Sustainable Public Financial Management

Doug Hadden, VP Products

We’ve updated our user metrics this week. The numbers reflect the FreeBalance company growth over the past year.

• Total number of FreeBalance users: approximately 70,000
• Number of civil servants affected by FreeBalance financial and human resource management: over 1.5 million
• Total annual government budgets managed: over $1/4 Trillion (USD)
• Number of software implementations: over 200
• Number of countries served: 19

Some of these numbers might not seem impressive. After all, many software companies have well over 200 implementations. Some of our customer implementations are across every level of government, so a single implementation can have a lot of impact.

Doug Hadden, VP Products

Comedian Stephen Colbert has captured some of the “truthiness” of government budget politics. This could go a long way to highlight the critical importance of budgets and, dare I say, government accounting. That’s because budget processes are so important that they must become fodder for satire.

The Canadian government fell based on a vote of confidence, triggering an election. (And explained very well in the first video clip below by a somnolent BBC reporter.) There is an interesting transparency and accountability dynamic here. The Conservative Party have won two minority governments partly based on a commitment for transparency. The Federal Accountability Act included the creation of a new post: the Parliamentary Budget Officer. This post is independent of the government and an officer of the Library of Parliament. The PBO, Kevin Page, criticized the government budget for lacking sufficient information on how estimates were developed. There has been particular debate about the cost of F-35 aircraft.

So, in typical Canadian fashion, the office set up by the government has been responsible for the fall of the government. As it was with the sponsorship scandal when the previous Liberal government set up a public inquiry.

Regardless of any viewpoint on the budget itself, it is important to realize that credible budgets and budget transparency is critical for good governance. Budget transparency is also critical. Canada is not a leader in budget transparency because of the practice of budget and cabinet confidentiality. However, Canada seems to be a leader in budget satire, as witnessed by the second video below by comedian Rick Mercer.

Yes, the Library of Parliament is a FreeBalance customer, as is the House of Commons and the Senate.

FreeBalance to leverage its Canadian Public Financial Management Expertise and Latin America & Caribbean Customer Experience

Ottawa, Canada (March 24, 2011) – FreeBalance, a global Government Resource Planning (GRP) software company, announced that it is attending the 52nd Annual Meeting of the Board of Governors of the Inter-American Development Bank (IDB) and the 26th Annual Meeting of the Board of Governors of the Inter-American Investment Corporation (IIC). The meeting will be held in Calgary, Canada, from March 25 to 28, 2011 and brings together Ministers of Finance, Presidents of Central Banks, and other high-level authorities of member countries. Participation at the Annual Meeting is by invitation only. The Inaugural Session including the seminars, sessions, and meetings will be held at the Calgary TELUS Convention Centre. The meeting is expected to attract 3,000 delegates.

Seminar topics at the IDB 2011 Annual Meeting includes: Innovative Business Models in Haiti: Linking profit, sustainability and social investment; Can you afford not to invest in Latin America and the Caribbean; Financing large infrastructure projects, accelerating the development of Latin America and the Caribbean; Private Sector Investments and Socially Responsible Development of Natural Resources; The Future of Oil in a Carbon Conscious World; Global Imbalances and Latin America; Sustainable Cities: The Challenges of Growing with Quality; and, Development Connections: Connecting the Unconnected.

The IDB supports efforts by Latin America and the Caribbean countries to reduce poverty and inequality. It aims to bring about development in a sustainable, climate-friendly way. Established in 1959, the IDB is the largest source of development financing for Latin America and the Caribbean, with a strong commitment to achieve measurable results, increased integrity, transparency and accountability.

“FreeBalance is pleased to have the opportunity to participate in the IDB IIC Annual Meeting in Canada,” said Matthew Olivier, Director, Global Marketing & Alliances at FreeBalance. “FreeBalance is a Canadian company that is active in Latin American and the Caribbean. Our mission is to help countries leverage technology to support economic growth and aid development through transparent and accountable financial systems.”

FreeBalance Accountability Suite Version 7 offers a pure web-based platform that has been optimized for rapid government deployment, operational effectiveness. It is ideal for needs and requirements of Latin America and Caribbean governments. FreeBalance offers flexible deployment options, service oriented architecture facilitating integration with government information systems. The FreeBalance Government Resource Planning solution covers the entire budget cycle including financial and human resources transparency to improve governance and trust.

