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Treasury
Department
1. Afghanistan Financial Management Information System (AFMIS)g
On 23 October
2002, the treasury fully manual expenditure processing system was
computerized which commenced the operations for centralized
expenditure recording, check printing, and financial reporting
system for budget expenditures ? including aggregate payroll and
other expenses. The system operates on Free Balance proprietary
software purchased from Free Balance, a Canadian company. It was
recognized that implementation would be limited to processing in the
Ministry of Finance Treasury Department of documents from the
Kabul-based ministries and from provinces to the extent that the
documents were presented to the treasury for payment. A recent pilot
project was initiated to extend the AFMIS to Herat, and if
successful, thereafter to other regional centers, and six ministries
in Kabul. Translation of the AFMIS software interface to Dari
language also has commenced and testing of the translated software
in coordination with Free Balance Inc. is in process. The
translated software will provide the screen-displayed messages and
reports in Dari language and checks will also be printed in local
language.
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Adoption of GFS Functional and
Economic Classification structure for reporting
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Configuration of the AFMIS for
recording Budget information
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AFMIS Enhancement to enable the
recording of country-wide revenue and expenditure data
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Development of electronic
interface for automating bank reconciliation in coordination
with the BearingPoint team working on Banking Reform Project in
DAB has already commenced. This facility will enable the
Treasury Department to import the daily bank statement data
electronically provided by DAB into AFMIS to perform the
automatic reconciliation, which will reduce the data entry time
for entering hundreds of checks presented each day.
2. Development of Chart of Accounts
A chart of
accounts is a means of classifying an entity?s accounting data in a
way that leads to better financial management and accountability.
Major classifications of accounting data for government are revenue,
expenditure, assets, liabilities, and capital. Within each major
classification further classification occurs, e.g., expenditure may
be sub-divided into accounts for salaries and wages, goods and
services, other operating expenses, etc. The necessary level of
classification depends on the nature of the accounting entity and
the needs of users of the accounting information. The chart of
accounts for government financial operations has been designed to
capture sources and uses of funds in sufficient detail to satisfy
the reporting requirements to government, international
organizations, donors, and eventually the legislature and the
public.
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Sources of funds include General
Budget, Donor Grants, etc.
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Use of funds will cover total
expenditures, further broken down to useful categories, such as
Ministry, project, major xpenditure category such as salaries
and wages, goods and services, etc.
The above
categories provide a structure within which the individual financial
transactions are recorded in a consistent manner and a logical means
of aggregation of each set of related transactions. It determines
the limit of reporting financial information because data cannot be
easily reported unless the relevant category has been created in the
chart of accounts. All the financial conforms to the Chart of
Accounts developed by the Ministry of Finance. Transactions are
identified by the source of funds (general budget funding, donor
grants), the organization and sub-unit involved, expenditure program
and its location. Also, unique identifying codes will continue to
be required for type of expenditure (economic) or revenue.
3. IT Management Unit
1. Treasury
Department of the Ministry of Finance established an IT unit for
better administering the AFMIS. The IT unit has maintained the
Local Area Network (LAN) for the Treasury and Budget Departments at
around 150 workstations. We have configured three servers which
manage the activities of the entire ministry and treasury.
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Free
Balance Financial (Database Server for entire Ministry)
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Authentication Server (Domain Controller) for entire Ministry
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Proxy
Server for Treasury Department for Internet sharing
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Free
Balance Financial Backup Server.
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Accessibility to Stand-alone environment (Number of computers
running in a separate environment for production server and
Treasury LAN) for free-balance reporting.
2. The IT
unit of the treasury has conducted training in basic computer
programs for 28 employees in the following programs.
3. As noted
above, the IT unit of the Treasury Department is also working on a
Wide Area Network (WAN) between MoF Kabul and MoF Heart, a LAN for
MoF Herat (Mustofiat), technical training for Herat Province, Free
Balance Application in different areas, and Introduction to
Networking & MS Office packages.
A Special unit
?GMU? was established by the approval of Dr. Ashraf Ghani, Minister
of Finance, on 8 December 2002 to handle grant management functions.
It was constituted as a unit within the Treasury Department of the
Finance Ministry, supported by both the Treasury Department and the
Financial Management Agent (FMA) of the World Bank Emergency Public
Administration Project (EPAP). It started as a physical and
operational unit in the month of February 2003. With the new reform
system, the senior management of the Ministry of Finance decided to
transfer the grant management functions to the Budget Department.
Under this change, only the payment processing, accounting and
financial reporting part of the functions remain in Treasury and
will be undertaken by the special disbursement unit. For the FY 1381
the auditor general office audited 4 grants out of 40 with the
advisory support of the PKF international auditors. A well developed
procedure is setup for the SDU.
