FM and the CAS Fiduciary Forum, March 2008 Ivor Beazley, OPCFM

Session objectives Why focus on CAS? What are the key FM issues in CASs, How well have recent CAS’s dealt with FM issues? Ideas for improvement Examples of good practice

Why focus on the CAS? CAS drives decisions about resource allocation and staffing Determines future scope for fiduciary work, AAA, and capacity building support to the government If it’s not in the CAS it won’t get done

Background to the review Periodic reviews to assess progress, identify examples of good practice and advise on changes to the design of CAS products Scope: FY06 and FY07 CASs: 32 CASs, 19 ISNs and 18 PRs FM drill down

What did we look for? Compliance with 2001 Guidance on FM and PR in the CAS Treatment of other issues (harmonization, private sector, and use of country systems) Experience of FM participation in CAS preparation and update

2001 Guidance on FM/PR in CAS Summarize fiduciary and corruption risks in the Bank portfolio and actions to be taken Identify policy actions and areas for PFM capacity building, DPLs should be underpinned by up to date PFM/fiduciary AAA

Portfolio review and FM risks Little recognition of fiduciary issues in discussion of the Bank’s portfolio (61% marginal,16% satisfactory) Response to risks only marginally better (24% satisfactory)- risk responses often DPL actions or AAA Fiduciary environment for DPLs well covered (76% S) Good Practice- Argentina Fiduciary Plan

GAC Governance and anti -corruption issues are very well articulated in most CASs (87% S) Focus on country systems - linkage to project risks less clear Good practice example: Albania. CAS articulates how to mainstream governance and create opportunities to improve governance.

Fiduciary AAA and capacity building Moderate level of recognition (50% S, 26% M) of fiduciary AAA slightly more on capacity building (58% S, 29% M) PFM triggers and milestones feature quite prominently in CAS results matrix. (47% S, 37% M ) Emerging use of PEFA benchmarks to measure progress Trend in AAA towards integrated fiduciary assessments

Use of country systems Discussed in few CASs. (18% satisfactory), not mentioned in more than half. Usually limited to a general statement of intent to use country systems when conditions met.

Accounting and Auditing Low level of recognition of ROSC A&A in CAS products (21%, compared with 50% for fiduciary) Poor translation into capacity building agenda (18% satisfactory)

Harmonization Good treatment of co-ordination of PFM work (87% satisfactory), including joint CASs PFM analytical work and capacity building main area of collaboration with other donors Good practice example Uganda

FM involvement Aim higher (55% rated satisfactory) Recognized role for fiduciary risk and use of country systems GAC agenda mostly led by PREM. FM input not consistent. Good practice: LAC policy notes underpinning the CAS, Country FM strategies

Quality Assurance Regional quality assurance arrangements vary – generally not documented Quality assurance at regional and anchor level could be better co-ordinated and streamlined.

Way ahead? Teamwork leading to involvement in CAS team. Integrated PFM and GAC teams are building blocks Engage with FPSI colleagues and CAS team to ensure recognition of private sector accounting and audit Country FM strategies or policy notes to provide structured approach to FM issues Template/checklist for review to improve quality, ensure compliance with guidance Structured analysis of country systems as input to CASs: What CS currently used (budgeting, accounting, audit)? Obstacles for moving to full UCS Milestones to move to full UCS (e.g. PEFA performance, CPIA ratings or other expected outcomes on PFM reform agenda) Review/standardize QA arrangements, between FM in the regions and OPCFM