FINANCIAL MANAGEMENT & GOOD GOVERNANCE IN PF

1. PF REGIONAL WORKSHOP. UGANDA NOVEMBER 2008 FINANCIAL MANAGEMENT & GOOD GOVERNANCE IN PF Ruth Farrant Financial Management Officer, PF

2. Country Strategy Setting the Context: IFAD’s New Operating Model • New corporate processes • Direct supervision • Country presence

3. 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

4. Financial Management (FM) & Good Governance in PF FM work involves 2 approaches: • 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)

5. 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

6. 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

7. 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

8. Financial Management (FM) through Direct Supervision Audit • Provides accountability and credibility • Financial statements prepared per IFRS/ IPSAS accounting standards National 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

9. 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)

10. 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

11. 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)

12. 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)

13. FM Tools & Resources PF FM&GG Internet site

14. 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) (addresshttp://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?)

15. Do’s National systems Compliance Quality Timeliness Use PF FM tools Send updated E-mail addresses to r.farrant@ifad.org/r.getachew@ifad.org Don’t’s Be afraid to ask PF! FM Tips

16. Financial Management (FM) & Good Governance in PF Questions and Answers ?