Cablegate: Iraq Financial Management Information System

DE RUEHGB #2617/01 2301512
R 171512Z AUG 08




E.O. 12958: N/A

1. (SBU) SUMMARY: The Iraq Financial Management Information System
(IFMIS) is an automated governmental accounting data tracking
system, designed to increase the effectiveness and transparency of
the GoI's accounting process. As of June 2007 when it was taken off
line (following the abduction of a Bearing Point contractor and four
other British nationals who were working on the system at the
Ministry of Finance Data Center), several system modules were
complete and it was in the early stages of a roll-out to GOI
spending units. In January of 2008, the Ministry of Finance (MOF)
and USAID signed a Memorandum of Understanding (MOU) detailing a
plan for joint responsibility for funding and the completion of the
IFMIS rollout to all GoI spending units nationwide. The MOF has
responsibility for certain technical costs, including internet
hosting fees, and two software licenses, as well as connectivity to
all spending units, and the system's ongoing maintenance fees. END

2. (SBU) On 5 July 2008, the GoI and USAID/BearingPoint restarted
the IFMIS. This milestone marks the system's successful
redeployment and indicates renewed commitment on the part of the
MOF. The MOF and USAID have identified a sample set of 11 GoI
spending units to track initial IFMIS usage. As of 10 August, nine
out of the 11 spending units were entering budget execution data
(expense and journal vouchers) using IFMIS. During the first six
weeks of the sample pilot, a total of over 3,700 individual expense
/ journal vouchers were entered into the IFMIS. These were submitted
by a total of 19 different spending units or offices, including from
the Ministries of Water Resources, Justice, Transportation, and
Science and Technology. A significant number of entries were also
made by the Shia Endowment Council, and by treasury offices located
in Mosul, Babil, Najaf, Muthana, and Wasit. There are a total of
250 spending units within the GoI. The system is expected to be
formally handed over to the MOF in January of 2009.

Purpose of IFMIS
3. The intended purpose for the implementation of the IFMIS is to
provide the GoI with an integrated automated financial management
information system and a set of regulations and procedures that give
the Ministry of Finance (MOF):
-Real-time reporting and management of cash expenditures across
spending agencies;
-Improved control and management of cash resources, accounting
processes and budget execution in accordance with the Financial
Management Law and international standards, and increased
transparency in budget preparation and execution. Implementation of
IFMIS is a key benchmark in the International Compact with Iraq.

USAID Support
4. The IFMIS is an automated budget execution tracking system that
was selected in 2003 by the Coalition Provisional Authority in Iraq
to replace a manual system used since the 1940s. The program
continued through phase II of implementation, and was on target for
timely handover until all activity was suspended and the system was
taken offline in June 2007 due to lack of GOI buy-in as well as the
abduction of a BearingPoint consultant and his security team from
the Ministry of Finance Data Center on 29 May 2007.

5. On 14 January 2008, a Memorandum of Understanding was signed by
the Minister of Finance and USAID. The agreement outlines a joint
effort to restore the system to nationwide use and it sets a
timeline for handing the system over to the MoF. On 5 July 2008, the
system went live and select GoI spending units began to enter
transaction data. Project implementation is on track for adoption by
all ministries beginning January 1, 2009. Parallel processing with
the manual system will continue for one year before full conversion
to IFMIS. The MOF has agreed to assume internet connectivity
changes and procurement and licensing costs for the IFMIS going

--------------------------------------------- ----
Budget Execution Reporting and GoI Financial Data
--------------------------------------------- ----
6. The IFMIS is capable of producing a robust assortment of
financial reports based on real time data. The cumbersome nature of
the GoI's legacy system was such that access to financial data and
expenditure information took months to gather, and weeks to
assemble, meaning that the GoI had no reliable, authoritative, and
current data by which to gauge the effectiveness of our joint
efforts to improve budget execution. As might be expected, the
manual process was prone to human error, and was thus of limited use
to the Minister of Finance.

7. The IFMIS will allow the GoI to produce reports detailing trial
balances, budget variance, expenditures and revenues -- broken out

BAGHDAD 00002617 002 OF 002

across spending units, directorates and ministries. However, it is
important to note that while the GoI and the Ministry of Finance
will have access to this information in real time, the IFMIS is a
secured system, and the United States Government (USG) and other
donor agencies will not have access to the data unless the GoI
communicates it through official channels.

--------------------------------------------- ----
USAID Implementing Performance Budgeting and Purchasing
Functionality within the IFMIS
--------------------------------------------- ----
8. USAID and the MoF have agreed to resume work on implementing
performance budgeting and purchasing functionality in the form of
two modules. Prior to June of 2007, this work was supported through
an ITAO-funded project. EGII advisors are presently performing
functional mapping and are working with GoI counterparts in the
Ministries of Finance and Planning to rebuild working groups. Speedy
completion of the performance budget module, in particular, is
crucial, as the MOF team is counting on its use for budget modeling
in the upcoming negotiations for the 2009 budget.


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