REVENUE TO CASH PROCESS

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Nov 10, 2013 (3 years and 8 months ago)

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REVENUE TO CASH PROCESS

MINISTRY OF FINANCE


IFMIS RE
-
ENGINEERING


Account Receivables


Table of

Contents




1.0 IFMIS
Financial Management Operating
Model


1.1 Introduction



8


1.2 Revenue to Cash Sub
-
processes





9

2.0 Identify revenue sources

3.0 Revenue collections


3.1
Revenue Collection Activity
Description



14



3.2 Revenue Collections Inputs and Outputs



15


3.3
Revenue

Collection To
-
Be Process
Flow



16


3.4
Revenue

Collection
-
Receipt
Process



17


3.5
Receipt Entry
Methods



18


3.6
Receipt
Statuses



19


3.7
Receipts
Reversal



30

4.0
Exchequer Release
Process



4.1
Exchequer Release Process Activity
Descriptions




39


4.2
Exchequer Release Process Inputs and
Outputs



40









Table of Figures


Figure
I


Miscellaneous
Receipts


Entry
Screen



20

Figure
II

Miscellaneous
Receipts


Entry Screen with receipt
details

21

Figure
III

Miscellaneous
Receipts


Distributions
Button



22

Figure
IV

Miscellaneous
Receipts


Distributions
Screen


23

Figure
V


Miscellaneous
Receipts


Create

accounting



24

Figure
VI

Miscellaneous
Receipts


create accounting options


25

Figure
VII

Miscellaneous

receipts


create accounting notification


26

Figure
VIII

Miscellaneous

Receipts


view accounting



27

Figure
IX

Miscellaneous

Receipts


create accounting notification

28

Figure
X


Miscellaneous Receipts
-

accounting

entries




29

Figure XI

Querying the receipt for reversal 31

Figure XII


Enter

Reason For Receipt Reversal



32

Figure XIII

Notification Showing Record is

Updated



33

Figure XIV

Reversed Miscellaneous

Receipt





34

Figure
XV

Create

accounting






35

Figure XVI

notification showing record is updated



40

Figure
XVII

Reversed
receipt accounting
entries




41








List of
Abbreviations

A
-
I
-
A



Appropriation in Aid

AIE



Authority to Incur Expenditure

AP



Accounts Payable

AWP



Annual Work Plans

BD



Budgeting Supplies Department

BPG



Budget Procedural Group

BPR



Business Process Re
-
Engineering

BPS



Budget Policy Statement

BSC



Budget Steering Committee

BSP



Budget Strategy Paper

CBK



Central Bank of Kenya

CMM



Cash Management Module

CoA



Chart of Accounts

EFT



Electronic Funds Transfer

ERD



External Resources Department

EXU



Exchequer Unit

GL



General Ledger

GoK



Government of Kenya

GPAY



Government Payment System

ICT



Information, Communication and Technology

IFMIS



Integrated Financial Management Information System




List of
Abbreviations

IPPD



Integrated Personal Payroll Data

KRA



Kenya Revenue Authority

MDG



Millennium Development Goals

MoF



Ministry of Finance

MPER



Ministerial Public Expenditure Reviews

MTC



Ministerial Tender Committee

MTEF



Medium Term Expenditure Framework

P2B



Plan to Budget

P2P



Procure to Pay

PBB



Programme Based Budgeting

PFM



Public Financial Management

PO



Purchase Order

PPOA



Public Procurement Oversight Authority

PR



Purchase Requisition

PS



Permanent Secretary

R2C



Revenue to Cash

R2R



Record to Report

RFP



Request For Proposal

RFQ



Request For Quotation

VAT



Value added Tax



Learning Outcome


After
completing this
component,
you should be able to
:


Describe the Miscellaneous Receipt
Process


Reverse
receipts


Create/View accounting entries generated












1.0
IFMIS
Financial Management
Operating Model











Customers
Ministries * Local Authorities * Parastatals/Quasi
-
Govt’s
* Citizens
Channels
Telephone * Mail * Email * Fax * In
-
Person * Web * Contact Centre
Financial Management Systems, Security & Application Support
IFMIS Academy
Compliance, Control & Query Management
IFMIS Department
Plan to
Budget
Procure to
Pay
Revenue to
Cash
Record to
Report

1.1 Introduction

Overview of revenue to cash

Revenue
to Cash involves all the activities
related to revenue and cash management
from generation, collection
,
recording of
revenue to distribution of funds to the
ministries. It also involves management
and control of the actual and forecasted
cash inflows and outflows.

