[OpenSpending] Follow-up to transaction standard call

Sat Oct 20 14:39:27 UTC 2012

Hi,

I agree with many points that James has put in this discussion and I will
try to give some examples from Brazil, which is the reality I better know.

>1) If you want data at this low level, then you are signing yourself up to
create your own government-scale >accounting system, which is a Herculean
effort.

I totally agree! In Brazil most information is standardized in the law, but
according to autonomy principle, some are not.  Integration of existent
financial information from different government levels
(municipal, state/region, central) at transaction level could be a very
hard (in the best case) task.For this purpose, maybe program and action
levels could give valuable information.

 I am not sure if you are aiming to do such integration or if you just want
transactions at the
central/national level what, in our case, could not give enough elements to
understand if some
public policies have been receiving enough resources or if the money have
been spent appropriately.

Maybe I am very behind in this discussion, but it seems to me that is very
difficult to construct
such spending standard in a "top-down" way. I think that´s ok to make
wishlists, but how to make
bindings to different countries realities then ? I am not sure, but maybe a
strategy could be learning from
few different countries, build a minimal set of parameters and try to run
the first loop of standardization
(maybe we can´t call this a standard).

Another point is that, in my opinion, reverse engineering will not work. I
agree that there is knowledge inside SAP/Oracle government-focused
accounting products, but I am not sure
if it is available or easy to be extracted and neither if it will be
useful, as James have observed,
knowledge can be fragmented in many systems used inside government.

So where can we learn about public budget in order to extract reliable
information? Laws/regulations are
 a good starting point. They set the budget structure and also tell what is
mandatory or not.
We have also this knowledge, in many studies about many countries around
the world, as those
from International Budget Partnership. My doubt here is about Global
Initiative on Fiscal Transparency:
what are its purposes and how do its different working groups work and
exchange ideas/difficulties/knowledge
in order to meet its objectives?

These are my two cents.

Gisele

2012/10/19 Lucy Chambers <lucy.chambers at okfn.org>

> Hi James,
>
> Thank you very much for writing this all up, I think that it is worth
> circulating it straight away to the list in order to get their thoughts.
>
> @all - James McKinney has taken the time to run the proposal for a
> spending standard as discussed on the last community call by an accountant.
> He raises some concerns about whether the focus of our current efforts
> should in fact be a standard for transactions, or to actually focus on the
> contracts as the most interesting source of information.
>
> James, I also agree with you that it is worth looking into the SAP, Oracle
> etc guidelines on this information. I am led to believe that  the majority
> of the world's governments actually use software from a very small number
> of providers.
>
> In order to help shape the discussion further, it would be useful to know
> from those on the list:
>
> * What questions would you need to be able to answer using
> transaction-level spending data?
>
> I am currently writing up meeting notes and am prepared to organise
> another call soon if people feel this would be helpful. Let's consider
> James' points and I will proceed accordingly,
>
> Thoughts?
>
> Lucy
>
>
>
> On Friday, October 19, 2012, James McKinney wrote:
>
>> Hi Lucy,
>>
>> Feel free to forward to openspending list if appropriate.
>>
>> I asked an accountant for feedback on the standard. She has not worked
>> for government. Two big questions were:
>>
>> 1. Do you already have data that you want to represent using this
>> standard?
>> 2. What are the use cases and requirements for this standard?
>>
>> The high-level process in government (and in many corporations) is for
>> example:
>>
>> A budget for office supplies is set to $10,000.
>> Purchase orders are made throughout the year, eg a purchase order is made
>> to buy $1,000 of paper.
>> Processing the purchase order creates a commitment, so that only $9,000
>> of the budget is considered available.
>>
>> The commitment can then:
>> 1) be cancelled
>> 2) be relieved when the paper is received
>> 3) the actual cost is lower than the commitment, so the difference is
>> uncommitted
>> 4) the actual cost exceeds the commitment, in which case authorization
>> must be given to increase the commitment from the same budget or another
>> budget
>>
>> Searching these keywords brings you fascinating documentation like
>> Oracle's JD Edwards EnterpriseOne's chapter on "Processing Purchase Order
>> Commitments".
>>
>> A few things come out of even just this simple explanation:
>>
>> 1) If you want data at this low level, then you are signing yourself up
>> to create your own government-scale accounting system, which is a Herculean
>> effort. Will you be modelling all the back and forth that occurs when the
>> commitment must be changed? In accounting systems, changes are considered
>> transactions. The current standard has no concept of ledgers, so I assume
>> you (wisely) will not go in this direction.
>>
>> 2) The current transactions.txt has amount_budgeted, amount_allocated,
>> amount_executed, but it rarely works that way. Organizational units (eg
>> departments) don't create a budget for each purchase of office supplies. A
>> unit would have one budget for office supplies, which multiple transactions
>> deplete.
>>
>> 3) In an accounting system, there will be no difference between the
>> amount allocated and the amount executed. You can't balance the books if
>> it's otherwise! In all cases, there would be a transaction to change the
>> amount committed (allocated) to match the amount that must be paid
>> (executed).
>>
>> On the call, one justification that I remember for having both fields is,
>> for example, if a contractor doesn't cash a cheque. But in that case, the
>> money doesn't get recycled - it stays in Accounts Payable. Accounting
>> systems rarely care when cheques are actually cashed. If money is in
>> Accounts Payable, then in the government's view *it's no longer its money.*
>>
>> Clarifications:
>>
>> In a call for tender for paving a specific road, the government would
>> estimate the cost, and contractors would submit bids which will differ from
>> the estimate. The government estimate wouldn't be amount_budgeted, it would
>> be amount_estimated. The money for the contract would come from a larger
>> "road work" budget.
>>
>> If we look at USAspending.gov, those aren't transactions, they're
>> contracts. There will be many transactions tied to a single contract. But
>> do you care about all the component transactions, or do you care about the
>> contract as the basic unit of interest? If so, then this project should
>> focus on contracts, not transactions.
>>
>> If the focus really is on transactions, then I would study the
>> documentation that SAP, Oracle and others have for their government-focused
>> accounting products. (Of course, most governments rely on ancient
>> custom-made DOS programs and the like.)
>>
>> Use cases:
>>
>> I think a good use case is the comparison between budgeted and actual
>> spending. You don't need to go as low-level as transactions to do this,
>> though.
>>
>> Last note:
>>
>> It might actually be very easy to model transactions. But what you get
>> for modelling transactions is probably not what you want. A transaction is
>> a transfer of money between two accounts - but a lot of the time both
>> accounts will belong to the government! I don't think people want a long
>> list of transactions leading up to each transfer of money to a third-party.
>> And I don't think people want each transfer of money made to a third-party
>> as part of the same contract. Am I right? If so, transaction-level spending
>> is not the right focus.
>>
>> Looking forward to your thoughts,
>>
>> James
>>
>>
>
> --
> Lucy Chambers
> Project Coordinator,
> School of Data <http://schoolofdata.org/> & OpenSpending<http://openspending.org/>
> Open Knowledge Foundation <http://okfn.org/>
> Skype: lucyfediachambers
> Twitter: @lucyfedia <https://twitter.com/#!/lucyfedia>
>
>
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