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Public Financial Management Reform in Afghanistan

2006-2012 || World Bank

Abstract

Through this project, Deloitte advisors provided technical assistance to Afghanistan to install and develop the first automated financial management information system and to develop processes and procedures to help the Treasury meet its fiduciary responsibilities and reporting obligations to both the newly-created government and external donors. Deloitte supported the Treasury in its efforts at achieving self-sustaining operational capability by consolidating the rollout expansion and developing further capacity to accelerate the transfer of Afghanistan Financial Management System (AFMIS) operational responsibility to the Treasury civil service staff.  

The Challenge

A good public financial management system is essential to implement policies and achieve developmental objectives by supporting fiscal discipline, strategic allocation of resources and efficient service delivery. The Treasury function is fundamental to sound public financial management because it works diligently towards the provision and operation of accounting systems in government, produces financial policies and procedures, and issues financial reports and statements. In Afghanistan, the AFMIS General Ledger system records many transactions. However, internal control systems should be strengthened, particularly in terms of streamlining, fully documenting and implementing processes. The Treasury department also suffers a similar challenge faced across government, namely the attraction and retention of suitably skilled and qualified staff to perform key financial management tasks.

How We Helped

Beyond the development and continued maintenance support to AFMIS, Deloitte pursued complementary goals to increase the government’s capability in public financial management, thus creating a self-sustaining environment for the organizations, processes, and enabling technology. We focused on:

  • Improving the Treasury’s transaction processing for budget execution, including for World Bank and other donor-funded projects
  • Enhancing the accounting and financial reporting capability while upgrading the Treasury’s reporting systems
  • Further extending the coverage of the Verified Payroll Plan and other automated payroll procedures
  • Enhancing cash management
  • Preparing and implementing the Treasury Development Strategy
  • Building human resource development and training coordination

Solution

Major achievements included:

  • Full roll-out of AFMIS:  Core functions of AFMIS were successfully rolled out to Ministries and Provincial Mustofiats (Treasury offices in the provinces).
  • Expansion of the Verified Payroll Program: By the first quarter 2010, over 450,000 Government Employees had been registered under the Verified Payroll Program, and over 250,000 of these were receiving salary through transfer to their bank account.
  • Significantly improved financial reporting: Since 2006, the Audited Annual Appropriation Statements of the Government have been submitted to Parliament within six months of the end of fiscal year, in accordance with law. Since 2008, monthly financial statements covering Central Government have been published each month within 25 days of month-end.

The result has been that Afghanistan is one of the first in the region for implementation of modern public financial management practices, which can help to boost confidence of both donors and citizens that funds are spent in accordance with the critical development objectives of the country.

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