FINANCIAL MANAGEMENT & GOOD GOVERNANCE IN PF

Ruth FarrantFinancial Management Officer, PF

PF REGIONAL WORKSHOP. UGANDANOVEMBER 2008

Setting the Context: IFAD’s New Operating Model

Country Strateg

y

New corporate processes• Direct supervision• Country presence

Underpinning the New Operating Model: Financial Management and Good Governance

“The issue of good governance and

capacity-building is what we believe

lies at the core of all Africa’s problems” Commission for Africa, 2005

Good financial management means that funds are used: solely for the purpose intended and results-orientated in accordance with the AWPB in conformity with administrative, technical, financial,

environmental, agricultural and rural development practices and good governance

Financial Management (FM) & Good Governance in PF

FM work involves 2 approaches:

(1) assurance that IFAD funds are being used for the intended purposes (thro’ reliable internal systems & direct supervision)

(2) assistance to governments to improve FM capacities

FM is an integral part of the development process to achieve the Millenium Development Goals

One of the goals of the Paris Declaration is to ensure greater reliance on public financial management systems

PF works with borrowers to use national systems where possible (e.g. reporting/ procurement/ budget)

Financial Management (FM) through Direct Supervision

Core elements of Direct Supervision Implementation support Loan administration Procurement Audit

These elements are intended to provide reasonable assurance that the funds provided by IFAD are used appropriately, efficiently and only for the intended purpose

Financial Management (FM) through Direct Supervision

Loan administration Managed through PF Nairobi office Delegated authority of CPMs to certify

payments & provide procurement N-Os Regular contact with project thro’ (supervision)

missions (objective: 2 x year)

Timeliness of funds flows depends directly on accuracy & completeness of submissions

Statistical monitoring of WAs by PF

Financial Management (FM) through Direct Supervision

Procurement review Responsibility for project/ programme

implementation including procurement lies with the Government

Funds should be used for purposes for which the financing was provided, with due attention to economy, efficiency and social equity

IFAD provides no-objection (N-O) based on evidence provided

Expenditures should be reimbursed even subsequent to N-O if later found ineligible

Financial Management (FM) through Direct Supervision

Audit Provides accountability and credibility Financial statements prepared per

IFRS/ IPSAS accounting standardsNational standards can + should be used if meet minimum disclosures

External auditor – independent, uses ISA auditing standards

Annual audit report due 6 months after year end Annual TOR should be prepared for auditor

Financial Management (FM) through Direct Supervision

Audit (continued) 3 audit opinions:

Financial statements Use of Special account Statement of WAs

Management letter on internal controls & systems Suspension of disbursements may occur if:

Untimely submission of reports Non compliance with IFAD standards (e.g. qualified

accounts without satisfactory action plan)

Governance and Corruption

Governance Quality of governance is critical, contributing to

economic & social development Improving local governance implies:

delivering basic services strengthening capacities for

decision-making resource management implementing developmental initiatives

Monitoring of the quality of governance: across countries within individual countries over time

Governance and Corruption

Corruption IFAD has a zero tolerance against fraud, corruption &

misconduct Most countries in which IFAD operates

have poor governance/corruption records Responsibility for use of funds rests

with the Government Systematic checks/ controls may be built in at design

+/or implementation stage of a project (e.g. low procurement thresholds/ FM advisors), in addition to normal IFAD procedures (e.g. audit)

Governance and Corruption

Corruption (continued) Government is responsible for

following up in the first instance IFAD may declare mis-procurement/

ineligible expenditures as a result of fiduciary responsibilities, also if in doubt

Specific cases of suspected fraudulent/ corrupt practices are referred to IFAD’s Office of Audit and Oversight, which may collaborate if required (rare cases)

FM Tools & ResourcesPF FM&GG Internet site

FM Tools & Resources

Newcomers and not so new…..PF FM&GG Internet site

(address http://www.ifad.org/operations/pf/finance Userid=community Password=ifadcommunity)

Withdrawal Application Tracking System (WATS) (address http://open.ifad.org/wats/login)

Group E-mails (PC/ M&E/ Accountants)FM specialist staff/ CPMs

Coming soon…..New General Conditions (2009?)New Loans & Grants System (2010?)

FM Tips

Do’s National systems Compliance Quality Timeliness Use PF FM tools Send updated E-mail

addresses tor.farrant@ifad.org/ r.getachew@ifad.org

Don’t’so Be afraid to ask PF!

Financial Management (FM) & Good Governance in PF

Questions and Answers

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