This weekly news update provides the Government Resource Planning (GRP) community with a brief overview of recent FreeBalance developments and relevant industry news.

Technology: the Asymmetric Anti-Corruption Weapon?

In this age of botnets, corporations parsing through personal data and government web blocking, we sometimes miss the asymmetric use of technology to prevent and expose corruption. Many observers fear that technology is a new frontier for corrupt practices. It was interesting this weekend to have two separate twitter discussions on the subject. No anticorruption strategy is foolproof. But we need to understand the interplay between technologies and corruption

Read the full article on the FreeBalance blog >>

The Difficulties and Rewards of so-called “technical” PFM Reforms

It’s the era of PFM myth building and myth busting. Of clichés and fashion. Cynicism and risk aversion. But, ultimately, it’s the era of increased insight into what works in public financial management reform. Current discussions about PFM effectiveness seem to centre about the relative merits of applied technology versus applied practice. We invite you to join in on the discussion.

Find out more on the FreeBalance blog >>

Thailand Introduces Social Media Analytics Tool

The National Electronics and Computer Technology Center (Nectec), Thailand has recently launched a social media analytics tool called “Social Sensing” (S-Sense) to evaluate product popularity among the Thai netizens. Social media analytics have captured 10% of the Thai research market over the past three years due to the popularity of social media. Thailand has total of 18 million Facebook users, ranking the 13th country in the world, and 1.5 million Twitter accounts.

Read the article on the FutureGov website >>

Lessons Learned at the Innovation in Government Week

We attended a 2-day conference at the Inter-American Development Bank, Innovation in Government Week: Strengthening the Institutional Capacity of the State to Deliver. The conference was focused on lessons learned in Latin America but has wider applicability. There were some very interesting trends in Latin American governance discussed.

Read more about Innovation in Government Week >>

Let’s benchmark aid effectiveness with other government programs

There is probably no public debate so much dependent on bad information and confirmation bias than foreign aid. Polls consistently show that public perception of aid spending is orders of magnitude larger than it is. And, press reporting about aid focuses far more on the bad news than the good. That’s not to say that foreign aid can’t be improved. And, there has been significant work to find evidence of what works and what doesn’t. And, for transparency thanks to the International Aid Transparency Initiative (IATI).

Read more about the aid effectiveness debate >>

Ces nouvelles hebdomadaires apportent à la communauté de la planification des ressources gouvernementales (PRG) un aperçu général des récents développements de FreeBalance et des nouvelles pertinentes de l’industrie.

Technologie: l’arme asymétrique de lutte contre la corruption?

À l’heure des réseaux de « botnets », des entreprises décomposant les données personnelles et du blocage de sites Web du gouvernement, nous oublions parfois l’utilisation asymétrique de la technologie pour empêcher et exposer la corruption. Plusieurs observateurs craignent que la technologie soit une nouvelle frontière pour les pratiques de corruption. Cette fin de semaine a été intéressante quant aux deux discussions distinctes sur le sujet sur twitter. Aucune stratégie de lutte contre la corruption n’est infaillible. Mais nous avons besoin de comprendre l’interaction entre les technologies et la corruption..

Lire l’article complet sur le blogue de FreeBalance >>

Les difficultés et les récompenses des réformes dites « techniques » de la GFP

Nous sommes dans l’ère du renforcement et de la démystification du mythe de la GFP. Des clichés et de la mode. Du cynisme et de l’aversion pour le risque. Mais en fin de compte, c’est l’ère de l’accroissement des aperçus de ce qui fonctionne dans la réforme de la gestion des finances publiques. Les discussions actuelles au sujet de l’efficacité de la GFP semblent se concentrer sur les mérites relatifs des technologies appliquées par rapport aux pratiques appliquées. Nous vous invitons à vous joindre à la discussion

En savoir plus sur le blogue de FreeBalance >>

a Thaïlande instaure l’outil analytique des médias sociaux

Le National Electronics and Computer Technology Center (Nectec) en Thaïlande a récemment lancé un outil analytique des médias sociaux appelé « Social Sensing » (S-Sense) afin d’évaluer la popularité d’un produit parmi les Thai netizens. L’analytique des médias sociaux a capté 10 % du marché de recherche thaïlandais ces trois dernières années grâce à la popularité des médias sociaux. La Thaïlande compte un total de 18 millions d’utilisateurs Facebook qui la classe au 13è rang mondial, et 1,5 million de comptes Twitter.

