The World Bank Sudan Multi Donor Trust Funds Operations Manual (Draft version 3) November 2006
Abbreviations used..................................................................................................iv Foreword by the Chairs of Oversight Committees..............................................vii 1 Background and context .................................................................................1 1.1 Background ...............................................................................................1 1.2 Objectives of MDTFs.................................................................................2 1.3 MDTFs operations manual........................................................................3 2 Governance arrangements .............................................................................6 2.1 Introduction................................................................................................6 2.1.1 Operating principles ............................................................................................ 6 2.1.2 Governance arrangements ................................................................................. 7
2.2 2.3 2.4 2.5 2.6 2.7
Sudan Consortium ....................................................................................7 Oversight Committees...............................................................................8 Standing committees.................................................................................9 Technical Secretariats.............................................................................10 Monitoring agent......................................................................................12 Implementation modalities ......................................................................13 2.7.1 2.7.2 2.7.3 2.7.4
3
MoFNE and MoFEP.......................................................................................... 13 Ministries, departments, states, PIUs and PMTs............................................... 14 UN agencies ..................................................................................................... 15 Non Governmental Organisations..................................................................... 15
2.8 Project accounting agent.........................................................................16 2.9 Procurement agent..................................................................................17 2.10 External audit ..........................................................................................18 Managing the MDTFs’ parent and special accounts ..................................19 3.1 Introduction..............................................................................................19 3.2 Administrative agreements......................................................................19 3.2.1 Initial donor deposit........................................................................................... 19 3.2.2 Subsequent deposits ........................................................................................ 20
3.3 3.4 3.5 3.6 3.7
Overview of funds flow into and out of parent accounts .........................20 Deposits into parent accounts.................................................................20 Transfers to designated accounts...........................................................22 Withdrawal modalities from designated accounts...................................24 Expenditure eligibility ..............................................................................25 3.7.1 World Bank-executed activities ......................................................................... 25 3.7.2 Recipient-executed activities............................................................................. 26
4
Project eligibility criteria, and processes to be followed from identification to completion ..........................................................................27 4.1 Eligible organisations ..............................................................................27 4.2 Eligible projects .......................................................................................27 4.3 The project cycle .....................................................................................29 4.3.1 4.3.2 4.3.3 4.3.4 4.3.5 4.3.6
Identify and present priority projects ................................................................. 30 Prepare and present IPP/PCN .......................................................................... 31 Prepare and present FPP/PAD ......................................................................... 34 Negotiate and sign GA...................................................................................... 38 Meet conditions of project effectiveness ........................................................... 39 Implement project ............................................................................................. 39
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4.3.7 Close project..................................................................................................... 42
5
Procurement of goods, works and services ...............................................44 5.1 Introduction..............................................................................................44 5.2 Procurement policies and guidelines ......................................................44 5.2.1 For the GoNU ................................................................................................... 46 5.2.2 For the GoSS.................................................................................................... 46 5.2.3 Arrangements for UN bodies and NGOs........................................................... 46
5.3 5.4
Eligible and ineligible expenditure...........................................................46 An overview of methods and thresholds .................................................48 5.4.1 Procurement plan ............................................................................................. 48 5.4.2 Procurement methods and thresholds .............................................................. 49
5.5
Summary of procurement process..........................................................52 5.5.1 Procurement using World Bank procedures...................................................... 52 5.5.2 Procuring works ................................................................................................ 55 5.5.3 Procuring consultants ....................................................................................... 56
6
Financial management ..................................................................................60 6.1 Introduction..............................................................................................60 6.2 Financial management system requirements .........................................60 6.3 Planning and budgeting ..........................................................................63 6.4 Accounting policies, procedures, controls and information systems ......63 6.4.1 6.4.2 6.4.3 6.4.4 6.4.5 6.4.6
6.5
Reporting.................................................................................................69 6.5.1 6.5.2 6.5.3 6.5.4
7
Basis of accounting........................................................................................... 63 Accounting systems .......................................................................................... 64 Chart of accounts.............................................................................................. 64 Accounting for goods, works and services procured ......................................... 65 Accounting for expenditure ............................................................................... 66 Replenishments to designated accounts........................................................... 68 Government institutions .................................................................................... 69 The World Bank ................................................................................................ 70 MDTF Technical Secretariats............................................................................ 70 Other institutions............................................................................................... 71
6.6 Project/program audit..............................................................................71 United Nations in MDTF implementation.....................................................72 7.1 The role of UN agencies .........................................................................72 7.2 UN agencies’ operational modalities.......................................................72 7.2.1 Procurement arrangements .............................................................................. 72 7.2.2 Financial management arrangements............................................................... 73 7.2.3 Audit ................................................................................................................. 74
7.3
UN agency implementation arrangements – some examples ................74 7.3.1 7.3.2 7.3.3 7.3.4
8
The WFP agreement......................................................................................... 74 UNOPS memorandum of agreement ................................................................ 76 UNDP/MDTF Capacity Building of Sudan Judiciary .......................................... 78 UNDP/MDTF Police and Prisons Support Projects ........................................... 80
NGOs in MDTF implementation ....................................................................82 8.1 Context for NGOs participation ...............................................................82 8.2 Guiding principles in engaging NGOs as sub-grant recipients ...............83 8.3 Minimum operational requirements for NGOs ........................................84
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8.3.1 8.3.2 8.3.3 8.3.4
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Organisational arrangements............................................................................ 84 Financial management arrangements............................................................... 85 Procurement arrangements .............................................................................. 85 Service delivery ................................................................................................ 86
Monitoring and evaluation ............................................................................88 9.1 Introduction..............................................................................................88 9.2 M&E definitions .......................................................................................88 9.3 Overview of recipient’s monitoring and evaluation activities ..................88 9.4 Overview of project monitoring agent’s activities....................................92 9.5 Overview of Bank’s supervision activities ...............................................93 9.5.1 9.5.2 9.5.3 9.5.4
Supervision at project start-up .......................................................................... 94 Supervision during implementation ................................................................... 95 Mid-term reviews .............................................................................................. 96 Trust fund and project/program audits .............................................................. 97
Annexes: A – Forms and reporting formats B – Terms of Reference for Project Accounting Agent C – Terms of Reference for Procurement Agent D – Terms of Reference for Monitoring Agent E – List of key references
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Abbreviations used AFTQK
Operational Quality and Knowledge Services, Africa Region
ARCS
Audit Report Compliance System
BOQ
Bill of Quantities
BP
[World] Bank Procedure
CPA
Comprehensive Peace Agreement
CSOs
Civil Society Organisations
DN
Delivery Note
EAA
External Audit Agent
EOI
Expression of Interest
ESMF
Environmental and Social Management Framework
FMFA
Financial Management Framework Agreement
FMR
Financial Management Report
FMS
Financial Management Specialist
FPP
Final Project Proposal
GA
Grant Agreement
GoNU
Government of National Unity
GoSS
Government of South Sudan
GPN
General Procurement Notice
GRM
Grant Reporting and Monitoring
GRN
General Procurement Notice
HS
Highly Satisfactory
IBRD
International Bank for Reconstruction and Development
ICB
International Competitive Bidding
ICM
Implementation Completion Memorandum
IDA
International Development Association
IMC
Inter-Ministerial Committee
INT
Department of Institutional Integrity
IPP
Initial Project Proposal
ISDS
Integrated Safeguards Document Sheet
JAM
Joint Assessment Mission
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LCS
Least Cost Selection
LIB
Limited International Bidding
LOA
Loan Department
M&E
Monitoring and Evaluation
MA
Monitoring Agent
MDG
Millennium Development Goals
MDTF
Multi Donor Trust Fund
MDTF-N
Multi Donor Trust Fund – National
MDTF-S
Multi Donor Trust Fund – South Sudan
MIS
Management Information System
MOA
Memorandum of Agreement
MoF
Ministry of Finance
MoFEP
Ministry of Finance and Economic Planning
MoFNE
Ministry of Finance and National Economy
MS
Moderately Satisfactory
MU
Moderately Unsatisfactory
NA
Not Applicable
NCB
National Competitive Bidding
NGOs
Non Governmental Organisations
NR
Not Rated
OC
Oversight Committee
OP
Operational Policy
OPCS
Operational Policies and Country Services
PAA
Project Accounting Agent
PAD
Project Appraisal Document
PCN
Project Concept Note
PDO
Project/Program Development Objective
PIM
Project Implementation Manual
PIP
Project Implementation Plan
PIU
Project Implementation Unit
PMT
Project Management Unit
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PO
Purchase Order
PPU
Procurement Policy Unit
PSC
Project Steering Committee
PTT
Project Task Team
PV
Payment Voucher
QBS
Quality Based Selection
QCBS
Quality and Cost Based Selection
RFP
Request for Proposal
S
Satisfactory
SBD
Standard Bidding Documents
SOE
Statement of Expenditure
SPLM
Sudan People’s Liberation Movement
SPN
Special Procurement Notice
TOR
Terms of Reference
TTL
Task Team Leader
UN
United Nations
UNDB
United Nations Development Business
UNDP
United Nations Development Program
UNICEF
United Nations Children’s’ Fund
UNOPS
United Nations Office for Project Services
WFP
World Food Programme
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Foreword by the Chairs of Oversight Committees Following the signing of the Comprehensive Peace Agreement in January 2005, Sudan entered into a transition from war to peace. Over the interim period, expected to run until 2011, post-conflict reconstruction and development will be high on Government’s agenda. In support of this agenda, Government has promulgated an interim constitution with a decentralised system of governance (i.e. a federal system). Within the framework of this federal system, various bilateral and multilateral agencies have pledged and/or committed substantial funds, a portion of which will be channelled through the National Multi Donor Trust Fund (MDTF-N) and South Multi Donor Trust Fund (MDTF-S). MDTF-N targets the war affected areas in Northern States; where as MDTF-S is directed at the ten states of Southern Sudan. Both MDTFs aim to provide a flexible financing mechanism directed at funding propeace and pro-poor projects and programs that the Government of National Unity (GoNU) and Government of Southern Sudan (GoSS) consider urgent or essential. Furthermore, the MDTFs aim to ensure that development partner financing is efficiently and effectively coordinated by applying common institutional, administrative and financial management arrangements. To this end, for example, the MDTFs are administered through two secretariats, one for each fund. Recipients of MDTF-N and MDTF-S funds will include the GoNU and GoSS as lead agencies; UN agencies, NGOs, private sector firms and civil society / community based organisation contracted by Governments as sub-grant recipients; UN agencies and NGOs contracted directly by the fund’s administrators as grant recipients in their own right. To ensure recipients do not experience delays, an administrative framework has been developed for the MDTFs to enable quick, clear decision-making and disbursement processes. This manual specifies the MDTFs’ governance arrangements, criteria for access, processes to be followed from project/program identification to completion, financial management, and monitoring and evaluation arrangements. In addition, it contains specific guidance for UN agencies and NGOs. It has been developed in consultation with a cross-section of stakeholders, and in accordance with the World Bank’s policy and procedures. We encourage you to make the most of MDTF resources, and to periodically refer to this manual as your organisation implements approved projects/programs.
