have entered a $1,000 credit to “accounts payable,” rather than to “cash.” Likewise, the vendor would 

have entered a $1,000 debit to “accounts receivable”, rather than to cash. 

The permutations on this simple example are innumerable. The way financial transactions are recorded, whether in 

government or in the private sector, can vary depending on the nature of the transaction, method of payment (e.g., 

cash vs. credit), method of accounting (e.g., cash vs. accrual), and myriad other factors. Notwithstanding these 

factors, the fundamental principle of double-entry accounting always holds: the debit and credit accounts must 

balance. Where the accounts are not in balance, close scrutiny will reveal any errors or irregularities. 

A testament to the ingenuity of the double-entry methodology is that it has not been fundamentally changed since 

it was invented. Whether in government, banks, small or large businesses or non-governmental organizations, the 

same concept forms the basis of today’s modern computerized accounting systems. It is important to understand 

this concept before embarking on an analysis of the reasons why IFMIS systems sometimes succeed, but more 

often fail when implemented by developing country governments. For such a robust system to falter, the problems 

faced must be related to factors external to the system itself. This paper highlights some of these factors. 

4 INTEGRATED FINANCIAL MANAGEMENT INFORMATION SYSTEMS: A PRACTICAL GUIDE 
BASIC COMPONENTS OF A GOVERNMENT IFMIS 

An IFMIS will generally consist of several distinct components or modules that use information to 

perform different functions. Figure 2 presents a basic diagram of a typical government IFMIS, 

including several core components, as well as non-core components that will either be integrated into 

the system or connected to the system via an interface. Bear in mind that some systems are far 

simpler, while many are far more complex in scope and functionality. 

At the core of the system is the General Ledger. The General Ledger constitutes the central “books” 

of any IFMIS. Every transaction entered into the system posts to the General Ledger, starting with the 

allocation of budget funds through to the commitments to payment for goods and services. All 

transactions should simultaneously post to the General Ledger and to all appropriate subledgers/modules following the rules imposed by a standardized chart of accounts. (See section below 

for more on the ‘Chart of Accounts’.) These records remain as a permanent track of the history of all 

financial transactions, and represent the source from which all reports and financial statements are 

derived. 

Figure 2. Components of a typical IFMIS

In addition to the General Ledger, other core components and their main functions will generally 

include: 

 Cash Management – monitors and forecasts cash flows and financing requirements, and performs 

reconciliation between bank accounts and IFMIS records. 

Procurement 

module 

Cash Mgmt / 

Commitment 

Control module 

Budget planning 

module 

Accounts 

Payable 

module 

Accounts 

Receivable 

module 

General Ledger 

module 

Statutory 

financial 

reports 

HR / 

Payroll 

interface 

Budget 

reports 

Revenue 

(tax and 

customs) 

interface

Other 

modules / 

interfaces 

Other 

reports 

Data/ 

transactions 

entry 

Chart of 

Accounts 

Reporting

 PART 1: UNDERSTANDING IFMIS 5
 Commitment control – ensures that before a purchase is committed to, there is sufficient cash 

allocated for the expense and the allocation matches the appropriated budget. 

 Accounts payable – Processes and generates payments, with built-in checks to ensure invoices 

match approved commitments. 

 Accounts receivable – produces bills and processes and records receipts, including all types of 

inflows received by government units, including nontax revenues and fees. 

Beyond these core components, there are myriad other types of information that an IFMIS could 

conceivably support. Other modules or systems that an IFMIS can support or interface with might 

include: 

 Budget preparation/planning 

 Procurement and contracts management 

 Payroll and human resources 

 Revenue administration (tax and customs) 

 Debt management 

 Assets management 

 Project ledger 

 Grants management (e.g., counterpart funds from international assistance) 

The list of potential add-ons can be very long, depending on the particular needs and the level of 

sophistication of the government. Moreover, the functions the IFMIS may be called on to perform can 

vary from producing budgets and reports to managing procurements and grants to processing 

payments and receipts. On top of this, the system needs to provide security on several levels: 

 Internal system security; 

 User profiles for each type of user; and 

 External security as the system communicates with the outside world: internet, the banking 

system, citizen interfaces for facilities like taxes, licenses, etc. 

A COMMERICAL SOLUTION, WITH GOVERNMENT CHARACTERISTICS 

Financial management information systems are implemented and used successfully almost all the 

time in the commercial world. When they fail, so do the companies they support. This is the 

fundamental difference between the commercial and the government environment. Commercial 

organizations can and do fail. Companies like Enron, WorldCom, and Parmalat are just the most 

recent examples of organizations whose financial management lapses precipitated their downfall. On 

the flipside, governments can and do end up in severe financial straits, but rarely is financial collapse 

the end of the road for a sovereign state. 

The major advantage in a commercial environment, however, is that there is a clear objective—be it 

improving efficiency or improving productivity—and a clear decision making process. If the 

decision is made to put into place a new financial management information system, then once the 

needs have been assessed, the organization shops around for the most appropriate product, purchases 

it, and deploys the necessary resources to complete the job. 

6 INTEGRATED FINANCIAL MANAGEMENT INFORMATION SYSTEMS: A PRACTICAL GUIDE 
Government decision-making and action is not as efficient, or clearly directed, as it is in most 

commercial institutions. Governments do not have simple line-oriented chains of command. They 

generally have complex administrative structures, and especially in developing and post-conflict 

settings, they tend to lack the required competencies and knowledge at most levels to choose or 

implement the solution. Moreover, the political will to replace old systems, processes and structures 

with new ones and introduce new ways of operating is often not there. Even when the political will is 

there, maintaining it can be quite problematic when once considers that the timeline for most IFMIS 

implementations is longer than most finance ministers’ term in office. 

The design and functionality of government IFMIS is also critically different from that of private 

enterprise systems. Because governments are not driven by profit but rather by measures of 

accountability, financial management information systems for government must be designed to 

ensure compliance with budget laws, other public finance rules and restrictions, and an entirely 

different set of accounting rules and reporting requirements. Moreover, they must also be designed to 

support a multitude of distinctly public sector-oriented functions and organizational arrangements. 

Governments big and small undertake a vast number of transactions on an ongoing basis, requiring 

powerful, resilient, dependable systems to handle the information flows. These systems must be able 

to handle and communicate all the financial movements for the complex structure made up of line 

ministries, spending agencies, regional and local governments as well as other government clients. 

Aside from the above considerations, introducing a government IFMIS is also context-specific and 

varies greatly from country to country. Indeed, implementing public finance reforms of any kind 

requires an understanding of the entire public finance system in place in that country. It requires an 

understanding of the institutional arrangements, the division of authorities and responsibilities, and 

how these arrangements are carried out across government. Vietnam, with a population over 80 

million, has a strong central government, but also has 64 provinces, each with its own full 

administration and political requirements. In Kosovo, on the other hand, the international community 

built the fiscal infrastructure of this territory of 2 million people virtually from scratch, delegating 

only limited powers to nascent Kosovar institutions in the initial post-conflict period. The scale and 

the challenges are quite different, and these considerations will influence the strategies and solutions 

adopted. (These country examples are discussed in greater detail in Part 2.) Clearly, without a critical 

understanding of the political and administrative structure, the existing systems and processes, and 

other defining factors, any effort to introduce new systems will ultimately fail, or at the very least 

meet with costly delays. 

A PANDORA’S BOX 

Once the decision is made to introduce a new IFMIS system, a plethora of issues needs to be 

anticipated and planned for. These include issues related to: 

 Legal framework 

 Business/functional processes 

 Organizational arrangements 

 Budget classification structures 

 Chart of accounts 

 Change management 

 Systems requirements/specifications 

 Systems development 

 Procurement/tender of software and hardware 

 Configuration of software and hardware 

 Data conversion/migration 

 PART 1: UNDERSTANDING IFMIS 7
 Testing and training 

 Corruption 

As each issue is addressed, so a Pandora’s box of unknowns is opened for each, as each country 

situation presents challenges that, if ignored, decreases the potential for successful IFMIS 

implementation. 