Lire l’article sur le site Web de FutureGov >>

Les leçons apprises lors de la semaine d’innovation dans le gouvernement

Nous avons participé à une conférence de 2 jours au sein de la Banque interaméricaine de développement; la semaine d’innovation dans le gouvernement : renforcement de la capacité institutionnelle de l’État à fournir. La conférence s’est orientée sur les leçons apprises en Amérique latine, mais avec une application à plus grande échelle. Des tendances vraiment très intéressantes ont été abordées sur la gouvernance en Amérique latine.p>

Lire la suite sur la semaine d’innovation dans le gouvernement >>

Comparons l’efficacité de l’aide avec d’autres programmes gouvernementaux

Il n’existe probablement aucun autre débat public qui dépende autant de la mauvaise information et des préjugés de confirmation que l’aide étrangère. Les sondages indiquent régulièrement que la perception du public concernant l’aide dépensée comporte différents ordres de grandeur qui sont plus importants que ce qu’elle est réellement. De plus, les rapports de la presse au sujet de l’aide se concentrent davantage sur les mauvaises nouvelles que sur les bonnes. Cela ne veut pas dire que l’aide étrangère ne peut pas être améliorée. En outre, il y a eu suffisamment de travail pour apporter la preuve de ce qui fonctionne ou pas. De même que pour la transparence grâce à l’Initiative internationale pour la transparence de l’aide (IATI).

Lire la suite sur le débat relatif à l’efficacité de l’aide >>

Doug Hadden, VP Products

In this age of botnets, corporations parsing through personal data and government web blocking, we sometimes miss the asymmetric use of technology to prevent and expose corruption. Many observers fear that technology is a new frontier for corrupt practices. It was interesting this weekend to have two separate twitter discussions on the subject. (Daniel Kauffmann of the Brookings Institution and Revenue Watch on the question of ICT-enabled corruption and Transparency TL on the advantages of procurement transparency for civil society to expose government corruption.)

No anticorruption strategy is foolproof. But we need to understand the interplay between technologies and corruption.

• No technology = no trail. Informal corruption involving favours is hard to track.
• The technology of paper-based systems can provide a “paper trail”. Eliminating the paper trail or manipulating the paper trail has costs.
• The technology of cash adds costs to corruption. Although cash is fungible, cash movement or “money laundering” has risks for the corrupt. Large sums of cash money is not a sign of innocence.
• The electronic movement of money through financial systems and electronic funds transfer leaves an audit trail. These systems also have built-in segregation of duties and other controls. Costs by the corrupt to manipulate or obscure the electronic trail are high.
• Vulnerabilities in transactional systems can enable corruption. But, these vulnerabilities are often closed where the corrupt must expend more resources to achieve the same reward. As anyone in technology knows, the major vulnerability is physical not technical – the person leaving their password on a post-it note or poor data centre physical security.
• Social media and mobile technology enables reporting on the outcomes of corruption. Clever use of technology by the corrupt can be easily exposed: the bridge not built, the public servant living a life of splendour, the leaking of Swiss bank accounts.

Corruption has poor economies of scale relative to anti-corruption in the hands of citizens and civil society. It only takes one picture, one video, one leak – perhaps even one tweet to expose corruption. Risk of exposure increases thanks to technology.

There is a corruption calculus. The corrupt understand that more technology means higher chance of exposure. They also understand that more technology tends to help increase prosperity. Turn off the internet can reduce the income of the corrupt. It’s only in very resource-rich countries where the anti-corruption technology-enablement can be suppressed without material impact to the corrupt. That’s why initiatives such as Revenue Watch are so critical in the asymmetric fight against corruption.

Asymmetric ICT-enabled Corruption Warfare

2 Twitter conversations about technology, corruption & transparency result in a blog post

Storified by · Mon, Apr 15 2013 15:17:37

Liza Benkovitch, Pre-Sales Consultant

A government procurement portal is a platform that allows web users access to information on public spending, procurement procedures (bidding processes), tenders and awards. Users are able to access the bidding documents and review the tender process to ensure that all bidding vendors had equal opportunity in the bidding process. Procurement portal is an example concept in open government, where the public has direct and interactive access to government expenditure information.

