1. FINANCIAL MANAGEMENT & GOOD GOVERNANCE IN PF
PF REGIONAL WORKSHOP. UGANDA
NOVEMBER 2008
FINANCIAL MANAGEMENT & GOOD GOVERNANCE IN PF
Ruth Farrant
Financial Management Officer, PF

2. Setting the Context: IFAD’s New Operating Model
Country Strategy
New corporate processes
Direct supervision
Country presence

3. “The issue of good governance and capacity-building is what we believe
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

4. Financial Management (FM) & Good Governance in PF
FM work involves 2 approaches:
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)

5. 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

6. 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

7. 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

8. 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

9. 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)

10. Governance and Corruption
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

11. Governance and 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)

12. 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)

13. FM Tools & Resources
PF FM&GG Internet site

14. FM Tools & Resources Newcomers and not so new…..
PF FM&GG Internet site
(address
Userid=community Password=ifadcommunity)
Withdrawal Application Tracking System (WATS)
(address
Group s (PC/ M&E/ Accountants)
FM specialist staff/ CPMs
Coming soon…..
New General Conditions (2009?)
New Loans & Grants System (2010?)
Internet site
Userid=community
Password=ifadcommunity
Some of links to xdesk may not work if you are not an IFAD staff member. We will work on how to grant access to those of you who are interested.
WATS
Tracking tool – checking on security and debugging initial issues

15. FM Tips Do’s National systems Compliance Quality Timeliness
Use PF FM tools
Send updated addresses to
Don’t’s
Be afraid to ask PF!

16. Financial Management (FM) & Good Governance in PF
Questions and Answers ?