Public Sector Governance and Accountability Series: Budgeting and ...

Automating Public Financial Management in Developing Countries 341
The capacity of those human resources determines the pace of a reform.
A weakness of process innovation is that it does not always adequately take
into consideration the need to clean up administrative backlogs (a six-year
backlog in accounts in the case of Ethiopia). The iterative approach in
Ethiopia started with this step. The government’s decision to clear up the
accounts backlog before implementing the double-entry bookkeeping
reform was prudent but also meant that the accounts reform was delayed by
two years. It also meant that the procedural improvements, training, and
computer systems had to support the existing accounting system and not just
a new system.
The Strategy of Automation of the Ethiopian Reform
The strategy for automating the budget, accounts, and disbursement
reforms in Ethiopia has four attributes. First, it is a customized and iterative
approach. Second, it is driven by procedures. Third, it simultaneously managed
multiple versions of the system at different administrative levels.
Fourth, the systems are developed in phases, which are based on user
demand and resource availability. 24
The baseline financial information systems at the start of the financial
reform were rudimentary. Budgets were prepared on Microsoft Excel
spreadsheets and a simple accounting system written in COBOL (common
business-oriented language) operated on the mainframe.
Three distinct phases existed in the development of these systems
(table 10.1):
Phase 1: Translating the requirements and operational testing. The first
phase of automation focused on replicating the new manual procedures
by creating a seamless interface between the manual forms and the input
screens of the application. Phase 1 system development went hand-inhand
with the procedural design; the manual formats were meticulously
designed and brought a new standard of clarity to budget and accounts
preparation. Phase 1 produced an operational prototype that was tailored
to the needs of users who had never used customized computer
applications. The risk of using an operational prototype for budgeting
(the BIS) was limited because the new manual formats could have been
processed using the previous rudimentary spreadsheets. 25 The risk of
using an operational prototype for accounts (the BDA system) was
reduced because an existing operational application was available. In
summary, in this critical first stage of reform, risk was carefully managed