Georgia’s PFMS model and structure of the Treasury General Ledger

1. Georgia’s PFMS model and structure of the Treasury General Ledger Lela Kurashvili February, 2012

2. The National Treasury PFMS Model CIVIL REGISTRY AGENCY REVENUE SERVICE AUDIT PROCUREMENT AGENCY NBG DEBT MANAGEMENT BUDGET MANAGEMENT THE STATE TREASURY A BUDGET ORGANIZATION THE GENERAL LEDGER REPORTING THE FUNCTIONAL PROCESS THE FUNCTIONAL PROCESS THE INITIAL DOCUMENTS BUDGET/ ALLOCATIONS AGREEMENT THE ELECTRONIC TENDER SYSTEM REPORTING CONFIRMATION OF AGREEMENTS / LIABILITIES PROCUREMENT / OBLIGATIONS TAXES GROUNDS FOR LIABILITIES, OTHER DOCUMENTS $ CONFIRMATION OF INVOICES /PAYMENT ORDERS DEBTORS / CREDITORS / PAYMENTS INVOICE THE GENERAL LEDGER $ RTGS RECORDING OF REVENUES/ PAYMENTS / REFUNDS NON-MONETARY OPERATIONS, EXCEPT ASSETS AND INVENTORY NON-MONETARY EVENTS $ ASSET AND INVENTORY MANAGEMENT MODULE DEBT FOREIGN INTERNAL HR MANAGEMENT PERSONNEL PAYROLL

3. The Procurement / Obligation Ledger NBG DEBT MANAGEMENT BUDGET MANAGEMENT THE STATE TREASURY A BUDGET ORGANIZATION CIVIL REGISTRY AGENCY REVENUE SERVICE AUDIT PROCUREMENT AGENCY THE GENERAL LEDGER REPORTING THE FUNCTIONAL PROCESS THE FUNCTIONAL PROCESS THE INITIAL DOCUMENTS BUDGET /DISBURSEMENT THE ELECTRONIC TENDER SYSTEM AGREEMENT PROCUREMENT/ OBLIGATIONS GROUNDS FOR LIABILITIES, OTHER DOCUMENTS $ • INFORMATION ABOUT AGREEMENTS WILL BE RECORDED IN COMPLIANCE WITH CPV CODES; • MODULES FROM WHICH THIS INFORMATION WILL BE TRANSFERRED: • REMUNERATION OF EMPLOYEES“ • „INTERNAL DEBT“ • „FOREIGN DEBT“ • „HR MANAGEMENT“ DEBT FOREIGN INTERNAL HR MANAGEMENT PERSONNEL PAYROLL

4. The Procurement / Obligation Ledger • A record made in the Procurement/Obligations Ledger is a source of double entries in accounting books. • An organization selects the type of operation using the Directory of Operations; • The Directory ensures that the budget classification clause is selected from the Uniform System of Accounts; • The Directory ensures that the accounting reports are made based on debit entries.

5. The Procurement / Obligations Ledger NBG DEBT MANAGEMENT BUDGET MANAGEMENT THE STATE TREASURY A BUDGET ORGANIZATION CIVIL REGISTRY AGENCY REVENUE SERVICE AUDIT PROCUREMENT AGENCY THE GENERAL LEDGER REPORTING THE FUNCTIONAL PROCESS THE FUNCTIONAL PROCESS THE INITIAL DOCUMENTS BUDGET /DISBURSEMENT AGREEMENT THE ELECTRONIC TENDER SYSTEM PROCUREMENT/ OBLIGATIONS GROUNDS FOR LIABILITIES, OTHER DOCUMENTS $ • THE SYSTEM AUTOMATICALLY REGISTERS INFORMATION IN THE PROCUREMENT / OBLIGATIONS LEDGER; • ANY CHANGE MADE IN THE LEDGER IS AUTOMATICALLY REFLECTED IN THE ELECTRONIC DATA BASE OF THE TREASURY. • THE OPERATIONS DIRECTORY HAS A “TREE STRUCTURE”. DEBT FOREIGN INTERNAL HR MANAGEMENT PERSONNEL PAYROLL

6. The Procurement / Obligation Ledger • A Typical Directory of Operations • Abudget classification clause; • An Accounting Report; • A cash based or accrual operation; • Functional classification etc. Clause Debit Example: 11112121 Purchase of a transport vehicle by means of cash transfer to the supplier 31121 2121

7. The Debit/Credit Payment Ledger NBG DEBT MANAGEMENT BUDGET MANAGEMENT THE STATE TREASURY A BUDGET ORGANIZATION CIVIL REGISTRY AGENCY REVENUE SERVICE AUDIT PROCUREMENT AGENCY THE GENERAL LEDGER REPORTING THE FUNCTIONAL PROCESS THE FUNCTIONAL PROCESS THE INITIAL DOCUMENTS BUDGET / ALLOCATIONS THE AGREEMENT THE ELECTRONIC TENDER SYSTEM PROCUREMENT / OBLIGATIONS GROUNDS FOR LIABILITIES, OTHER DOCUMENTS $ DEBTOR / CREDITOR PAYMENTS • INFORMATION ABOUT THE TYPE OF OPERATION; • INVOICE/AGREEMENT CONDITIONS; • THE OPERATION SUB-TYPE, DEFINED ACCORDING TO THE OPERATION SUBJECT. INVOICE INVOICE DEBT FOREIGN INTERNAL HR MANAGEMENT PERSONNEL PAYROLL