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1 Background and context 1.1
Background At the request of the international community and in preparation for a donor conference to be held in Oslo, Norway, in 2004, the World Bank and United Nations led a Joint Assessment Mission (JAM) together with Sudanese Government authorities to determine the reconstruction and development needs of Sudan. The mission prepared a JAM report that outlines the shared vision, strategic objectives, and operational implications that will help lead toward a peaceful and unified Sudan. The priorities of the JAM report are specified in a program document, “A Framework for Sustained Peace, Development and Poverty Eradication”. Supported by strong domestic input and ownership, the framework covers an interim period of six years and sets out a priority program to address recovery from the underlying structural causes of conflict. The framework also presents clear commitments and monitoring indicators that will be supported by domestic efforts and resources as well as development partners. The mechanism for financing the priorities identified in the framework program was set out in the Wealth Sharing Protocol as part of the Comprehensive Peace Agreement (CPA) signed by the Government of Sudan and the Sudanese People’s Liberation Movement (SPLM) in Nairobi on January 9, 2005. The Protocol called for the establishment of two Multi Donor Trust Funds (MDTFs), one for National (MDTF-N) and another for Southern Sudan (MDTF-S). The Government of Sudan and the SPLM formally requested the International Development Agency (IDA) of the World Bank to be the Administrator for both the MDTFs. Following several rounds of consultations with the Government of Sudan, the SPLM, the United Nations (UN), and donors, the World Bank prepared a proposal setting out the role, responsibilities, and operational modalities of the proposed funds. The World Bank’s Board discussed the proposal on March 17, 2005 and authorised IDA to be the Administrator of the MDTFs. The Board also endorsed a proposal for the IDA to be a member of the two MDTF Oversight Committees, together with the UN, donors, and the Government of National Unity (GoNU) and the Government of Southern Sudan (GoSS). The donor conference held in Oslo, Norway from 11-12 April 2005, raised $US4.5 billion in pledges. Over US$2 billion of this amount was earmarked for the framework program, of which more than US$500 million was pledged for the two MDTFs for the period 2005-07. It is generally anticipated that pledged amounts are likely to increase throughout the duration of the MDTFs. Sudan Multi Donor Trust Funds
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Unless otherwise agreed by the GoNU, GoSS, donors and the World Bank, the MDTF arrangement is expected to be operational throughout the interim period of six years, and will cease operating thereafter. Over this period, it is expected that an increasing share of Sudan’s development needs will be met through domestic resources, while all MDTF funds would be transparently recorded in government budgets to ensure government ownership and accountability. The governance and implementation of the MDTFs are structured so as to support these objectives and hence ensure the sustainability of MDTF-supported programs and projects beyond the interim period.
1.2
Objectives of MDTFs The overarching goal of the MDTFs is to accelerate progress in improving development (poverty, income and human development and governance) outcomes on a sustained basis. The objective of the MDTFs is to ensure coordinated, flexible and swift donor responses for JAM financing of priority expenditures in the context of a unified budget and a coherent public expenditure process. As a pooled funding vehicle, MDTFs reduce transaction costs and help to avert the emergence of gaps or duplication. While fostering harmonisation among donors, full ownership and endorsement of MDTF funded programs and projects by the GoNU and GoSS is at the forefront in consultation with donors. The MDTF-N focuses on war-affected areas of Northern Sudan, with special focus on areas badly impacted by the conflict – Southern Kordofan, Blue Nile, and Abyei – popularly known as the Three Areas. The strategy for MDTF-N is guided by the JAM Framework and is focused on two central goals, the consolidation of pro-peace and pro-poor growth, both to help reach the Millennium Development Goals (MDGs), and as a means to make peace sustainable. The strategic objectives for the MDTF-N suggest a balanced approach encompassing five guiding principles for prioritisation of MDTF supported programs and projects. The strategic objectives are listed in Table 1.1. The MDTF-S focuses on providing capacity building support to the newly formed GoSS, and rebuilding the ten states of Southern Sudan. Building on the cooperation and lessons learned during the JAM, the operational strategy of the MDTF-S is to be a central partner of the GoSS in all the key sectors. With special emphasis on ownership and capacity building, as well as on enabling the GoSS to prioritise among a vast array of recovery and development needs. This prioritisation is expected to promote expeditious decision making and phasing of investments, and provide a basis for scaling up. The strategic objectives for MDTF-S also suggest a balance across five key areas as listed in Table 1.1.
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Table 1.1: Objectives of the MDTFs
1.3
Objectives for MDTF-N
Objectives for MDTF-S
• Support priority national investments to consolidate peace
• Establish an effective core of public sector administration, including core capacity to plan and finance GoSS programs with key accountability mechanisms in place
• Support state and locality-level investment programs with high visibility in war affected zones in Northern Sates and the Three Areas
• Prepare selected investments to consolidate peace and generate social capital through access to basic services with rapid scale-up of education programs
• Focus on making rural development pro-poor with support for micro/smallenterprises
• Put priority sector programs in place including basic infrastructure
• Make decentralisation work in the context of reforming the public service and expanding access to basic services
• Support the preparation of programs, including agriculture and private sector development to facilitate the transition from subsistence-based livelihoods to a development-oriented economy
• Lay the groundwork for good governance, in particular by opening up the private sector, unleashing the creativity of civil society, and possibly, supporting direct interventions in opening up the media and establishing rule of law
• Harmonise development assistance
MDTFs operations manual This operations manual summarises the policies and practices adopted by the IDA in the administration of the MDTFs. The objective of the manual is to set out, in one document the procedures for the management and implementation of MDTF projects and programs (the requirements of the various aspects of the project cycle for activities financed by the MDTFs). The manual is intended to serve as a generic reference guide. As the manual offers guidance on accessing, utilising and accounting for MDTF resources, the target audience of the manual is primarily the recipients of MDTF grants, sub-grants, Project Management Teams (PMTs), and Project Implementation Units (PIUs). The manual is also useful to donor partners and World Sudan Multi Donor Trust Funds
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Bank staff, such as those working for the MDTF Technical Secretariats and the Task Team Leaders (TTLs) that are involved in the operations of the MDTFs. The remainder of this manual is laid out in eight chapters as follows: •
Chapter 2 – Governance arrangements
•
Chapter 3 – Managing the MDTFs’ parent and designated accounts
•
Chapter 4 – Project eligibility criteria, and processes to be followed from identification to completion
•
Chapter 5 – Procurement of goods, works and services
•
Chapter 6 – Accounting, reporting and audit of expenditures
•
Chapter 7 – United Nations in MDTF implementation
•
Chapter 8 – NGOs in MDTF implementation
•
Chapter 9 – Monitoring and evaluation.
Prior to preparing a project proposal, grant recipients should read the manual thoroughly, especially the sections in Chapter 4 relating to eligibility, project identification, preparation, application and assessment. More detailed procedures are provided for UN agencies and NGOs in Chapters 7 and 8 respectively. For ease of reference, the manual contains templates to be used by users of the MDTFs for recording/ transacting and reporting purposes in Annex A. The manual does not cover every aspect of project implementation in full. Rather, the various chapters and sections of the manual provide references to applicable policies and directives, checklists, sample letters, and templates, most of which can be accessed at the World Bank’s website. The World Bank will endeavour to ensure that this manual remains relevant and current. Its subject matter and style will also be driven by users’ needs. In this regard, users are welcome to submit any suggested amendments to the manual in writing to either of the following:
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Asif Faiz Manager MDTF-N World Bank Country Office Plot 39, Block 39 Khartoum East Khartoum II Sudan
Shamima Khan Manager MDTF-S World Bank Sub-National Office MDTF Technical Secretariat UN Ocha Compound Juba Sudan
Tel: +249 155155021
Tel: +249 912501175 +254 720 681583 Email:
[email protected]
Email:
[email protected]
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2 Governance arrangements 2.1
Introduction This chapter describes the governance arrangements for the Sudan MDTFs.
2.1.1
Operating principles It is worth drawing attention to the fact that the MDTF financed operations (including preparation, supervision, implementation and evaluation), are governed in accordance with Operational Policy (OP)/ Bank Procedure (BP) OP/BP 14.401 and the Trust Fund Handbook2. Furthermore, the Sudan MDTFs are designed to operate under the following eight principles: 1)
Recognise the ownership and leadership of the GoNU and the GoSS in the comprehensive reconstruction and development framework for Sudan
2)
Maintain full transparency in the process
3)
Foster mutual accountability between the GoNU/GoSS and the donors, as well as, trust between the GoNU and GoSS
4)
Recognise the need to build the capacity of the GoNU/GoSS while allowing the delivery of immediate transition needs through UN agencies, civil society organizations, and the private sector
5)
Foster effective donor coordination within the context of broader aid management structures in order to reduce transaction/duplication costs, provide consistent policy advice on donor coordination, and arrange common forums for dialogue
6)
Support the peace process (for example, through complementary economic and social programs that support other efforts)
1
See:
http://wbln0018.worldbank.org/institutional/manuals/opmanual.nsf/0/B9F1623596832E478525672C007D081D?OpenDocume nt and http://wbln0018.worldbank.org/Institutional/Manuals/OpManual.nsf/0/214475b6b9924bce8525672c007d081e?OpenDocument 2 See: http://wwwwds.worldbank.org/external/default/main?pagePK=64187835&piPK=64187936&theSitePK=523679&menuPK=64187282&doc Title=Trust%20Fund%20Handbook®ion=&cntry=&sec_sectr=&lang=&sortDesc=DOCDT&pageSize=10&dAtts=DOCDT,RE PNME,REPNB,DOCTY,DOCNA,LANG,OWNER,ORIGU,VOLNB&siteName=WDS&callBack=null Sudan Multi Donor Trust Funds
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7)
Establish solid financial management arrangements that provide an example for the healthy development of local governance structures
8)
Ensure that resources from both trust funds are used for the purpose intended. In this regard, should anybody wish to file a complaint, they may do so by contacting the World Bank’s Department of Institutional Integrity (INT). Contact details are as follows: Through a Fraud and Corruption Hotline hired by INT for this purpose: (24 hours/day; translation services are available) Toll-free: 1-800-831-0463 Collect Calls: 704-556-7046 Mail: PMB 3767 13950 Ballantyne Corporate Place Charlotte, NC 28277 USA.
2.1.2
Governance arrangements Based on the above principles, the Sudan MDTFs operate under a three-tier governance structure. The World Bank, in playing the role of the MDTFs’ Administrator, manages two Technical Secretariats that receive and review proposals and make recommendations to the Oversight Committees (OCs) regarding allocation of resources. The OCs exercise the programmatic and allocational responsibility for MDTF operations. Finally, a Sudan Consortium meets once or twice a year during which past performance as well as future priorities and funding needs are discussed. The Consortium comprises all donors, the GoNU, GoSS and representatives of civil society and the private sector. The MDTFs’ governance arrangements are depicted in Figure 2.1 below and described in the following paragraphs.
