Session 9b: Next steps on
financial management
harmonization and alignment
Purpose of Session
Share information and seek feedback & advice:
• What are benefits?
• What are the areas to harmonize and align with
country systems?
• Is the proposed approach feasible?
• What would be the challenges of the proposed
approach?
06/04/2015
Key messages from IHP+ Review
More needs to be done to increase the use of country
systems
• Lack of capacity
• Lack of performing systems and lack of transparency
More needs to be done to reduce transaction costs
• Duplicative processes – multiple assessments and
activities
• Parallel systems and divergent
requirements/mechanisms
• Uncoordinated planning, financing, supervision and
M&E
06/04/2015
What is Full FM Harmonization?
An approach and partnership for effectiveness and
transparency
• The goal of FMH is to:
– Reduce redundancies, align with country processes if possible
– Enhance transparency and accountability
– Simplify processes and complexities, and develop common
arrangements
– Preferably align with country systems
• The outcome is that:
– DPs and PCs on the same page and on one framework
– Use the same system and FM arrangements, preferably that of
the government
– No more multitude of financial reports and audits
– One single action plan and capacity building program
06/04/2015
What it is NOT about:
• Pooling of funds (although that could be part of it)
• Creating a mechanism for a small group of donors and
excluding others
• Additional funding or immediate financing from
participating development partners; that could be a
mid-term outcome
• Weakening of transparency and accountability
• Doing a full FM assessment if sufficient information is
available
06/04/2015
What does it involve?
• Begins by government/development partners
agreement to proceed
• Timing is not linked to donor’s immediate financing; it
can be done when appropriate and on agreement; it
can be linked to retrofit existing funding
• Begins by putting together a team to review the
existing available information and the country system
• Careful scoping for any additional in-country work
• Partner Countries and Development Partners come
together and follow the process (next two slides):
06/04/2015
Steps to harmonized and aligned financial
management arrangements
1
2
At the request of the
country, GOV-MOH and
active DPs agree to proceed
with FM harmonization.
FM Team with
representatives from
donors and government is
appointed.
6
5
Government & donors
complete and sign MoU
for common FM
arrangements.
Government implements
action plan; DPs follow-up
and support
implementation.
7
3
Core Team verifies that
the system is up and
running and start
disbursement .
4/6/2015
Completed
in parallel
Core FM Team
agrees/designs common
FM arrangements, drafts
MOU, and produces action
plan for implementation.
In all cases the final report should
include:
• Proposed action plan for systems and
capacity building
• Proposed single accounting system
and Chart of Accounts
• Content for single set of financial
reports
• Draft ToRs for single external
comprehensive audits
• Proposed draft MOU with salient
features of the Common Financial
Management Arrangement.
Small subset of FM Team
(Core FM Team) collects
and shares all available,
relevant information.
Yes, information is
sufficient. Field
Financial Management
Assessment not
required, core team
produces FM report
4
Core FM Team conducts
desk review, produces
inception report, and
meets with the FM Team
to determine if information
is sufficient.
No, information is not
sufficient. Field
Financial Management
Assessment required
4a
See Slide 2 “Steps to
Producing a Report on FM
and outputs (when
additional FM assessment
is required)”
Steps to Producing a Report on FM and Outputs (if partial or
full FM assessment required)
4
4a
FM Team conclusion:
The information
available
Is NOT sufficient.
FM Team agrees on
level and scope of
field work,
composition of the
assessment team, and
expected outputs.
4d
4e
Core Team finalizes
the report and
outputs.
Resume with steps required
for Harmonized Financial
Management Arrangements
(Slide 1 box 5)
5
Core Team designs
common FM
arrangements and
action plan for
implementation.
4/6/2015
Quality Assurance review
takes place. Participating
DPs and FM Team provide
consolidated comments on
the report and outputs.
4b
Core team fields incountry mission,
additional work/ full
assessment is
completed.
4c
Core Team produces
draft report and
outputs (all 6 pillars
of FM are covered)
In all cases the final report should
include:
• Proposed action plan for systems and capacity building
• Proposed single accounting system and Chart of Accounts
• Content for single set of financial reports
• Draft ToRs for single external comprehensive audits
• Proposed draft MOU with salient features of the Common
Financial Management Arrangement.
Main recommendations from the
FM team:
• Form an FM team representing both sides
• Decide together whether there is a need to do more
FM assessments
• Do joint in-country assessments when needed
• Establish a joint quality assurance process to ensure
acceptability by all donors
• Design the framework, systems, arrangements
together
• Design comprehensive capacity building program
06/04/2015
Main recommendations from the
FM team (2):
• DPs to draft model MOU with standard language and
optional language
• Draft MOU for common arrangements with
country/operation-specific parameters
• Agree on the action plan to implement mitigating
measures, strengthen the system to manage risks
• DPs to Support the country to implement action plan
• DPs to agree on coordinated/joint FM supervision and
monitoring.
06/04/2015
Expected Benefits
•
•
•
•
•
•
•
•
Reduced number of assessments and missions
Reduced number of parallel systems
Enhanced transparency and accountability
Reduced number of set of rules to learn and follow
Better flow of funds and less uncertainty
Reduced number of reports
Reduced number of audit teams
Clarity on units/departments responsibilities and
deliverables and transparency on financial results.
06/04/2015
Challenges
• Institutionalization of the joint efforts and formation of
the Joint FM teams at country level;
• Demand from Country Partners and push back on solo
work and parallel systems proposed by DPs
• Misunderstanding that this needs to be done when
someone has a financing coming up rather than a
strategic move
• Mobilizing financial support to implement the FM
action plans and having one well funded capacity
building TA program.
06/04/2015
Barriers, difficulties, the way forward
• Trying to link the harmonization to different processes
and timetables/ timing for funding of DPs.
• Terminology continues to be an obstacle- things have
different meaning to different people.
• Existing diagnostic tools often do not look at sectors.
• Classifications/Chart of Accounts in the sector needs to
be worked on (recommendation of the group).
• Sector particularly disadvantaged in terms of FM
capacity and needs specific effort for capacity
development (sometimes misunderstood by the
central ministries)
• A Working group to develop a standard MOU for use
and completion at country level.
06/04/2015