Some of the above issues are discussed briefly below to arm the reader with a basic understanding of 

the dimension of the challenges that can be faced. How much attention to devote to each issue 

depends on a variety of factors, including existing conditions, donors’ time horizon, and other factors. 

LEGAL FRAMEWORK 

When designing a government IFMIS, it is critical to review the legal and regulatory framework and 

assess the necessary changes to the overall framework for public financial management, including the 

deployment and reporting of resources. Changing legal frameworks is not a simple task, but IFMIS 

implementation teams must carefully address legal and regulatory requirements if the IFMIS is to be 

successful and sustainable. 

Typically, the legislative framework—whether enshrined in a Constitution or in a series of public 

finance, budget and accounting laws and regulations—should include: 

(i) the roles and responsibilities of the treasury, ministry of finance and other agencies 

involved in controlling and managing public finances, 

(ii) provisions on the receipt and custody of government funds, the annual process, 

submission and approval of estimates and procedures for release of funds, 

(iii) the basis of accounting and the form and procedures for presentation of annual accounts, 

and 

(iv) provisions on asset management, borrowing and investment.2

Attention will also need to be given to statutory review and reporting requirements, such as 

publication of the budget, external audits, and reporting to international bodies such as the IMF. 

Strong political support for public finance reform can help move legal reforms forward, but even with 

this support changing national law takes time, a luxury that most IFMIS projects, donor-funded or 

not, do not have. Yet the legislative reform process need not stall IFMIS implementation. It is very 

important to understand how the legal system in place functions, and then to build an IFMIS that 

responds not only to its requirements, but also has the adaptability to respond to eventual changes in 

the legal framework. Off-the-shelf tools can provide this flexibility. 

BUSINESS PROCESS RE-ENGINEERING 

Information technology is vastly changing the way information is captured, summarized and 

communicated, and the benefits of these technological advances should not be underestimated. 

However, the introduction of a new IFMIS system should not just be seen as a technology fix. Simply 

automating inefficient processes will not necessarily make them any more efficient; nor will 

automating tasks that did not need to be carried out in the first place. Rather, an IFMIS 

implementation should be seen as a public finance reform that affects how things are done across 

 

2

 Diamond and Khemani (2005), p. 13. 

8 INTEGRATED FINANCIAL MANAGEMENT INFORMATION SYSTEMS: A PRACTICAL GUIDE 
government. It requires changes in management and organizational structures. It requires changes in 

workflows. And, it requires changes in roles and responsibilities. 

Business process re-engineering or redesign (BPR) is, therefore, a critical aspect of any IFMIS 

reform. This will require a review of all systems, functional processes, methods, rules and regulations, 

legislation, banking arrangements and related processes. New procedures will have to be established 

and standardized throughout government. New job descriptions will have to be formalized. The 

arrangements and systems for internal and external control of public financial management will have 

to be improved.3

 

To be clear, BPR is a continuous process, one that has to be institutionalized. To ensure that BPR 

remains a critical focus long after an IFMIS is put in place, it can be integrated into the government’s 

internal control and internal audit functions as part of the risk management process. This will provide 

a formal framework for identifying risks, errors and potential instances of fraud and a framework for 

responding to those risks. 

THE CHART OF ACCOUNTS 

The Chart of Accounts (CoA) represents the basic building block of any accounting system, IFMIS 

included. The CoA lists all accounts tracked by the system. Each account in the chart is assigned a 

unique identifier, or an account number, involving a series of information tags that denote certain 

things about the data being entered into the system. For example, these tags may denote the cost 

center, the department or unit responsible for the transaction, the program or purpose for which the 

transaction is being made, the nature of the transaction, and so on. 

The account number attaches to the data and serves accounting, management and all other reporting 

purposes. It also forms part of the data validation process, indicating things such as whether or not a 

vendor exists, whether or not there is an authorized budget, and whether or not funds have been 

committed. These are just a few of the many validations that a good computerized system will carry 

out. 

The Chart of Accounts is integral to the success of any IFMIS. Without an intelligently designed 

CoA, information cannot be stored or accessed properly. Designing an appropriate CoA is not a 

difficult task, but obtaining the agreement of all parties is. Once there are more than a handful of 

stakeholders involved, then the task of reaching consensus can become virtually impossible. 

Box 2. IFMIS and cash vs. accrual accounting 

In financial accounting, whether in private sector or government, there are basically two accounting methods to 

choose from: cash and accrual. Most developing country governments record their finances on a cash basis. 

However, “best practice” suggests that the accrual basis, while relatively complex, is a better method for 

assessing the government’s true financial position and performance against budgets and plans. Fortunately, 

using a well designed chart of accounts and sometimes some tailored interfaces, an IFMIS can be configured to 

generate reports using either method, literally at the click of a button. 

Furthermore, the chart of accounts can be compromised by the frequent changes in leadership and 

priorities that are characteristic of most governments. There are constant pressures to restructure or 

re-shuffle administrative units or shift responsibility for programs each time there is an election or a 

 

3

 In Pakistan, the move to a new IFMIS necessitated a complete reorganization of the supreme audit institution. 

 PART 1: UNDERSTANDING IFMIS 9
minister is replaced. If the CoA is not designed with the flexibility to accommodate these types of 

changes, then the IFMIS will almost certainly be thrown into disarray. 

CHANGE MANAGEMENT 

Change management is one of the most critical, but also one of the most neglected, aspects of IFMIS 

reforms. Despite the obvious advantages of a new IFMIS system, opposition is to be expected. 

Resistance will come from all angles. There will be vested interests who have benefited from the way 

things have traditionally been done. There will be civil servants who see new systems as a threat to 

their jobs. There will be those who resist simply for fear of the unknown. While opposition is not 

always easy to overcome, any systems implementation that ignores change management flaunts with 

failure. 

So what can be done? As soon as an IFMIS project is conceived, a change management strategy 

needs to be laid out, taking into consideration the change implications for diverse stakeholders, from 

politicians and senior managers to department heads, civil servants and the IT personnel who will 

support the new systems. A core team needs to be designated to manage the change, composed of 

people who can and are empowered to lead. This requires a strategy, a plan, with alternatives, with an 

aim to bring about the change. Overcoming resistance will happen through clear communication, 

education, training, and “quick wins” that demonstrate the benefits of change. 

This topic is worth a major examination in itself, and this paper does not pretend to delve deeply into 

the subject, only to introduce it to make the reader aware that change management must not be 

overlooked when planning or implementing an IFMIS project. 

CENTRALIZED TREASURY MANAGEMENT: THE TREASURY SINGLE ACCOUNT 

Governments need to ensure both efficient implementation of their budgets and good control over 

their financial resources. Spending agencies must be provided with the funds needed to implement the 

budget in a timely manner, and the cost of government borrowing must be minimized. Sound 

management of financial assets and liabilities is also required. This is generally the role of the 

treasury operations. 

Box 3. Centralized treasury management in the commercial world 

In the early 1980s it was already common practice for major corporations to group all financial resources into 

one treasury management structure. A good example at the time was Reynolds Aluminum, which placed its 

global treasury operations in Geneva, Switzerland. The treasury unit was staffed with only 11 people, for an 

organization that employed tens of thousands with hundreds of business units worldwide. 

The Reynolds Treasury managed all of the company’s monetary resources. Resources included not only all cash 

moneys but also all debt and negotiable paper. By company policy, no business unit anywhere in the world was 

allowed to hold any cash balances in its bank account. Instead, the Geneva Treasury transferred funds to each 

unit’s local bank account to meet the reported payment schedules. Any manager found to have residual cash in 

his unit’s bank account for more than seven working days was subject to dismissal (to the author’s knowledge, 

such action was only taken on two occasions). 

The results produced by the system were extraordinary. Reynolds’ treasury unit in Geneva regularly made more 

profit than the rest of the company. The management of the treasury was extremely prudent, focusing on risk 

limitation and minimizing the cost of financing. Yet, while applying very conservative money management 

techniques substantial sums of money were generated for the group from its own resources. 