2.2
Sudan Consortium The Sudan Consortium is the apex forum for consultations. Membership comprises all donors, representatives of the GoNU and GoSS, and representatives of civil society and the private sector. The Consortium meets twice a year to discuss matters of social and economic development, as well as to renew donor pledges. The Consortium also reviews progress against the agreed targets in the monitoring framework and revises them where appropriate. In addition, the Consortium governs the constitution and composition of the OCs. All donors contributing to MDTFs make up the donors’ group. The donors’ group meets separately in advance Sudan Multi Donor Trust Funds
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of the consortium meetings for consultations on issues of interest to the functioning of the MDTFs. Figure 2.1: Sudan MDTFs’ governance structure Sudan Consortium Donor Group Implementation
Oversight Committee National Decisions
Follow-up on recommendations/ decisions
Standing Committee MDTF-N
Technical Task Teams Team Fiduciary assurance
Monitoring Agent National
Grant allocations
Technical Secretariat National
Progress
Oversight Committee South Sudan Decisions
Standing Committee MDTF-S
Technical Secretariat South Sudan
Proposal/ Recommendations
Feedback & guidance
Technical Task Teams Team
Grant allocations
Periodic consultations
Fiduciary assurance
Proposal Proposal/ Recommendations
Grant allocation
Government of National Unity Implementation Progress
Grant allocation
Grant allocation
Grant allocation
UN Agencies
Feedback & guidance
Government of South Sudan
Procurement services
Procurement Agent Sub-grant allocation
Sub-grant allocation
2.3
Accounting services
Implementation Progress
Implementation Progress
MDTF Unit MoFEP
Project Implementation Units
Monitoring Agent South Sudan
Ministries Departments States/Localities
NGOs
Sub-grant allocation
UN Agencies
Project Accounting Agent
Sub-grant allocation
Private Sector
Ministries Departments States/Localities
Oversight Committees The OCs comprise representatives from the World Bank, the UN, one government (GoNU or GoSS) (with the other government sitting as observer), the two largest contributing donors, a rotating representative of other donors, and possibly the main International Financial Institutions. Other donors who have pledged or expressed interest in joining the MDTF together with NGO representatives may attend OC meetings as observers. The OC reviews the observers’ status from time to time. The OCs elect their respective chairs on a periodic basis. Currently, the OCNational is chaired by the State Minister of Finance and National Economy. The cochair is the representative of the Netherlands. The OC-South is chaired by the
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Minister of Finance and Economic Planning, while the representative of the United Kingdom is the co-chair. The OCs have responsibilities to: •
Make programmatic and allocative decisions
•
Set and revise general guidelines for MDTF operations, including criteria for allocation of funds
•
Provide strategic guidance, review results on the ground, and address impediments to progress
•
Ensure integrity, competition, and equitable allocation of implementation responsibilities to different entities, consistent with the framework and MDTF objectives
•
Monitor progress reports submitted to them by the Technical Secretariat (except for audits and unaudited financial statements, which are transmitted directly to the donors by the Trust Fund Accounting Department of the World Bank)
•
Solicit proposals for MDTF financing so that there is an equitable distribution of available funds for priority activities
•
Raise funds from current and potential donors to help finance priority activities.
In addition, the OCs provide guidance on all other matters that affect the efficiency, effectiveness, and economic and financial sustainability of the MDTFs. The OCs may delegate the resource allocation authority for proposals below a threshold it may determine, to the Technical Secretariats. The OCs meet at least quarterly in Khartoum and Juba. Technical Secretariats prepare official minutes of the OC meetings. The Committees act collectively and, to the extent practicable, make decisions by consensus.
2.4 Standing committees Standing Committees for both the MDTFs have been established to provide continuity between OC meetings. The Standing Committees are responsible for the following:
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2.5
•
Approving proposals to be funded by the Technical Assistance Facility a MDTF-N financed grant to strengthen the professional capacity of central and state government ministries and public corporations in identifying, designing, preparing, appraising and implementing development projects and programs for poverty reduction
•
Approving proposals for a small projects/programs window
•
Following-up recommendations and finalising conditions for approvals made by the OCs to avoid processing delays
•
Providing a forum for periodic consultations among key partners on other activities of the Technical Secretariat.
Technical Secretariats As administrator, the World Bank carries the sole fiduciary responsibility for the trust funds. All proposed programs are proposed are subject to technical appraisal and review. Criteria for the approval of programs and projects are elaborated by the OCs and include: conformity with the Framework (as updated over time); costs versus benefits; capacity building of national and local entities; and feasibility based on demonstrated capacity of the implementing agency. The World Bank has established two Technical Secretariats to help carry out its responsibilities as the MDTF Administrator. Located in Khartoum for the National and Juba for the South, each Technical Secretariat is headed by a Trust Fund Manager, who is a World Bank staff and reports to the Country Director/Manager. Other staff include operational staff comprising World Bank employees, UN staff, and secondees from donor organisations. The Secretariats report to the World Bank and have the following technical, managerial, informational, and logistical responsibilities: •
Provide guidance to potential and actual recipients on World Bank and MDTF procedures
•
Receive and evaluate project proposals (jointly with the assigned World Bank task teams and country/sector managers ), and make recommendations to the OCs, and follow up on OC’s decisions.
•
Coordinate with governments and donors to ensure that the proposed operations are consistent with priorities identified in the Framework
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•
Provide sectoral and cross-sectoral coordination
•
Ensure that such programs are coordinated with those funded from the national budget and bilateral donors
•
Handle logistical arrangements for World Bank missions, help guide potential or actual recipients in preparing for the missions, organise arrangements for the mission with the relevant government entities
•
Follow-up on actions agreed upon between the project entities and Bank missions
•
Organise technical appraisals by World Bank led teams and prepare and present semi-annual reports detailing MDTF operations, including the receipt and use of contributions and the activities financed or in the pipeline, and progress against agreed benchmarks
•
Oversee the work of the Monitoring Agent, and exercise oversight over procurement and audit, and help ensure that:
The project is being executed according to the implementation plan
World Bank guidelines and requirements for procurement and eligible expenditures are followed
Replenishment claims received from the implementing agencies are accurate, genuine, and can be substantiated
Financial covenants and other requirements stipulated in the Grant Agreement (GA) are met
•
Respond to enquiries from donors, Sudanese authorities and entities, NGOs, and others on MDTF and its operations, requirements, project processing steps, financing priorities, gaps, and other questions
•
Handle logistical arrangements for OC and Sudan Consortium meetings and draft and distribute meeting minutes.
During project identification, the World Bank’s Country Director and Sector Director identify a Task Team Leader and team members to support the proposed operation. Sudan Multi Donor Trust Funds
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The task team includes a Procurement Specialist, a Financial Management Specialist, a Sector Specialist, and depending on the project, an Economist. The team assesses and provides guidance on the initial and ongoing project arrangements, and is involved in supervision during implementation. Each team receives assistance and advice from a Disbursement Officer, Country Lawyer, Safeguards Specialist, a Quality Adviser and other specialists as required. The MDTF Technical Secretariat also functions as part of the team.
2.6
Monitoring agent The World Bank has engaged two Monitoring Agents, one for each MDTF. The overall role of each Monitoring Agent is to review, support and report on the sound financial and efficient and effective utilisation of the Sudan MDTFs. The Monitoring Agents also provide technical assistance to the GoNU and GoSS to help build their own capacity in the procurement and financial management areas. The Monitoring Agents, who report to the World Bank, have specific responsibilities (see Annex D) to: •
Pre-screen and support the World Bank in monitoring the procurement of goods, works and services
•
Pre-screen and recommend withdrawal applications for the World Bank’s approval and payment, ensuring that reimbursements claimed are consistent with the GA and eligibility criteria
•
Support the World Bank in monitoring all expenditures financed from the MDTFs, ensuring that funds are disbursed for the purposes provided by for example: o Substantive testing of the specified 25% ad valorem categories of eligible expenditure o Physical monitoring of outputs
•
Pre-screen the financial management capacity of potential grant recipients and monitoring the progress of the grant recipients in achieving fiduciary benchmarks (see Section 9.4).
The selection and recruitment of the Monitoring Agents by the World Bank, and the procurement of goods and services to be used by the Monitoring Agents in the performance of their obligations take place in accordance with the World Bank’s applicable policies. Sudan Multi Donor Trust Funds
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The World Bank has the authority to change the terms of reference of the Monitoring Agents and, where justified, to replace the Monitoring Agents with other firms or agencies. The contract of the Monitoring Agents also provides for scaling down or phasing out services as and when conditions in Sudan allow. The World Bank must inform the OC and donors of changes in the terms of reference of the Monitoring Agents. Upon completion of the activities financed under the MDTFs, the World Bank is required to arrange an independent review of the Monitoring Agents’ performance and provide the MDTF contributing donors with a copy of the report.
2.7
Implementation modalities Projects financed by MDTF resources are implemented through various modalities. Successful preparation and submission of project proposals result in a GA between the World Bank and the main grant recipient. Main grant recipients include: the GoNU; the GoSS; UN agencies; and NGOs. In recognition of capacity constraints of both the GoNU and the GoSS, and the need to ensure that the immediate transition needs of Sudan are met, several entities are eligible for implementing approved projects. These eligible sub-grant recipient/implementing entities include: ministries, departments and states; UN agencies; NGOs and CSOs; and the private sector. Consistent with emerging structures of decentralised governance and the locus of service delivery responsibilities, local levels of government are also able to access financing as implementing entities. Where appropriate, implementation arrangements involve local governments twinning with NGOs to help build capacity while meeting immediate needs. Implementing entities are responsible for implementing activities in accordance with procedures acceptable to the World Bank and those detailed in Project Implementation Manuals.
2.7.1
MoFNE and MoFEP The MoFNE of the GoNU and the MoFEP of the GoSS are the principal interlocutors for the Sudan MDTFs and have an oversight function. Each ministry is supported by a high-level Inter-Ministerial Committees (IMCs), chaired by the Under Secretary. IMCs are responsible for the national level coordination with donors, and for managing donors and counterpart funds. They oversee the implementation of the various projects funded through MDTF resources and approve the selection criteria for sector-wide allocations of MDTF resources. Specifically the MoFNE and MoFEP: •
Provide overall policy guidance for donor assistance to the OCs
•
Review all proposals accepted and approved by the line ministry to ensure that MDTF resources are equitably distributed, that proposals
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reflect the prioritised needs of the GoNU/GoSS, and are in conformance with the overall budgetary framework •
Endorse proposals and submit them to the Technical Secretariats with request to consider for financing
•
Revise priorities of the Framework in light of changes in the budgets, resources and economic circumstances
•
Oversee the implementation status of the MDTF portfolios.
At individual project level, the MoFNE and MoFEP:
2.7.2
•
Oversee the fulfilment of the project effectiveness conditions
•
Authorise applications for replenishment on the designated accounts, reimbursements and direct payments
•
Authorise project signatories and provide specimens to IDA
•
Approve the terms and conditions for staffing of the PIUs and PMTs (see Section 2.7.2 below)
•
Provide authorisation to the Directors or Coordinators of the PIUs and PMTs to: (i) sign subsidiary GAs; and (ii) to sign contracts performed under the relevant procurement legislation.
Ministries, departments, states, PIUs and PMTs Ministries, departments and states have a critical role to play in implementing approved projects where the GoNU or GoSS is the main grant recipient. However, all grant requests from sub-national governments or state owned entities must be channelled through the MoFNE/MoFEP. Those ministries, departments and subnational entities (states, localities and communities) that are responsible for implementing projects, may utilise a Project Implementation Unit (PIU) or a Project Management Team (PMT). PIUs and PMTs have the overall responsibility for the project’s implementation. In discharging this responsibility they are responsible for carrying out all activities with due diligence and efficiency and in conformity with appropriate administrative, financial, environment and social practices. They are also required to prepare, adopt, and thereafter implement a Project Implementation Manual (PIM) to the satisfaction of MDTF Technical Secretariat. Sudan Multi Donor Trust Funds
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PIUs and PMTs through their respective ministries, departments and states must:
2.7.3
•
Submit quarterly progress reports and audit reports on the project implementation to the Technical Secretariat
•
Undertake a mid-term review of project implementation jointly with the World Bank
•
Prepare an implementation completion report in a form and substance that is satisfactory to the Technical Secretariat on the results and impact of the project no later than six months after the completion of the project.