1.2 Revenue to Cash Sub
-
processes


The
Revenue to Cash end to end process comprises 8 key sub
-
processes: Identify
Revenue Sources; Revenue Collections; Exchequer Release Process; Perform Bank
Reconciliations; Manage Cash Position; Perform Forecasting; Manage Bank
Accounts; Debt
Management



2.0 Identify revenue sources

This

is

currently

and

will

continue

to

be

a

manual

process
.

There

are

a

number

of

different

sources

of

revenue

generated

by

the

government
.

They

include

ordinary

revenue
;

user

charges
;

sale

of

assets
;

investment

income
;

grants

from

external

sources

and

borrowing
.

Below

are

some

examples

of

the

various

sources

of

revenue

collected

by

the

government

and

the

ministries
.

Each

source

of

revenue

will

have

a

different

method

of

collection

and

processing

(will

be

discussed

more

in

the

revenue

collection

section)


Revenue

from

taxes

collected

by

Kenya

Revenue

Authority

(KRA)


Licenses

e
.
g
.

mining,

trading

collected

by

the

specific

Ministries


Disposal

of

Obsolete

Stock

(Miscellaneous)

collected

by

all

Ministries


Services

rendered

(Miscellaneous)

collected

by

all

Ministries


Fines

collected

by

all

Ministries


Levies

collected

by

all

Ministries


Tender

documents

payments

collected

by

all

Ministries


Donor

grants

collected

by

External

Resource

Department

and

some

Ministries


Land

rates

collected

by

Local

Government

and

Ministry


of

Lands



3.0 Revenue collections

This

sub
-
process

involves

all

the

various

activities

to

collect

revenue

from

the

previously

identified

revenue

sources
.

The

end

to

end

process

involves

collection

of

revenue

generated

by

the

government

and

recording

the

information

in

IFMIS
.

The

target

processes

will

optimize

the

revenue

collection

process

and

efficiently

meet

all

legislative

requirements,

providing

a

solution

that

will

result

in

improved

revenue

generation,

tracking

and

compliance
.

The

ability

to

fully

automate

and

standardize

processes

throughout

the

revenue

collection

lifecycle

is

critical

to

streamlining

operating

efficiencies
.

The

target

process

will

provide

ministries

with

a

single

view

at

any

time

of

the

revenue

collected,

outstanding

balances,

people,

supplier,

and

business

history
.

The

net

result

is

a

single

view

to

better

manage

collections
.

The

target

process

for

revenue

collection

will

involve

the

development

of

an

interface

between

the

KRA

system

and

IFMIS,

recording

tax

and

revenue

collection

information

in

the

IFMIS

system
.

The

ministry

revenue

collection

process

will

involve

scanning

and

uploading

documents

related

to

collections

processed

and

automated

reconciliation

with

cash

receipts

and

banked

collections

in

order

to

have

accurate

balances

and

records


3.0.1 Forms of
R
evenue Collection



There
are 2 main forms of revenue collection




Revenue collected by KRA


Revenue collected by the Ministries



Revenue collected by KRA

The
Kenya Revenue Authority is responsible for the assessment,
collection, administration and enforcement of laws relating to
revenue. It serves as the collection agent for collection of revenue
on behalf of the Government of Kenya. It includes
Direct
and
Indirect
taxes,
VAT,
C
ustoms
,
Income
tax,
Corporation
tax,
Withholding
tax and
Road
transport fees.




3.0.1 Forms of
R
evenue Collection..
Cont
.



Revenue
collected by the Ministries

Ministries generate revenue from a variety of sources depending on
the mission and operations of the individual ministry. General
revenue collected across all ministries would include sale of tender
documents. Revenue collected by specific ministries would include
land rates. The ministries also
collect
revenue on behalf of the KRA
in the form of value added tax. The collection of revenue is
performed by the accounting department. Sometimes ministries or
departments which collect revenue in the form of taxes, fines, fees,
other charges or grants from donors to directly finance a project is
allowed by treasury to use some of those funds directly instead of
waiting for disbursement from the exchequer, the amount is deducted
from the approved budget. The amount allowed is known as
Appropriations in Aid (A
-
I
-
A). If the amount collected is not authorized
for expenditure or the receipts exceed the A
-
I
-
A, then the amount
must be surrendered to the exchequer to the consolidated funds.

