VZCZCXRO2458
RR RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK
DE RUEHGB #2617/01 2301512
ZNR UUUUU ZZH
R 171512Z AUG 08
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC 8899
RUEATRS/DEPT OF TREASURY WASHDC
RHEHAAA/WHITE HOUSE WASHINGTON DC
RHEHNSC/NSC WASHDC
RUCNRAQ/IRAQ COLLECTIVE

UNCLAS SECTION 01 OF 02 BAGHDAD 002617 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EFIN EAID ECON PREL PGOV IZ
SUBJECT:  IRAQ FINANCIAL MANAGEMENT INFORMATION SYSTEM 
 
¶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 
SUMMARY 
 
¶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. 
 
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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 
forward. 
 
--------------------------------------------- ---- 
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. 
 
 
CROCKER