Goals of Procurement Portals

The objective of a procurement portal is multi-dimensional. Its primary functional purpose is to show how public funds are spent. However, the broader goal for a procurement portal is to help governments achieve transparency and accountability in public financial management.

Scenario in Procurement Governance

Consider the following situation in Cameroon, where public procurement process heavily challenged by many forms of corruption . The government of Cameroon has lost FCFA 70 billion (US$143 million) to private pockets through the non-execution of public contracts . Given that contract award procedure is done through open invitation bidding process and is subject to Public Contract Award Agency (ARMP), there still exists a loophole via contract fragmentation. Contract fragmentation is the beginning of the corruption stage which can be eliminated by a procurement portal with strong auditing controls. In addition, there is a problem of unexplained delays between awarding the contract and release of funds, as well as lack of performance monitoring after the contract has been awarded.

The FreeBalance eProcurement Portal is an example of a solution to the overall problem of procurement corruption as we have described previously . The portal integrates back-office automated procurement procedures with commitment accounting from the FreeBalance Accountability Suit. In the particular case of Cameroon, a procurement portal would allow contract delivery and monitoring, as well as the value for money in the contract award process.

Procurement portals are of high value to governments wishing to demonstrate integrity, promote transparency and accountability in management of public resources. Portals have become a way for governments to promote active civil society participation – as information is available on a real time basis to all categories of users: NGO’s, civil servants, businesses, and general public. Users can search for various types of procurement awards and trace any fraudulent activity. The direct access to information holds the government accountable for keeping the procurement process corruption free.

Doug Hadden, VP Products

FreeBalance has developed a framework to show where Government Resource Planning (GRP) software can help improve governance outcomes for governments in developing countries. This Governance Framework includes an overview of the governance question and a description of the methodology.

Manuel Pietra, our President and CEO, presented the case for using GRP to reduce procurement corruption at a seminar at the Harvard Kennedy School last week. This is an updated version of that presentation with more details.

Impact:Total global annual government procurement is estimated to be $9.5 Trillion .

Problem:Corruption is estimated to cost developing country governments 20% to 25% of procurement costs.

Other factors:Procurement efficiency, effectiveness and competitiveness are other important governance factors

Scenario:Lifecycle for an important multiple year public investment program such as the building of a new hospital.

Government Resource Planning

The technical GRP lifecycle can be described as follows:

1. Enterprise-grade ICT Platform as foundation including a secure infrastructure
2. User group controls have been defined in the ICT Platform
3. The hospital public investment program is defined during budget preparation, part of Government Performance Management functionality, and the budget has been approved by the legislature
4. Core Public Financials part of GRP includes commitment accounting functionality used to ensures that the government does not overspend the budget (integrates with the budget passed by the legislature) and tracks all accounting transactions related to the hospital program
5. Public Expenditure Management integrates with commitment accounting through a procurement cycle begins with the approval of a commitment from a purchase requisition that generates a Request for Proposal (RFP) to qualified bidders as part of the tendering process that results, in this case, a winning “turnkey” contract based on evaluation criteria to a winning bidder or consortium
6. Proposal opportunities were presented via the web through e-procurement and the winner of the proposal and contract size is posted
7. Payment is provided to the winning bidder through payment management based on the contract provisions typically based on the government acceptance that building milestones have been reached
8. And the entire cycle is stored in an audit trail to improve Government Performance

Governance Toolset

The hospital acquisition scenario described provides multiple corruption opportunities:

• Vendor collusion to provide only a single winning bid
• Bribes by vendors to manipulate the process such as changing the evaluation criteria unfairly
• Approval of a bid by family members
• Payment for goods and services not received

GRP systems contain three classes of toolsets that can be used to overcome corruption opportunities:

• Controls that prevent civil service users from manipulating the process
• Transparency that expose inner government workings to provide oversight
• Decision-making to enable tracking compliance and performance

Some governance tools from the FreeBalance Governance Framework can be leveraged in this scenario.