8. Procurement/Obligations Ledger NBG DEBT MANAGEMENT BUDGET MANAGEMENT THE STATE TREASURY A BUDGET ORGANIZATION CIVIL REGISTRY AGENCY REVENUE SERVICE AUDIT PROCUREMENT AGENCY THE GENERAL LEDGER REPORTING THE FUNCTIONAL PROCESS THE FUNCTIONAL PROCESS THE INITIAL DOCUMENTS BUDGET / ALLOCATIONS THE AGREEMENT THE ELECTRONIC TENDER SYSTEM PROCUREMENT / OBLIGATIONS GROUNDS FOR LIABILITIES, OTHER DOCUMENTS $ CONFIRMATION OF INVOICES / PAYMENT ORDERS DEBTORS/CREDITORS PAYMENTS INVOICE INVOICE THE GENERAL LEDGER RTGS • AN ACCOUNTING ENTRY MADE BY SELECTING THE OPERATION; • ACTIVATED ONLY IF THE AMOUNT IS SPECIFIED; • IN PARALLEL, A PAYMENT ORDER IS FORMED. DEBT FOREIGN INTERNAL HR MANAGEMENT PERSONNEL PAYROLL

9. Procurement/Obligations Ledger NBG DEBT MANAGEMENT BUDGET MANAGEMENT THE STATE TREASURY A BUDGET ORGANIZATION CIVIL REGISTRY AGENCY REVENUE SERVICE AUDIT PROCUREMENT AGENCY THE GENERAL LEDGER REPORTING THE FUNCTIONAL PROCESS THE FUNCTIONAL PROCESS THE INITIAL DOCUMENTS BUDGET / ALLOCATIONS THE AGREEMENT THE ELECTRONIC TENDER SYSTEM PROCUREMENT / OBLIGATIONS GROUNDS FOR LIABILITIES, OTHER DOCUMENTS $ CONFIRMATION OF INVOICES / PAYMENT ORDERS DEBTORS/CREDITORS PAYMENTS INVOICE INVOICE THE GENERAL LEDGER RTGS • A PAYMENT ORDER IS CONFIRMED BY A BUDGET ORGANIZATION BASED ON DETAILED CPV CODES; • THE PAYMENT ORDER CONFIRMED BY THE TREASURY IS AUTOMATICALLY SENT TO RTGS. • ACCOUNTING RECORDS MADE BASED ON THE DOUBLE ENTRY PRINCIPLE ARE AUTOMATICALLY REFLECTED IN THE GENERAL LEDGER OF THE TREASURY“ DEBT FOREIGN INTERNAL HR MANAGEMENT PERSONNEL PAYROLL

10. Assets and Inventory NBG DEBT MANAGEMENT BUDGET MANAGEMENT THE STATE TREASURY A BUDGET ORGANIZATION CIVIL REGISTRY AGENCY REVENUE SERVICE AUDIT PROCUREMENT AGENCY • ASSETS ARE RECORDED ACCORDING TO THE IDENTIFICATION CODES OF ANALYTICAL RECORDING (REPORT); • EACH OPERATION PERFORMED WITH ASSETS IS AUTOMATICALLY REFLECTED IN THE MAIN LEDGER BY MEANS OF BACK LINK. THE GENERAL LEDGER REPORTING THE FUNCTIONAL PROCESS THE FUNCTIONAL PROCESS THE INITIAL DOCUMENTS • ACCEPTANCE OPERATION • ACCRUAL OF AMORTIZATION • DEPRECIATION • MATERIAL IMPROVEMENT • CHANGE OF TYRES • REPAIR COSTS • Example: Transport vehicle: Mercedes, “C” class, manufactured in 2000“ - Code 0001; $ THE GENERAL LEDGER NON-MONETARY EVENT THE ASSET AND INVENTORY MANAGEMENT MODULE DEBT FOREIGN INTERNAL

11. Other Non-monetary Operations, Except Assets and Inventory NBG DEBT MANAGEMENT BUDGET MANAGEMENT THE STATE TREASURY A BUDGET ORGANIZATION CIVIL REGISTRY AGENCY REVENUE SERVICE AUDIT PROCUREMENT AGENCY THE GENERAL LEDGER REPORTING THE FUNCTIONAL PROCESS THE FUNCTIONAL PROCESS THE INITIAL DOCUMENTS • NON-MONETARY OPERATIONS • INTERNAL OPERATIONS • OTHER ECONOMIC FLOWS $ THE GENERAL LEDGER THE GENERAL LEDGER NON-MONETARY OPERATIONS, EXCEPT ASSETS AND INVENTORY NON-MONETARY EVENT NON-MONETARY EVENT DEBT FOREIGN INTERNAL

12. Accounting of Aggregated Parameters • Once at the end of each reporting period, aggregated parameters are recorded in the General Treasury Ledger as one operation: • Expenses funded from income received from economic activity of legal entities of public law; • Common public payments; • Direct payments made bypassing the Common Treasury Account.

13. Georgia’s PFMS model and structure of the Treasury General Ledger Thank You for Attention! www.mof.ge www.treasury.gov.ge Lela Kurashvili February 2012