The AFMIS project aims to support capacity building in the area of financial administration in the Ministry of Finance, Line Ministries, Budgetary Units, Governorates and Districts to complement the existing capacity. This will be achieved through the implementation of a computerized budgeting, accounting and payment system hereafter referred to as the Accounting and Financial Management Information System (AFMIS).
The system should provide greater fiscal transparency by posting approved budgets, allocations and monthly, quarterly, annually budget execution reports on the web site of MOF. Fiscal transparency will increase as the system incorporates a medium term budgetary framework and commitment accounting procedures.
The AFMIS will be phased out by organizations and geographic locations. In the first stage the system will be deployed in the headquarters of:
(i) Ministry of finance (MOF).
(ii) Ministry of education (MOE).
(iii) Ministry of health (MOH) .
(iv) ministry of public works and Housing (MOPWH).
In Stage 1, electronic communication between MOF and Central Bank of Yemen (CBY) will be established.
The AFMIS system will be, in future Stages, deployed to cover all budgetary units in Sana’a, governorates and districts. The successful completion of this project will result in better payment, budgeting and accounting systems and improved financial management.

 Institutional Structure of the Yemeni Government

The institutional structure of the Yemeni government consist mainly of two levels:
• Central Authorities
• Local Authorities
This composition divided the state budget into the following iterates:
a) Summaries for the state budget.
b) Central Authority Budget:
- Summaries,
- Detailed budgets of central authorities units.
c) Local Authority Budget:
- Summaries,
- Detailed Governorates budgets, which consist of all district` budgets within the governorate area in addition to the budget of the governorate` local council budget.
Note: District budget consists of all office budgets within their districts in addition to that of the district’s local council.
Thereafter, the formats of the budgets are sizeable and complicated.

 Strategy for Software Development

The strategy for software development will be to develop all the possible core and enhanced functions into the AFMIS software such as:

 PAYMENTS:

The present payment system, involving the issue of cheques by the individual budgetary units and disbursement of funds, by branches of the CBY, to discharge the liabilities created by these cheques, will be continued. However, additional functions will be built into the AFMIS to either (i) export electronic requests for payment to the MOF, line ministry, governorate and district, or (ii) issue electronic payment orders; instead of issuing cheques.
Note: Some districts will disburse the funds through commercial banks. The government accounting guide describes this process.

 COMMITMENTS:

The AFMIS will include a facility for recording commitments resulting from the signing of contracts for supply of goods or services. The commitments can be approved and recorded through a procedure analogous to the request for payment procedure. These commitments will be reported whenever information about budget execution is extracted from the AFMIS. The AFMIS will automatically track and process commitments for payments when the commitment matures. It is recommended that this facility be increasingly used so as to improve the cash management capability in the MOF.

 ASSETS & LIABILITIES:

The AFMIS will also provide the facility for recording and accounting for the liabilities or assets created as a result of certain types of payment or receipt transactions. This facility will enable the budgetary institutions to prepare balance sheets at periodic intervals and report their financial position in addition to reporting the progress of budget execution.

 PROJECT ACCOUNTING:

AFMIS will have a facility for recording transactions by project identification codes in addition to the codes pertaining to the chart of accounts. To use this facility, the budgetary units will have the option of maintaining a directory of project codes, which may be linked to the project details maintained at the MOPD or/and at MOF- DMFAS database- if the project is externally financed. The transaction input screens will have an additional facility for entering and validating project codes and project milestones.

 INTERFACE WITH OTHER RELATED SYSTEMS:

The AFMIS will interact with other satellite systems used in the budgetary units such as procurement systems, payroll systems, ASYCUDA, GST, DMFAS, etc. It is, therefore, suggested that the AFMIS be developed in an open platform such as ORACLE and provisions will be made in the software to import files electronically from external systems in addition to the paper-based documents. The standard format of such files exported from external systems to the AFMIS can be prescribed in accordance with the data input requirements of AFMIS.

 Expected end of project-component situation:

By the end of the project, the Ministry of Finance will have access to a modern fully ARABISED and computerised AFMIS, which will perform the following main functions government-wide:

 IN THE MINISTRY OF FINANCE:

 CREATE AND MAINTAIN A CHART OF ACCOUNTS COMPRISING:

• The economic classification.
• The functional classification.
• The organizational classification.
• The assets and liability accounts.