There are universal governance tools operating at every stage in the procurement lifecycle including:

Controls

• Chart of Accounts that aligns all government financial activity to budgets, users, purpose, organizational structure and accounting types to reduce accounting manipulation
• Segregation of Duties to ensure that multiple individuals are involved in the procurement cycle making manipulation more difficult
• Integration to ensure that the commitment rules in use in the commitment accounting system are respected in the procurement system
• Procedure Workflow that articulates the proper processes and prevents system user from changing rules such as the length of time that vendors have to respond to the RFP

Decision-making

• Alerts from the workflow that notifies interested parties such as internal audit or the Minister of Finance about milestones in the tendering process providing more oversight
• Dashboards that provides exception reporting to managers about the process

Some governance tools augment specific parts of procurement lifecycle:

• Secure infrastructure is augmented by control tools such as data integrity that prevents manipulation in underlying databases, encryption that prevents people from accessing certain types of data, and general IT security such as virtual private networks to reduce ICT manipulation
• User group controls is augmented by user management such as password controls
• Budget preparation is enabled through structured multiple year planning decision-making such as MTEF that leverages historical data to ensure that the planned hospital budget is realistic
• Commitment accounting is enabled through budget and commitment controls that ensures that obligations do not exceed commitments and that items not part of the hospital procurement are acquired
• Procurement is enhanced through e-procurement transparency that enables comparing contracts over time to expose potential manipulation
• Payment management is enhanced through secure payment controls such as Electronic Funds Transfer (EFT) that reduces the opportunity for the fungibility of cash and ensures traceability
• Auditing is enhanced through decision-making tools that trace every function, transaction and approval in the system from payments back to the original plan through the audit trail

Governance Enablers

Institutions and institutional characteristics such as capacity and political will are necessary to effectively leverage the governance capabilities of GRP. However, there is evidence that GRP systems, by themselves, reduce corruption:

• Controls prevent many corruption opportunity points
• Transparency through front-office systems changes behaviour because of the embarrassment factor
• Knowledge that all transactions are tracked changes behaviour because of the threat of being caught

Institutional governance enablers that are critical across the procurement lifecycle include:

• Capacity of stakeholders including businesses, civil society, legislature, anti-corruption organizations and the civil service for management and oversight
• Political Will by stakeholders such as the executive to support anti-corruption activities
• Standards used in public financials that provides better information to stakeholders
• Compliance processes and norms within the government

There are other institutional characteristics that are important during the lifecycle include:

• Accounting procedures used by the government that provides appropriate fiscal discipline using good practices and integrated with controls
• Access to transparency technology and maturity of civil society institutions during and after public investment procurement which can extend back to budget preparation to hold the government to account
• The independence and enforcement options for internal and external audit institutions to trap corrupt practices

It can be argued that appropriate institutional arrangements for anti-corruption will have limited impact without an effective underlying technology system:

• Auditors will be forced to track spending and compliance violations through paper files or across incompatible information systems
• Transparency mechanisms could result in publishing only the information that procurement officers wish to be published
• Manipulation of procurement processes will be difficult to uncover without an audit trail “smoking gun”
• Disconnection with the original budget process could result in the purchase of goods and services that have little to do with the intention to build a hospital
• Cash payment will reduce the ability for auditors to “follow the money”

Governance Signs

There are numerous signs that are used to measure the governance effectiveness of PFM in this scenario:

• Public Expenditure and Financial Accountability (PEFA) assessments are widely accepted as showing the PFM state-of-the-art in any country. PEFA provides detailed analysis of the comprehensiveness, efficiency and quality of PFM processes
• Transparency International Corruption Perception Index that uses surveys to determine the perception of corruption in a country
• Actual incidents of procurement corruption and prosecuted procurement corruption that becomes well-known in the country

Governance Linkages

In this anti-corruption scenario:

• GRP systems support automated transparency in the form of an e-procurement portals
• Governance tools within the GRP help to control corruption
• Transparency through the e-procurement portal changes stakeholder behaviour reducing corruption
• Procurement transparency improves the perception of corruption such as the Transparency International Corruption Perception Index
• Improved corruption perception and corruption processes will result in improved rating in the meta World Governance Indicator, Control of Corruption