10 INTEGRATED FINANCIAL MANAGEMENT INFORMATION SYSTEMS: A PRACTICAL GUIDE 
One of the treasury department’s main functions is to keep operating cash balances to a minimum. 

Centralizing cash balances through a Treasury Single Account (TSA) is an effective way to achieve 

this. A TSA is an account or set of linked accounts through which the government transacts all 

payments. The institutional arrangements can vary. In some countries, the treasury department 

controls all financial transactions and makes payments on behalf of spending agencies. In others, the 

treasury department may set cash limits for transactions but spending agencies have the power to 

transact payments directly. Whatever the arrangements, the treasury department maintains central 

control of cash, sweeping idle balances from spending agencies’ accounts and consolidating the 

government’s cash position at the end of each day. 

Figure 3 illustrates where a TSA fits into the broader IFMIS system. 

Virtually all major companies and financial institutions use centralized treasury management methods 

(See Box 2). Unfortunately, few governments have treasury systems that can match the efficiency of 

commercial treasury systems. A rare exception is the example of the Slovak Republic, which recently 

installed a new government IFMIS. The Slovak treasury centralizes control of all cash, foreign 

exchange and debt and applies similar risk management methods to those used in commercial 

treasury operations. Using one of the best software tools available (TREMA), the treasury is able to 

calculate the lowest possible risk exposure and take financial decisions accordingly. Grouping 

financial resources under one centralized account, the finance ministry gained the ability to make 

more productive use of its cash balances. By placing cash holdings on overnight international 

markets, the profits in the first year of operation of the new treasury system exceeded 120,000,000 

Euros. 

The Slovak example provides evidence of the benefits of implementing a Treasury Single Account. 

The TSA paid for the complete Slovak IFMIS system in less than 9 months, in terms of improved 

control over government accounts. Beyond the control aspects of centralized cash management, the 

return on investment can potentially be used to extend and upgrade the IFMIS as it expands and 

additional government sectors are brought into the system. This provides insurance for donors, who 

generally do not want to shoulder additional IFMIS costs once the system has been installed, and for 

the governments themselves, who have a powerful tool for raising the funds needed to maintain their 

systems on their own. 

 PART 1: UNDERSTANDING IFMIS 11
Figure 3. State budget execution process with TSA 

* “SU” = Spending Unit. 

12 INTEGRATED FINANCIAL MANAGEMENT INFORMATION SYSTEMS: A PRACTICAL GUIDE 
“OFF-THE-SHELF” OR BUILD-YOUR-OWN? 

While the debate continues, a basic understanding of IFMIS architecture, the complexity of these 

systems, and the intricacies of accounting and reporting rules demonstrates why commercial off the 

shelf (COTS) software packages are generally more practical than are custom-developed, or 

“bespoke” systems. 

The purpose of this section is not to make a firm recommendation for COTS over bespoke packages. 

Indeed, there are certain situations in which the build-your-own approach may be justified. Customdeveloped applications may be an effective interim solution when transitioning from manual to 

computerized recordkeeping. They may be sufficient if the functionality of the system and the number 

of users is limited. And, they may be preferable if the cost of custom development will be 

significantly lower than purchasing and implementing COTS software. 

However, the bespoke approach has its disadvantages. Bespoke systems often go over budget and 

seldom get delivered on time. They require established skill sets in custom software development 

and—expertise that is often difficult to find in less developed markets. Even where that IT expertise is 

available, the IT specialists that build these applications will generally have a limited understanding 

of government functions, so they fail to anticipate problems or build in the necessary controls and 

audit trails required of typical government financial management systems. 

Indeed, the work involved in writing the specifications for all the programs required to support a 

labyrinth of government functions and operations, then testing them and maintaining them is colossal 

and prone to difficulties. Likewise, taking an old system that is in place and modifying it, adding on 

new features piecemeal, requires major knowledge and resources regularly results in systems that are 

too complex and fragmented. This is why so many organizations, both commercial and government, 

make the choice to migrate to COTS packages. 

Commercial package producers have already invested and continue to invest considerable effort to 

standardize core IFMIS functions and “fail-safe” them against the most common problems faced in 

custom development. Using COTS solutions, an IFMIS project team is able to concentrate on the 

tailoring that is commonly required to meet specific counterpart or institutional requirements (See 

Part 3). Furthermore, the detailed checks and balances built in to COTS systems are critical 

especially for building and maintaining trust and transparency. There is great value in taking a COTS 

system that has stood the test—for instance, one that has been used successfully by publicly audited 

entities, or even one that has been certified by an accounting group. It is all too easy to overlook 

these key elements when building a customized system. 

COTS packages are usually modular and can expand in capacity and functionality to meet expanding 

requirements. For many developing country governments, all that will be required in the early stages 

is a basic “entry level” system—consisting of little more than a General Ledger application and basic 

cash management, accounting and payment functions. The new system may also be able to link into 

“legacy” systems that are already in place to postpone investments in additional modules that may not 

be needed until resources can justify them. Capitalizing on systems that are already in place can serve 

as a temporary fix while garnering support and resources for achieving a long-term solution, and can 

give donors the evidence they need to justify the commitment of additional resources. To achieve 

results, one must be imaginative and “opportunistic”. 

There are a number of COTS financial management systems that tailor to and incorporate public 

sector requirements related to budget control and accountability . These start from simple 

“shareware” packages to complex, fully integrated Enterprise Resource Planning (ERP) systems, such 

as SAP, Oracle Financials, and Free Balance. To attempt to compare each ERP solution here, their 

 PART 1: UNDERSTANDING IFMIS 13
functional coverage and their strengths and weaknesses, would be fruitless, as the software packages 

are constantly evolving in response to changing technologies and changing consumer demands. 

Of course, there are drawbacks to using COTS, too. For instance, COTS packages tend to impose a 

standard structure on business processes, forcing the government to organize to the application, not 

the other way around. This may not be such a bad thing as many developing country governments 

could benefit from the discipline that COTS providers build into their software applications. 

However, resistance should be expected—both well-founded and otherwise. 

The costs of implementing COTS solutions should not be underestimated either. The initial cost of a 

COTS solution can be high, the maintenance contracts and license fees a constant cost, but experience 

suggests that the cost-benefit of COTS compared with the “build-your-own” approach is almost 

always positive. The same applies to governments as it does to the private sector. 

Each software company has a pricing structure. These pricing structures are generally based on a 

combination of: 

 Number of users; 

 Size of the organization; 

 Types of users; 

 Types of hardware used; and 

 Number of modules acquired to make up the system installed. 

This calculation can become quite complicated and needs to be carefully controlled. If starting with a 

modest “entry level” system, the initial package can be quite reasonably priced and fall within a small 

budget. What is most important is to assess accurately what can be done as a first sustainable step, 

upon which an expanded system can be built. 

A PHASED APPROACH TO IFMIS IMPLEMENTATION 

Public tendering is a sound, tried and tested, and well-documented process. However, the tender 

process is best suited to clearly definable items, or turnkey situations. Apart from the hardware, 

specifications for an integrated financial management information system are not as clearly definable 

as, say, a specification for equipping a port with tugboats or procuring a vehicle, a computer or a 

stapler. All these can be defined with clear specifications. An IFMIS seems to be definable, but in 

reality there are too many interdependent variables that need to be firmed up as the process of 

implementation evolves. 

Implementing an IFMIS requires many different government structures to start to work with common 

tools. To begin with, for the information to be coherent, all administrative units—national as well as 

regional and local governments, when applicable—have to adopt a common “language”, in the form 

of a uniform Chart of Accounts. (See the section above on ‘Chart of Accounts’.) This may seem a 

very simple task and in principle it is, but in many countries this process can take years to complete. 

 In Vietnam, more than five years were required to reach agreement on a common CoA. 

 In Kosovo, which some have described as a tabula rasa, the process took a little more than four 

months of negotiation. 

 In Uganda, a software package was installed and a CoA configured, only to find that the CoA was 

too limited and required additional fields, requiring an extremely costly system migration. 

