Treasury Reference Model - World Bank

1 ITTrreeaassuurryy RReeffeerreennccee MMooddeellAli HashimLead Informatics SpecialistPublic Finance ClusterPoverty Reduction and Economic Management UnitEurope and Central Asia RegionWorld BankBill AllanSenior Economist,Fiscal Affairs Department,International Monetary Fundii : March 14, 2001iiiTABLE OF .viiAbstract .. I OUTLINE OF THE Treasury Reference Reference Model : Systems in the Context of the Overall Framework for Government Processes for Budgeting and Treasury Ledger Structure of the Treasury Reference Level Conceptual Management Management Processes and at Levels 1 and Software Specifications for Treasury Systems Organizational transaction processing and technology transaction processing and technology architecture.

2 Institutional Models for Expenditure Unit/ Line Ministry Based Expenditure Charts for Decentralized of International Standards and of Accounts and Basis Accounts and Classification Economic Transparency and Linkages with Treasury System Success Factors for Project commitment and management coordination and user involvement in systems capacity and technical of project and data technical Treasury Development Projects in Transition Treasury Modernization Treasury Systems Public Finance Management II- DETAILED PROCESS CHARTS, PROCESS QUESTIONAIRE,FUNCTIONAL SPECIFICATIONS & DATA Structure of the of Budget Authority.

3 Apportionment, Allotments and Warrant Transfers and of of Goods and of a New staff Position and Recruitment to this to the Payroll and Benefits and Grade and Receipts of Payment of Against and Benefits : Tax Tax : Non-Tax Flow Cash Cash TSA ( Treasury Single Account) and Sub-Account Idle Portfolio and Aid Debt Aid and Grants Debt Service of of Review and Fiscal Program System Overall Functional Process- 1. Management of Budget of the Year Budget Process - 2. Commitment of Process- 3. Payments and Receipts Management; (a) Payments of the Process- 3.

4 Payments and Receipts Management, (b) Receipts Reference Process- 4. Cash Monthly Expenditure Revenue Debt Management Process- 5. Debt & Aid of Basic Loan/ Aid and Guarantee Given by Government:.. with the Accounting Systems Process- 6. Budget Review and Fiscal Fiscal related to Management of Budget Authority, Commitments & related to Receipts related to Cash Related to Debt of the Year Aggregation from Regional of Daily postings to Treasury Single of Year closing of import and export with other Mapping of Account and data Architecture- Data Entities Created by Treasury World Bank and the International Monetary Fund are placing an increasing emphasison implementing projects aimed at improving the management of public finances inmember countries.

5 Treasury systems form the backbone for recording and processing allfinancial transactions related to the budget for any level of government. An integratedtreasury system offers several significant benefits in managing public monies moreeffectively, including, greater financial control, improved monitoring of the government scash position and better planning for future requirements, better fiscal reporting, andavailability of better data for budget formulation. The establishment of an effectivetreasury system will also contribute directly to improving transparency and accountabilityof paper is based on the authors' experience in designing and implementing Treasurysystems as part of Bank/ IMF projects in several countries in the ECA region and elsewhere.

6 The authors intend the Treasury Reference Model (TRM) described in thisdocument to be used as a development tool for fiscal managers and system developers. It is aimed, in the first instance, at facilitating the process of designing Treasury systemsprojects. By incorporating design features and best practices drawn from a range ofinternational experience the Model aims to improve the quality of technical specificationsand to provide key inputs to the institutional reform process. More broadly, it is expectedthat the TRM will help to implement good practices in fiscal accounting and expenditurecontrol and give guidance on meeting standards prescribed under various internationalstandards and codes such as those set out in the IMF Code of Good Practice on FiscalTransparency Declaration on Principles (fiscal transparency code) and the detailedfiduciary standards being developed by the World K.

7 MitraDirectorPoverty Reduction and Economic ManagementEurope and Central Asia RegionviiiixABSTRACTThe Treasury Reference Model (TRM) described in this document gives guidelines forthe design of automated Treasury systems for government aimed at two groups of people:(a) authorities within government and their advisors who are engaged in planning andimplementing such systems; and (b) software designers and suppliers from the privatesector or even in-house developers of Treasury software. For the former group, the aimis to provide tools to help with the design and definition of system functional andtechnical specifications in relation to government institutions and processes as well asfacilitate reforms of these processes.

8 For the second group, the main aim is to provide aclear definition of typical government needs for Treasury systems. These needs differsignificantly from private sector needs even though accrual accounting capability isincreasingly being required by assist in the process of designing Treasury systems, the paper starts in Part I with adiscussion of the key features of such systems, including the core functional processes,the various policy options associated with their design and the associated establishment of an effective Treasury system will contribute directly to improvingtransparency and accountability of government and to meet the requirements set out inthe IMF Code of Good Practice on Fiscal Transparency Declaration on Principles(fiscal transparency code) and other standards, such as detailed fiduciary standards beingdeveloped by the World Bank.

9 It is important that these aspects be taken explicitly intoaccount in the design and implementation of Treasury systems. Relevant elements of thefiscal transparency code are, therefore, included in the II of the Model , gives detailed flow charts of the functional processes associated withTreasury systems, a diagnostic questionnaire that could be used to assess country specificrequirements, a set of sample functional specifications that could be used for theprocurement and / or development of the application software that would be required toimplement these systems and a listing of the main data entities associated with TRM also provides a means for implementing improved analytical standards forfiscal reporting.

10 Increasingly governments are moving toward accrual basis reports andthe IMF Government Finance Statistics (GFS) system is being revised accordingly. Whilethese can be observed by adjusting reports from a variety of sources and using cash orvarious levels of accrual basis accounting, it is far preferable that the accounts bestructured to facilitate accrual recording and reporting. The structure of a generic chart ofaccounts that can be developed for either cash or accrual basis accounting, but isconsistent with the principles of the revised GFS is therefore included in the initial version of the Treasury Reference Model was developed under a grantprovided by the World Bank s INFODEV fund and under contract with IBM present version has been extensively modified to make it more useful to Governmentofficials and Bank / IMF staff in their work.