Institution / Sector Fiduciary
Assessments (IFAs/SFAs)
An example – the Croatia Education Sector
Fiduciary Assessment (ESFA)
Maria Vannari & Ranjan Ganguli, ECSPS
February 2005
Croatia ESFA
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Why?
What ?
How?
Results
Why (did we do the ESFA)?
• To support an upcoming Bank-financed SWAp operation,
the Croatia Education Sector Support Program (ESSP)
• A necessary step to implement a SWAp given the goals
of a SWAp:
– To strengthen an entire sector - It was supportive of the ESSP’s
priority to strengthen the education sector’s management and
leadership by providing the basis for formulating a concrete plan
to strengthen the sector’s fiduciary arrangements
– To pool funds & relying on country systems – It provided a basis
for assessing and relying on the ESSP’s fiduciary
implementation arrangements.
• The CFAA and CPAR (and other analytics) were not
specific enough
Terminology – IFA vs. SFA
• IFA vs. SFA (Institutional vs. Sector assessment)
• The name probably depends on the situation &
sector specifics
• IFA – when the focus of the assessment is a
single institution
• SFA – when the sector is decentralized or
comprises many institutions
• Don’t get hung up on the terminology – different
parts of the same spectrum
What (is the ESFA)?
It evaluates the education sector’s procurement
and financial management systems.
By reference to:
– acceptable (not best) international practices,
standards and codes;
– relevant documentation;
– compliance or walk-through testing; and
– evaluation of the relevant procurement and
financial management procedures and
controls
How (did we sell the ESFA)?
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The CFAA and CPAR, although invaluable, were not
specific enough. (Consider that CFAAs and CPARs are
no longer mandatory)
It was supportive of the ESSP’s priority to strengthen
the education sector’s management and leadership
It was supportive of the ESSP’s goal of preparing the
education sector for EU accession
The ESFA provided a basis for formulating a concrete
plan to strengthen the ESSP’s fiduciary
implementation arrangements
It will help determine how much loan funds the Bank
will provide for the program, and when
How (did we organize the ESFA)?
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Read the PCN, CFAA, CPAR and other sectoral and country background
information
Met with the sectoral project task team and CU to form an idea of the
institutions that we would look at during the scoping mission
One-week scoping mission - sent a draft report in which we set out the
institutions and expenditure systems that we would look at during the final
assessment mission as well as the preliminary findings and issues
Two-week ESFA mission
Drafted the ESFA and distributed within the Bank (ECSPS, the project task
team and CU) for discussion – consider peer reviewers for future IFAs
Distributed a revised ESFA to the relevant in-country institutions and
stakeholders.
In-country workshop to discuss and agree on the fiduciary issues – during
appraisal mission
Devised action plans to feed into either the sector project (for sectoral
issues) or relevant country programs (for wider country issues)
Fed conclusions of ESFA fiduciary assessment into the final project's
fiduciary assessment (in the PAD)
How (did we focus the ESFA)?
• started with looking at where the money on
education are spent from different sources,
including: MOE budget, MOF/Treasury, other
ministries (!), education sector institutions,
decentralized levels (counties, municipalities,
schools) 
• Identified who spends the money…
• Then made an assumption who would be
involved in spending the SWAp funds
How (did we do the ESFA)?
• Institutional analysis
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Institutional arrangements and administrative procedures
Accounting and financial reporting
Internal audit
External audit
Procurement systems
• Systems analysis (based on EU model):
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Identification of needs and planning, including budgeting
Tendering
Contract management
Authorization of payments
Execution of payments
Recording of payments
• FM and Procurement staff worked together (pros and cons)
Results
1. Presented the risks;
2. FM Issues / Needs of the sector;
3. Procurement Issues / Needs of the
sector;
4. Next steps for capacity-building;
5. Next steps for fiduciary implementation
arrangements
Civil works for schools –
managed centrally by
MOSES
??