14 INTEGRATED FINANCIAL MANAGEMENT INFORMATION SYSTEMS: A PRACTICAL GUIDE 
 In Slovak Republic, to overcome a stalemate over the design of the new CoA, the government 

had to devise a workaround to accommodate the needs of a variety of system clients. A 

centralized chart of accounts was introduced for operation in most major administrative units. 

Special interfaces were then designed to link into major client systems, such as those operated by 

the tax and customs administrations. Then, procedures were established for a number of smaller 

system clients (mostly smaller organizations without the resources to overhaul their systems to 

accommodate a new CoA) to submit their data monthly with certain key criteria. 

Establishing uniformity across all sectors of government can be a long-term process. However, this 

process need not hold up IFMIS implementation indefinitely. In fact, an IFMIS is so broad in size and 

scope that it might be better to break down the financing of such systems into defined steps. 

Examples of defined steps might include: 

 Preparation and delivery of the initial needs assessment; 

 Requirements gathering and delivery of systems specifications; 

 Design and delivery of a uniform chart of accounts; 

 Preparation and delivery of accepted rules and procedures for the new system; 

 Evaluation, selection and procurement of software and hardware applications; 

 Systems integration, testing and implementation; and 

 Audit/evaluation of project progress and results. 

Splitting up IFMIS delivery into discrete packages can result in vast improvements in the final 

product. Adopting a clearly defined, step-by-step approach based on a detailed assessment of existing 

conditions and needs can not only expedite the process of introducing a sound entry-level IFMIS, but 

can also help donors and governments alike minimize the risk of project failure. 

 PART 1: UNDERSTANDING IFMIS 15
PART 2: COUNTRY CASES 

This section briefly covers some country examples to demonstrate different approaches to IFMIS 

implementation; some of the common features and problems faced; and, how similar problems can be 

avoided or resolved. Some countries chosen were successes, while others have experienced or may 

continue to experience severe implementation challenges. 

SLOVAK REPUBLIC 

It is very hard to emulate the rapid success of the Slovak Republic’s IFMIS. Political will was a key 

driving force, but it was underpinned by a clearly defined strategy and timeframe. A clear 

understanding of what the government and its institutions required turned into a clear definition of 

what needed to be achieved, with a clear definition of the tools that were to be used. The system was 

defined, then acquired, tested, configured and “switched on” in time for the beginning of the planned 

fiscal year. The result was a system that, in its basic form, was efficient enough to pay for the 

investment in less than nine months of operation. 

The first step in this process was to undertake a needs assessment. This established the basic 

functions for the new Ministry of Finance IFMIS, a system that was to serve as many Governmentrelated client organizations as feasible. The needs assessment also set out other basic requirements for 

the new system. These included, inter alia:

 It should function in effect as a “bank” for all users, 

 It should have the functionality to manage budgets, record financial transactions, and manage 

financial resources, 

 The accounting framework would be International Accounting Standards (IAS), now 

International Financial Reporting Standards (IFRS), 

 The Treasury would centralize control of cash in a Treasury Single Account (TSA), transferring 

funds to settle payments as they come due, 

After careful evaluation of available software packages and their ability to meet these requirements, 

the system chosen was composed of three basic off-the-shelf packages: 

 A General ledger application – package chosen SAP 

 Client banking software – package chosen QBSW 

 Treasury management and trading software – package chosen TREMA 

A request for tender documents was then drafted and published and various bidders submitted 

proposals for integrating the system. The tender process itself did not go as smoothly as the overall 

implementation. The contract was initially awarded to one firm, and then swiftly withdrawn after a 

bribery scandal was exposed in the press. Despite a series of appeals, the contract was eventually 

awarded to the runner-up, Hewlett Packard, which set out to install the selected COTS packages on 

HP’s hardware platform. 

As a first task, the integration team established a steering committee to oversee the entire process. 

The team then designed a system architecture that would link all the information the system needed to 

handle into one structure. This figure below shows the basic system architecture. 

16 INTEGRATED FINANCIAL MANAGEMENT INFORMATION SYSTEMS: A PRACTICAL GUIDE 
Figure 4. Example of system architecture – Slovak Republic 

The next key step was to design a CoA that would tag the information correctly across the three 

central software packages and enable interfaces with other clients. 

Other steps included: 

 Assessing know-how gaps and setting up training 

 Configuring the system in accordance with IAS / IFRS 

 Setting up change management support 

 Developing training materials and training courses 

 Testing the system 

 Setting up the new TSA operation with an appropriate legal basis 

 Switching over from the old system to the new. 

The system “went live” on January 1, 2004. The basic cost of the system was a little over US$30 

million. However, when accounting for training, change management, and other factors, the overall 

cost was estimated at roughly US$ 70 million. Notably, the IFMIS was financed entirely from the 

Slovak Government’s own budget. 

The Slovak IFMIS was a major achievement given the political climate as well. The implementation 

process endured a change in government, but the process was not derailed because the elected 

Assembly (Parliament) was committed to a new system and forced the hand of the bureaucracy. 

 PART 2: COUNTRY CASES 17
The Slovak Government is now gradually bringing the system forward, with possibly one of the most 

effective IFMIS systems in the European Union (EU), rivaled perhaps by those in Lithuania, Estonia, 

and Slovenia. The Slovak IFMIS is possibly the most efficient among them and closest to the 

commercial model. 

The Slovak IFMIS implementation succeeded primarily because the country wanted to become part 

of the EU and was willing to make the changes required to comply with EU directives. The Slovak 

Government went a step further and installed a system that not only enabled it to conform to EU 

requirements, but also gave government extremely powerful management control and a sophisticated 

treasury. 

KOSOVO 

Post-conflict Kosovo offers another case of successful IFMIS implementation, although the 

conditions were vastly different from those in the Slovak case. With a population of 2 million people 

inhabiting a territory barely 100 km2

, Kosovo was of a much smaller scale. Furthermore, the 

reconstruction of infrastructure destroyed by conflict required huge inflows of foreign assistance. Yet 

as a province of Serbia, the territory did not have developed (or even nascent) institutions of 

government at the central level. There was no budget process, no treasury system to manage the 

disbursement of funds flowing into the country for reconstruction.4

 

Under a transitional administration led by the United Nations Mission in Kosovo (UNMIK), an 

administrative structure was put into place, pending establishment of Kosovar Government 

institutions and resolution of the territory’s final political status. An early step was the establishment 

of a Central Fiscal Authority (CFA), later renamed the Ministry of Finance and Economy (MFE), and 

creation of a basic financial management system. This initial system was a simple tracking 

mechanism in Microsoft Excel, the purpose of which was to get an immediate handle on spending and 

donor funds disbursement. However, within a few months the need for a more sophisticated, 

Government-wide IFMIS became apparent. The objective was to integrate the 30 Municipalities and 

the future line ministries and spending agencies under one central system. 

Financing of the IFMIS implementation was jointly undertaken by the Canadian International 

Development Agency (CIDA) and the Swedish International Development Agency (SIDA), with 

contributions from USAID including all the administrative instructions and procedures. The basic 

financial envelope was approximately 11,000,000 Euros. 

The IFMIS assistance included an E-Government software system, Free Balance, produced by a 

Canadian firm and also used by the Canadian Government. Having no choice in the software package 

was slightly unusual, but Free Balance is in itself an unusual package for it can run as well on a 

notebook as it can on a large-scale network. Consequently, it was possible to set up a pilot system for 

the CFA in less than 26 days. 

Once the first emergency budget for Kosovo had been developed, the IFMIS implementation team set 

out to install and configure the basic system architecture. The challenge was to set up a system that 

would work for the entire future administrative structure. 

The first step was an assessment process, identifying available human resources and system 

requirements. The Steering Committee decided early on that the system should include functionality 

for: 

 

4

 Mark Gallagher (2007), Building Fiscal Infrastructure in Post-Conflict Societies, funded by USAID under 

Contract GEG-I-06-04-00001-00 Task Order No. 06. 

18 INTEGRATED FINANCIAL MANAGEMENT INFORMATION SYSTEMS: A PRACTICAL GUIDE 
• Full accounting (General Ledger); 

• Treasury; and 

• Revenues. 

