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A Corporate Financial Management Solution for Government

Publication Date: Aug 10, 2017
Written by the MITA Corporate Finance Project Team with the Programme Management Department

On 10th July 2017, the Government of Malta (Contracts Department) signed a contract with the Grant Thornton Malta - Unit 4 Consortium for the implementation of a Corporate Financial Management Solution (CFMS) in Government for a total contract value of €11.6 million. The consortium will implement the Business World ERP Solution, enabling the Government of Malta to upgrade its technology, re-engineer its business and be able to achieve its goals and objectives effectively. The total estimated project cost, over and above the contract cost, is in excess of €17 million. 

By means of this contract the Ministry for Finance, led by the Treasury, will embark on a transformation of the financial operations of Government including the introduction of Accrual Accounting based on International Public Service Accounting Standards (IPSAS) and supporting guidelines.  

The new solution will support accrual-based core financial applications and will also eventually integrate and introduce other applications and services such as e-Government and e-Invoicing, that will be of benefit to citizens and businesses alike. It will replace the existing main cash-based corporate application which has been in use for several years - the Departmental Accounting System (DAS) – and which runs across all Departments and Ministries.

Amongst the mentioned anticipated benefits, the new solution will facilitate the implementation of European Union Directives, Regulations and Standards. The technology will be more responsive to business change and will allow the creation of coherent financial and budgetary modules to run on both cash and accrual basis.

The new financial system will enable Government to:

Introduce reporting structures to enable the provision of information to meet both local and international requirements, including System of National Accounts (SNA), Government Finance Statistics (GFS), Balance of Payment System (BPM), Monetary and Financial Statements (MFS), and European System of National and Regional Accounts (ESA). 
Introduce, replace or integrate subsidiary financial systems that are fundamental to Government’s accrual based financial framework, including Government Entities.  
Consolidate the corporate and ministry financial systems, which are inherently key to the consolidated Financial Statements of Government at large.
Facilitate the devolution of financial responsibility and accountability on departmental and ministerial decision-makers. Regular and timely financial reports will be made available to the Minister for Finance, Cabinet and Parliament including the Public Accounts Committee as well as timely reporting to EU financial institutions including EUROSTAT, and other international organisations, such as the IMF. 
The modern technologies will mitigate the current high technological risks associated with old technologies, which are currently posing a serious threat to Government’s financial business continuity. 
The introduction of accrual accounting via the new solution will provide a higher level of financial transparency over public funds, providing more information to Parliament and the citizen at large. 
In addition, the introduction of the new solution will necessitate the upgrading of human capital and skills through training programmes focused on accrual accounting.  
The introduction of e-invoicing and e-procurement creates the necessary link between Government, the business community and the citizen.

Business Ownership

A Corporate Implementation Programme Board, chaired by Treasury as the business owner of the financial solution, shall oversee the implementation across the whole of Government. To assist the Board, an Implementation Team shall be set up to carry out the implementation process. 

MITA will provide value-added services to Government in the ICT programme management, business re-engineering, consultancy and implementation oversight support, through its Corporate Finance Programme Team (CFP) within the Programme Management Department (PMD). MITA will also provide the required hosting facilities and services to enable the installation and commissioning of the client servers at MITA Data Centre wherefrom all Ministries and Departments will be able to access the solution. 

MITA has also been instrumental in securing an EU funding investment through an ERDF Programme called CONvErGE. The funds will be used to strengthen the Government’s IT infrastructure and support key line Ministries in implementing new ICT systems. The Ministry for Finance will be benefiting from circa €10 million of the total project funding in respect of the new solution.   

Implementation timescales of the new solution

Upon contract signing an implementation plan kicks-off. The project has been earmarked with three major implementation phases. During phase one the new Government financial and business model shall be piloted in a number of key pilot sites. It is planned that the core functionality of the CFMS will go live in these sites within 18 months from contract signing date.

The pilot sites include key Departments and Ministries. These include the Treasury Department, the Budget Office, the Inland Revenue Department within the Ministry for Finance; Central Procurement & Supplies Unit [CPSU], within Ministry for Health; Armed Forces of Malta within the Ministry for Home Affairs and National Security; Ministry for Foreign Affairs; Ministry for the Economy, Investment and Small Businesses; Ministry for Tourism; Ministry for Gozo; Ministry for Health and the Ministry for Education. 

The second phase is planned to be concluded within 30 months from date of contract signature, with the core CFMS going live in all Ministries and Departments.  

During the third phase, the implementation of other potential systems, shall be determined during the implementation process and successful completion of the second phase. The contract provides for maintenance and support for a period of 10 years.

Implementation Workshop

In the light of the strategic importance of the accounting reform, the implementation of the solution shall have an impact on all Ministries and Departments’ financial and business operations.  For this reason, to initiate the implementation process, it is indispensable to engage key players in these pilot sites.  

The Ministry for Finance and the Treasury, in collaboration with MITA, launched a presentation workshop at the MITA Data Centre on the 9th August 2017. The Accountant General, Ms Paulanne Mamo and Mr Michael Zammit Munro as Director for Government Accounts gave introductory speeches. The presentations during the workshop were delivered by the foreign representatives of the contractor, namely Grant Thornton Malta – Unit 4 Consortium, who explained and outlined the way forward of the work to be carried out within the chosen pilot sites and what input and cooperation would be expected from the said sites. The permanent secretaries and key officials within the pilot Departments and Ministries responsible for implementing CFMS were invited for this workshop. The workshop was very well attended.  With regards to the remaining Ministries and Departments which have not been chosen as Pilot Sites for the CFMS Project, these will be contacted in due course when they are due for implementation.