Country Financial Accountability Assessments

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Country Financial Accountability Assessments
Paul Bermingham Head, Financial Management
Sector Board June 22, 2001
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Overview

• What is a CFAA?
• Strategic Context Where Does it Fit?
• What is a CFAA used for?
• Future Directions

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• What is a CFAA?

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What is a CFAA?

• Diagnostic tool designed to enhance the Banks
  knowledge of financial accountability
  arrangements in client countries
• Supports both
• the exercise of fiduciary responsibilities by
  helping to identify risks to the use of Bank
  funds
• the Banks development objectives by facilitating
  the design and implementation of capacity
  building programs
• Together with the PER and CPAR, emerging as a key
  underpinning for country assistance strategies
  and programmatic lending

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Scope and Content of CFAA

• Public sector budgeting
• Public sector accounting and financial reporting
• Public sector internal control system and records
  management
• Public sector auditing
• Legislative scrutiny of the management of public
  finances
• Private sector financial accounting and auditing
  practices
• Corporate governance
• Public access to information on public finances
• Non-governmental and community-based organizations

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Number of CFAAs Done
Under Discussion
Completed
Underway

• Argentina
• Armenia
• Bangladesh
• Bhutan
• Bolivia
• Brazil
• Colombia
• Croatia
• Egypt
• Ghana
• Indonesia
• Jamaica
• Jordan
• Kazakhstan
• Korea

• Latvia
• Maldives
• Moldova
• Mozambique
• Nigeria
• Papua New Guinea
• Poland
• Slovakia
• South Africa
• Turkey
• Uganda
• Viet Nam
• Yemen

• Algeria
• Armenia
• Benin
• Bhutan
• Bosnia-Herz
• Chad
• India
• Mexico
• OECS countries
• Pakistan
• Panama
• Peru
• Romania
• Russia
• Ukraine

• Burkina Faso
• Cameroon
• Dominican Republic
• Ethiopia
• Laos
• Madagascar
• Malawi
• Mozambique
• Philippines
• South Africa
• Tanzania

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15
11
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• Strategic Context
• Where Does it Fit?

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Strategic Context

• Country development business model
• PRSP, CAS, diagnostic work, programmatic support,
  CDF
• Greater realization of the importance of
  institutions
• Shifting Bank resource transfer patterns
• Adjustment lending, debt relief, sector programs
• Fiduciary assessments in CASs
• (MIC Paper, April 2001)
• Fiduciary assessments as an underpinning for
  PRSCs
• (PRSC guidelines, May 2001)

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Relationship to Bank product lines
Bank activity

• Global products and partnerships

Standards
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Relationship to Bank product lines
Bank activity

• Global products and partnerships
• Diagnostic ESW work

Standards
Assessment
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Relationship to Bank product lines
Bank activity

• Global products and partnerships
• Diagnostic ESW work
• CAS, lending operations, advice

Standards
Assessment
Response
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Public Expenditure and ESW Products
Budget
Policy
Preparation
Execution
Reporting
Oversight
13
Public Expenditure and ESW Products
Budget
Policy
Preparation
Execution
Reporting
Oversight
PER
14
Public Expenditure and ESW Products
Budget
Policy
Preparation
Execution
Reporting
Oversight
PER
CPAR
15
Public Expenditure and ESW Products
Budget
Policy
Preparation
Execution
Reporting
Oversight
PER
CPAR
CFAA
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Public Expenditure and ESW Products
Budget
Policy
Preparation
Execution
Reporting
Oversight
PER
CPAR
CFAA
Fiduciary Assessment
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Sources of Information
World Bank
Other

• CFAA
• Procurement reviews
• Public expenditure reviews
• Institutional and governance reviews
• CPIA ratings
• Bank portfolio performance information

• IMF Fiscal transparency reports
• IMF Safeguards assessments
• IMF Red cover reports
• MDB and other donor diagnostic products
• SAI reports
• Other official oversight agencies in client
  countries
• International organizations

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• What is a CFAA used for?

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Uses of a CFAA

• Facilitate dialogue with borrowers and partners
  on financial accountability matters
• An input to the design of the Banks overall
  country assistance strategy (CAS)
• Underpins Bank advice and lending to strengthen
  country financial accountability
• Reference point in assessing financial management
  arrangements in individual projects
• Support fiduciary risk management strategy (e.g.,
  staffing, mitigation measures)

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• CFAA Future Directions

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CFAA - Future Directions

• Increased country coverage
• Better integration with other diagnostic tools,
  especially PERs and CPARs
• Enhanced linkage to borrower development
  strategies and Bank programs
• Increasingly carried out with development
  partners
• Emerging as a priority area for collaboration in
  financial management harmonization process
• Enhanced quality
• Likely to focus more on public sector, as private
  sector issues addressed by ROSC assessments of
  accounting and auditing