FreeBalance customers span the globe and the user community includes public financial management professionals in 19 countries, including Antigua & Barbuda, Panama, Canada, Iraq, Kosovo, Liberia, Mongolia, Namibia, Pakistan, Sierra Leone, Southern Sudan, Timor-Leste, and Uganda among others. FreeBalance operates in 15 customer time zones. FreeBalance has more than 60,000 users around the world. FreeBalance software manages a global civil service workforce of 1,500,000, and also manages a quarter trillion ($US) annual budgets worldwide.

About FreeBalance
FreeBalance helps governments around the world leverage robust Government Resource Planning (GRP) technology to accelerate country growth. FreeBalance software solutions for public financial and human resource management support reform and modernization to improve governance, transparency and accountability. Good governance is required to improve development results. For more information, visit www.freebalance.com.

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By James Elrick

The Aid & International Development Forum (AIDF) is a leading global event dedicated to the effective delivery of humanitarian aid, disaster relief and development programs. It aims to facilitate networking, partnership building, information sharing and cross-organization operations amongst those involved in the sector. The event runs from June 8-9, 2011 and takes place in Washington, DC. It is a free to attend. Make sure you register to secure your place.

FreeBalance President & CEO Manuel Pietra will be speaking at AIDF. Mr. Pietra will be participating in the Finance workshop on Thursday June 9 2011 at 10:15 – 11:00. The aim of this workshop is to discuss the effectiveness of current finance solutions in the disaster relief and development sector and look at current trends and how they can be improved/adapted to increase coordination and a better approach. After his presentation, there will be time for questions.

During Mr. Pietra’s presentation, he will be discussing if a country’s Public Financial Management (PFM) system is the ideal solution to manage the post-disaster reconstruction relief funds. Can a PFM system spend resources fast enough for disaster relief and development? What level of speed is acceptable, especially regarding such immediate needs as infrastructure spending and printing checks? And more.

To learn more about the FreeBalance Government Resource Planning solution, please drop by the Finance workshop, or visit the FreeBalance booth at the show.

Interested in scheduling a meeting with FreeBalance at the show, please send us an email at info@freebalance.com.

Doug Hadden, VP Products

Many experts have warned developing nations for trying too many reforms at once. Governments need capacity: technical infrastructure and human capacity to make reforms sustainable. The “platform” approach is a practice that recognizes these constraints and provide a series of reform steps. The completion of a stage or platform enables the government to move to the next stage. Risk is mitigated. Reform follows a course set by the country context.

So why are so many countries accelerating PFM reform?

We are witnessing some remarkable reforms in FreeBalance government customers. Although, as a GRP provider, with PFM experts, we are supporting these initiatives – it is important to recognize that these are country-driven:

• Government of Afghanistan rolling out financial management to all provinces without any outside technical assistance, when it was thought by many experts to be impossible.
• Government of Kosovo decentralizing budget management and purchasing.
• Government of Timor-Leste rolling out a financial transparency portal with 10 years of budget data.

Should we Think of a New Platform Approach?

Projects tend to have preparation, pilot, production and sustainability phases. Should a government begin preparing of the next stage only after the previous stage has been fully rolled out and deemed sustainable? The skill sets necessary for each phase within a stage or platform differ.

PFM reform has a learning curve. Should the time required for a subsequent platform of the same scope be planned for a similar time frame? Should the roll-out of technology to line ministries or sub-national governments take longer than the initial stage with the Ministry of Finance?

A more agile platform approach is needed these approach should include:

• Overlapping phases or platforms based on government capacity.
• Recognition of planning can begin for a subsequent phase while completing the pilot of the previous phase.
• Focus on capacity building so that rolling out reforms will follow a learning curve and accelerate at a standard rate.
• Flexibility to adapt the goals of the next platform based on current results. For example, the outcome of Platform 1 may result in more information that adjusts the goals of Platform 3.

Doug Hadden, VP Products

Why should governments move to accrual accounting? To international standards? These were some of the themes at the first annual international CIPFA (The Chartered Institute of Public Finance & Accountancy) conference on trust and accountability in London last week.

[My presentation audio from the video on lessons learned in GRP in developing countries has some problems, but the full slideshow with script is available.]

David Walker, the former comptroller general of the United States spoke about misleading public accounts and the lack of financial transparency.  An upcoming study with Standford University and Walker’s Comeback America Initiative will show that New Zealand, the first country to adopt accrual accounting, leads in fiscal transparency.