UN agencies UN agencies, based on their comparative advantage, may assist the GoNU and GoSS in several ways with respect to MDTF financed activities. For example, UN agencies can support governments in conceptualising projects or programs during the preparation of an initial project proposal, and later during the program/project development and implementation phases. . The roles of UN agencies in the implementation of MDTF funded projects and activities are two fold: •
UN agencies qualify as direct recipients of MDTF resources--this role is especially important in areas that fall outside the World Bank’s regular mandate such as security, law enforcement and judiciary
•
UN agencies qualify as sub-grant recipients when their areas of expertise are required. Areas include, for example, project management, contracting, and procurement services.
Chapter 7 of this manual provides detailed description of UN agencies’ roles in the implementation of MDTF projects and activities. 2.7.4
Non Governmental Organisations Implementation of approved projects by Non Governmental Organisations (NGOs) takes the form of: •
Facilitation: the MDTF Technical Secretariats play a role in catalysing the capacity of NGOs to engage and achieve consensus amongst citizens. This includes providing advice, sponsoring learning, sharing of knowledge events and provision of training programs for local government and community organisations
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•
Consultation and dialogue: the MDTF Technical Secretariats maintain regular dialogue and consultation on specific topics, programs, policies and procedures. They engage with NGOs and Civil Society Organisations (CSOs) on MDTF activities and encourage Government to support participatory processes involving NGOs, CSOs, and other elements of civil society
•
Partnerships: the MDTF Technical Secretariats build operational partnerships with NGOs at two levels: (i) project level; and (ii) thematic focus. Project level cooperation provides opportunities for qualified and interested NGOs to participate in various phases of project cycle for MDTF supported activities. NGOs are represented in thematic3 and budget sector working4 groups established by the GoNU and GoSS respectively. NGOs select their own representation from among themselves.
In addition, NGOs have a representation at OC meetings as observers. Chapter 8 of this manual provides detailed description of NGOs’ roles in the implementation of MDTF projects and activities.
2.8
Project accounting agent Just emerging from a post conflict situation, the accounting capacity within the Ministry of Finance and Economic Planning (MoFEP) of the GoSS needs substantial strengthening. Until such capacity is built up, in the interim period, a Project Accounting Agent (PAA) provides accounting services and fiduciary assurance for projects funded through GoSS and MDTF-S resources. The PAA forms part of the Project Disbursement Unit of the Treasury of the GoSS, and is responsible for preparing and issuing the Project Implementation Guidelines and accounting for all projects related expenditures. In addition the PAA is responsible for ensuring that all project accounting activities are in strict compliance with: the requirements of the GAs; and the Project Implementation Manuals. Amongst others, the key responsibilities of the PAA (see Annex B) are to:
3
Thematic groups are based on the former JAM cluster groups, with some adjustments. The GoNU’s Ministerial Decree (No 26) specifies Terms of Reference for thematic groups, an organisation structure and names of the members of each group. There are eight groups as follows: Basic Services Group; Rule of Law and Good Governance Group; Infrastructure Group; Food Security Group; Settlement of war-affected population Group; Economic Policy Group; Capacity Building Group; and DDR Group. 4 The Minister of Finance and Economic Planning has set-up ten budget sector working groups as follows: (1) accountability; (2) economic functions; (3) education; (4) health; (5) infrastructure; (6) natural resources; (7) public administration; (8) rule of law; (9) security; (10) social and humanitarian affairs Sudan Multi Donor Trust Funds
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2.9
•
Review the financial management organisation and procedures applying to project receipts and payments, and ensure that project funds are utilised for their intended purposes in an open and transparent manner
•
Prepare quarterly financial management reports and distribute them to the implementing agencies’ Chief Accountants, the Technical Secretariat and the GoSS’ MoFEP
•
Ensure that annual budgets for projects are prepared in accordance with the requirements of the GoSS
•
Investigate any significant variances between budget allocations and actual expenditures
•
Prepare annual financial statements for projects within three months of the end of the financial year in accordance with international accounting standards.
Procurement agent Given the non existence of procurement capacity in Southern Sudan, and until such time that sound public procurement polices and practices are installed within the GoSS, a Procurement Agent is contracted to carry out procurement tasks for programs that are financed by GoSS and MDTF-S resources. In addition to the specific procurement responsibilities that are provided below, the Procurement Agent has the responsibility of building procurement capacity and providing the GoSS, donors and the bidding community with assurance that procurement is carried out in a sound (responsible, accountable and transparent) manner. With the exception of handling any procurement related to defence hardware for police, military or paramilitary, the Procurement Agent is responsible for carrying out all procurement functions for all MDTF projects/programs. Specifically, the Procurement Agent is responsible for: •
Providing leadership and building capacity of the procurement unit in the MoFEP
•
Training GoSS officials in carrying out specific procurement tasks
•
Advising the GoSS and donors on all procurement related matters
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2.10
•
Procurement planning and processing
•
Supervising contract performance
•
Assisting the GoSS in attending to legal disputes arising out of procurement activities
•
Responding to any procurement related queries
•
Performing any other procurement related functions (see Annex C).
External audit Projects/programs financed through the Sudan MDTFs are subject to a financial audit on a regular basis. The scope of the audit at the minimum covers: an opinion on the special account balance(s), project’s/program’s financial statements and adequacy of internal controls; and the identification of measures to strengthen any weaknesses in the control environment. The external auditors for the MDTFs are appointed by each grant recipient, but must be acceptable to IDA. The World Bank causes a financial statement audit of the MDTFs to be performed by the World Bank’s external auditors every two years. It furnishes MDTF donors with a management assertion, together with an attestation, concerning the adequacy of internal controls over the cash-based financial reporting for the MDTFs as a whole.
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3 Managing the MDTFs’ parent and special accounts 3.1 Introduction The MDTFs are accounted for separately from the World Bank’s own resources. To this end, the Bank has agreed specific financial and administrative arrangements with co-financing bilateral and multi-lateral agencies, that ensure it manages funds and supervises MDTF interventions in the same manners as it does with respect to its own resources.
3.2 Administrative agreements Administrative agreements are legally binding arrangements between the International Development Association (IDA) as the Administrators of the Sudan MDTFs, and donors as providers of financial resources to the Sudan MDTFs, setting out the terms and conditions under which the funds are made available and used. Although all donors financing the Sudan MDTFs must enter into an individual administrative agreement with the IDA, by signing the ‘Trust Fund Administration Arrangement’, the terms and conditions that govern the agreements are identical for all donors. In addition to providing details on the committed funds, the administrative agreements provide for the reimbursable expenses incurred by the IDA in establishing and maintaining the Sudan MDTFs. 3.2.1
Initial donor deposit The Trust Fund Administration Arrangement specifies the total amounts that donors intend to make available as a grant to the MDTFs together with a payment schedule i.e. the amount payable upon signing the agreement and in subsequent tranches thereafter. However, IDA submits a Payment Request to donors before any payments are made. For the purposes of the Sudan MDTFs, the World Bank maintains an ‘International Bank of Reconstruction and Development’s (IBRD’s) Cash Account or a “T” Account with a suitable local bank in the donor’s country. The individual Trust Fund Administration Arrangement provides full details of the account including: account number; swift bic code; internal route code; bank name; and bank address. Upon receipt of a Payment Request from IDA, each donor deposits the agreed initial amount into the specified bank account and instructs the bank to include in the Remittance Advice: (i) the amount paid; (ii) name of the donor; (iii) confirmation that the amount is for MDTFs; and (iv) date of the deposit. Donors are required to submit a copy of the Remittance Advice to the World Bank’s Trust Fund Division.
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3.2.2
Subsequent deposits Subsequent deposits of grant amounts by donors into the IBRD’s Cash Account follow the payment schedule as prescribed in the Trust Fund Administration Arrangement and the procedures (see Section 3.3 below). However, such deposits are made subject to the evidence provided by the World Bank on: •
Continuing satisfactory progress in the allocation and commitment of funds to specific activities
•
Actual and projected disbursements, as demonstrated by the quarterly reports submitted by the Technical Secretariats to the OCs.
3.3 Overview of funds flow into and out of parent accounts Figure 3.1 illustrates the flow of funds into and out of the MDTF accounts. Once donors have deposited funds into the relevant local IBRD accounts, funds are then transferred and credited to one of the two off-shore income earning pooled accounts that IDA maintains for MDTF-N and MDTF-S. These are called the parent accounts. The GoNU and GoSS withdraw funds on a project basis by way of Withdrawal Applications. IDA as the Administrator of the MDTFs, also makes direct payments to settle supplier’s invoices and to meet the costs of administering the funds (see Section 3.6.1 below).
3.4 Deposits into parent accounts Grant amounts pledged by the World Bank for the MDTFs are directly deposited to the parent accounts. Since the MDTF parent accounts are maintained in United States Dollars, and donors usually deposit grant amounts into the IBRD “T” accounts in their own currency, IDA arranges for the conversion of the amounts from the local currency into United States. Further, when IDA enters into a GA with a MDTF recipient i.e. GoNU or GoSS, the grant amount is credited to an account that is opened by the IDA in the name of the recipient / project. These accounts are referred to as the child accounts. A notional allocation is made from the relevant parent account into the child account. For the purpose of the Sudan MDTFs, child accounts are referred to as the grant accounts. All transfers to the designated accounts and / or direct payments to suppliers relating to the project are made from grant accounts.
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Figure 3.1: Funds flow into and out of MDTF accounts World World Bank Bank
Development Development Partners Partners
Initial and subsequent deposits of agreed grant amounts
MDTF-N Parent Account
Transfer
World World Bank Bank
Initial and subsequent deposits of agreed grant amounts
IBRD’s “T” Account
Transfer
MDTF-S Parent Account Transfer
Transfer
MDTF-N Child Account
MDTF-S Child Account
Withdrawal applications, SoEs, refunds for ineligible expenditure Direct payments
Suppliers Suppliers
Direct payments Advances, reimbursements and replenishments
Advances, reimbursements and replenishments
Fees
Monitoring Monitoring Agent Agent Administration costs
MDTF-N MDTF-N Technical Technical Secretariat Secretariat
Fees
Project Designated Account
Project Designated Account
Project Designated Account
Eligible project expenditure
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Monitoring Monitoring Agent Agent Administration costs
MDTF-S MDTF-S Technical Technical Secretariat Secretariat
3.5 Transfers to designated accounts GAs between IDA and recipients of MDTF resources require each recipient to open and maintain one or more designated accounts into which grant proceeds are transferred to, and from where eligible project payments are made. Designated accounts are opened and maintained in central and/or commercial banks on terms and conditions that are suitable to IDA5. In addition to specifying the terms and conditions for establishing and using the designated accounts, GAs also specify whether designated accounts are to be opened as segregated or pooled. Segregated accounts are used for transferring grant proceeds for projects that are funded through donor resources only. Pooled accounts are used for transferring grant proceeds for projects that are funded jointly through donor and counterpart resources i.e. funds from the GoNU and/or GoSS. Designated accounts are opened and maintained in a foreign currency agreed with the MDTF Administrator. However, where grant recipients foresee a high volume of payments to be made in local currency, then an additional designated account is opened and maintained in Sudanese Dinars. IDA establishes disbursement arrangements for projects in consultation with Grant Recipients, on the basis of an assessment of the Grant Recipient’s financial management arrangements, and the cash flow needs of an individual project. The World Bank’s Loan Department (LOA) specifies these arrangements in a letter to the Government/recipient. The LOA disburses proceeds from grant accounts to designated accounts using one or more of the following disbursement mechanisms: •
Reimbursement: Grant Recipients are reimbursed for eligible expenditures pre-financed from their own resources
•
Advance: grant proceeds are advanced into the designated accounts to finance eligible expenditures as they are incurred.
