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Appendix IV

PUBLIC FINANCIAL MANAGEMENT REFORM

In consultation with its development partners, the GOJ is currently executing an updated public

financial management reform action plan. In this regard:

• A new procurement manual has been developed, with technical support from the IDB and is

currently being reviewed. Implementation of an Electronic Tendering System has been

executed across four (4) pilot institutions - the Ministry of Finance and the Public Service,

E-Gov, Ministry of Health and the National Health Fund. Three additional institutions

(HEART Trust, Office of the Prime Minister and Port Authority) were included under the

pilot in June 2016.

• The GOJ and the BOJ signed a service level agreement (SLA) in August 2016. Full

responsibility for the management of government bank accounts is being transferred to the

AGD. It is anticipated that by end-September 2016, a list of all dormant and inactive accounts

to be closed, will be prepared to facilitate closure by December 2016.

• The GOJ continues its expansion of the coverage and functionality of the central treasury

management system (CTMS). As at August 2016, the salaries of 53,000 public servants are

paid through the TSA. A ledger accounting system, with ledgers for the RTGS and ACH

accounts, has been developed for the CTMS. Steps are being taken to introduce ledgers for all

other accounts. Responsibility for further development and management of the CTMS has

been transferred from the Ministry of Finance and the Public Service to the AGD.

• A new organizational structure for the Accountant General’s Department (AGD) should be

approved by September 30, 2016.

• By March 2017, all earmarked Central Government revenue flows or Appropriations-in-Aid

(AIA) will be required to be lodged to the Consolidated Fund, with daily sweeps of revenue

transit accounts. All MDA bank accounts used for depositing AIA proceeds are therefore to

be closed by end FY 2016/17.

• With continued technical assistance support from the IMF, the MOFPS has been enhancing its

macro-fiscal capacity. This process focuses on:

 Strengthening the assessment of fiscal risks;

 Documenting methodology and processes for the efficient production of key

outputs and continuous effective management of datasets and information;

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1. BACKGROUND:

1.1. The Chart of Accounts (CoA) implemented in 2015 provides a sound general ledger

accounting system. 1 Following recommendations made by an IMF mission in 2014, the MOFPS

mobilized technical assistance from the IMF Caribbean Regional Technical Centre (CARTAC)

to develop a unified CoA for the central government. The COA was implemented in 2015 after a

3-day workshop which brought together all the stakeholders 2 . Earlier IMF reports confirmed that

the overall structure of the 2015 CoA would meet most of the reporting requirements existing at

that time even though the consultation with stakeholders was limited in scope and time.

Subsequently the FSU organized many workshops to validate and propagate the CoA. This

improved the understanding and ownership of the CoA among stakeholders. An IMF Technical

Assistance mission in early 2017 confirmed that the 2015 CoA provides a sound general ledger

accounting system that can distinctly identify and maintain the integrity of government funds-

budgetary and others.

1.2. The CoA is a living document which should be updated to keep pace with the government’s

evolving reporting requirements. While the 2015 CoA was conceptually sound, it has not been

systematically updated over the last 3 years to provide for evolving improvements in the

classifications of revenues and expenditures. Additionally, budgetary reforms in the government

require linkages between the financial reports and performance reports. The coding of the

program/ activity segments in the CoA should be updated to provide this linkage. Finally, the

GoJ has signalled its intention to implement IPSAS cash-based accounting standards and this has

implications for activating economic category classifications already embedded on the 2015

CoA.

1.3. The CoA is a critical component of the on-going web-based upgrade of the CTMS and

should provide a sound basis for the eventual implementation of JIFMIS. The multi-

segmented CoA of 2015 has facilitated the configuration of the general ledger in CTMS. CTMS

will now be the operational Financial Management System of the GoJ for five to six years till

JFMIS is implemented. It should be appreciated that the upgrading of any CoA has two parts: (i)

modification/ addition of the codes within each segment, and (ii) restructuring of the segments

themselves. The former is a periodic exercise which provides for additional codes within existing

segments to cater for additional revenue resources, additional expenditure items, implementation

of new programs, and changes in the organization structure. The latter is much more

fundamental and involves reorientation of the database of the Central Treasury Management

System (CTMS). It requires system reconfiguration, testing and user training. The challenge is to

design a CoA which is futuristic so that there should not be a periodic need to restructure the

segments.