PEFA Impact

Although PEFA assessment lack some detail on procurement processes, a GRP with tools and enablers will help to improve ratings for:

PEFA B Comprehensiveness and Transparency

• PI-5 budget classification could be improved to show objectives and sector programs within the government books
• PI-6 increase in the comprehensiveness in budget documents thanks to improved planning and accessibility of procurement details
• PI-10 increase in the availability of financial information to the public via the e-procurement portal and through improved reporting

PEFA C(ii) Predictability and Control in Budget Execution

• PI-19 improved value for money through increased competition and improved commitment and procurement controls
• PI-20 effectiveness of controls for non-salary expenditures through budget, commitment and process controls integrated across accounting and procurement systems
• PI-21 effectiveness of internal audit through improved capacity, independence and access to audit trails

PEFA C(iii) Accounting, Recording, Reporting

• PI-22 improved timeliness of accounts reconciliation via integration and automation including bank reconciliation from payments made to the vendor providing the hospital
• PI-24 improved quality and timeliness of in-year reports through integration, automation and the use of international standards and good practices in accounting procedures that shows potential gaps between the proposed budget and actuals
• PI-25 improved quality and timeliness of in-year reports through integration, automation and the use of international standards that shows the impact of public investment projects like the hospital to the government books

PEFA C(iv) External Audit and Scrutiny

• PI-26 improved scope of external audit through independence, capacity and access to the procurement audit trail

Governance Indicators and Outcomes

The improvement of meta governance indicators like the Control of Corruption improves trust and investment in countries. These indicators are used by credit agencies. Foreign Direct Investment (FDI) can increase. “Doing Business” ratings can improve based on the transparency of government procurement that represents significant portions of business opportunities within developing countries.

The procurement “output” – the acquisition of a hospital through a process that reduces corruption can enable a small developing country to improve health outcomes. Some health outcomes are used by donors such as the Millennium Challenge Corporation (MCC) when evaluating funding decisions. Other health outcomes are tracked as part of the Millennium Development Goals (MDGs).

These health outcomes are not trivial. MDGs are highly politicized and play a significant role in donor and government priorities.

It is true that exogenous factors can prevent the smooth transition from GRP systems to improved health outcomes. Yet, it is clear that a lack of corruption controls in the hospital procurement will negatively impact any governance outcomes.

Conclusions

Public investment programs are critical in developing countries. Infrastructure is needed to improve the transportation of goods to market. Hospitals and schools are needed to improve health and education.

Public investment programs are also fraught with corrupt practices even in developed countries. GRP systems are leveraged to reduce procurement corruption and to trap incidences of procurement corruption through:

• ICT security techniques to reduce manipulation
• User management integrated with GRP controls
• Audit trails and alerts to track manipulation of GRP systems
• Integration among systems to prevent corruption at interface points
• Transparency through e-procurement to enable civil society and competitors to monitor procurement
• Workflow that ensures that government procedures are used

These tools and techniques are best leveraged by governments with anti-corruption political will, good civil service and civil society capacity and audit organizations with sufficient capacity, independence and enforcement.

Doug Hadden, VP Products

We’re on the front-lines helping those governments with political will to improve fiscal transparency and accountability. I encountered this recent Ted talk from Afra Raymond on the

We started a Three Myths about Corruption: Some Lessons from Trinidad. He speaks about his experience with freedom of information, transparency and corruption. Well worth viewing to gain a good perspective, especially if you don’t view corruption as a serious governance problem today.

I was most strucl by Mr. Raymond’s corruption calculation :

PUBLIC EXPENDITURES

minus TRANSPARENCY

minus ACCOUNTABILITY

equals CORRUPTION

The other important food for thought, in my view, was the contribution of “government to government” funding relations to overall corruption.

Quoi de neuf à FreeBalance?

Ces nouvelles hebdomadaires apportent à la communauté de la planification des ressources gouvernementales (PRG) un aperçu général des récents développements de FreeBalance et des nouvelles pertinentes de l’industrie.