5. Cash Management Unit
Cash Management
Unit (CMU) was established in the Treasury Department to manage the
cash inflows and outflows for Afghanistan. CMU prepares cash
reconciliation statement for all accounts by getting information
from AFMIS and reconciling this with statements from Afghanistan and
DAB. By 11:00 AM each working day, the CMU Head prepares a statement
account ?Daily Cash Management Report? comprising:
The CMU Head
provides this information to the Treasurer, who matches cash
availability with cash needs assessed by the operations unit from
data in AFMIS. The CMU Head and directs the operations unit to
issue cheques to the value of cash available on the day.
6. Provincial Mustofiat Reporting Unit
Brief History of
Provincial Reporting Unit
To enable the
reporting of countrywide budget execution, BearingPoint World Bank
funded project set up a provincial reporting unit was established
within the project treasury in July 2003 team to deal with the
revenue and expenditure information of the provinces in July 2003.
The unit deals communicate primarily with the six Regional Managers
engaged under the USAID-funded Economic Governance project in to
obtaining the monthly expenditure and revenue reports from the
provinces. The procedures for provinces to submit through the
respective Regional Manager to Central Treasury, Monthly Payments
Report (M23), and Monthly Revenue report (M29) by the tenth working
day of each month were developed. Intensive training was provided
to the six Regional Managers on the record-keeping, consolidation,
and preparation of the monthly reports for timely submission to
Central Treasury Department. During last year (1381), provincial
reports on non-salary expenditures were nearly non-existent, and
revenue reporting lagged and spotty. Now expenditures and revenue
reports are being obtained on a consistent basis from the provinces,
and the data being included in the AFMIS. The provincial reporting
system is progressively streamlined. Great attention is being paid
to obtaining Expenditure and Revenue reports from provinces monthly.
The overall M23
monthly payment report and M29 monthly revenue report submission
rate from 32 provinces for 4 months in 1383 is 98% as of 11 August
2004. This success dramatically improves the efficiency and
timeliness of the compilation of countrywide budget execution
reports and treasury cash management.
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Main Functions of Provincial Reporting Unit:
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Establish a system to collect
revenue and expenditure data from 32 provincial mustofiats
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Work closely with the president
of the Treasury Department and BearingPoint World Bank funded
project to ensure the complete and accurate accounting of budget
revenues and expenditures in the provinces
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Collect reliable and accurate
monthly expenditures reports (M23) and monthly revenues reports
(M29) of all provincial mustofiats
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Maintain M23 and M29 report
status registers for each province
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Forward M29 reports to the Cash
Management Unit for entering into the Afghanistan Government
Financial Management Information System (AFMIS)
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Enter provincial expenditure of
each M23 report into AFMIS
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Produce provincial expenditure
reports from AFMIS, and submit to the management of the Treasury
Department weekly
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Assist the management of the
Treasury Department in determining monthly cash requirements for
provinces
7. Debt
Management Unit
Before the
establishment of the Debt Management Unit, no one in the Ministry of
Finance was keeping the track of new and old loans. There was always
a late payment for principal and interest because no one in the
Ministry of Finance knows when to make the payment. The Debt
Management Unit is established to keep track of loan withdrawals,
loan repayments in principal, and interest on timely basis the
payment.
Its main
functions are:
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Keeping Track of New Loans
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Make sure the debt payment is
made on time
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Giving the information to the
Treasury when the payment of debt is due
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Keeping records of new loans
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Producing monthly report to keep
track of debt
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Projections for the repayment on
the new loans
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Keeping the Debt Payments Profile
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Keeping track of the principal
payment and interest payment
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Letting the Treasury know when to
make a payment.
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Making sure whether the
Ministry of Finance has the Credit Agreements
8. Individual Salary Payment
Based on the
proposal submitted to Minister of Finance by the Treasurer, Ms.
Nargis Nehan and Hamayun Khan MarufKhail with the assistance of
Steve McKennon (Herat, Regional Manager), a pilot implementation of
Individualized Salary Payment (ISP) program started in the month
Qaws for two select ministries. With the ministries selected by the
Finance Minister, Dr. Ashraf Ghani, a special ISP team has been
working under the supervision of the Treasurer Ms. Nehan and has
been successfully paying the selected salaries of the Kabul staff of
the selected ministries individually through the Da Afghanistan
Bank, Banke? Millie, and Pashtany Bank. The success of the pilot
project has led to an expansion of the ISP, with the central
ministries joining the project. This new reform has made a huge
impact on the Afghan government employees because for the fist time
in Afghanistan?s history, each employee was paid individually and
received the exact amount to which they were entitled. GoA
employees? salaries have increased by 10 to 20%, because they did
not have to pay rent or commissions in order for them to receive
their salaries. The ISP team also has plans to computerize the
payroll system of all ministries and assign each GoA employee with a
unique payroll ID number, as well as rolling out the improved manual
payment process to Kandahar, Jalalabad, Herat, Kunduz, and Mazar. ISP
team is also actively working on compiling employee database of the
selected ministries for the pilot program, and we have been able to
move from paying bulk salaries to a single ministry representative,
to a system where each employee is now paid individually.
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