Activity

Activity Description

Process

Organisational Role

Identify Revenue
Sources(Start Point)

Identify Revenue Sources

Manual

Ministries

KRA



From Taxes

From taxes
-

KRA manages all
tax collections through a
separate system

System Supported

KRA

Revenue collected by KRA
through an external system

The collections made by KRA
will be processed through an
interface to IFMIS and the
records posted in the system



Automated

KRA



Other Revenue Sources

Other sources
-

revenue
collected for the ministries by
the accounting department

System Supported

All Ministries/ Accounting
Department

Issue miscellaneous
receipts for collections
made

Issue miscellaneous receipts
for collections made

Manual

Accounting Department

Record collections through
miscellaneous receipts in
the system

Record collections through
miscellaneous receipts in the
system

System Supported

Accounting Department

Accounting department
obtains bank slips and files
them

Collected revenue is directly
banked



Accounting department obtains
bank slips and files them

Manual

Accounting Department

Automatic reconciliation of
collections posted in the
system with the bank
balances (End Point)

Automatic reconciliation of
collections posted in the
system with the bank balances

Automated

Accounting Department

3.1
Revenue Collection Activity
Description

3.2 Revenue
Collections Inputs and Outputs

Input

Process

Output

(Taxes or other sources) Outside
of IFMIS

Revenue generated

Outside of IFMIS

Input file containing records of all
revenue collections

Revenue collected by KRA

Revenue successfully collected

Input file containing records of all
revenue collections

Revenue collected by Ministry

Revenue successfully collected

Revenue

collected

Collections

are

posted

in

IFMIS

through

an

interface

for

taxes

and

miscellaneous

receipts

for

other

sources


Revenue collection transactions
posted successfully in IFMIS

Collections

posted

in

IFMIS

Collections

posted

in

the

General

Ledger

and

account

balances

updated

in

IFMIS

General Ledger and account
balances updated accurately in IFMIS


3.3
Revenue
Collection
To
-
Be Process
Flow

Revenue Collection Process
KRA
KRA
Ministries
Ministries
Collections are
processed in IFMIS
through an interface
Issue miscellaneous
receipts for collections
made
Revenue collected by
KRA through an
external system
Yes
Identify
Revenue
Sources
From Taxes
Other
Revenue
Sources
Record collections
through miscellaneous
receipts in the system

Collected revenue is
directly banked
Accounting department
obtains bank slips and
files them
Automatic reconciliation
of collections posted in
the system with bank
balances
No

3.4
Revenue Collection
-
Receipt Process

RECEIPT

ENTRY

UPDATE

Vote BALANCE

CLEARANCE

RECONCILE



3.5
Receipt Entry
Methods




Manual (Miscellaneous Receipts)






