Financial Management Improvement Program (FMIP)

The FMIP is responsible for the GoPNG Integrated Financial Management System (IFMS); the Financial Framework Review (FFR), a revision of the legal framework of public financial management; the delivery of donor funded Provincial Capacity Building Project for Provincial and District Finance Offices; and the monitoring of implementation of the Public Expenditure and Financial Accountability (PEFA) Road Map 2015-2018.

The IFMS rollout to all of Government is the key PFM reform activity for GoPNG. The IFMS replaces PGAS throughout all levels of government, and will substantially strengthen internal controls and improve reporting capability, resulting in greater accountability and transparency.  Current internal control weaknesses in PGAS will be overcome because IFMS has a centralised database that can be accessed from anywhere (with internet access), anytime, from any device. For example: accounts are managed and reviewed in real time, manual reconciliation of accounts outside of the system are no longer allowed and electronic upload of bank statement is also available; expenditure approvals are completed on-line with an audit trail; use of Integrated Local Purchase Order and Commitment (ILPOC) are enforced by the system; and an extensive range of statutory reports are available.

IFMS is also subject to continuous review to ensure that it provides the necessary controls and work flows to support the requirements of the revised PFMA and other legislation.

Substantial work has been carried out to enhance IFMS and provide environments (work places) within the system to support the accounting and reporting needs of sub-national governments.  A standardized chart-of-accounts (COA) has been designed and configured, in close collaboration with the pilot province (East New Britain) and Treasury that aligns with the National Government program budgeting structure.  Similarly, a suitable work place

has been designed and implemented to support Statutory Authorities – if required, Statutory Authorities at the sub-national levels (e.g. DDAs’) could adopt IFMS as their accounting system.

As at June 2017, 43 Government Departments and 4 Statutory Authorities operate on IFMS.  It is scheduled that by the end of 2017 all Government Departments and all Statutory Authorities (part of the budget framework) will operate on IFMS.  The sub-national roll-out has commenced with East New Britain as the pilot project.  The sub-national roll-out schedule, which has been endorsed by the IFMS Project Board, is scheduled for completion by August 2019.

The Financial Framework Review (FFR) completed a comprehensive overhaul of the Public Finance (Management) Act (PFMA) which passed Parliament on 11 August 2016 and which commenced operation effective 1 January 2017. This PFMA reform is the most comprehensive public finance management reform in over 20 years and has addressed a series of issues that were adversely impacting public finance administration.

The FFR has also developed a National Procurement Policy which is awaiting National Executive Council endorsement. New procurement legislation is already prepared and this will go to Parliament as soon as the NEC endorses the National Procurement Policy.

The FFR has commenced a review of all statutory bodies, SOEs and Trust Accounts. The primary focus of the review is to strength monitoring, reporting and management of fiscal risks associated with the operations of all statutory bodies and SOEs in line with the Government’s roadmap highlighted in the medium-term priority for 2017-19, which is to focus on a robust framework for managing and monitoring the financial positions and fiscal risks of state entities.

The review outcomes will be recommendations for the rationalization of statutory bodies & SOEs to be more cost-effective and improve fiscal operations. From the outset, the expected broader outputs of the review are:

  • rationalization of statutory bodies & SOEs;
  • develop astringent framework for the establishment of new statutory bodies & SOEs;
  • streamline trust accounts; and
  • rationalize SOE management systems & governance structures.

The specific objectives of the review are:

  • cost effective and robust operational, fiscal and governance systems and processes used by all statutory bodies & SOEs;
  • increase in government revenue (into the Consolidated Revenue Fund (CRF)) to support the Budget; and
  • ensure SOEs enjoy commercial flexibility, whilst paying appropriate returns directly to the State.

The CACC created an Inter-Departmental Committee to oversight the reviews which commence sittings July 2017.