Use of SAIs in environments of low capacity: Opportunities & Challenges for Capacity Building

1. Use of SAIs in environments of low capacity: Opportunities & Challenges for Capacity Building Organization of Eastern Caribbean States: Policy Note on Project Fiduciary Management

2. Policy Note Background • Policy Note - tailor-made, focused study, inspired by the existing necessity, and based on the principles of simplification, harmonization and improved efficiency of public sector • OECS – small island-nations with limited institutional and human capacity and high cost of public services. Donor aid represents a very significant share of the budget • Entry point - Gov’ts dissatisfaction with the performance of the donor-financed capital projects, in particular in the area of the fiduciary management • Breaking down the silos - comprehensive review of the capital projects implementation cycle, in the context of the countries own policies and procedures • Higher objectives - effective allocation of available resources, optimal use of public funds and successful implementation of capital projects (both internally and externally financed)

3. Policy Note – Background (cont’d) • Areas reviewed: • Legal Framework, defining capital project implementation arrangements • Strategic, Sectoral and Project Planning • Budgeting • Financial Management • Procurement • Audit • Outcomes – comprehensive, actions oriented recommendations, focused on: • Rationalization of the underlying policies and legal framework • Alignment of the strategic, sectoral and project planning • Upgrade of the FM, procurement and budgeting systems • Training of the involved personnel • Empowerment of the Director of Audit Department • Special emphasis on:gradual merge of the implementation arrangements for the donor and country-funded projects; regional approach; harmonization and simplification of the donor fiduciary policies and procedures

4. Directors of Audit (DOAs) – Status Quo • Based on the Westminster model, have a constitutional mandate to audit all projects • Recently revised audit legislation • Plagued by the overall weak capacity, in terms of numbers and professional qualification • Delays in the submission of the countries accounts, in some cases low quality of the conducted audits, very limited follow-up • Inability to undertake project audits meeting donor requirement; resulting absence of these operations in the DOA’s reports to the Parliament • Exception – St. Lucia. Audits 95% of the WB-financed projects • Willingness to catch up and to be more actively involved

5. DOAs Empowerment – Framework for Recommendations • The DOAs should be able to eventually take responsibility to audit ALL capital projects, according to their constitutional mandate • Basic considerations: realistic approach, short term vs long term, gradual steps towards the achievement of set objectives • Systemic Improvement Measures • Development and/or update of audit methodology and manual (including computer-based audit, internal controls review, performance audit, etc.) • Purchase and installation of auditing software • Provide sustainable training options to the DOAs’ personnel, including peer learning and secondment programs • Develop training capacity in the sub-regional training institutions • Just-in-Time Actions • The DOAs participation in the selection and shadowing of the private sector auditors work • Systematic submission of audit reports prepared by the private sector auditors to the DOA’s review

6. From Recommendations to Implementation • Successful implementation is equally dependent on the governments and donors commitment • CAROSAI Strategic Plan (2008-2011) – to be used as a reference framework for the sub-regional donors coordination • While regional approach makes a lot of sense, individual country needs count ! • IDF grant -OECS Institutional Capacity for Project Implementation – working with the sub-regional partner • Remaining challenge – the general scarcity of the HR….

7. CAROSAI Strategic Plan • Advocacy: To raise the profile of SAIs • Institutional Capacity of SAIs: To assist member SAIs in strengthening their institutional capacity • Professional Capacity in SAIs: To help member SAIs in developing their professional capacity • Information Sharing: To establish an effective information sharing process • Organizational Capacity of CAROSAI: To strengthen and maintain the sustainability of organizational capacity of CAROSAI