Digital solutions promise better public finance management. They can speed up routine work, show where money goes and promote transparency.

They also fail when treated as a quick fix. When software is designed and implemented in a complex system without adequate policy measures, people and processes to support it, the result is frustration, workarounds and fading use.

Nepal’s School Accounting System shows both the promise and the risk. School education in Nepal is the largest sector that has been devolved to local governments under fiscal federalism and much of that funding flows to public schools through local governments.

The goal is straightforward: ensure that school leaders and funders have access to accurate, timely financial data. By digitizing school income and expenditure into a standardized system, we enable officials to make informed decisions based on reliable numbers.

Nepal has experience with standardizing school finance. Manuals issued in 2009 and 2015 set rules for how schools should record and report funds. The digital system aimed to build on that base and create consistent reporting that could be audited and used for planning.

The first wave of digitalization reached 2,000 of the country’s 27,000 schools in 2020, with plans to scale it nationwide over time. Yet a rapid assessment in 2025 found only 752 schools were using it. That drop signaled deeper problems that software alone cannot solve.

Governance gaps undercut the effort. No law clearly assigns who controls the School Accounting System and who is accountable for its performance. Without a standing committee or a clear place in a national digital strategy, decisions are slow, standards drift, and practices differ from one local government to another.

While the guidance comes from the federal level, schools answer to local governments. That split leaves participation voluntary and adoption patchy.

Schools draw money from multiple sources, including local government budgets, parent groups, donors, bank interest and non-government groups. The current software focuses mainly on government transfers and does not link to local government platforms.

Cash transfers and reporting from the local government sources require separate steps and manual checks. If the system cannot record all sources and uses of funds, reports will never match reality and users will abandon it.

The goal is straightforward: ensure that school leaders and funders have access to accurate, timely financial data.

Technical limitations make matters worse. The software is rigid, and it is hard to correct mistakes and reconcile accounts. Many schools also face weak internet service. If the tool does not work offline, data entry stalls. Data security raises another concern. The platform stores data in one place without strong safeguards.

There is little redundancy and few tested backups. In a crash, years of records could be lost. That risk erodes trust among users who are told to move sensitive information into a system that might not protect it. These issues turn a tool meant to simplify work into a burden.

People also need support. Many school staff have had little training in the system. In the assessment, 82% of respondents cited lack of training as the main barrier to adoption, and they also raised concerns about the weak technical functionality.

This has eroded their confidence in the system. When staff do not trust the tool or see how it helps their daily work, they keep parallel notebooks and spreadsheets.

There is a clear path forward.

First, fix the institutional setup. Place the School Accounting System inside a national plan for digital education finance, with a legal mandate that clarifies roles and responsibilities between federal government, local governments and schools. Tie policy to practice by issuing a simple rulebook that tells each actor what to do and when to do it.

Second, invest in people. Training should be local, practical and ongoing. Teachers and accountants need short, repeated sessions that mirror the tasks they do each day.

Get the buy-in from the participating schools by showing them the benefits that will accrue, such as faster fund receipts, fewer queries from auditors and less time spent filling out forms. When people see that the system saves time and reduces stress, they will choose it.

Third, improve the software. The system should record every rupee, no matter the source, and do so with simple screens that a nonaccountant can understand. It should allow corrections with a clear audit trail and should work offline.

Link to local government finance platforms so that transfers, acknowledgments and reports move automatically. Host the platform on a trusted government domain with modern security practices.

If federal and local partners move in step, adoption will rise, data will improve, and decisions will be better. The winners will be students who benefit from transparent budgets and timely support.

These reforms will take time. A measured rollout is better than a big bang. Start with a group of local governments in selected provinces that receive full support or bigger schools who have the required capacity for early adoption. Fix bugs and process gaps, then expand. Link adoption to incentives that reward use and data quality.