Prior to the withdrawal of any grant proceeds from grant accounts, recipients must furnish the World Bank’s Country Lawyer for Sudan with the names of the officials authorised to sign applications for withdrawal and their authenticated specimen signatures. A Sample “Authorised Signatory Letter” is provided in Annex D of the Disbursement Handbook for World Bank Borrowers Volume I - Investment Lending. Grant recipients must indicate clearly if more than one signature is 5
The financial institution should be: financially sound; able to maintain the designated account in the currency agreed by IDA and the recipient; audited regularly, and obtain satisfactory audit reports; able to process large numbers of transactions promptly; able to provide a wide range of banking services; able to provide a detailed statement of the designated account; part of a satisfactory corresponding bank; and in a position to charge reasonable fees for its services Sudan Multi Donor Trust Funds
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required on applications, and must notify IDA promptly of any changes in signature authority. Grant recipients can request for funds to be transferred from the grant accounts to the designated accounts by preparing and delivering to the LOA, a written application for withdrawal for such amount and category as stipulated in the GA. Application forms are available online from the password protected web-based information system, the “Client Connection” website at http://clientconnection.worldbank.org, or from the World Bank upon request. Withdrawal applications must be: •
Authorised by a representative of the recipient
•
Accompanied with evidence in support of the application as the World Bank may reasonably request.
In summary, IDA requires the following supporting documentation: •
Interim financial reports
•
Statements of expenditure
•
Records and/or
•
Records required by IDA for specific expenditures and statements of expenditure for all other expenditures.
Users of this manual are required to review the World Bank Disbursement Guidelines for Projects (Loan Department May 1, 2006). The Guidelines specify requirements for the: i)
Electronic delivery of applications and supporting documents
ii)
Minimum value of withdrawal applications
iii)
Grant disbursing period
iv)
Disbursement deadline date
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v)
Disbursement conditions
vi)
Supporting documentation requirements.
On the basis of the above procedures and conditions, the LOA, on behalf of recipient, withdraws funds requested from the grant account and deposits them into the designated account. “Grant recipients with access to Client Connection can, inter alia, track the status of applications for withdrawal that they have submitted. Based on that information, a grant recipient can determine when a supplier will be paid, or, when funds will be available in a designated account.
3.6 Withdrawal modalities from designated accounts Designated accounts are used for (see Figure 3.2): i)
Making direct payments for eligible expenditure as incurred under projects that are directly implemented by recipients
ii)
Disbursing funds to sub project implementers. These are the sub-grant recipients who are primarily responsible for implementing the part or components of projects.
The provisions for making direct payments and disbursing funds to sub-project implementers are covered in Chapter 6, Section 6.5 – Accounting for Expenditures.
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Figure 3.2: Flow of funds illustrated for the Sudan 5th Population Census Project
Source: Workshop on Procurement Management Development Centre, Khartoum, 2006
3.7 Expenditure eligibility Expenditure eligible for financing from the Sudan MDTFs are categorised into two broad activity categories specified in the administrative agreement: (i) World Bankexecuted activities; and (ii) recipient-executed activities. Whilst the following paragraphs provide a brief description of the eligible activities under both the categories, Chapter 5, Section 5.3 provides a detailed description of eligible and ineligible expenditure. 3.7.1
World Bank-executed activities World Bank-executed activities are carried out to enable IDA to fully discharge its responsibilities and duties per the administrative agreement, “including, without limitation, any duties or obligations that might otherwise apply to a fiduciary or
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trustee under general principles of trust or fiduciary law”6. Box 3.1 provides an indication of administrative costs which IDA is allowed to recover. Box 3.1: Administrative costs which IDA is allowed to recover In order to assist in the defrayment of its administrative costs, IDA may deduct from the Contributions and transfer to itself an amount equal to 0.4 percent (0.4%) of the Contributions to cover IDA’s internal overhead costs for the administration of each MDTF. In addition, IDA will charge to each MDTF the actual costs for: (i) the Monitoring Agent and its evaluation; (ii) managing the Technical Secretariat (TS) identified in paragraph 2 (a) above; (iii) supporting the Oversight Committee identified in paragraph 2 (b) above; (iv) carrying out external audits as specified in paragraph 9.4 below; and (v) appraisal and supervision of projects. IDA will provide quarterly reports to the Oversight Committee on costs incurred for the administration of each MDTF. Source: Administrative Agreement
3.7.2
Recipient-executed activities “Trust fund recipients…have responsibility for executing country-specific activities”7. Recipient-executed activities include: preparing TOR/ specifications; hiring consultants or consulting firms; procurement of goods, works and services; contract negotiations; making payments; preparing and submitting progress reports; other project/program implementation activities.
6 7
World Bank, (1997), Trust Fund Handbook (paragraph 2.8, Page 11) Ibid.
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4 Project eligibility criteria, and processes to be followed from identification to completion 4.1
Eligible organisations Projects funded through the MDTFs are implemented by a range of organisations. GoNU and GoSS ministries, departments and sub-national governments have primary responsibility for implementation. In addition, the GoNU and GoSS may collaborate with or outsource implementation activities to a UN agency, NGO, CSO, and private sector firm: •
Under a GA between the World Bank and the GoNU/GoSS, with a subsidiary agreement between Government and the respective organisation (see Chapter 8)
•
By contracting the relevant organisation as a procurement agent (see Chapter 8).
The MDTFs may also directly grant funds to UN bodies and NGOs to implement special projects and programs. Under this arrangement, direct implementation by these organisations occurs following a specific request by the GoNU/GoSS. The World Bank negotiates and signs a GA with the implementing agency (see Chapter 7).
4.2
Eligible projects The MDTFs finance stand-alone investment projects or sector-wide programs of smaller projects and activities that meet reconstruction and development objectives. In this regard, eligible projects must fall within the eight cluster groups or crosscutting themes of the JAM (see Table 4.1). Furthermore, projects must meet the following criteria, they: •
Must have the endorsement of the GoNU/GoSS i.e. the MoFNE/MoFEP and pertinent line ministry/sector
•
Must be consistent with government policies for their respective sectors
•
Must be included in the Government’s budget. Also, counterpart funding (where applicable) must be available as MDTF resources are
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commingled with government funds. Any exceptions are considered on a case by case basis by the OCs •
Should be expected to have a material impact on Sudan’s reconstruction. In this regard, projects with a value below US$5 million are considered only in exceptional cases.
In addition to the above, priority is given to projects that: •
Support the implementation of pro-peace and pro-poor agenda embodied in the CPA
•
Have a strong capacity building element
•
Promote decentralisation during their implementation
•
Are considered high priority by the GoNU/GoSS but have not attracted sufficient donor financing
•
Enable the Government to rapidly improve service delivery throughout the country
•
Promote stronger linkages between central government and provinces, districts, and communities in the reconstruction process
•
Produce quick tangible results on the ground.
Table 4.1: JAM Clusters and cross-cutting themes Cluster • Institutional development and capacity building • Rule of law and governance • Economic policy and management • Productive sectors (i.e. rural and private sector development • Basic social services (health, education, water and sanitation) • Infrastructure • Livelihoods and social protection • Information / statistics
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HIV/AIDS
•
Gender
•
Conflict prevention
•
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4.3
The project cycle The project cycle covers the identification, preparation, appraisal, approval, implementation and completion of a project. Given the urgent need to reconstruct and develop Sudan, the World Bank’s formats have been abridged for the MDTFs to reduce the elapsed time from preparation to approval, and thereby facilitate a speedy launch of priority projects/programs. Furthermore, the project cycle has been tailored to make it simpler8. In this regard, there are seven steps in the project cycle described in more detail in the remainder of this chapter and listed as follows (see Figure 4.1):
8
(1)
Identify and present priority projects
(2)
Prepare and present Interim Project Proposal (IPP)/Project Concept Note (PCN)
(3)
Prepare and present Final Project Proposal (FPP)/ Project Appraisal Document (PAD)
(4)
Negotiate and sign GA
(5)
Meet conditions of project effectiveness
(6)
Implement project
(7)
Close project.
However, the project cycle still takes into account OP 10.00 (see
http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/EXTPOLICIES/EXTOPMANUAL/0,,contentMDK:20064659~page PK:64141683~piPK:64141620~theSitePK:502184,00.html) Sudan Multi Donor Trust Funds
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Figure 4.1 – The project cycle
START
Identify and present priority projects
END
4.3.1
Close project
Project Cycle
Implement project
Meet conditions of project effectiveness
Prepare and present Interim Project Proposal / Project Concept Note
Prepare and present Project Appraisal Document / Final Project Proposal
Negotiate and sign Grant Agreement
Identify and present priority projects The GoNU/GoSS identifies potential projects in consultation with the World Bank, UN agencies, donors and other stakeholders. Consultations have been formalised through the creation of thematic/budget sector working groups. Each thematic group is chaired by a GoNU/GoSS representative from the relevant sector ministry. Other members include GoNU/GoSS officers from affected ministries, departments and local governments; and representatives from the MDTF Technical Secretariat, UN, NGOs, CSOs and donors. Each thematic group is responsible for prioritising and sequencing proposed MDTF investments with a view to: initiating critical reforms; adopting a more holistic approach to the design of project/program components; minimising overlaps and duplications; developing core capacities; and promoting better integration of donor funded programs. Bank staff are also expected at the identification stage to “assess the project’s susceptibility to corruption by considering country and sector environments as
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well as the nature of project activities”9. As part of this assignment, for high-risk projects, they are expected to, through a collaborative process, draw up anticorruption plans, and assign personnel to monitor their implementation. Six months before the commencement of each new financial year, the GoNU/GoSS presents a paper to the OC on its proposed priority projects for the next three years on a rolling basis. The presentation also provides indicative financing requirements of proposed projects, together with estimates of government and MDTF contributions. The split between Government and MDTF funding should as much as possible conform to the principle agreed in the JAM – that project and program financing should be in the ratio of twothirds Government to one-third MDTF. The GoNU/GoSS proposals are deliberated at the quarterly OC meeting: focusing on their feasibility; weighing alternatives; assessing processing requirements etc. The outcome of these deliberations is that proposals are endorsed or consensus is reached on the need for modifications. Thereafter, GoNU/GoSS makes the necessary modifications and/or incorporates indicative project costs for the first year in the coming year’s budget. 4.3.2
Prepare and present IPP/PCN Upon endorsement of proposals above, the GoNU/GoSS forms a project preparation team to prepare the project/program. The team members are drawn from the relevant sector ministry/department or local government. When the requisite technical skills are not available within Government, they are drawn from the World Bank, UN agencies, NGOs/CSOs and the private sector. In addition, the MDTFs provide for up to US$200,000 per project/program to orientate GoNU/GoSS officers on the MDTF, enabling them to quickly meet grant effectiveness conditions. The World Bank also assigns a Task Team Leader (TTL) with specialism in the sector and a task team of World Bank staff to support him or her. The TTL reviews progress, advises and coordinates with the GoNU/GoSS team on the various aspects of preparation. As it designs the project, the project preparation team, should also consult beneficiaries and other stakeholders to understand their needs and preferences. The immediate task of the project preparation team is to prepare the Initial Project Proposal (IPP)/Project Concept Note (PCN) within a timeframe of about three months. The IPP is the first formal document for the project and defines the rationale for the proposed project, sets out the preparation framework, and flags 9
World Bank, (2006), Strengthening Bank Group Engagement on Governance and Anti Corruption
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issues of special concern. The IPP follows a standard format provided in Annex A (see A1) and includes the following: •
Cover sheet
•
Government endorsement
•
Strategic context, key development issues, rationale for MDTF involvement
•
Proposed project development objective(s) and expected outcomes/results as a basis for initiating the planning actions needed prior to project implementation
•
Preliminary project description and costs
•
Institutional arrangements. The IPP should spell out preliminary thinking with respect to implementation arrangements
•
Potential risks and issues to be addressed during preparation and appraisal
•
Proposed detailed project preparation schedule.