Ian Ball of the International Federation of Accountants (IFAC) spoke about the move to accrual accounting in New Zealand. Although accrual accounting exposes political expediency, it leads to much better decisions according to Mr. Ball who showed how the value of the Government of New Zealand has increased over time until the financial crisis.

Dr. Ionnis Sarmas described the public debt crisis in Greece. Dr. Sarmas showed how subsequent audits increased the debt estimate. Financial controls were not observed. Professor John Fitzgerald described the public debt crisis in Ireland and the lack of effective oversight in the financial sector. He pointed out that Germany has decided not to adopt even modified cash accounting.

Here are some takeaways:

• The lack of accrual accounting enables governments to “cook the books”. In particular, governments often show pension investments as assets but do not count the present value of pension obligations or entitlements.
• The use of different standards makes it difficult to compare governments around the world and can hide systemic weaknesses.
• The lack of multiple year planning in many countries provides too short a window for substantial change.
• Many vehicles used for managing public finances are dubious from an accounting perspective. As David Walker says, Trust Funds in the US Federal Government are not funded and no one trusts them. There is also concern about the magic bullet of Public Private Partnerships (PPPs). Governments often absorb the liability should the private sector partner fail.
• Perhaps developing countries, like Timor-Leste, will leapfrog more developed countries, on this road to international public sector accounting standards.
• Trust and accountability means that the population needs to see the books. Politicians and public servants need to understand the long-term implications of public policy.

Portal enables citizens, the press, donors, NGOs and civil society to monitor government budget execution interactively and in real-time

Ottawa, Canada (March 15, 2011) – FreeBalance, a Government Resource Planning (GRP) software For Profit Social Enterprise (FOPSE), today announced that the Government of the Democratic Republic of Timor-Leste (RDTL) has launched the web-based Transparency Portal.

The Timor-Leste Transparency Portal allows citizens to access historical and recent government financial information to monitor RDTL state funds effectiveness. Detail provided includes amounts allocated expenditure location, and program data. Citizens can investigate projects further to view budget transactions to ensure the budget is being spent as intended. This ensures honesty and transparency to improve citizen and investor confidence. The Timor-Leste Transparency Portal provides 10 years of budget information: the budget that was approved and the actual budget spent. Reports and filtered results can be exported in PDF, Word, Excel, XML and HTML formats.

“With the launch of the FreeBalance Transparency Portal, the Government of Timor-Leste demonstrates worldwide leadership in transparency, trust and accountability,” said Manuel Pietra, President & CEO of FreeBalance. “Timor-Leste continues to modernize rapidly by adopting transparency initiatives, some of which have yet been implemented in more developed countries. Transparency and accountability are dominant themes in governance and are key factors at reducing corruption. Government transparency creates participation and confidence. Oversight improves government efficiency and effectiveness, strengthens capacity, and budget execution.”

The Government of Timor-Leste has leveraged rich web technology from FreeBalance so that it can integrate data from multiple sources, simplify finding information and make information externally available for other systems. The Governments now has the option to display information from multiple sources, including other government financial databases. The Transparency Portal integrates seamlessly within the FreeBalance Accountability Suite.

FreeBalance has been working with the RDTL since 2000. FreeBalance has provided GRP software and PFM services supporting improved governance, accountability, and transparency. The Government of the Democratic Republic of Timor-Leste uses FreeBalance Financials, Purchasing, Assets, Human Capital Accountability, Treasury, and Performance Budgeting modules. The RDTL and FreeBalance worked closely to implement a range of products including a Minister’s Dashboard.

FreeBalance customers span the globe and the user community includes public financial management professionals in 18 countries. FreeBalance operates in 15 customer time zones. FreeBalance has more than 60,000 users around the world. FreeBalance software manages a global civil service workforce of 1,500,000, and also manages a quarter trillion ($US) annual budgets worldwide.

About the Democratic Republic of Timor-Leste
Internationally recognized as an independent state in 2002, Timor-Leste is located in South East Asia. After 400 years of occupation, 24 years of war, two years of a United Nation’s led transitional administration, Timor-Leste restored its independence. Timor-Leste has witnessed rapid development in recent years and has been ranked one of the top ten fastest growing economies in the world for the last three consecutive years. Tetum and Portuguese are the official languages.