Le gouvernement du Suriname accélère la réforme de la gestion des finances publiques avec FreeBalance

FreeBalance a récemment annoncé que le gouvernement du Suriname mettait en place une solution complète de FreeBalance comprenant le logiciel, les services, le soutien et le renforcement des capacités. L’Accountability Suite de FreeBalance est en cours de déploiement au sein du gouvernement, en commençant par le Ministère des finances. La mise en œuvre comprendra tous les ministères responsables, les administrations infranationales et les entités parapubliques (travaux publics et éducation).

Lire la suite au sujet du projet Suriname >>

L’appel de l’ICGFM à des conférenciers, des jurys, des articles

Cinq ans après les débuts de la crise financière mondiale, les ajustements économiques continuent de se produire. L’ICGFM étudiera à la fois les mesures proactives qui ont eu lieu ainsi que les solutions de gestion qui ont été apportées pendant cette période d’ajustement. Cette thématique générale formera le cadre de discussion de cette conférence internationale à venir. L’ICGFM sollicite des propositions pour des conférenciers, jurys et documents qui traitent des pratiques d’excellence dans la gestion des finances publiques. Date limite de soumission des propositions pour la conférence annuelle : le 22 février 2013.

En savoir plus sur le site Web de l’ICGFM >>

Utiliser les systèmes de PRG pour lutter contre la corruption

Nous avons publié un ensemble de documents relatifs à la gestion des finances publiques (GFP) la semaine dernière suite à notre mandat de partager les pratiques d’excellence pour la communauté. Le cinquième document publié décrit les pratiques d’excellence dans la lutte contre la corruption par l’utilisation des systèmes de planification des ressources gouvernementales (PRG). Les systèmes de PRG pour les bureaux administratifs et de direction peuvent être de puissants outils pour empêcher et dénoncer la corruption financière, tels que les employés fantômes, l’évasion fiscale et la collusion d’approvisionnement. Il est clair que la volonté politique et les mécanismes de responsabilité sont nécessaires pour tirer profit des outils. La vérification indépendante et la primauté du droit sont clairement essentiels.

Lire le document complet relatif aux pratiques d’excellence >>

Stratégie de vérification interne du gouvernement

Des modifications se sont préparées depuis quelques temps dans le domaine de la vérification. Le rendement et la stratégie sont désormais les thèmes majeurs dans les secteurs public et privé. Cela a créé une discussion rafraîchissante et passionnée par Jorge da Silva, de la Banque interaméricaine de développement lors de la réunion de l’International Consortium on Governmental Financial Management (ICGFM) à Washington, DC, hier.

Lire la suite >>

Les Philippines améliore la surveillance des performances à l’aide des TI

Un atelier de renforcement des capacités a été organisé pour le personnel législatif des unités gouvernementales locales afin d’améliorer leurs compétences sur l’utilisation des TI dans le suivi et la surveillance des performances du gouvernement, dans le cadre des efforts du gouvernement pour promouvoir la transparence et une meilleure excellence dans la législation locale. L’activité a été organisée par la division de développement des capacités du gouvernement local du bureau régional du Département de l’intérieur et des collectivités locales (DILG), et a rassemblé des représentants des municipalités d’Aglipay, de Cabarroguis, Diffun, Maddela et Nagtipunan.

Lire l’article complet sur le site de Futuregov >>

What’s new at FreeBalance?

This weekly news update provides the Government Resource Planning (GRP) community with a brief overview of recent FreeBalance developments and relevant industry news.

Government of Suriname Accelerates Public Financial Management Reform with FreeBalance

FreeBalance recently announced that the Government of Suriname is deploying a comprehensive FreeBalance solution including software, services, support and capacity building. FreeBalance Accountability Suite software is being deployed throughout the government starting with the Ministry of Finance. The implementation will include all line ministries, sub-national governments and parastatal entities (public works and education).

Read more about the Suriname project >>

ICGFM Call for Speakers/Panels/Papers

Five years after the beginnings of the global financial crisis, economic adjustments continue to take place. ICGFM will explore both the proactive measures that have taken place as well as the response that have been undertaken to manage through this period of adjustment. This overall theme will frame the focus of both of its upcoming international conferences. ICGFM solicits proposals for speakers/panels/papers that address good practices in public financial management. Deadline for submitting proposals for the Spring conference: February 22, 2013

Find out more on the ICGFM website >>

Using GRP Systems for Anti-Corruption

We released a set of Public Financial Management (PFM) documents last week following on our mandate of sharing good practices for the community. The fifth released document describes good practices in anti-corruption through the use of Government Resource Planning (GRP) systems. Back and front-office GRP systems can be powerful tools to prevent and uncover financial corruption such as ghost employees, tax evasion and procurement collusion. It’s clear that political will and accountability mechanisms are required to leverage tools. Independent audit and the rule of law are clearly required.

