PF REGIONAL WORKSHOP. UGANDA
NOVEMBER 2008
FINANCIAL MANAGEMENT &
GOOD GOVERNANCE IN PF
Ruth Farrant
Financial Management Officer, PF
Setting the Context: IFAD’s New Operating Model
New corporate processes
• Direct supervision
• Country presence
Country
Strateg
y
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
Financial Management (FM) &
Good Governance in PF
FM work involves 2 approaches:
(1) 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)
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
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
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
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
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)
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
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)
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)
FM Tools & Resources
PF FM&GG Internet site
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)
(address http://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?)
FM Tips
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
o Be afraid to ask PF!
Financial Management (FM) &
Good Governance in PF
Questions and Answers
?