 BUDGET:

• Export budget frames to the line ministries/ departments governorates / districts and all other budgetary units.
• Import budget proposals from the line ministries, governorates.
• Consolidate the budget frames to formulate the Appropriation Act for approval of Parliament.
• Register the budget appropriations approved by Parliament.
• Register according to the budget execution regulations the budget allocations for the governorates / districts and all other budgetary units containing the annual budget appropriations distributed over months or quarters. These files will be used to exercise budget control over the expenditures proposed by the budgetary units. The budget allocation files should include the budget allocations for all Chapters including Chapters pertaining to Capital Expenditures and Repayment of Debt.
• Maintain budget work files for processing budget proposals and linking the proposals with the budget frames.
• Distribute the budget appropriations, allocations and frames over the governorates / districts/ line ministries/ departments and all other budgetary units.
• Export the control budgets to the governorates / districts/ line ministries/ departments and all other budgetary units.
• Amend, delete and adjust the budget allocations as per the Technical Budget Committee/ Cabinet/ Parliament decisions (by amount or by percent). The amendments/adjustments /deletions should be reflected in the control budgets at the most detailed levels of functional, economic and organizational classification.
• Export of control budget files from the MOF to the CBY. Exported files will include virements/ corrections to the control budgets effected in the MOF during the year.
• Export of control budget files and changes to control budgets, to the governorates/ districts/ line ministries/ departments/ all other budgetary units.

 EXPENDITURES, COMMITMENTS AND RECEIPTS:

• Import the request for payments from the governorates / districts line ministries/ departments and all other budgetary units.
• Process the requests for payments for approval and issue of cheque or payment order.
• Import daily expenditure, commitment and receipt transactions from the line ministries/ departments/ governorates.
• Import other accounting entries (pertaining to assets & liabilities) from the attached budgetary units.
• Register the transactions, commitments and other accounting entries of the attached budgetary units in the database of the governorate / district / Ministry/ Department.
• Export the daily transactions, commitments and accounting transactions received from the governorate / district/ line ministry / department and any other budgetary units, to the MOF.

 BANKING:

• Import budget transaction files (debit & credit) received from the CBY incorporating all the transactions effected by the CBY on behalf of the line ministries/ departments/ governorates / districts / other budgetary units.
• Automatically generate the accounting entries to register the changes to the bank balance resulting from the debit or credit advices.
• Compare the transactions as reported by the CBY with the transactions reported by the attached line ministries/ departments/ governorates / districts/ budgetary units.

 REPORT GENERATION:

• Produce periodic reports regarding the progress of expenditure and commitments against the budget allocations and cash-in /cash-out statements.
• Produce a statement of accounts for the government at different classification level, whenever required.
• Produce all financial and statistical reports for the purpose of budget follow-up and control and cash management.
• Produce all reports (summary, details) for budget review by the Technical Budget Committees/ cabinet/ parliament.
• After budget approval by the Parliament, the system must be able to produce budget reports for all the government, by different budget structures.

 GENERAL:

• Export the chart of accounts or changes made to the chart, to the governorates / districts/ line ministries/ departments/ all other budgetary units.
• Restrict access to the system or parts of the system through passwords and user profiles.
• Maintain a detailed log of identities of users accessing the system.
• Keep track of the sequencing of files imported or exported so that files are not duplicated or lost.
• Secure all transaction imports or exports through encryption and decryption of data.
• Maintain a detailed log of all the exports from the system and all the imports into the system.
• Export the payment status in respect of payments requested from the MOF, to the governorates/ districts/ line Ministries/Departments/Other budgetary units.
• Export of changes in the economic, functional and organizational code directories.
• Import of budget transaction files from the governorates / districts / Line Ministries/Departments and other budgetary units.
• Whenever the system provides for import of data from other systems it should provide the alternative of entering the data through paper- based documents in the event of non-availability of electronic communication facilities.
• All budget transactions files will register amounts broken down to the most detailed level of economic, functional and organizational classification. In case the amounts are not classified down to the lowest level the system should provide for registering budgets at higher levels and comparing actuals at the corresponding level.
• The allocated budget amounts registered in the control budget files will not be adjusted with reference to the budget transactions. The available budget will be computed by comparing the budget allocation file with the transaction file.
• When the governorates / districts/ Line Ministries/ Departments/ or other spending units are authorized to effect virement these should be reported immediately to the MOF through the appropriate superior database. This will ensure that the changes sought to be made through the virement are registered in the database of the MOF and reported down to the database of the other links in the chain.

The AFMIS will have a multiple-currency capability for recording oil receipts, grants and loans and for processing repayment of loans and other expenditure items.

  In the Governorates / districts:

 BUDGET

• Import, validate and register the budget appropriation files, budget allocation, budget frames, received from MOF.
• Maintain budget work files for processing budget proposals and linking the proposals with the budget frames.
• Distribute the budget appropriations, allocations and frames over the attached districts/ offices.
• Redistribute the budget allocations for capital expenditure by project.
• Export budget proposals to the MOF.

 EXPENDITURES:

• Input and validate the particulars of the vouchers for which payments are to be processed.
• Perform budget control to ensure that the proposed payment is covered by the available budget allocation.
• Automatically generate the required accounting entries for the transactions, which are accepted for payment.
• Retain the unaccepted transactions in the database till these are corrected or finally rejected.
• Process the accepted transaction for payment by one of the following modes of payment: (i) By cheque printed through the system, (ii) By electronic payment orders exported to the CBY, (iii) By request for payment sent to the MOF office.
• Record and monitor the status of the payments i.e. (i) Actual encashment of the cheques, or (ii) Actual transfer of funds as required in the electronic payment order, or (iii) Actual payment of the payment requested from the MOF.