Read the full Good Practice document >>

Strategy in Government Internal Audit

Changes have been brewing in the audit profession for some time. Performance and strategy are now major themes in the public and private sectors. This generated a refreshing and passionate discussion by Jorge da Silva of the Inter-American Development Bank at the International Consortium on Governmental Financial Management (ICGFM) DC Forum yesterday.

Read more>>

The Philippines enhances performance monitoring with IT

A capacity building workshop was held for the legislative staff of local government units to enhance their skills on using IT in tracking and monitoring local government performance, as part of the government’s efforts to promote transparency and greater excellence in local legislation. The activity was organised by the Local Government Capacity development Division of the Department of the Interior and Local Government (DILG) regional office, and was attended by representatives from the municipalities of Aglipay, Cabarroguis, Diffun, Maddela and Nagtipunan.

Read the full article on the Futuregov site >>

Doug Hadden, VP Products

We released a set of Public Financial Management (PFM) documents last week following on our mandate of sharing good practices for the community.

The fifth released document, embedded below, describes good practices in anti-corruption through the use of Government Resource Planning (GRP) systems. Back and front-office GRP systems can be powerful tools to prevent and uncover financial corruption such as ghost employees, tax evasion and procurement collusion. It’s clear that political will and accountability mechanisms are required to leverage tools. Independent audit and the rule of law are clearly required.

Anti-corruption initiatives tend to focus on creating special commissions. This is critical. But, it seems to me that there is a general assumption that technology, but itself, does not have any particular effect on corruption. There’s also the suspicion that automation can automate corruption – make corruption more efficient.

Our experience suggests that setting up controls and an audit trail dramatically changes behaviour. Controls can prevent circumventing the system. Audit trails and reports can expose corrupt activities.

Public Financial Management Good Practice Anti-Corruption using Financial Systems by FreeBalanceGRP

Doug Hadden, VP Products

I attended the International Consortium on Governmental Financial Management( ICGFM _ DC Forum last month where Marcela Rozo from the World Bank described the Open Contracting initiative. Her presentation is available and some of my notes are located below via Storify.

Ms. Rozo pointed out that even a 1% improvement in government costs through procurement transparency is material because total annual government procurement is $9.5T. Procurement transparency leads to increased competition and reduced corruption. Jorge Claro, formerly of the InterAmerican Development Bank, and an expert in government procurement at a DC Forum in 2008 suggested that Public Sector Procurement accounts for approximately 15% to 20% of GNP in many countries Procurement has traditionally been poorly managed with inefficiencies adding anywhere between 15% to 20% to the cost of the works, goods and services being procured. Corrupt practices add an additional 15% to 20% to the cost of those works, goods or services In other words, inefficiency and corruption combined could account for 2.25% to 4% of GNP in most countries, thus negating growth – yet there seems to be little concern about this loss of GNP in most countries.

These are staggering figures.

We’ve been delivering government procurement automation including e-procurement portals and transparency for a few years. Many governments have initiated e-procurement portals – but without direct integration to back office procurement and commitment accounting systems. I think that this integration is critical to reducing corruption because it eliminates a point where data can be “treated” manually. It also improves efficiency and ensures that the procurement opportunity was posted only after meeting all fiscal discipline rules. (It’s not unusual to hear about the disconnection between systems so that Ministries of Finance are caught unawares of budget arrears.)

I wrote about performance procurement last year and the need to integrate front and back office processes. Yes, open contracting is an important step towards government value for money. But, tight integration with back-office systems will provide significant improvements in procurement performance.

Procurement: the next horizon for transparency

ICGFM DC Forum Wednesday January 9th on open contracting. Presentation by Marcela Rozo from the World Bank

Storified by · Wed, Jan 09 2013 10:28:27