Assessment Report of Harari People National Regional State Project Report: September 2004 Decentralization Support Activity Project The DSA Project is implemented by Harvard University and funded by USAID, Ireland Aid and Netherlands Minister for Development Corporation
CIVIL SERVICE REFORM Expenditure Management and Control Program Assessment Report of Harari Region TABLE OF CONTENTS Section 1: Introduction 1 Section 2: Findings 3 Section 3: Recommendations 5 Section 4: Action Plan 7
SECTION 1: BACKGROUND AND PURPOSE 1.1 INTRODUCTION The DSA Project is providing technical assistance to the Government of Ethiopia s Civil Service Reform in the areas of budget, accounts and expenditure planning. The DSA Project is implemented by Harvard University and funded by USAID, Ireland Aid and the Netherlands Ministry for Development Corporation. The Budget Reform has so far been implemented with the support of the DSA Project at the Federal Government and in the Tigray, SNNP, Oromia, Amhara and Beneshangul/Gumuz regions. The Accounts Reform has so far been implemented with the support of the DSA Project at the Federal Government and in the Tigray, SNNP and Amhara regions. The DSA Project was extended from July 1 2004 to November 30,2006 to ensure that the above reforms are extended to all regions and administrative areas of Ethiopia. A part of the work plan agreed with the Ministry of Finance and Economic Development envisages that the budget and the accounts reforms are introduced in Hararri Region in FY 1998-99. To achieve this goal, the reform activities should commence in FY 1997-98. The DSA Project conducted an assessment of the Region in September 2004 with the following objectives: To obtain a full understanding of the Region in areas such as restructuring, status of the budget reform, status of accounts closure, and its impact on the Budget and Accounts Reform. To identify whether adequate technical staff capacity exists to effectively implement the reforms. To identify other constraints that may negatively impact the introduction of Accounts Reform in the Region. To develop a joint action plan and strategy to strengthen the Budget Reform and implement the Accounts Reform.
The assessment was conducted using the following approach: A questionnaire was developed and used in the field visits. DSA staff visited BOFED and some sector Bureaus and conducted interviews with senior staff BOFED selected the sample bureaus to be visited. The assessment team comprised staff from BOFED and DSA. Whilst the assessment found a number of areas that require improvement, it also recognizes the significant efforts exerted by the regional staff in implementing the Budget reform independently in FY 1996. We fully acknowledge the support provided by staff members of Hararri region to assist with the assessment. 1.2 JURISDICTIONS ASSESSED The jurisdictions assessed included BOFED and six other Regional Sector Bureaus. The jurisdictions assessed are listed below: 1. Bureau of Finance - Treasury 2. Region Sector Offices: - Education Bureau - Public Works & Urban Development Bureau - Agriculture Bureau - Office of the Auditor General - Bureau of Health - Supreme Court The remainder of this report is structured as follows: Findings Recommendations Action Plan
SECTION 2: FINDINGS This section details the overall findings of the assessment: 2.1 BUDGET REFORM Harari implemented the budget reform without the provision of appropriate training and adequate manuals. The reform has not been fully understood by the users. To improve the quality of the reform, it is necessary that all Users obtain a fuller understanding of the budget reform in terms of its purpose, capabilities and benefits for improved planning, control and management functions within the region. 2.2 BUDGET EXECUTION Harari has two level administrative structures: Regional Council, and Region Sector Offices. The Sector offices do not have a clearly defined process for transaction recording, processing, and reporting as key staff assigned at the Bureaus do not possess the relevant experience and have not yet received sufficient training in the system. Some
examples are provided below to illustrate the common areas where problems were observed: The accounting cycle of transaction capture, coding, recording, analysis and reporting is not well understood The number of GeHe 23s to be maintained by a Regional Sector Office is not clear. (Some offices are keeping more than one GeHe 23 for one bank account). The importance of budget calendar for systematic scheduling and timely accomplishment of important tasks is not understood Attaching sub-agency codes on the budget structure is not clear. A specific budget execution manual for the Region is not developed and there are no reference materials that provide guidelines on the documentation, process and reports required to execute budgets. 2.3 OTHER ISSUES Closure of FY 1995 Accounts Closing could not be finalized because the accounts of one of the reporting units, Hiwot Fana Hospital, still remain to be reconciled. Closure of FY 1996 Accounts Consolidation of accounts at BoFED has been discontinued as BOFED has not received complete reports from all public bodies for FY 1996, and the BDA used by BOFED does not accept the capital budget data. Staffing
Positions that require qualified staff - Heads of Budget, Accounts, and Disbursement are filled with nonqualified staff, 12 th grade and less, in 15 of the 22 sector offices Many of the staff that received orientation in budget reform have either been assigned to other sectors or have left. Training of Senior Officials Senior officials in the Region have not received orientation on the reforms. The officials could actively support the Reform if they understand the objectives and the advantage of the Reform. Reform Management For the successful implementation of both Accounts and Budget Reforms, it is important that there exists a responsible management body that plans, manages controls and oversees all aspects of the reforms. However, such a body does not exist at BOFED.