The resource assessment showed that many Kosovars had worked under the previous Yugoslav 

system. Therefore, it was decided to use, wherever possible, procedures and practices that 

corresponded to the old system. 

On this basis, a CoA was developed, agreed on and adopted using the old Yugoslav model. The CoA 

conformed both to local requirements, and to international standards, such as those of the IMF and the 

EU. This gave the new Kosovar administrators a familiar set of rules and regulations by which to 

work, while also meeting international requirements. 

At this stage in the implementation process, a meeting was organized to present the complete new 

system to financial and executive personnel of all of the municipal administrations in the 

parliamentary assembly hall. After the meeting, comments were received, certain minor changes were 

made, and the system configured. 

A major advantage in using Free Balance is and remains that each installation can run independently 

but still enable data to be collected into a central unit. This feature allowed the Kosovo system to be 

rolled out rapidly because each unit could stand alone. As will be seen in the Kazakhstan example 

below, other systems are not as flexible, but this does not necessarily mean that they are to be 

avoided; in fact, each has its own strengths and weaknesses. 

The program for the Kosovo roll out included: 

 Systems demonstrations to show the functionality to future Users; 

 Training workshops for both senior administrators and managers and for general staff; and 

 Change management workshops. 

The data originally entered into the system during the emergency phase was migrated to the new CoA 

and the system was gradually expanded as the different municipalities were brought on line. 

There were problems that needed to be solved as the project evolved, but none were severe enough to 

halt progress. The biggest challenge faced was when UNMIK ripped out the communications network 

as it prepared to scale down its operations. Fortunately, the implementation team was able to develop 

inexpensive replacement routers using specially programmed PCs to link the microwave antennas for 

the network. 

The other major challenge was political, that of addressing the three Kosovo municipalities that are 

majority Serb. The IFMIS implementation team adopted a non-partisan approach, configuring the 

system and disseminating all documents and information in Albanian, Serbian as well as English. All 

Kosovar project staff spoke both languages fluently. As the system incorporated the Yugoslav CoA, 

the new system allowed Serbian municipalities to extract and communicate their financial data to the 

Serbian Government in Belgrade, which after the war continued its financial support to the Serbian 

communities in Kosovo. So, even reporting and accounting were made easier with the introduction of 

the new IFMIS, which was configured to work in multiple languages depending on the user’s system 

profile. 

The core system was up and running in all three languages in 2003 and has been expanding in 

functionality, ever since. SIDA continues to fund dedicated local staff for system support, but the 

system now falls directly under the management of the Kosovar Ministry of Finance and Economy. 

 PART 2: COUNTRY CASES 19
KAZAKHSTAN 

Kazakhstan’s IFMIS implementation faced many hurdles, chief among which was the choice of 

software. The software selected for the core applications was Oracle Financials—an excellent 

package, but a system that requires a full communications backbone since all data are processed 

centrally. This issue had not been addressed in the tender and was completely ignored during the 

implementation phase. As a consequence of this oversight, the system integrator and the government 

implementation team had to make a special visit to the World Bank in Washington to negotiate a 

further loan of more than US$25 million to put in place a satellite-based communications backbone. 

This was hardly the extent of the obstacles faced in installing Kazakhstan’s IFMIS. To begin with, 

CoA development took longer than planned, delaying many other phases of system development. 

Secondly, the Government made the decision not to implement various key modules of the software, 

most notably payroll, due to lack of financial resources. This turned out to be a grave mistake, given 

the size of the public sector workforce and the salary and benefits management this entailed. 

Third, the Government failed to ensure full sustainable support to the expansion of the system beyond 

the initial installation. Many government IFMIS systems encounter this problem. In an ideal world, 

systems should have the flexibility and the sustained support needed to grow with changes and 

improvements in fiscal policy and management, and to meet the increasing information requirements 

of a maturing government administration. 

UGANDA 

Uganda offers an example of a country where introduction of a government IFMIS has moved in fits 

and starts. 

The most recent IFMIS implementation started in 2002. This is the second effort to set up a 

government-wide IFMIS with World Bank loan financing. The previous attempt never went live, after 

faltering in the design stage. The current system, based on the Oracle Financials platform, is basically 

a good system, but is fraught with key design problems that will necessitate a system migration. 

As mentioned in Part 1, the main design problem lies around the CoA. The Government signed off on 

the CoA and the system was configured, only to discover several months later that there were several 

deficiencies in the design of the CoA fields—a discovery that led to months of delays and 

considerable cost overruns. Most CoA’s have this limitation: Once the structure is created, it is very 

difficult and costly to change. 

This problem could have been easily avoided, but once the CoA was approved and the software 

configured it was too late. The problem was discussed but the cost involved for a rebuild of the 

system would have added more than US$6 million to the project cost. This would have meant going 

back to the World Bank to negotiate an increase in funding. Rather than go back to the donor, the 

system was put into operation with the defects unaltered. The Uganda IFMIS has limped along ever 

since, under performing its potential, with patches and workarounds that only serve to decrease the 

efficiency of what could have been an excellent system. 

Various other problems were encountered, most of them common to IFMIS projects around the 

world. These included: 

 Inadequate planning; 

 Poor communications between implementers, donors, and Government; 

 Shortage of management capacity and resources; 

20 INTEGRATED FINANCIAL MANAGEMENT INFORMATION SYSTEMS: A PRACTICAL GUIDE 
 Changes in systems design documents without full agreement; 

 Poorly implemented trainings; and 

 Unnecessary and spurious project expenditures. 

These types of problems are common to many public sector reforms, whether donor-funded or selffinanced. Suggestions will be made in Part 3 to avoid or at least mitigate these problems. 

Box 4. An indication of total cost 

Putting a price tag on a complete IFMIS installation is not easy. This is because the costs can vary depending on 

factors such as the scale of the administration, the number and types of users, hardware and software 

requirements, and the types of modules required. Yet from successful installations, a rough guideline for 

estimating the cost of installing the complete hardware and software platforms for a comprehensive government 

IFMIS is to estimate about US$6 per capita . 

For a country of 5 million, on this basis, the cost would be roughly US$30 million, approximately the base cost 

for Slovak IFMIS installation. Then there are the ancillary costs, including training and reorganization , which 

can easily double the price tag. This is precisely what happened in the Slovak Republic, where, all told, IFMIS 

installation came to US$60 million. This does not even account for the ongoing costs of licenses and 

maintenance contracts. 

However, the cost for implementing an “entry level” system that starts the process moving forward is generally 

far lower, and the time frame far shorter, which make this approach attractive for both donors and developing 

country governments with limited resources. The donor community can provide the seed funding, but for a 

prolonged process that will take as many as 10 to 20 years to complete, the country itself must be able to 

generate the resources needed to support the system and its modernization expansion on an ongoing basis. 

It is for this reason that it is recommended that a Treasury Single Account be put into place, as quickly as 

possible, to enable more efficient management of public finances and to generate the additional cash flow 

required to support the costs entailed by the move to a modern IFMIS. 

IRAQ 

The development of an IFMIS for the new Iraqi Transitional Government encountered many of the 

same problems highlighted in the Uganda case, from poor planning and communications to weak 

management and human capital. But, the process has also encountered a host of problems unique to 

the Iraq context. 

It is clear now that there was a lack of coordination in planning the new system among the various US 

Government agencies involved in Iraq’s reconstruction. An October 2007 audit by the Special 

Inspector General for Iraq Reconstruction (SIGIR) highlights some of the critical problems with the 

IFMIS implementation process.5

 Among these was a lack of understanding of the existing Iraqi 

financial systems and processes before and during installation of the new system. The Iraqi 

government has a distinctive accounting system, a unique combination of cash and accrual accounting 

methods, that is not easily adapted into the IFMIS system. Moreover, the report indicates that user 

requirements were not adequately identified and incorporated into the system’s development. 

 

5

 Interim Report on Efforts and Further Actions Needed to Implement a Financial Management Information 

System in Iraq, Office of the Special Inspector General for Iraq Reconstruction, SIGIR-08-001, October 24 

2007. 