 COMMITMENTS:

• Input and validate the particulars of contracts for which commitments are to be recorded.
• Perform budget control to ensure that the proposed commitment is covered by the proposed budget allocation.
• Automatically generate the required commitment entries for the commitments, which are budgeted and approved .
• Retain the unaccepted commitments in the database till these are corrected or finally rejected.
• Process the commitment for payment on maturity.

 RECEIPTS:

• Input and validate the particulars of receipts collected by the offices.
• Automatically generate the required accounting (transitory) entries for validated transactions. These transitory entries are required to monitor the transaction till the deposit is confirmed by the bank through their credit advice.

 BANKING:

• Import and validate the transactions reflected in the daily debit and credit files received from the CBY.
• Automatically generate the accounting entries to register the changes to the bank balance resulting from the debit or credit advices.
• Automatically generate the accounting entries required to liquidate the transitory entries created to monitor the actual registration of the debit or credit in the bank balance.

 ASSETS & LIABILITIES:

• Input and validate the details of assets or liabilities being registered in the system for the first time.
• Carry forward the details of assets or liabilities from one accounting period to the next.
• Automatically generate the asset or liability accounting entries resulting from the expenditure or receipt transaction.
• Maintain a detailed inventory of the assets or liabilities.
• Register non-cash transactions such as depreciation of assets.

 REPORT GENERATION:

• Produce periodic reports regarding the progress of expenditure against the budget allocations and performance indicators (project milestones), and cash-in/ cash-out statements.
• Produce a statement of accounts for the budgetary unit at different classification level, whenever required.
• Produce reconciliation reports with reference to transactions reported by the CBY. These reconciliation reports should be able to print a detailed list of outstanding cheques / debit advices. The report should also provide the facility of ageing the outstanding differences.
• Produce all financial and statistical reports for the purpose of budget follow-up and control and cash management.

 GENERAL:

• Import the chart of accounts and changes made in the chart of accounts from MOF.
• Restrict access to the system or parts of the system through passwords and user profiles.
• Maintain a detailed log of identities of users accessing the system.
• Keep track of the sequencing of files imported or exported so that files are not duplicated or lost.
• Secure all transaction imports or exports through encryption and decryption of data.
• Maintain a detailed log of all the exports from the system and all the imports into the system.
• Export the transactions and other accounting entries, at the end of each day, to the MOF/ Line Ministry/ local council.
• Export the request for payments (wherever applicable) to the MOF/ line ministries/ local council.
• Import the payment status in respect of payments requested from the MOF, from the line ministry/department or governorate or a district.

 In the headquarters of Ministries/ Departments/ units of central Authority:

 BUDGET:

• Import, validate and register the budget appropriation files, budget allocation (and modifications to allocation) files and budget frames received from the MOF.
• Maintain budget work files for processing budget proposals and linking the proposals with the budget frames.
• Distribute the budget appropriations, allocations and frames over the attached budgetary units.
• Import budget proposals from the attached budgetary units. • Export the budget appropriations, allocations and frames to the attached budgetary units.
• Export consolidated budget proposals for the Ministry/ Department to the MOF.

 EXPENDITURES, COMMITMENTS AND RECEIPTS:

• Import the request for payments from the attached budgetary units.
• Import the payment status in respect of payments requested from the MOF.
• Import daily expenditure, commitment and receipt transactions from the attached budgetary units.
• Import other accounting entries (pertaining to assets & liabilities) from the attached budgetary units.
• Register the transactions, commitments and other accounting entries of the attached budgetary units in the database of the line Ministry/ Department.
• Export the daily transactions, commitments and accounting transactions received from the attached budgetary units, to the MOF.

 BANKING:

• Import and validate the daily debit and credit files received from the CBY.
• Automatically generate the accounting entries to register the changes to the bank balance resulting from the debit or credit advices.
• Compare the transactions as reported by the CBY with the transactions reported by the attached budgetary units.

 REPORT GENERATION:

• Produce periodic reports regarding the progress of expenditure and commitments against the budget allocations and cash-in/ cash-out statements.
• Produce a statement of accounts for the ministry/ department at different classification level, whenever required.
• Produce all financial and statistical reports for the purpose of budget follow-up and control and cash management.

 GENERAL :

• Import the chart of accounts or changes made to the chart, from the MOF.
• Export the chart of accounts or the changes made to the chart of accounts, to the attached budget units. • Restrict access to the system or parts of the system through passwords and user profiles.
• Maintain a detailed log of identities of users accessing the system.
• Keep track of the sequencing of files imported or exported so that files are not duplicated or lost. • Secure all transaction imports or exports through encryption and decryption of data.
• Maintain a detailed log of all the exports from the system and all the imports into the system.
• Export the payment status in respect of payments requested from the MOF, to the attached budgetary units.
• Export the request for payments received from the attached budgetary units, to the MOF.