An Inter-Ministerial Committee (IMC) headed by the MoFNE/MoFEP screens and reviews all IPPs. The MoFNE/MoFEP submits the IPP to the Technical Secretariat. The Technical Secretariat: checks that the IPP is complete and complies with the requirements of the template in Annex A.; confirms that the applicant is an eligible organisation (per Section 4.1); and screens the IPP against the criteria provided in Section 4.2. Where there are gaps, the Technical Secretariat and/or TTL support the project preparation team in addressing them. The Technical Secretariat must also submit the IPP to the Director Operational Quality and Knowledge Africa Region (AFTQK), and Operations Adviser for review, comment and sign-off10. Where there are any fiduciary concerns, the Financial Management and Procurement Specialists need to review the IPP. Thereafter, the representatives of the GoNU/GoSS circulate and present the IPP to the OC at its quarterly meeting. At the presentation, the GoNU/GoSS is expected to 10
They share the IPP with Operational Policies and Country Services Staff (OPCS) staff monitoring the operations pipeline
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give an overview of the project in about thirty minutes, highlighting key features of the proposal, its components, risks and mitigating measures. The OC comments on: the proposal’s comprehensiveness and budget; aspects to be included in the FPP; areas requiring clarification etc. The OC also gives its decision, which is recorded in the minutes of quarterly meetings. Its decision is normally one of the following: •
A “green light” – which means the project/program preparation team can go ahead and prepare the FPP over the next three months (see Box 4.1)
•
An “orange light” – indicating that the project/program can proceed, but a revised IPP needs to be prepared taking into account written comments to be provided by the OC. Typically, the OC tasks its Standing Committee to review the revised document, and if satisfied, advise the project preparation team to move ahead (“green light”)
•
A “yellow light” – signifying that the project/program should be postponed. Such a decision is given where proposal objectives are not clear, components are not well defined/defined at all, management arrangements are not specified, the project is premature or should be funded through other channels.
Box 4.1 – An OC “green light” decision illustrated Education Rehabilitation Project in Southern Sudan: General comments: a comprehensive IPP. Good consultation process (though there’s room for improvement). However, it’s very ambitious, considering the absorption capacity; and concerns were raised about the high expected GOSS financial contribution, and its relation with the components to be funded by the MDTF. Recommendations (for the FPP): •
Address all activities in the sector, i.e. other stakeholders’ financial and other contributions (e.g. technical assistance provided by USAID and UNICEF to the SoE).
•
Objectives and goals need to be made clear: room for improvement in prioritisation.
•
Explicit links with other sectors, namely Health and Water & Sanitation.
•
Highlight cross-cutting issues, while avoiding duplications.
•
More Gender focus, when developing the curricula and on the program area.
•
Consultation and coordination to be improved, considering existing fora.
•
Emphasis on the structure side, more focus on consolidated gains, how to maximise resources.
•
Emphasise the role of NGOs implementing on the ground (particularly active in this sector).
•
Emphasise bottom-up approach (e.g. give opportunities to teachers willing and capable of improving access), as well as creative initiatives (e.g. “under-the-trees” schools).
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Clarifications (following questions): Gender is a higher priority for the future MoE, who will have a core Dept Director for girls’ education, also linking with sectors others than Education. The estimated needs in teachers are far higher than the training capacity; recruitment of teachers in surrounding countries (e.g. Uganda, where there is a surplus of teachers) is being considered. The IPP budget includes both Investment and Recurrent Costs; contracting-out is being considered (e.g. for Infrastructure); if absorption capacity is found limited, the budget can be reduced; GOSS contribution will be revisited when the 2006 budget is elaborated. The GOSS budget for Education in 2005 is no more than US$ 4 to 10 million, considering the absorption capacity up to the end of the year; as to the UN expected contribution, US$ 8 to 10 million are already available, the remaining is still to be raised. The MDTF funding can be spread all over the program or concentrate on specific components: the 1st option implies a bigger no. of contracts, more time needed, while the 2nd allows focusing and is less cumbersome. Decisions: 1. Green light for the development of the Final Project Proposal (FPP). 2. Proceed with the appraisal of the full package, ensuring a specific strategy and sequencing (how to organise to substantially increase service deliver in 3-4 years time). 3. On Emergency needs: identify the most urgent needs to be included in the Emergency Basket (e.g. school kits). Source: Interim Oversight Committee Minutes, Annex 10, October 2005
4.3.3
Prepare and present FPP/PAD Once the OC gives the “green light” to proceed, the World Bank’s task team embarks on the detailed project/program design and development. The team: •
Works with the GoNU/GoSS project preparation team, beneficiaries and other stakeholders to confirm what has been done so far
•
Fleshes out the information contained in the IPP
•
Addresses comments raised by the OC
•
Draws on lessons learned from previous experiences to inform design and implementation arrangements
•
Specifies implementation, financial management and procurement arrangements
•
Identifies staffing and capacity building requirements
•
Computes project costs and funding sources; reviews social and environmental safeguards
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•
Defines the results framework to be used to monitor progress during implementation.
The outputs of the work above are incorporated in a Final Project Proposal (FPP)/ Project Appraisal Document (PAD) (see format in Annex A3). When a draft FPP/PAD is ready, the team submits it to the inter-ministerial committee for comment. Thereafter, it submits the FPP/PAD to the World Bank’s Regional Operations Committee for review, and subsequent sign-off by the AFTQK Director prior to appraisal. The appraisal mission determines a project’s/program’s suitability for MDTF financing. It involves extensive consultations with Government officials, potential beneficiaries, concerned UN agencies, NGOs and donor partners. The Technical Secretariat with support from other Bank staff (e.g. TTL, Financial Management Specialist, Procurement Specialist etc.), use the World Bank’s operational policies to appraise the FPP. The appraisal covers the assessment of whether the project is likely to meet its objectives, institutional arrangements including implementation readiness, technical quality, and economic viability (see Box 4.2). In addition, the mission undertakes a comprehensive and candid risk assessment, specifying any mitigating actions. The appraisal mission also helps resolve bottlenecks that may prevent the project from meeting its goals. There are two main outputs from the appraisal. First, an appraisal mission aide-memoire which documents the status of the FPP/PAD, highlights issues for the attention of the GoNU/GoSS and agreed next steps. Second, a postappraisal letter to the GoNU/GoSS which summarises the mission’s findings and recommendations, and comments on any revisions to be made to the FPP/PAD. Thereafter, the World Bank task team and project preparation team revise the FPP/PAD in line with appraisal discussions and decisions, submit the document to the MoFNE/MoFEP for endorsement and prepare themselves to present the document to the OC. Again, a representative from the GoNU/GoSS project preparation team is expected to present the FPP/PAD to the OC giving a brief (30 minute) PowerPoint presentation. The OC confirms that the FPP/PAD addresses any comments received at the IPP stage. Team members are also expected to respond to any questions posed. The OC considers funding proposals subject to availability of donor funds, and may where necessary recommend slicing or shelving of a project/program. It also provides comments on the quality of information contained in the FPP/PAD, the proposed project’s compatibility and complementarity with other initiatives, and issues for further consideration (see Box 4.3). It must also approve each FPP/PAD before project/program negotiation and grant signing, and document its decisions in minutes. Sudan Multi Donor Trust Funds
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Box 4.2 – Appraisal checklist Technical Appraisal focuses on whether the project is soundly designed, appropriately engineered, and follows acceptable standards. •
Is the project likely to achieve its development objectives?
•
Is the project based on sound design, appropriate engineering, and technical principles corresponding to the circumstances of the entity and the country?
•
Are the proposed scale, design, and layout feasible and appropriate?
•
Do proposed procurement arrangements meet the Bank’s requirements?
•
Are procedures for obtaining engineering, architectural, or other professional services (consultants) and the estimated cost of operating project facilities and services appropriate?
•
Are project cost estimates realistic? Allowances for physical contingencies and price escalation during implementation adequate? Local/foreign cost breakdown realistic?
•
Are cost estimates for operating project facilities and services realistic?
•
Is the implementation schedule realistic; are technical staff available to carry out the project; what is the likelihood of achieving expected outputs?
Institutional Analysis. Appraisal of institutions is concerned with questions such as: •
whether the entities to be involved in project implementation are properly organized and their management and staff are adequate to do the job
•
whether technical assistance/training is needed to support the proposed institutional arrangements for project implementation
•
whether policy or institutional changes are required outside the entity to achieve project objectives
Economic and Financial Aspects. MDTF operations are processed under the Bank’s Emergency Recovery Assistance policy which provides for rebuilding physical assets and restoring economic and social activities in the country. Therefore, the Bank would not do cost-benefit analyses and rigorous financial analyses. Rather, the mission would seek to validate questions such as the following (some of these questions would have been raised at the IPP stage but need validation at appraisal). •
Does the project come from a priority area in the Framework Program?
•
Does the project fit in well with the most urgent needs within the priority area?
•
Is the project well designed—are the standards appropriate or do they require excessive cost?
•
If the project did not go forward, what are other practical opportunities for using resources?
•
Is the project financially sustainable?
•
How appropriate are project’s budgeting, accounting, internal controls, funds flow, financial reporting, and auditing arrangements?
•
Are the project’s arrangements capable of correctly and completely recording all transactions and balances related to the project?
•
Are there systems to facilitate preparation of regular, timely and reliable financial statements?
•
Are there appropriate arrangements to safeguard the project’s assets?
•
Are the project’s auditing arrangements acceptable to the World Bank?
Environmental Analysis. An assessment is required of proposed projects to help ensure that they are environmentally sound and sustainable (Environmental Assessment). The scope of the Environmental Assessment depends on the scope, scale, and potential impact of the project. Given the emergency nature of MDTF-funded operations, carrying out formal Environmental Assessments for each project during project Sudan Multi Donor Trust Funds
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preparation is not deemed feasible. The Bank will therefore work with the GoNU and GoSS in achieving sound environmental management and social safeguards through the preparation and implementation of an Environmental and Social Management Framework (ESMF). Applicable clauses of ESMF would be included in project documents and in bidding and other contract documents, as applicable. At a minimum, however, the appraisal mission should look into the following questions: •
Were significant environmental impacts (positive and negative) and risks identified and assessed and to what extent?
•
Were alternatives examined and compared?
•
Were consultations with affected groups conducted in a satisfactory manner?
•
Are arrangements for mitigating and managing any adverse environmental impacts during (and following) project implementation adequate?
•
Does the country have adequate environmental policies and institutional capacity for carrying out the EA and ensuring subsequent compliance?
Social Analysis •
Is there ownership of the project by the government, beneficiaries, and other stakeholders? Have they participated in project design? Are they participating in designing implementation arrangements
•
What might be the negative social impacts? Are there adequate safeguards to mitigate these impacts?
•
Are the institutions, policies, and procedures in place to implement the Bank's Social Safeguard Policies?
•
What are possible effects of project on the environment and health and welfare of people and are mitigating measures being taken?
Box 4.3 – OC comments on a FPP illustrated Technical Assistance Facility (TAF): General comments& recommendations by Norway, on behalf of all donors: •
Appreciation for the work done: one of the 2 FPPs submitted for approval
•
Good risk factor and mitigation analysis
•
Govt contribution is small
•
Very much based on the WB experience: are there other relevant experiences to be taken into consideration?