 PART 2: COUNTRY CASES 21
According to the SIGIR report, because their buy-in was not sought, Iraqi ministries have not taken 

ownership of the new system and continue to operate legacy systems alongside the new system, 

manually inputting data from one system to the other, simply ignoring the new system altogether. In 

fact, several ministries have set up alternate and incompatible financial management information 

systems. 

The problems with interagency coordination have not only led to suboptimal outcomes, but also to 

missed opportunities. Three years ago, it was easier to find personnel, knowledge resources, and 

communications systems. As time has passed, the situation has gone from bad, to worse, to 

disastrous. Now, the comprehensive information needed to conduct fiscal planning and develop and 

execute budgets is simply not available. After more than $20 million of investment from USAID and 

considerable additional investments from other agencies, the Iraq IFMIS project has been halted 

pending decisions on a strategy for the future. 

VIETNAM 

The Socialist Republic of Vietnam has been working on introducing a new IFMIS since 2001. IFMIS 

development and implementation has been funded by the World Bank, administered directly by the 

Vietnamese Government but using the Bank’s procurement guidelines and tender process. 

Vietnam offers an interesting example of “too much, too fast.” The Government has embarked on 

drastic reforms to come into compliance with international standards and agreements and to become 

an accepted player in the international community. Unfortunately, while the leadership races forward, 

the people and systems in the government administration are not capable, or not willing, to keep up 

with the feverish pace of reforms. 

The critical problem of the CoA has been visited and re-visited for more than four years, without a 

clear resolution. Officially, the leadership has already signed off on a CoA, but the discussion carries 

on as various stakeholders in the bureaucracy continue to voice opposition. 

The Vietnamese administrative structure is complex, not only in the center, but also in the 64 

provinces that comprise the main structure. Little understanding of the complexity of its 

administrative structure has been taken into account in the current system, which is a hybrid of a 

French colonial administrative system, with an overlay of ex-Soviet bureaucratic practices. The result 

is a very cumbersome, slow administrative bureaucracy with an inability and unwillingness to adapt 

to new circumstances. 

The plan for the new IFMIS system is to cover the both central administration as well as the 64 

provincial administrations. The scale is monumental, especially considering where Vietnam is 

starting. 

This is where the concept of an “entry level” system comes into perspective. The Slovak Republic’s 

“entry-level” system was set up in the Ministry of Finance in the capital, Bratislava. As the system 

has been broken in and refined, plans have been formulated to bring other ministries and 

administrative units into the system. 

Vietnam’s ambition should not be criticized, but the IFMIS strategy is too ambitious and will likely 

have to be scaled down if it is to have any chance of success. The system chosen requires, as in 

Kazakhstan, a strong communications backbone. This does not exist and it is not feasible in the short 

term. All these problems might have been foreseen and could have been addressed had a proper 

assessment been done in advance of the tender. It is so tempting to try to drive forward faster than 

resources can follow. 

22 INTEGRATED FINANCIAL MANAGEMENT INFORMATION SYSTEMS: A PRACTICAL GUIDE 
PART 3: BEST PRACTICES 

This section offers a series of good or best practice steps to successful IFMIS implementation, 

drawing on the country cases cited above, as well as conventional wisdom on the topic. Of course, 

“best practices” should be taken with a grain of salt. There are few hard and firm rules, for the 

situation and the requirements vary from country to country. Nevertheless, the following steps seem 

to be helpful in ensuring successful implementation of IFMIS projects. 

STEP 1 – THE NEEDS ASSESSMENT 

The first step in any institutional reform project is a needs assessment—not a “wish list,” but a serious 

and comprehensive assessment of the current institutional conditions, what is needed, and what can 

be reasonably achieved. 

A number of questions should be addressed: 

 What are the political priorities of stakeholders? 

 How does the current governance system function (the nature of the political system, the 

bureaucracy, the budget process, etc.)? 

 What is the existing legal framework, and how does it function? 

 Can the legal framework be used to support the public financial reform process? 

 How does the current fiscal system work? 

 What systems are in place? 

 How is the information being used? 

 What human capacity and technical know-how are available, both at the central and at 

subnational levels of government? 

In addition, the assessment team should collect and analyze past years’ spending budgets, planned 

and executed, going back as many years as possible. This is not always possible, in particular in postconflict settings such as Iraq, where historical information is extremely scarce and cooperation from 

counterparts at a minimum. 

The historical analysis is of great importance to the assessment process. Many developing countries 

have inherited systems left behind by past governments or in many cases colonial powers, each 

leaving its own distinctive trademarks and traits. On top of these systems, subsequent governments 

have superimposed changes to accommodate changing needs, priorities, and ideologies (socialist, 

communist, etc.). Consider Vietnam, for example, long colonized by France but also strongly 

influenced by its recent communist history. As a result, while Vietnam has a very strong central 

government, each of the 64 provinces has a strong government, too, thanks to its colonial experience. 

This creates a relatively inflexible system, with each administration having its own demands, 

requirements, laws, and internal structures. This is a major impediment to introducing a unified 

IFMIS for the country as a whole. In such a large structure, change comes very slowly. 

Implementation of an IFMIS on the proposed 4-6 year timeline is simply not feasible. 

 PART 2: COUNTRY CASES 23
Box 5. The ideal IFMIS assessment team 

The initial needs assessment should ideally be conducted by a multidisciplinary team. Too often the when 

systems are proposed by donors and international organizations, the specification work is led by economists, 

who are simply not equipped with the knowledge or training required. This is not to say that economists are not 

needed or desired. On the contrary, their input is essential to designing systems that support sound fiscal policy 

and management. To achieve the best results, however, a wider array of specialists should be deployed. The 

ideal IFMIS assessment team on the ground should include: 

 A skilled project manager, 

 An economist, 

 A qualified accountant with expertise in public and private accounting systems, 

 An IT systems expert, 

 A business process analyst/engineer, 

 A change management specialist, 

 Trainers, and 

 A logistics expert. 

All situations are complicated by the national frameworks, which divide a country up into 

administrative areas, themselves complicated by other historical structures. These have an effect on 

the configuration and scope of a system, often best limited to one central agency, namely the finance 

ministry. Regardless, the technology chosen must be flexible to adapt to evolving conditions so that 

the system can be rolled to other parts of government gradually as the conditions and resources justify 

it. Analyzing and understanding how the current systems function, and how they have evolved, will 

enable a better assessment of how to plan Step 2, the “Roadmap” for IFMIS implementation. 

CHANGE MANAGEMENT 

Change management, as explained above, must be addressed early in the needs assessment as well. It 

is all very well to work out system needs, but the human needs are just as important, if not more. If 

these are not addressed, then the project will constantly be faced with resistance and obstacles from 

executive staff and elected officials all the way down to the civil service personnel who use the 

system most regularly. Clearly, identifying the various audiences and their needs is important in this 

first step. 

The best way to overcome resistance is to “sell” the changes, relying on credible national resources to 

deliver the message. The “selling” can be done through a variety of media: workshops, seminars, 

training sessions, a website, conferences, or newsletters. The techniques are evolving rapidly and 

often becoming cheaper as time moves forward. 

CAPACITY BUILDING AND TRAINING 

Like change management, capacity building and training need to be scoped out during the needs 

assessment process. The different user groups have to be identified; their levels of knowledge 

determined; recruiting needs established; and training curricula explored. Training programs need to 

address various audiences, from senior members of the bureaucracy down to mid- and entry-level 

civil servants. 

24 REFERENCES AND FURTHER READING 
The training programs, along with change management, should begin as early as possible in the 

project, using nationals, who are both committed to the project and to public service, to deliver the 

programs as much as possible. This process builds local capacity and helps build confidence among 

users, who through this process are re-assured that there will be some constants amid the change. 

Given the nature of institutions and organizations, capacity building is a never-ending process. It 

needs to be ongoing and permanent. This requires, therefore, establishment of a sound permanent 

authority within government, empowered to carry these functions forward. 

LEGACY SYSTEMS AND DATA MIGRATION 

Existing or “legacy” systems must be addressed as part of the needs assessment. It is also important to 

establish if the data can be recovered and transferred into the future system. 

