Background to the Workshop

2. Background to the Workshop 2 Objective of workshop To upgrade fiduciary capacities & facilitate exchange of experiences & best practices in the implementation of projects This was in response to requests by project implementers Coverage Fiduciary issues of loan administration, financial management, procurement, audit & accounting Sharing of best practices from projects (BI, KE, MG, UG, ZM) to enable replication Participation Overwhelming! 128 staff from 14 countries, including staff from ministries, auditor general (SAI), projects, IFAD country offices & HQ (Rome)

3. Background to the IFAD ESA portfolio ESA Loan & DSF Grant Portfolio 3

4. Background to the IFAD ESA portfolio ESA Portfolio by type 4

5. Background to the IFAD ESA portfolio Disbursements 2009/10 - USD 121 million (36% increase) 5

6. Financial Management IFAD has a fiduciary role to ensure that its funds are used for the purpose for which intended 6 Accounting systems Computerization assists effective/ timely reporting Reporting Financial management reports: sources & uses of funds for period + cumulative by category + component, assets, commitments, inputs + outputs Physical progress reports: link outputs to related costs Procurement reports: compares actual with plan & status Tips Implementation manual - to be used as guide & reference Regular back up and filing

7. Annual Financial Statements 7 • Project Financial Statements include: • Statement of sources & use of funds • Cash Flow Statement • Schedule of Withdrawal Applications • Statement of Special account & Reconciliation • Status of Funds/ Financing • Fixed assets schedule • Accounts should be prepared in accordance with best practice - internationally accepted accounting principles (IPSAS or IFRS), using cash or accruals basis • National systems to be used where possible

8. Audit 8 Purpose: Provide accountability, verify compliance & make recommendations Key points: Audit can be conducted by Supreme Audit Institution or private audit firm approved by IFAD Audit report to be submitted within 6 months of fiscal year end 3 Audit opinions to be provided on the Financial statements, the Special Account & Statements of Expenditure To include a management letter with details of weaknesses in internal controls and non compliance Failure to submit within 180 days after due date or unsatisfactory report will lead to suspension of funding

9. Background to the IFAD ESA portfolio Assessment of 41 Audit Reports received: 1 July 2009 - 30 June 2010 9

10. Procurement 10 Purpose: • To establish an effective procurement system that leads to improved procurement performance • This can be achieved by: • Preparing a procurement plan before start of financial year & submit to IFAD for No-objection • Finances to be used for only items in the procurement plan & provisions of financing agreement • IFAD procurement guidelines to be followed & all steps adhered to • Plan in advance - consider whether prior or post review applies & act accordingly • Contract management is key

11. Other areas discussed 11 • Annual work plans and budgets • Critical setting of AWPB to ensure milestones met • Monitoring to ensure steady progress & performance • Value for money leads to higher impact from resources • Ensure adequate cashflows + anticipates gaps by planning • Loan administration • Financing Agreement/ LTB – critical documents • Special account reconciliations, Exchange rates • Loan closure procedures • Challenges faced by particular projects in implementation

12. FM Tools & Resources FM&GG Internet site: English:http://www.ifad.org/operations/pf/finance French:http://www.ifad.org/operations/pf/finance/french/index.htm Withdrawal Application Tracking System (WATS) https://webapps.ifad.org/wats/login Group PC/ Accountants mailing lists – updated names to r.farrant@ifad.org 2010 • Revised Procurement guidelines • ARTS (Audit Report Tracking System) • 2010/11 • Regional FM resource packs • Revised Loan Admin procedures • Revised Audit Guidelines • 2012 • New Loans & Grants system 12

13. Key success factors 13 Project management – single most important determinant of project implementation results FM Workshop test highest results Farida Mukungu (CAIIP, Uganda) Randrianarimanana Mamitiana(Ad2M, Madagascar) Zaki K Juma (ASSP/ASDP-L, Zanzibar) Clear correlation between projects with high fiduciary ratings and overall implementation progress 2010 Portfolio performance review – highest fiduciary ratings

14. Fiduciary best practices 14 • Centralised country control unit • Use of external services firm • Additional missions and support • Internal auditor • Country finance & procurement working group • Standardised country rules, procedures, training • Review of authorised allocations & thresholds • Proactive staff to accelerate procurement processes • Reliable computerised financial systems • Regular (quarterly) reporting

15. What next? 15 Lessons learned Better efficiency + effectiveness in fiduciary matters = increased implementation results Many best practice examples exist in IFAD projects Greater exchange of experiences should occur Make use of IFAD tools & resources Future FM workshops When, where, how often, how to finance?