•
Overall development objectives are ambitious
•
Capacity building to a large extent focused on Procurement – consider to broaden the scope of what capacity is needed
•
Concerning training activities: ensure that consultants are used for capacity building, also in the mode of the way they work; how to include academic & research in-country institutions for the training?
•
Not clear which studies are included at this point; still space for others? Make sure that this will be a facility benefiting all line ministries
•
On supervision – twice a year – make sure to include an ample audience on board (UN agencies, donors, etc.).
Clarifications: •
Govt contribution is mostly in-kind (offices, staff salaries, etc.).
•
TAF will benefit line ministries: MoFNE has been and will continue to play a key role in coordinating with the other ministries.
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•
MoFNE has long experience in using in-country academic/training & research capacity.
•
US$ 5 million is just an initial installment. Once the 1 tranche is exhausted quickly, other(s) will follow.
•
The first projects (mentioned in the FPP) are purely indicative, just a flavour of the kind of activities that will be financed through this facility, broad consultation process not yet started. TAF will be broad based and demand-driven.
•
Each proposal will go through scrutiny: is there any other project/donor operating in the same domain? How important is the proposal, in terms of JAM priorities? Etc.
•
Proposals above US$50,000 will be submitted to the SC for approval, however, this stipulation may be reviewed/removed during the supervision missions.
st
Conclusions: •
The FPP “Technical Assistance Facility” is approved.
Source: Interim Oversight Committee Minutes, December 2005
4.3.4
Negotiate and sign GA Upon OC approval of the FPP/PAD, the World Bank Country Director/ Manager invites the recipient (i.e. GoNU/GoSS or external parties) for negotiations. The invitation letter, with the draft legal documents attached, set out the conditions/issues to be negotiated. Negotiations are generally held in Sudan. The TTL who also chairs the meeting, prepares minutes, which the GoNU/GoSS must give formal agreement to in writing. Project/program financing is conditional upon the implementing organisation signing a GA. The GA which is legally binding, generally takes the form of a letter agreement. It is supplemented with an Annex which specifies the grant’s purposes and terms and conditions (e.g. with respect to procurement, the special account etc.). It lists conditions that must be met before the project/program is declared effective. Although some conditions of effectiveness are standard, there are also specific ones which vary from project/program to project/program. Specific conditions of effectiveness may arise from issues that crop-up at the appraisal stage or OC presentation. Some examples of specific effectiveness conditions include: •
Establish a Project Implementation Unit
•
Develop an operational manual
•
Prepare a procurement plan for the first eighteen months of the Project acceptable to the IDA
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•
Open a designated pooled account, and deposit an initial amount of not less than x million United States Dollars.
The GA is signed by the World Bank’s Sudan Country Director/Manager and the applicant. When the project/program execution agency is not a Government entity, the GoNU/GoSS signs the GA as a witness. When the applicant is a public sector organisation, the Minister of MoFNE/MoFEP signs the GA. The recipient returns the signed and dated agreement to IDA. 4.3.5
Meet conditions of project effectiveness A GA only comes into force after the Government or third party has met the conditions of effectiveness if any. The effectiveness deadline is normally 90 days from the date of signing the GA. Thereafter, the grant lapses, if no action is taken to extend the deadline and the conditions have not been met. To prevent any GA lapses, the World Bank TTL and Technical Secretariat support recipient organisations to monitor progress, resolve any bottlenecks and where necessary apply for extensions. When a recipient requests an extension, the World Bank on the basis of the reasons given for the delay, may lengthen the effectiveness date by one to three months. The Country Director can approve cumulative extensions for up to nine months. The Bank’s Regional Vice President must authorise extensions beyond nine months. When the World Bank is satisfied that a project’s/program’s conditions of effectiveness have been met, it sends a letter to the signatory to the GA, signed by the Country Director, declaring the grant effective. Specifically, the letter acknowledges that the evidence submitted by the recipient fulfils the conditions precedent to the effectives of the GA. The GA becomes effective on the date indicated on the letter. After the project/program has become effective, it is IDA’s policy to make the GA, FPP/PAD and other relevant documents publicly available. The recipient gives its consent to such disclosures by countersigning the GA. Soft copies of these documents can be obtained from the Sudan MDTFs website (www.mdtfsudan.org), which serves as a “one-stop source of comprehensive and peer-reviewed information on…strategies and project portfolios”11.
4.3.6
Implement project Even before a project has been approved, the World Bank and recipient can agree to the implementation of some activities. Where activities are to be 11
World Bank,(2006), News Release: Launching of Sudan Multi Donor Trust Funds Web Site
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financed by the MDTFs, there should be an express provision for retroactive financing in the GA (see Chapter 5). There are also cases where the GoNU/GoSS, using counterpart funding, embarks on implementation prior to project effectiveness. For example, to avoid any delays in conducting the national census scheduled for late 2007, the 5th Population Census project, using GoNU funds, commenced the procurement of goods and works. The management of the concerned implementing institution is responsible for establishing a Project Implementation Unit (PIU) or Project Management Team (PMT) comprising: a Project Manager/Coordinator/Executive Manager; and team members with in depth knowledge and experience of project management and/or technical knowledge of the sector, procurement or financial management. The PIU/PMT is staffed with a combination of resources from implementing ministries, specialists employed through an open recruitment process and technical assistance12. Ideally recruitment should start prior to negotiations so that team members are in place by project effectiveness. Also: •
Where a project/program extends to states, similar project management/implementation structures are often established at that level
•
The project may engage NGOs and CBOs using sub-agreements to carry out promotional activities, build capacity, provide technical assistance and support implementation (see Chapter 8)
•
UN agencies, on the basis of a Memorandum of Agreement or Management Services Agreement have been engaged to procure goods and construct works, and provide overall coordination and supervision (see Chapter 7).
In addition, a Project Steering Committee (PSC) oversees implementation, makes policy decisions, supports and guides the PMT/PIU, and teams at state and locality level. It is expected that some members of the PSC and PMT/PIU would have been involved in the project’s identification and design. Prior to implementation, the Project Manager should organise training sessions to orient his/her team members on the project’s operations, documented in a project implementation/operations manual developed prior to project appraisal. He/she should also ensure that special accounts to manage contributions made by the GoNU/GoSS and World Bank are opened (see Chapter 6). Further the Project 12
For some projects the PIU/PMT is an independent unit with administrative and financial autonomy
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Manager must in collaboration with his/her fellow team members, implementing partners and key stakeholders prepare: •
A detailed work plan covering the entire period of the project (see Figure 4.2). The work plan which can be documented using a Gantt chart or spreadsheet, specifies planned start and end dates for project activities, persons assigned to undertake activities and delivery dates for outputs taking into account any dependencies. During implementation, the Project Manager monitors these dates against actual start and completion dates. Work plans are updated quarterly
•
A procurement plan. This plan allows for the team to: map-out the sequence and timeline for procurements; specify the methods of procurement to be employed; monitor progress against plans. More detailed information on procurement is set out in Chapter 5 of this manual.
Each project/program is subject to a supervision mission (see Chapter 9) by the World Bank at least twice a year. The mission visits project sites to review progress, give advice, meet beneficiaries and stakeholders, and perform sample reviews of reports. At the end of each mission, the Bank team issues an aide memoire to the PSC and PMT/PIU detailing their findings, decisions, recommendations and the agreed way forward. Projects/programs are also subject to annual and mid-term reviews by the Bank and independent studies (see Chapter 9). In addition, the Project Manager is responsible for ensuring that his/her team and partners contribute to the preparation of quarterly project progress reports for submission to the PSC, Technical Secretariat, OC and other stakeholders. Each report should contain a succinct summary of the project’s/program’s achievements in the quarter, an analysis of actual outputs achieved against targets, and project plans for the next quarter. The report should also highlight implementation issues. The Project Manager is expected to address any queries/concerns/findings and take appropriate action on any instructions/directives issued by the PSC. Where a project has encountered any unexpected deviations, the PSC should discuss these with the World Bank’s TTL/Technical Secretariat, and agree any measures to ameliorate them. Measures may include revising the project workplan or restructuring it all together. In case of the latter measure, after seeking legal counsel, the TTL discusses any proposed changes with the PSC and advises on their implications to the GA. If changes are significant, a project reappraisal may be necessary, and require that revisions are approved by the OC.
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The MDTF Administrator publishes a report every six months which consolidates the progress of each MDTF financed project/program. Typical contents of this report include:
4.3.7
•
Main achievements, constraints and actions taken
•
The MDTFs portfolio of projects
•
Key events and performance benchmarks
•
The financial and operational status
•
The results of any Monitoring and Evaluation (See Chapter 9).
Close project The project closing date should not exceed the deadline given in the GA. Therefore, it is vital to a project’s success that the process of closing it down is adequately planned. In this regard, to ensure satisfactory completion, PMT/PIUs are urged to draw up a schedule highlighting uncompleted activities and outputs not yet delivered. PMTs/PIUs are expected to monitor progress towards completion through frequent meetings. In addition to the above, the TTL monitors project progress during supervision. One of the aspects he/she gauges, is whether planned activities can be substantially completed by the closing date. Furthermore, as the closing date approaches, the Bank’s financial information system sends automatic reminders to the TTL. Six months before the closing date, the TTL and PSC should decide whether there is need to extend the closing date. After the closing date passes, the Bank may stop accepting withdrawal applications from the project/program. Closing dates should not pass without Bank action to either close the grant account or extend the closing date. Unless already provided for in the GA, the TTL decides with the PSC whether an additional period of up to four months after the closing date is needed to process final withdrawal applications. If so, the TTL advises the PSC that the Bank will process withdrawal applications received within four months after the closing date. These apply solely to expenditures made or payments due for goods, works, and services delivered or performed before the closing date. The TTL initiates action for closure when the grant activities are completed. Following completion of disbursements by the Bank’s LOA, the TTL advises Sudan Multi Donor Trust Funds
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the GoNU/GoSS of the final disbursement position and any unused balance. The Bank’s Trust Fund Accounting Unit cancels any unused funds and ensures that they are disposed of in accordance with the Administration/Framework and GA. The Trust Fund Accounting Unit prepares the final financial statement and arranges for any audit required (see Sections 6 and 9). It is noteworthy that the grace period of four months after closing is not optional. Once a project/program is complete, the PMT with support from the Bank and stakeholders prepares an Implementation Completion Memorandum (ICM) that assesses the project’s success in meeting the development objective and intermediate outcomes. The ICM also includes lessons of experience. Thereafter, PSC signs off the ICM and formally closes each project. Once a project is closed, the PSC and PMT/PIU disband. Figure 4.2 – Excerpts from the indicative workplan for the 5th Population Census Project ID
Task Name
1
PROJECT DEVELOPMEN T
2
Initial discussion w ith World Bank
3
Submission of capacity statement
4
Meeting w ith WB appraisal team and devlopm ent.
