It may have only received a whispered reference and a small pot of funding from the last two State Budgets, but an overhaul of the NSW Treasury’s budget system is shaping up to become one of the largest ICT projects the State will commence in future years.
In 2012-13, Budget Papers revealed that a rollover of unspecified prior year funding would kick off preparatory work on a “Treasury transformation project”, the foundation of which would be a new financial management system.
The 2013-14 Budget, tabled yesterday, adds a concrete price-tag to the continuation of the process. In the coming financial year $8 million will be spent on progressing “the financial management transformation program focussing on a new framework and financial information system as recommended by the Commission of Audit”.
Released in February 2012, Kerry Schott’s Interim Report of the Commission of Audit into Public Sector Management got the ball rolling on the budget overhaul. It identified “systemic weaknesses” in the way Treasury tracks agency expenditure and made some strong recommendations for budget management across the NSW Government.
Three key systems are used by Treasury to track revenue and expenditure in the NSW Government:
- The Treasury Online Entry System (TOES) – into which agencies report transactions and annual expenditure forecasts;
- The Capital Treasury Online Entry System (CAPTOES) – into which agencies report on expenditure against capital projects; and
- The Financial Information System (FIS) which collates the collected information to produce consolidated financial statements for the Treasury.
The interim report, referred to internally as ‘Schott One’, found that manual data entry, poor interfaces between agency and Treasury financial systems and misalignment of business processes meant that the Treasury’s understanding of Government expenditure often failed to synchronise with that of agencies, and that errors went uncorrected.
It advised that “Treasury in consultation with agency CFOs should commence scoping the design of a new financial management information system as a matter of urgency”.
“The Government will need to consider investment in a new financial management information system against other priorities in deciding both the timing and quantum of investment to be made in addressing the structural weaknesses in the financial management framework” it added.
The investment required to solve the deep and concerning shortfalls identified in the report would be “significant” in both “time and resources” it also said.
Treasury officials present at the NSW Budget lock-up yesterday confirmed that 2013-14’s $8 million allocation represented ‘just the start’ of a significant reform journey for the agency, which will involve extensive transformation of the business processes that go into managing the State Budget as well as the replacement of the IT solution.
At this early stage the Treasury has not settled upon a forecast for the project’s budget. Such an estimate is likely to emerge from the business scoping activities being conducted.
Similar activities are either complete or underway in other jurisdictions. In 2010 the Federal Department of Finance and Deregulation embarked on a program to redevelop its legacy Central Budget Management System (CBMS). It has since signed a $24.4 million contract with SAP for Commercial-Off-The-Shelf Software for the CBMS redevelopment out to 2016, and a $26.4 million contract with CSC for the provision of systems integration services for the project.
Tasmania is also looking to replace its Budget Information Management System (BIMS) after an independent assessment found its current system, which has been operating since the 1990s, cannot be sustained for any more than five more years.
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