Quick



Automatic

3.6 Receipt Statuses




Approved



Confirmed



Remitted



Cleared



Reversed




Figure I Miscellaneous Receipts


Entry Screen

Miscellaneous Receipts


Entry Screen


Figure II Miscellaneous Receipts


Entry Screen with receipt details


Miscellaneous Receipts


Entry Screen
with receipt details

Figure III Miscellaneous Receipts


Distributions Button


Miscellaneous Receipts


Distributions
Button


Figure IV Miscellaneous Receipts


Distributions Screen


Miscellaneous Receipts


Distributions
Screen

Miscellaneous Receipts


create accounting

Figure V
Miscellaneous
Receipts


create accounting

Figure

Vi Miscellaneous Receipts


Create Accounting Options

Miscellaneous Receipts


create accounting
options

Figure VI Miscellaneous
Receipts


create accounting option

Figure

VII Miscellaneous Receipts


Create Accounting Notification

Miscellaneous Receipts


create accounting
notification

Figure VII Miscellaneous Receipts


Create Accounting Notification

Figure VIII Miscellaneous Receipts
-

View Accounting

Miscellaneous Receipts


view accounting

Figure
VIII Miscellaneous
Receipts


view accounting

Figure X Miscellaneous Receipts
-

Accounting Entries

Miscellaneous Receipts
-

Accounting Entries


3.7 Receipts Reversal

Following types of receipts can
be
reversed



Miscellaneous
receipts



Automatic receipts with a
status of
Approved



Receipts that are part of a
batch


Figure XI Querying the Receipt for reversal

Querying the Receipt for reversal

Figure XII Enter Reasons for reversing the receipt

Enter Reasons for reversing the receipt

Figure XIV Reversed Miscellaneous Receipt

Reversed Miscellaneous Receipt

Figure

XIV
Create Accounting

Create accounting

Figure XV Create Accounting

Figure XV Notification Showing
Record Is Updated

Create accounting for reversed receipt

Figure
XVI create accounting successfully created

Figure
XVII

R
eversed receipt accounting entries

Reversed receipt accounting entries

4.0 Exchequer
Release Process

The

exchequer

release

sub
-
process

involves

the

government

cash

management

and

funds

distribution

process

to

the

ministries

in

accordance

with

their

budget

plans,

cash

flow

forecasts

and

expenditure

requirements
.

As

funds

are

deposited

by

the

central

bank

into

the

consolidated

fund,

the

exchequer

unit

is

notified

of

the

deposits

and

distributes

the

funds

accordingly
.

This

process

occurs

because

ministries

are

required

to

maintain

a

zero

balance

bank

balance

to

ensure

funds

are

utilized

properly
.

The

ministries

process

exchequer

requisitions

which

are

spending

requests

made

to

the

exchequer

to

allocate

the

money
.

The

ministries

perform

this

process

on

a

frequent

basis

based

on

expenditure

identified

within

and

outside

their

procurement

plans
.

In

all

cases,

funds

distributed

through

the

exchequer

release

process

must

be

for

approved

purposes

and

in

accordance

with

treasury

instructions

and

relevant

procedures
.

4.1 Exchequer Release Process Activity Descriptions

Activity

Activity

Description

Manual/

Automated

Organisational

Role

Funds deposited in
GoK

consolidated fund (Start Point)

Funds deposited in GoK
consolidated fund

Automated

Outside IFMIS

Ministries submit exchequer
requisition

Priority and Non Priority Spending
units in Ministries submit
exchequer requisitions in the
system based
on

expenditure
requirements



System Supported

Department User

Review priority request in IFMIS



Committee displays request, and
approves online if priority
spending unit



System Supported

Committee

Controller releases funds to
spending units

Workflow notification sends
request to the controller of funds
to approve release of funds from
consolidated fund

System Supported

Controller of funds

Review non priority request in IFMIS

Committee reviews non priority
requests and approves based on
requisition request and the order
requested

System Supported

Exchequer Unit

Request rejected in IFMIS, request
goes into pending status

If request denied, it goes into
pending status until funds are
available

System Supported

Committee

Workflow notification to ministries
for
approval

Workflow notifies ministries of
approval or pending release

Automated

System Process

Ministries can display status of the
exchequer requisition

Ministries have online access to
display status of the request
instead of physically calling or
going to the location

System Supported

Automated report/ Department User

GL accounts and balances updated
in IFMIS (End Point)

Ministries receive notification of
funds deposited in their accounts

Automated

System Process

4.2 Exchequer
Release Process Inputs and Outputs

Input

Process

Output

Revenue deposited into accounts

EXU displays balances in revenue accounts in
IFMIS

EXU successfully displays total account
balances in revenue accounts

Need for funds by spending unit

Request for funds by spending unit in IFMIS

Spending requests created in IFMIS

Request for funds by spending unit

Approval or rejection of request for funds in
IFMIS lead to disbursement of funds

Approval and disbursement of funds or
rejection of requests

Approval and disbursement of funds
through bank transfer

General ledger accounts and account
balances are automatically updated in IFMIS

General ledger accounts and account
balances are successfully updated

IFMIS DEPARTMENT

Ministry of Finance, Treasury Building

Harambee Avenue

P.O. Box 30007
-

00100

Tel: +254 20 2252299

Email:
info@ifmis.go.ke

Website:
www.ifmis.go.ke


Contacts