About FreeBalance
FreeBalance helps governments around the world leverage robust Government Resource Planning (GRP) technology to accelerate country growth. FreeBalance software solutions for public financial and human resource management support reform and modernization to improve governance, transparency and accountability. Good governance is required to improve development results. For more information, visit www.freebalance.com.

Doug Hadden, VP Products

Big day at the first International CIPFA Conference in London on trust and accountability in government.  Some excellent session so far with dynamic speakers. (Follow the FreeBalance twitter feed for more.) And, the opportunity to present lessons learned in FreeBalance implementations around the world.

The key problem addressed is how to overcome the high failure rate in government integrated financial management system implementations. The following presentation includes all speaking notes and extra slides (including screen shots from the Timor-Leste transparency portal).

Doug Hadden, VP Products

Where did the idea of best practices in public financial management come from? PFM experts agree that there are many good practices but few “best” practices. That’s because practice improvement, in the public sector, depends on the government context. Many so-called best practices, such as full accrual accounting, have limited incremental benefit to most governments. To many, the cost to train and implement accrual accounting, exceeds any benefit. It’s high time to break some of the myths of “best practices”. (I hope to do that in blog posts over the course of the next month.)

Private Sector and “Best Practices”

enterprise software and private sector

“Best practices” has become consultant-speak and justification for acquiring leading ERP software. I can’t help but wonder whether this is perpetrated because when one only has a hammer, every problem looks like a nail.

enterprise software and government

When companies whose software was originally designed for the private sector encounter government requirements, invariably, a theme arises: “government should be run like a business.” (Notwithstanding completely different accounting environments and the need for rich budget controls.) And, the private sector has “best practices” that are so “BEST” that these should be adopted by government.

In other words, when encountered with a screw – bang it in as hard as you can. Make sure that it can’t be removed without any damage. Call it a best practice. Insist that it “should” work, even when it isn’t working.

Government and Best Practices

GRP and government

We’ve talked a lot about how Government Resource Planning (GRP) is unique. For government. Not a variation of ERP.

As we navigate through the world of government financial practices in future blog posts, there is one thing to keep in mind: the public sector is always changing. Modernizing and reforming.

So, one needs to be able to remove the screw and insert a different one at the right time.

Presentation will share how FreeBalance has adapted to the international PFM needs  

Ottawa, Canada (March 9, 2011) – Manuel Pietra, President & CEO at FreeBalance will be presenting at the Trust and Accountability in Public Financial Management (PFM) conference organized by the Chartered Institute of Public Finance and Accountancy (CIPFA). The conference takes place March 15-17 at the Queen Elizabeth II Conference Centre, London, UK.

Mr. Pietra will be presenting on the “Implementing Integrated Financial Management Information Systems (IFMIS) - Lessons Learned and Value Added in the Developing World” panel on Tuesday, March 15 at 13:40. Mr. Pietra’s presentation will describe how Government Resource Planning (GRP) vendors achieve government financial management implementation success. The presentation describes how public financial management software design, implementation and support methodology can be adapted to improve success. It will also describe how adaptable open systems are less expensive to implement and sustain. Roger Tabor, Chair of the IFAC Professional Accountants in Business Committee will moderate the panel.

“Trust and accountability in Public Financial Management have become significant factors to improve government effectiveness and achieve country objectives,” said Manuel Pietra, President & CEO of FreeBalance. “In this era of the ‘new normal’, it has become more important for FreeBalance as a For Profit Social Enterprise (FOPSE) to share good practices in GRP software development, implementation and sustainability.”

This conference is aimed at Accountants General and Auditors General, public sector CFOs, international accounting bodies and IFAC members, donors and aid organizations, and international development professionals and advisors. The conference PFM focus is with transparency, governance and anti-corruption good practices.  The critical needs for government trust, support of international standards, and achieving value for money will be discussed by leading PFM experts.

FreeBalance customers span the globe and the user community includes public financial management professionals in 18 countries, including Canada, Liberia, Namibia, Sierra Leone, Uganda, and Southern Sudan. FreeBalance operates in 15 customer time zones. FreeBalance has more than 60,000 users around the world. FreeBalance software manages a global civil service workforce of 1,500,000, and also manages a quarter trillion ($US) annual budgets worldwide.

About FreeBalance
FreeBalance helps governments around the world leverage robust Government Resource Planning (GRP) technology to accelerate country growth. FreeBalance software solutions for public financial and human resource management support reform and modernization to improve governance, transparency and accountability. Good governance is required to improve development results. For more information, visit www.freebalance.com.  

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