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Assessment of Fiduciary Risks in the Use of Country PFM Systems for Bank-Supported Projects

Assessment of Fiduciary Risks in the Use of Country PFM Systems for Bank-Supported Projects. Presentation at the Fiduciary Forum March 2008. Objectives. Objectives of this presentation Present initial ideas on assessing fiduciary risks in the use of country PFM systems

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Assessment of Fiduciary Risks in the Use of Country PFM Systems for Bank-Supported Projects

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  1. Assessment of Fiduciary Risks in the Use of Country PFM Systems for Bank-Supported Projects Presentation at the Fiduciary Forum March 2008

  2. Objectives • Objectives of this presentation • Present initial ideas on assessing fiduciary risks in the use of country PFM systems • Elicit suggestions and ideas from the FM community so as to further develop the framework

  3. Guiding Principles for Developing Fiduciary Risk Assessment Framework (for the use of country PFM systems) At the FM Sector Board meeting in September 2007, the following guidance was noted: • No new PFM diagnostic tool should be developed; make use of the existing PFM diagnostic tools • Risk-based framework should be consistent with the risk assessment framework mandated in the FM Manual

  4. Proposed Elements of country PFM System • Budgeting • Accounting and Financial Reporting • Treasury Management- Funds Flow • Internal Controls and Internal Audit • Audit

  5. Mapping of PEFA Indicators to Elements of the Country PFM System • Map PEFA indicators to the elements of the Country PFM system (i.e. Budgeting, Accounting Financial Reporting, …etc)

  6. Proposed Mapping of PEFA indicators to elements of PFM system

  7. Proposed Mapping of PEFA indicators to elements of PFM system

  8. Conversion of PEFA Scores into Fiduciary Risk • PEFA Scores to be converted into fiduciary risk rating of high, substantial, moderate, and low

  9. Conversion of PEFA rating into Fiduciary Risk Rating

  10. Conversion of PEFA rating into Fiduciary Risk Rating

  11. Sample Summary Risk Table

  12. Sample Risk Matrix

  13. Seek Your Views General: • What are your broad views on the proposed framework? Specific: • How do we factor in governance and corruption? • Should we use judgment or mathematical aggregation to arrive at the overall risk for the component?

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