SECTION 3: RECOMMENDATIONS This section details the overall recommendations based on the findings of the assessment: 3.1 BUDGET REFORM Procedure manuals and training modules on budget preparation should be developed and designed and a training strategy developed to ensure that all stakeholders within the region are adequately trained on the budget reform in readiness for the preparation of the FY 1998 budget. 3.2 BUDGET EXECUTION Procedure manuals and training modules on budget execution should be developed and designed and a training strategy developed to ensure that all stakeholders within the region are adequately trained to execute the FY 1997 budget. 3.3 OTHER ISSUES Closure of FY 1995 and 1996 Accounts BOFED should assign competent staff to reconcile the Hiwot Fana Hospital account and finalize the closure of 1995 accounts immediately; and for FY 1996 closure, a) sort out the current BDA problem with support from MOFED, and b) assign staff to follow up and collect reports from all the sector offices; and speed-up data entry and the closure of the accounts. Staffing The following actions are recommended: a) Qualified staff should fill up staff vacancies by expediting the recruitment process particularly the positions related to the Heads of Budget and Accounts.
b) Ensure that each Sector Office has at least two diploma level accountants prior to the commencement of FY 1998 in readiness for the implementation of the accounts reform. Training of Senior Officials An awareness creation workshop for Senior Officials should be conducted to ensure they understand and support the reforms. Reform Management Committee A Reform Management Committee that oversees and coordinates the implementation of the budget and accounts reforms should be established immediately.
SECTION 4: ACTION PLAN 4.0 INTRODUCTION This Section contains an action plan to implement the budget and accounts reform in Harari Region. 4.1 KEY MILESTONES The key milestones to implement the action plan include: Establishment of a Reform Management Committee in September Delivery of budget execution training in October Printing of budget execution forms for FY 1997 in November Resolution of BDA issues at BOFED to close backlog of accounts as soon as possible Assignment of accounts staff at BOFED to close FY 96 accounts as soon as possible Approval from Cabinet on the recruitment of at least two qualified accountants at each accounting unit as soon as possible Conducting an awareness workshop for senior officials in December Strengthening of the budget reform in FY 1997 to process the FY 1998 budget by developing budget procedures manual, training materials and installation of BIS to support the reform Introduction of the accounts reform in FY 1998 by developing procedures manual, training materials and installation of BDA to support the reform Provision of training in budget and accounts reforms Printing of accounts forms required to implement the accounts reform in FY 1998
4.2 ACTION PLAN FOR THE ACCOUNTS REFORM Key Tasks Timing Responsible Establish Reform Management Committee September BOFED Close1995 Accounts Assign staff to finalize FY 95 accounts September BOFED Reconcile Hiwot Fana Hospital Accounts September BOFED Close 1995 accounts November BOFED Deliver Budget Execution Training Define training strategy and invite trainees September DSA/BOFED Design manual & module, September DSA Print training materials & deliver training October DSA Print & Distribute Budget Execution Forms Prepare list of forms to be printed October DSA/BOFED Define quantities to be printed October DSA/BOFED Commence procurement of modified forms October BOFED Complete procurement December BOFED Complete distribution of forms region wide January 05 BOFED Closure of 1996 Accounts Assign staff to process closure of 1996 accounts September BOFED Resolve BDA issues with MOFED September BOFED Enter accounts data into BDA October BOFED Close 1996 accounts February 05 BOFED Other Issues Obtain Council decision on recruitment of qualified accounts staff September BOFED Conduct awareness workshop for Senior Officials December BOFED/DSA Process 1997 Accounts Collect reports from reporting units September BOFED Enter data into BDA September BOFED Close 1997 accounts October 05 BOFED
Key Tasks Timing Responsible Design and Translate Accounting Manuals/Modules Contract and translate forms in Accounting Manual January 05 BOFED Design and finalize regional manual March 05 DSA Translate regional manual April 05 BOFED Design regional modules April 05 DSA Translate regional modules April 05 BOFED Print Forms to Implement the Accounting System February 05 BOFED Print & Distribute Accounts Training Materials June 05 DSA Deliver Accounts Reform Training TOT June 05 DSA Region wide training July 05 BOFED Install Double Entry BDA October 05 DSA
4.3 ACTION PLAN FOR THE BUDGET REFORM Key Tasks Timing Responsible Review and Finalize Budget Structure November DSA/BOFED Revise the budget structure consistent with the Federal structure Ensure consistency of the structure within regional jurisdictions Finalize Budget Reform Manual & Training Module Obtain comments on Manual & Module December DSA/BOFED Finalize Manual & Module January 05 DSA Print & Distribute Budget Training Materials Complete printing February 05 DSA Distribute training materials - region wide March 05 BOFED Print & Distribute Budget Preparation Forms Prepare list of forms to be printed February 05 DSA Define quantities to be printed April 05 DSA/BOFED Complete printing April 05 DSA Complete distribution of forms region wide May 05 BOFED Deliver Budget Preparation Training Identify names of trainers January BOFED Conduct TOT program April DSA Identify and invite trainees for each jurisdiction April BOFED Book training venues at each jurisdiction April BOFED Deliver training Region April BOFED
Issue Budget Call with Estimated Ceilings Finalize: Covering letter & ceiling by source of finance March BOFED Copies of budget structure & budget calendar March BOFED Copies of sector policies, principles for preparing budgets March BOFED Issue estimated ceilings March BOFED BIS Define BIS implementation strategy April DSA Enter budget structure into BIS April DSA Deliver training May DSA Enter budget data July BOFED Key Tasks Timing Responsible Consolidate & Approve Budget Requests Notify actual ceilings May BOFED Submit budget requests to BOFED June RSB Review/approve all budget submissions June BOFED Consolidate budgets June BOFED Obtain Cabinet approval July BOFED Notify House of Speakers of Cabinet s Recommended July BOFED budget Obtain approval from the Council July BOFED Notify Budgets Notify budget to RSB using BIS July BOFED Consolidate Region Budgets August BOFED Print Budget Book August Publish Negarit Gazette September BOFED