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 [email protected]/ [email protected]
Don’t’so Be afraid to ask PF!
Financial Management (FM) & Good Governance in PF
Questions and Answers
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