1.4. The linkages between the core financial information classified using the CoA and

additional management information required by different MDAs can be provided through

reference tables held in the IFMIS database. The CoA essentially provides for financial and

budgetary reporting needs of the government. Every transaction processed through a financial

management system should, as far as possible, be input in the system once. Thereafter, the

workflow, designed for the system, will process the transaction through the expenditure cycle

involving budget control, commitment, purchase, delivery, payment, accounting, and reporting.

Additional pieces of management reporting information such as performance indicators, staffing

numbers, supplier bank accounts, etc. added to the COA structure, and by implication, to coding

1 AN UPDATE ON TREASURY MODERNIZATION AND MACROFISCAL CAPACITY DEVELOPMENT January 2017

2 CARTAC supported the FSU in delivering this workshop and in its earlier design work.

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Transport Allowances Voucher P6 Organisation No. Voucher Number

P V

Ministry/Department Accounting

Event Number FP Commitment Reqn No. Period Fiscal Year Year month Day

20___/20__ 20

Name of Officer ……………………………………………………………………………………Make of Vehicle …………………………………………………

Motorcar Commuted/Upkeep allowance at …………………………………………….per annum $____________________________________ Or

Motorcycle Actual Mileage ……………………………at ……………………………….per Km $____________________________________

Passenger Mileage………………………….at ………………………………..per Km $____________________________________

Toll Charges $___________________________________

Total $____________________________________

I hereby certify upon honour that I have, during the month of ………………………………….performed the travelling set out overleaf and have kept in my

possession/or as my own property a …………………………………for which the allowance as provided in the Staff Orders for the Public Service 2004 is payable

to me, and that the said………………………………….has not been let out for hire. I further certify upon honour, that all travelling on private business

or pleasure has been excluded from the total mileage making up this claim ………………………………………………. ….…………………..

Signature of Claimant Date

I hereby certify that I have examined this claim and found it to be for travelling on duty only, and the trips made and mileage incurred have been necessary for the proper performance of the officer’s duties

………………………………………….. ……………………. Certifying Officer Date

Document Expiry Date

Driver’s Licence

Motor Vehicle Registration Certificate

Motor Vehicle Certificate of Fitness

Motor Vehicle Insurance Certificate

CLASSIFICATION LINE NO 01 LINE NO. 02 LINE NO. 03

Function/Subfunction

Programme/SubProg.

Activity/Project

Sub-Activity/Project

Object/Sub Object

Amount $ Amount in Words Tax Registration

Number (TRN) CTMS Ref #/

Cheque No.

.

Total $

Voucher Processing Details

Checked by ____________________

Posted by ____________________

Authorisation ( Finance &Accounts Division/Branch/Unit) (Accountable Officers)

I certify that this voucher has been properly prepared ,the payee entitled to the amount stated herein, the calculations are correct ,according to regulations and contract, and that funds are available.

___________________________________________ ________________________________ Certifying Officer Authorising Officer

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of the transaction input at source, will only increase processing overload without ensuring the

validation or accuracy of the additional information. The linkages between the core financial

information classified using the CoA and additional management information required by

different MDAs can be provided through reference tables held in the IFMIS database. These

reference tables are an integral part of the database and not tables held externally on excel

spreadsheets or paper documents. The tables are referenced by the application software only

when the specific management report is required.

1.5. The implementation of the web-based upgrade of CTMS provides an opportunity to

centralize responsibility for the CoA maintenance. Many IMF technical assistance reports

have recommended that the responsibility for the implementation and future development of the

COA, which are managed by the FSU, should shift to the AGD">AGD. This should of course be done in

close coordination with counterparts in MOFP, MDAs and revenue collection agencies. They

have recommended that a CoA Steering Committee led by the AGD">AGD should supervise this task.

