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ROAD MANAGEMENT AND SAFTY PROJECT Project Launch Workshop. Financial Management Implementation. Key Objectives. What in financial management and why? Financial Management in Road Management and Safety Project (RMSP) Financial Monitoring Reports (FMR) New audit arrangements.
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ROAD MANAGEMENT AND SAFTY PROJECTProject Launch Workshop Financial Management Implementation
Key Objectives • What in financial management and why? • Financial Management in Road Management and Safety Project (RMSP) • Financial Monitoring Reports (FMR) • New audit arrangements
Financial Management System • The Road Directorates to maintain adequate financial management systems • To provide accurate and timely reports on project resources and expenditures
Why Financial Management? • Part of overall management • Renewed emphasis in the bank • Increasing focus on corruption and transparency • The Bank’s new initiative on Loan Administration (disbursement mechanism) • Strengthening institutional development • Helps in performing and improving the Bank’s fiduciary responsibility
What is Financial Management System? Characteristics of financial management include: • Internal Control • Accounting • Reporting • Planning and Budgeting • Staffing, and • Audit
ORGANISATION & STAFFING PLANNING & BUDGETING FINANCIAL MANAGEMENT INTERNAL CONTROL ACOUNTING AUDITING REPORTING
How do we ensure that the project have adequate FMS? • Conducting an assessment of project financial management system during project design - pre-appraisal, appraisal, or negotiation • Develop an time-bound action plan to strengthen financial management • Verification of the adequacy of Project Financial Management arrangements
RMSP - Key Steps in FMS • Appointment of qualified accountants • Appointment of global auditors • Implementation of a computerised accounting software • Design of FMR • Implementation & training of accounting software • Completion of financial manual
FEATURES OF THE FMR • INCLUDES INFORMATION ON FINANCIAL PERFORMANCE, PROCUREMENT ANDPROJECT OUTPUTS • COVERS ALL SOURCES AND APPLICATION OF FUNDS • FACILITATES COMPARISON OF FINANCIAL AND PHYSICAL PROGRESS • NORMALLY PREPARED ON THE BORROWER’S CHART OF ACCOUNTS AND UNDERLYING SYSTEMS • FREQUENCY NORMALLY QUARTERLY BUT THE PERIOD MAY BE VARIED TO FOUR OR SIX MONTHS TO MEET PROJECT NEEDS • CONTENTS SHOULD BE AGREED DURING PROJECT PREPARATION
Contents of FMR • Introductory narrative discussion of developments and progress • Financial Reports (FMS primary responsibility) • Sources and Uses of funds (period and cumulative) • Uses of funds by project components (budgeted and actual – period and cumulative) • Balance Sheet • Special Account Statement
Contents of FMR • Physical Progress Reports (TL primary responsibility) • Output indicators or contract status for key activities • Outcome indicators not required in FMR • Narrative information may be the most appropriate in some projects
Contents of FMR • Procurement Reports (PS primary responsibility) • Generally for contracts not subject to prior review but above a certain threshold
Scope and Frequency • Ability to produce FMR should be in place by Before Board • Scope – encompasses total project and not just Bank financed portion • Currency of FMR – normally in the currency used for maintaining books of accounts • Frequency – flexible, normally quarterly • At least semi-annually (BiH Quarterly) • Submission – within 45 days
RMSP - Main Outputs • Computerized accounting system • Completion of financial manual • Acceptable FMR template • Sound financial capacity with Road Directorates
Where to for RMSP? • Finalise project plan & budget • Reliable and regular FMR • Updating Financial Manual • Improve financial capacity • Counterpart funding – compliance with legal agreement (ie advance to project account before effectiveness) • Compliance with FARAH Handbook and disbursement procedures