There are various degrees of data migration, all depending on the volumes and costs needed to 

undertake the exercise. It is very important to bring a creative approach to handling legacy systems 

and data migration. Often there are very innovative, creative ways to tackle this aspect the IFMIS 

project. 

STEP 2 – CREATE A ROADMAP 

Once the needs assessment is completed and agreed, the team can set to work on Step 2, the 

“Roadmap.” The Roadmap is essentially a strategic plan mapping out how to transform the needs into 

a coherent solution, the steps involved, how to address each step, and setting out clear objectives and 

milestones for each step of the way. The Roadmap itself should become a measuring stick by which 

to measure progress in the process of implementing an IFMIS. 

The Roadmap should cover immediate, medium- and long-term tasks and objectives of the IFMIS 

project. It should clearly define parameters including the system objective and scope; expected 

impact and benefits; critical milestones and success factors; project implementation methodology; 

risk assessment and mitigation strategy; estimated cost breakdown by phase; and the financing 

arrangements. Agreement on these and other parameters should lead to a written commitment the 

cooperating government and corresponding commitments from donors and other external institutions 

engaged in the reform process. 

The Roadmap (and the needs assessment) should be revisited regularly to ensure that the situation has 

not substantially changed, as the time spans involved in implementing an IFMIS are so long that 

Government changes are inevitable and these will often lead to structural changes, which will have an 

effect on the Roadmap. 

Once this phase has been completed, a realistic timeframe has to be worked out through each 

successive milestone. There should be no overlapping. Each milestone should follow on from the 

next. Here is where the tender process should come into play. Each milestone should become a 

specific package, but with provisos, for if the offeror has successfully completed Milestone 1, it 

should be allowed to go to the next step automatically for a previously agreed price. If it has 

completed the milestone but outside parameters, then the subsequent milestones should be put out for 

tender anew. 

It must be clearly understood in this approach that all that is being achieved is an “entry-level” 

IFMIS. Once such a system is in place, providing it is sustainable and the political will remains, then 

the new system will evolve under its own impetus as management demands for information and 

processes become increasingly sophisticated. 

 PART 2: COUNTRY CASES 25
Rolling out the IFMIS system beyond core central level ministries to the various levels of government 

needs to be planned in distinct phases with a long-term plan. The needs assessment should help form 

a preliminary idea of these phases, but the Road Map will set the triggers and milestones that need to 

be attained in order to ensure that the long-term plan is carried out. This is not only important to 

reassure donors of the value of their initial investment, but also to enable them to measure progress 

into the future and to plan future critical investments as deemed appropriate. 

STEP 3 – THE MODIFIED TENDER APPROACH 

Once an agreed upon Roadmap is in place, the next step is to prepare the tender. Yet before the tender 

is issued, the stakeholders have to work out the overall cost of the exercise. 

All installations are comprised of the same basic components: 

1. Intellectual input; 

2. Software; 

3. Hardware; 

4. Training; and 

5. Support. 

From the initial needs assessment, the project team should know the approximate size of the user base 

and the various profile types that will be required. This provides a good estimate of the basic software 

profile, the licensing requirements, service costs, and annual maintenance and support fees. The 

hardware costs are also easy to calculate. 

The needs assessment should show the amount, types of training required, and the time frame 

required—again, a simple calculation. The support related to software and hardware should be fixed 

in the hardware and software costs. 

The technical assistance inputs, from CoA design and business process re-engineering, to testing and 

configuration, to training and change management are the variables on which most projects stumble, 

for the timeframes cannot be easily fixed. In Vietnam, four years have been consumed by CoA design 

and consultation, and still the issue is not resolved. In Slovak Republic, a turf war between the 

Central Bank and Ministry of Finance over debt management nearly derailed the IFMIS process. 

Indeed, there are myriad issues that, even if carefully analyzed during the needs assessment and 

contemplated in the Roadmap, require long, drawn-out negotiations that can break a project by delay 

upon delay. This is why Government IFMIS projects should be broken into discrete packets—

established from the needs assessment and laid out in the Roadmap. 

By adopting a modified tender approach, the IFMIS project can be surmount the hurdles that have 

been described in this report. It would provide the donor with an interactive role with the 

beneficiaries, establish clearly what needs to be done to put into place an IFMIS, setting local 

standards to meet the multiplicity of the objectives. 

STEP 4 – IMPLEMENTATION 

The final and most critical step of any IFMIS project is Implementation. 

26 REFERENCES AND FURTHER READING 
IMPLEMENTATION TEAM 

The implementation team needs to be capable of bringing to the project the right skills and talents. A 

core, or primary, project team should be made up as follows: 

• Project Manager (PM) 

o The PM must be a “diplomat” who not only has access to the Minister and other key 

counterparts as and when needed, but also has the skills and sensitivity to win the 

trust and confidence of those counterparts. 

• Public Finance Economist 

o Must have a sound understanding of public finance, but not a rigid “There is only one 

way” approach; and, a good understanding of IMF’s Government Finance Statistics 

(GFS) and UN’s Classification of the Functions of Government (COFOG). 

• Qualified Accountant 

o Must be open to an economist’s way of approaching accounting and finance; and, 

should have a solid understanding of Charts of Accounts, IAS, IFRS and Government 

adaptation of Standards. 

• Change Management/Training Expert 

o Able to visualize the system’s impact on institutional arrangements, responsibilities 

and relationship, and design programs with counterparts to bridge and fill knowledge 

gaps and build capacity. 

• IT Systems Expert 

o Must have the requisite IT systems skills and have the creativity to work around 

obstacles that the new system will encounter. 

• Logistics expert 

o Needed to organize resources, meetings. Essential and great diplomatic skills are 

needed to provide backstopping as and when needed. 

The persons chosen must not only be professionally qualified, but also culturally aware, with proven 

skills in handling delicate negotiations. The ability to come up with new ideas and be creative to find 

solutions to the problems that will be faced in delivering the system is critical. Each of the team 

members must have previous experience in putting into place IFMIS, whether in government or in 

industry, but some Government systems experience is a must for the team as a whole. Team members 

must all have a proven ability to convince and sell ideas and concepts. And, they must be capable of 

mentoring, transferring knowledge and know-how to a team of local counterparts who will “shadow” 

them in the initial stages of project implementation. 

The “shadow” team should have counterparts to each of the expatriate team members. These 

individuals should have similar backgrounds and skills to their expatriate counterparts, but their 

knowledge and experience will be generally at the outset less. They must be capable of taking over 

the project, assuming its responsibilities. The potential must be there from the start. 

The expatriate team’s task is not only to manage the project in its initial phases, but to transfer 

knowledge and capacity to the local shadow team, who should as quickly as possible assume the 

responsibilities for the project. The time frame for this is difficult to set. The objective is for the local 

 PART 2: COUNTRY CASES 27
team to become the motor behind the IFMIS installation, to build in-country capacity, and for the 

expatriate team to be phased out from an active role to one of mentoring and support until their 

support is no longer required. Throughout, the implementation teams, international and local, must 

have the support of all the stakeholders. 

STEERING COMMITTEE 

A regular Steering Committee should oversee progress from the highest level. Its role is to ensure that 

obstacles and hurdles are tackled smoothly and in a timely fashion. Chaired by the Minister of 

Finance and/or his Permanent Secretary, the Committee should meet regularly, e.g., monthly, 

produce minutes and follow up on issues and milestones. Donors and stakeholders should attend and 

observe, for with proper surveillance and interest, obstacles and problems can be addressed and 

decisions taken to ensure the process of implementation is not derailed. 

START SMALL, THINK BIG 

Integrated financial management information systems are basically simple to put into place. In theory, 

they should work as well in a government environment as they do in commercial environments—

corporations like GE, Microsoft, and Coca-Cola are as large if not larger than the GDP of most 

developing countries, and their networks similarly complex— but of course it rarely seems that way. 

Indeed, size has little to do with the problems governments face in transitioning to modern IFMIS. 

What government IFMIS projects often overlook are the inherent conditions on the ground: the 

political structure, existing systems, human capital, and other forces that come into play when 

attempting any major institutional change. 