The AG has been reluctant to take over this responsibility because she believed that (i) there

were deficiencies in the CoA which needed to be resolved, and (ii) there is a lack of capacity in

the AGD">AGD to anchor this responsibility. AG had communicated her concerns about the

deficiencies in 2015 CoA to FSU in April this year. The response given by FSU on 27th April

2018 is attached as Annex 1. The implementation of a centralized CTMS architecture provides

the opportunity to maintain and update a single occurrence of the CoA which becomes available

immediately for transaction processing by the MDAs.

2. TERMS OF REFERENCE OF CHART OF ACCOUNTS REVISION COMMITTEE

2.1. A Chart of Accounts Revision Committee was established in July 2018 to facilitate the transfer

of responsibility for maintenance of COA from FSU to the AGD">AGD. The MOFPS Critical PFM

Programme to Support Reform of the AGD">AGD issued on April 13, 2018 provided for action items which

were required to be completed before the maintenance of the COA was transferred to the AGD">AGD by

31st August 2018. Most of these action items have been completed. It is anticipated that the

maintenance of the CoA will be anchored in the GAR unit of the AGD">AGD. The recruitment of a Deputy

AG to oversee the GAR is underway.

2.2. The terms of reference of the committee were to review the current COA and make

recommendations to:

(i) Rationalize the program structure to eliminate overlap and repetition of items classified as

programs, sub-programs, projects, and activities.

(ii) It was agreed that due to timing constraints, the COA revision will be implemented as

follows:

Phase 1. The COA changes related to the economic and organizational segments will be

completed in time for inclusion in the budget formulation for 2018-19.

Phase 2 will be implemented after the on-going work in the Public Expenditure Division related

to the definition of Programs, Sub-Programs, Activities and Projects for implementing Results

Based Budgeting has been completed. However, it was decided that the structure of the

Activities/ Project segment would be rationalized to eliminate the possibility of overlap and

repetition of items classified as activities, sub-activities, projects, and sub-activities.

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2 | P a g e

1. BACKGROUND

The country is undergoing a comprehensive Public Financial Management (PFM) reform, aimed

at modernizing its public financial management and administrative systems. This should result in

a more efficient and effective use of funds to deliver services to the public. A proper working

PFM system should enable the strategic allocation of resources, fiscal discipline and efficient and

effective delivery of public services. the ongoing reform is taking place on the recommendations

from recent Auditor General’s reports that identified recurring breaches and weaknesses; less

than favourable fiscal discipline scores from an international performance assessment, as well as

key policy reforms outlined in Jamaica’s agreement with the International Monetary Fund (IMF).

Under the ongoing PFM transformation, the Finance Ministry is working to achieve a credible

fiscal strategy and budget; accuracy and comprehensiveness in reporting; and transparency and

accountability, which should lead to high performance and a sustainable macro-economic

framework. Good PFM systems are not only central to the Ministry of Finance, it is also central

to all MDAs. In its mandate to further institutionalize the principles of responsible fiscal

management and to improve fiscal transparency and efficiency in financial management, the GoJ

has undertaken several Public Financial Management (PFM) reforms by adopting a Fiscal

Responsibility Framework (FRF) to:

i) institute a Medium-Term Expenditure Framework (MTEF),

ii) enhance debt management legislation,

iii) establish a Central Treasury Management System (CTMS) and

iv) improve fiscal governance.

2. INTRODUCTION

The public expenditure process in the GoJ is currently managed using the CTMS which is the

government’s core financial management system. The CTMS has been deployed since 2004 and

its modules have been developed in a piecemeal way to extend the CTMS’s capabilities to

conform to the growing demands of PFM reform. The ad-hoc approach in providing ICT support

for government financial management has been costly and is hindering the pace of

implementation of the government’s ambitious PFM reform agenda. The information and

communications technology (ICT) environment within which government financial systems

function is changing rapidly with key stakeholders such as the Central Bank, commercial banks,

Tax Administration Jamaica (TAJ), Jamaica Customs Agency (JCA), and some public bodies

moving towards fully integrated Enterprise Resource Planning (ERP) solutions.

Though the CTMS has matured as a budget control and payment system, it may not be able to

continue to leverage the fast-evolving technological developments in the ICT environment, to

meet the growing needs for transparency and accountability of government towards its citizens.

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