X
X
X
X
Civil works for civil works
for schools – managed at the
local level
X
X
X
X
X
High
Operational costs for
schools – managed at the
local level
X
X
X
X
X
High
X
X
X
X
X
Med
X
X
X
X
Med
Salaries of staff of MOSES
and IFE
X
X
X
Salaries of staff of schools
X
X
Other operational
expenditures
X
X
Consultants’ services
X
Training
X
X
X
Fiduciary Risk
Assessment
X
Schools
X
Decentralized
Budget Holders
X
E-Croatia
MOF incl. Treasury
??
Institute for
Education &
Matura Center
MOSES
Goods
Expenditure system
(inter-institutional)
2005 ESSP
2006 -2008 ESSP
Results
Main institutions and expenditure systems
Med
High
Med
X
X
High
X
Med
Results
FM Issues / Needs of the sector
1.
2.
3.
4.
5.
6.
7.
8.
9.
Perform a system-by-system analysis of MOSES’s financial
management control framework;
Rationalize and integrate the various accounting systems of the
MOSES;
Establish proper financial management control frameworks at the
various education sector institutions;
Provide schools with guidance on financial management issues;
Simplify the administration of schools’ salaries;
Simplify the systems for the payment of salaries of the staff of
MOSES.
Produce comprehensive sector financial statements;
Formulate a strategic plan, risk assessment and audit plan for the
internal audit function of MOSES;
Establish rules, procedures and internal controls for new, revised
and emerging systems
Results - Procurement Issues /
Needs of the sector
1.
2.
3.
4.
5.
6.
Improve organization and management by establishing
appropriate organizational structure to house procurement
function and address staffing and training needs;
Improve efficiency of the system by developing model standard
bidding documents (preferably in coordination with the PPO) ;
Improve procurement practices and efficiency by developing
Users’ (Procurement) Manual;
Improve transparency and accountability by introducing public
advertisement of contract awards and annual reporting on
procurement activities for the past year ;
Improve efficiency of the use of the public funds by introducing
adequate procurement planning and expanding it beyond one
budget year time limit;
Introduce periodic procurement audit carried out by an
independent experts
Results
Next steps for capacity-building
• Establish a core team (within the Ministry)
to lead the initiative and
• to discuss and agree upon:
– Benchmarks for improvement (sector)
– The action plans for improvement (sector, is
broader than what is included in the education
project)
Results – Next steps for fiduciary
implementation arrangements
1. Assign counterparts in MOSES for the ESSP Coordinator for
reporting on ESSP expenditures and procurement (Q1, 2005)
2. Agree on ESSP audit arrangements (Q1, 2005)
3. Establish Operational Procurement Unit (Q1, 2005)
4. Prepare procurement plan for first 12 months of ESSP (Q1, 2005)
5. Prepare a procurement manual for the ESSP with a description of
agreed procedures (Q1, 2005)
6. Advertisement of upcoming tenders on MOSES website (ongoing)
7. Prepare annual reports on procurement activities for preceding year
(starting 2006)
8. Establish TA facility for procurement capacity assessment and
training of procuring entities at decentralized levels (Q2, 2005)
9. Establish mechanism for reporting on expenditures incurred for
decentralized functions (Q4, 2005)
Results - Incentives
Performance-based disbursements
Program review cycle
Jan-Dec
Q1
SAR1
Q2
Semi-Annual Review 1 (SAR1)
-review the progress
-financial review
-amendments to Annual
Development Plan
-amendments to procurement plan
Q4
SAR2
Q3
Semi-Annual Review 2 (SAR2)
-Annual Development Plan
for next year
-budget for next year
-procurement plan for next year
-financial update
Could do better
1. Joint assessment with borrower;
2. Timing and sequencing;
3. …
By the way …. SWAp
1.What is actually the difference (in regard
to procurement and fm) between an “oldfashioned” Project and a fashion of the
season – SWAp?
1. performance based disbursements
2. procurement – higher thresholds for ICB, less
prior review
2.SWAp with reliance on country systems –
controversy of the issue