Setting the introduction of an IFMIS at a feasible level can help overcome these obstacles. Setting the 

level can be compared to that of setting the bar for a high jumper training for a competition. The 

height has to start from a level that can be jumped, with the capabilities already acquired; with 

training and practice, the bar is gradually raised until the target height is achieved. One does not start 

at 3 meters, when 50 centimeters is all that the jumper can do at the outset. This analogy applies to 

IFMIS as well. 

A first step should be an entry-level system, limited to a controlled environment such as the Ministry 

of Finance. The system can be then be rolled out in phases once it has been tested and proven in that 

controlled environment. This is precisely how systems have developed even in developed western 

countries. All systems started from some experimental entry level that were gradually expanded, 

rationalized, consolidated and migrated. An example is the Government of Geneva in Switzerland: 

Until 2005, the Government had separate IFMIS system, each using different platforms and software 

configurations, that are only now being consolidated into one. 

TESTING THE SYSTEM 

Ultimately, the effectiveness of IFMIS as a financial management tool is dependent on the 

technology—the software and hardware—on which it operates. 

It is important to bear in mind that software and hardware are engineered products. When building a 

production line, engineers will test all steps in a process before actually installing the new line. 

Through this testing process, they prove that the product can be manufactured; at the same time, they 

address at least 80% of the problems that the real production line may encounter. 

28 REFERENCES AND FURTHER READING 
Like all good engineers, all quality hardware and software suppliers test their engineered products in 

their internal laboratories simulating situations of all types, ensuring that their products function. This 

is also why, as a rule, it is more cost effective to use COTS products for the process. There are very, 

very rare exceptions to this. 

Installing a government IFMIS is nothing more than a new production line, one that will handle 

information in a new way. All successful IFMIS installations have gone through a similar process. 

The systems introduced in Slovak Republic, Kosovo, and Slovenia, to name a few, were tested with 

data either on paper, or in actual hardware/software environments, to prove the system engineering 

design before advancing to the installation phase. 

Pre-testing the working model with real data—proving the functioning of the CoA, the software and 

integration processes, recording real transactions, and producing real reports—can mitigate future 

problems and speed up final installation. One option to consider is setting up a “laboratory” 

environment in which to test and calibrate the system. Unless one has unlimited resources to dispose 

of, a new system cannot simply be rolled out and switched on without this kind of testing. In the 

context of a Ministry of Finance alone, the impact of an IFMIS is enormous; the impact and the risks 

on a government-wide scale would be exponentially larger. 

To ensure that this step is built into the IFMIS project, it should be clearly laid out as one of the 

tender process milestones to prove that the solution will work before too many resources are 

committed to the project, thus avoiding wasted money, time and credibility. Of course, this does not 

obviate the need to pilot-test the system with real users in real budgetary units (e.g., within the 

finance ministry) before rolling the system out to the broader government. 

CONCLUDING REMARKS 

While this paper cannot cover all of the facets of IFMIS design, development and implementation, the 

thrust is to provide a basic understanding of what is required to bring an IFMIS successfully to life. 

Today, the systems themselves are based on tried and tested software and hardware platforms, which 

have worked thousands of times successfully. The problem when it comes to government 

environments is not an engineering problem, but one of inertia: inertia that is political and 

bureaucratic at its core. Introducing modern financial management systems demands a commitment to 

change: change in technology, in processes and procedures, as well as changes in skills, 

responsibilities and behaviors. Changes of this nature and magnitude have to be accepted from within 

and not simply imposed from the outside. Successes like the Slovak Republic were the result of real 

acceptance, at the highest levels of the political system. IFMIS success also requires donors to 

provide firmer monitoring, and firmer support to ensure sustainability. Too often these projects under 

perform or take much more time and effort than anticipated because costly mistakes were made, 

whether in the assessment and design stages, in the tender process, or in the course of system 

implementation. 

This paper proposes a series of best practice steps for introducing IFMIS based on experiences and 

knowledge of past successes and pitfalls. What is presented here is not a recipe for instant IFMIS 

success, for this is impossible. Instead, it highlights the key features that must not be overlooked, the 

key techniques that have been common in successful installations. Starting with these as a basis, 

IFMIS projects can be better designed and managed to produce the financial management and 

governance results that they are intended to have. 

 PART 2: COUNTRY CASES 29
30 REFERENCES AND FURTHER READING 

REFERENCES AND FURTHER READING 

Bartel, Margaret (1996). “Integrated Financial Management Systems: A Guide to Implementation 

Based on The Experience in Latin America.” Washington, DC: Institute For Democratic Strategies, 

LATPS Occasional Paper Series. 

Casals and Associates (2004). “Integrated Financial Management Systems Best Practices: Bolivia and 

Chile,” funded under USAID Contract AEP-I-00-00-00010-00, Task Order No. 01 Transparency and 

Accountability, 2004. 

Diamond, Jack and Pokar Khemani (2005), “Introducing Financial Management Information Systems 

in Developing Countries,” International Monetary Fund. 

Dorotinsky, William and Junghun Cho (2003). “The World Bank’s Experience with Financial 

Management Information System (FMIS) Projects”, Washington, D.C.: World Bank, PRMPS, draft, 

4/16/03. 

Gallagher, Mark (2007). “Building Fiscal Infrastructure in Post-Conflict Societies,” funded by 

USAID under Contract GEG-I-06-04-00001-00 Task Order No. 06. 

“Interim Report on Efforts and Further Actions Needed to Implement a Financial Management 

Information System in Iraq,” Office of the Special Inspector General for Iraq Reconstruction, SIGIR08-001, October 24 2007. 

World Bank’s Public Financial Management (PFM) Reform database, materials on PFM automation 

and IFMIS: 

http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/EXTFINANCIALMGMT/0,,contentM

DK:21475540~isCURL:Y~menuPK:3914586~pagePK:210058~piPK:210062~theSitePK:313218,00.

html. 
 ANNEX 1 31

ANNEX 1: CHECK LIST 

Table 1. Basic checklist for IFMIS implementation 

1 Institutional and Organizational Needs Assessment 

2 Initial Road Map 

3. Government resources to be committed 

4. Project team composed of: 

• Project Manager 

• Logistics Support 

• Legal support expert in current Government Financial rules and regulations, fiscal matters, 

• IT expertise 

• Business process expert – current business processes 

• Other experts the host government may nominate 

5. Steering Committee (SC) chaired by Minister of Finance or his delegate. Members to include: 

• Project Managers – Government and IFMIS team 

• Central Bank representative 

• Debt Agency representative 

• Ministry Finance department nominees, maximum 4 

• Nominated minute-taker and secretary to the SC 

6. SC Minute approval process to be in place – Maximum time, 5 working days 

SC Monthly meeting schedule to be fixed 

Other committees established should all report to SC 

7. Dispute resolution process to be agreed, max time period 60 working days, 

Ombudsman Minister Finance, or Prime Minister – Donor Representative, last resort 

8. Information minimum that be available: 

• Current CoA(s) 

• Full library of current reports produced, including Balance Sheets 

• At least past three years’ approved and executed budgets 

• Current Budgets in execution 

• Complete set of current accounting records (General Ledger and sub ledgers) 

• Audit reports and Management replies by: 

• Auditor General 

• Internal Auditors 

• External Auditors 

• Organization Chart 

• Current Business process flows 

• Main job descriptions 

• Information on current systems functioning 

9. What must be completed before tender process 

• CoA 

• Business Process mapping 

• Set of complete reports that all Users and User Departments require to accomplish their work 

• Testing of accepted CoA 

10. Training requirements: 

• Train the Trainer personnel need to be identified 

• Contractually all need to be committed to staying with project for 3 years minimum 

9 IFMIS implementation team, minimum requirements: 
32 INTEGRATED FINANCIAL MANAGEMENT INFORMATION SYSTEMS: A PRACTICAL GUIDE 

• Project Manager 

Experts in: 

• Finance (Public and Corporate0, Budgeting, Treasury and IAS / IFRS 

• Training 

• IT 

• Change Management 

• Business process engineering 

• Logistics 

• Government legal systems