5
Logistics Assessm ent, budget discussions with client
6
Preparation of final Proposal
7
Final Proposal, MOU and LOA Subm itted
8 9
Goverrnment assessment. UNOPS advised of required change to budget
11
UNOPS readjustment and submission
12
Approval/ Signature by CBS
13
Approval/ Signature by SSCCSE
14
No Objection letter signed by World Bank
15
PAC Approval Documents prepared
16
Signature of M OU/LOA/PAC by CC
17
ATLAS Codes entered by country office
19
UNOPS UNOPS 10/04
PROJECT PROPOSA L Assessment and Pro cesses
10
18
March 2006 April 2006 May 2006 28 03 06 09 12 15 18 21 24 27 30 02 05 08 11 14 17 20 23 26 29 02 05 08 11 14 17 20 23 26 29
CBS-SSCCSE 22/04 CBS SSCCSE Wor ld Bank UNOPS UNOPS UNOPS UNOPS
ATLAS codes accepted by UNOPS NY Transfer of Fund s
20
Submission of Blanket Withdrawl to M DTF
21
Appointm ent of World Bank Accounting Agent to Project
22
Transfer of M oney from MDTF to Government
23
Transfer of Funds from Government to UNOPS
24
NY send authority for UNOPS SUDAN to spend
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5 Procurement of goods, works and services 5.1
Introduction Procurement is important to the implementation of most if not all MDTF funded projects and programs. If properly managed, procurement: •
Enhances service delivery
•
Promotes the development of the private sector
•
Enhances public confidence in Government
•
Builds confidence of donor partners.
This chapter sets out the procedures to be followed by project/program implementers when undertaking procurement of works, goods and services that are financed through MDTF resources. The procedures for undertaking procurement for MDTF projects are set out under the following sections:
5.2
•
Procurement policies and guidelines
•
Eligible and ineligible expenditure
•
An overview of procurement, arrangements and thresholds
•
Summary of procurement processes.
Procurement policies and guidelines All procurement undertaken for MDTF projects/programs are primarily governed by two key World Bank’s documents: (i) “Guidelines for Procurement under IBRD Loans and IDA Credits, May 2004”13; and (ii) “Guidelines for Selection and Employment of Consultants by World Bank Borrowers, May 2004”14. These guidelines, which apply to contracts financed wholly or in part by the MDTFs, cover all procurement methods, together with their procedures for all types of projects and the thresholds at which the respective procurement methods are used. 13 http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/PROCUREMENT/0,,contentMDK:20060840~menuPK:93977~p agePK:84269~piPK:60001558~theSitePK:84266,00.html 14 http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/PROCUREMENT/0,,contentMDK:20060656~menuPK:93977~p agePK:84269~piPK:60001558~theSitePK:84266,00.html Sudan Multi Donor Trust Funds
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In addition, all procurement undertaken for projects/programs financed by the MDTFs must comply with the provisions of the World Bank’s OP 11.0015 and BP 11.0016, which provide detailed guidance on the principles of procurement. In summary, the following four basis principles guide the procurement process: •
Competition, economy and efficiency – implementing agencies must ensure that economy and efficiency prevail in the procurement of goods, works and services, as mandated by the World Bank’s Articles of Agreement
•
Eligibility to compete – implementing agencies must provide eligible bidders from developed and developing countries, a fair opportunity to compete in providing goods, works and services
•
Domestic preference – implementing agencies must encourage the development of domestic industries by engaging, as much as possible, contracting, manufacturing, and consulting industries in Sudan
•
Transparency – implementing agencies must provide for transparency in the procurement process.
However, OP 11.00 also specifies that procurement of goods, works and services will only be carried out in accordance with the above World Bank policies and guidelines to the extent that provisions of the [MDTF project] GA are not in conflict with the guidelines. In case there is a conflict, the provisions in the GA prevail. Each GA provides clear directives in the application of the relevant procurement provisions. However, in the interest of expeditious assistance, implementing agencies have a certain amount of flexibility over the use of procurement provisions but with due consideration for economy and efficiency, whilst also, maintaining safeguard measures to ensure that grant proceeds are used only for the purposes specified in the respective GA. Political and other non-economic influences or considerations must not influence procurement.
15 http://wbln0018.worldbank.org/institutional/manuals/opmanual.nsf/tocall/2C9004DCBC81968E85256E8B004E7A31?Open Document 16 http://wbln0018.worldbank.org/Institutional/Manuals/OpManual.nsf/toc2/BA66675E955249A185256A860054EB85?OpenDo cument Sudan Multi Donor Trust Funds
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5.2.1
For the GoNU The provisions of Section 8 of Articles 56 – 66 of the Financial and Accounting ByLaws of 1995, govern the procurement of goods, works and services undertaken by all public sector entities and state owned enterprises within the GoNU.
5.2.2
For the GoSS The provisions of the Interim Public Procurement and Disposal Regulation of 2006 govern the procurement of goods, works and services (except for military hardware) undertaken by the GoSS or one of its ministries, departments and/or states.
5.2.3
Arrangements for UN bodies and NGOs One of the key points that was agreed in a meeting between the World Bank and the UN, held on 12 February 2006 in Khartoum, to discuss UN’s role in the MDTFs, was that where the UN or one of its agencies is an implementing agency (either as a direct or as a sub grant recipient), the concerned agency can use its own rules and regulations for procurement. Where an NGO is responsible for implementing a project financed through MDTF resources, the relevant project GA or sub-grant agreement or contract specifies the procurement regulations which it must abide by in undertaking procurement. More details on procurement undertaken by UN bodies and NGOs are provided in Chapter 7 and 8 respectively.
5.3
Eligible and ineligible expenditure Chapter 3, Section 3.6 describes the expenditures eligible for financing from the Sudan MDTFs which are categorised into two broad categories: (i) World Bankexecuted activities; and (ii) recipient-executed activities. Further, it also provides details of eligible expenditure under World Bank-executed activities. Eligible and ineligible expenditure items under recipient executed activities are listed in Table 5.1. Each project’s/program’s GA specifies the amount of MDTF grant allocated to various categories. These expenditure thresholds should not be exceeded without prior written notice to the World Bank. Once approved, an additional budget may be provided from the unallocated expenditure category or from other line items.
Table 5.1: Eligible and ineligible expenditure under recipient executed activities Sudan Multi Donor Trust Funds
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Eligible expenditure items Civil works Consultancy services Equipment External audit fees Goods (including vehicles) Incremental operating costs Project accounting agent’s fees Service delivery contracts Study tours Technical assistance Training Vehicles including registration and maintenance Workshops
Ineligible expenditure items Customs duties Levies Public service salaries Taxes Expenditure related to military, paramilitary, intelligence services and anti-narcotics campaigns Weapons of all kinds
Typically, an implementing agency is prohibited from incurring any MDTF financed expenditure before project/programme effectiveness, unless there is a provision for retroactive financing. Retroactive financing for a project/program must be provided for in the GA. The GA specifies allowable expenditure categories, amounts as a percentage of the total project cost (disbursement percentage), and the time period in terms of the number of months prior to the commencement of the project, in which eligible expenditure can be incurred, and claimed as retroactive financing. The Bank sets disbursement percentages to reflect MDTF’s share of expenditure in a category. Disbursement percentages also ensure that the overall level of MDTF financing excludes any customs duties and taxes. The disbursement percentages therefore sometimes differ depending on whether the expenditure is foreign or local. Each GA defines what qualifies as foreign and local expenditure. In addition to the above, it is worth drawing attention to the fact that expenditures are only eligible when implementing agencies fully comply with procurement guidelines. In other words, if a contract is procured ‘below board’ or wrongly, then all expenditures under that contract may be declared ineligible (see Table 5.2).
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Table 5.2: The consequences of not adhering to procurement guidelines Issue Procurement of Goods and works Consultants Fraud and World Bank will: corruption • Reject the proposal for reward • Same provisions • Cancel the portion of the grant • Declare the involved bidder ineligible for a limited time or indefinitely • Reserve the right to audit the bidder’s accounts and records of the contract Misprocurement Occurs when: Occurs when: rendering • Steps/procedures followed are inconsistent • Ditto expenditure with World Bank guidelines / GA t ineligible • Prior approval is sought on the basis of • Ditto incomplete, inaccurate or misleading I information .I .I. Result: • Ditto • Contract not financed • Amount cancelled from grant • For repeat cases of misprocurement, grant may be suspended
5.4
An overview of methods and thresholds The GoNU has appointed a Procurement Specialist who is stationed at the MoFNE. The Procurement Specialist provides advice and support to Government ministries, departments and agencies in procurement for the MDTF-N projects/programs especially with respect to: planning; preparation; and issue of bid documents; evaluation of bids; contract awards; and supervision of contracts during implementation. The GoSS has established a Procurement Policy Unit (PPU) within the MoFEP. The PPU, which is also referred to as the Procuring Entity, in association with the Procurement Agent (see Section 2.9), is responsible for undertaking all procurement on behalf of the GoSS, its ministries and departments. No ministries and departments can undertake any procurement on their own until such time that the Minister for Finance designates it to be a Procuring Entity.
5.4.1
Procurement plan To ensure value for money, each MDTF project is guided by a procurement plan, which a PIU/PMT prepares during project preparation. Once project effectiveness conditions are met, and just before the implementation of a project, each PIU/PMT Sudan Multi Donor Trust Funds
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in association with the Procurement Specialist (for GoNU) or the Procurement Agent (for GoSS), refines the procurement plan covering the initial eighteen months of the project. The procurement plan is prepared in the format provided in Annex A (see A8). The procurement plan is updated on an annual basis. The procurement plan provides the following information relating to each major category of procurement i.e. works, goods and services: •
Number of contracts (broken down into packages and lots)
•
Amount for each contract; procurement methods to be used
•
Whether procurement requires prior or post review by the World Bank
•
Various dates (both target and actual) ranging from preparation to contract signing.
Through the use of target and actual dates, a PIU/PMT is able to track procurement activities at various stages. This therefore requires that the PIU/PMT updates the procurement plan with the actual dates soon after procurement activities take place. Where target commencement and completion dates are repeatedly not met, the PIU/PMT must revise the procurement plan to reflect actual project implementation needs. A copy of the procurement plan is submitted to the PSC, the relevant Ministry of Finance (MoFNE for GoNU and MoFEP for GoSS), and the relevant Technical Secretariat (MDTF-N for GoNU and MDTF-SS for GoSS). As indicated in Section 5.1 above, implementing agencies have a certain amount of flexibility over the use of procurement provisions. It is in this context that the World Bank’s Operational Memorandum on the “Application of Procurement Plans to Trust Fund Grants” dated 18th August 200417, specifies that, for recipient executed grants: below and including US$1 million, a procurement plan is not required; and above US$1 million, a procurement plan is required, unless the contracts are foreseeable for the duration of the project, in which case a procurement plan is not required. 5.4.2
Procurement methods and thresholds Each project GA (except for projects implemented by a UN agency) specifies the particular methods of procurement of goods, works and services and their 17 http://wbln0018.worldbank.org/Institutional/Manuals/OpManual.nsf/32574cb373c9b6278525705c001862a1/bf9681e86e324 a8385256ef400620e9a?OpenDocument Sudan Multi Donor Trust Funds
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corresponding thresholds. Table 5.3 below provides a brief summary of the major procurement methods for each category of expenditure and their key features. It is noteworthy that in the Africa Region, thresholds for projects financed by the IDA/IBRD vary according to the nature or complexity of the project. To this end, details of thresholds for each project are provided in its respective GA. Table 5.3: Procurement methods and key features Procurement method Key features International Competitive Bidding (ICB)
Awards contracts to the lowest evaluated bid. This method requires that prospective bidders are given adequate notification and opportunity (i.e. time to submit bids, fair contract conditions and broad specification)
Limited International Bidding (LIB)
Is appropriate when amounts are small and there are only a few suppliers. Under LIB there is no public advertising. Rather, the GoNU/GoSS solicits bids from suppliers. Otherwise LIB procedures are identical to ICB
National Competitive Bidding (NCB)
Is suited in situations where the cost of ICB is disproportionately high, amounts are small, foreign bidders are unlikely to be interested and/or the nature of goods/works is dispersed. However, Government procurement procedures must be reasonable. Further, there must be adequate competition. NCB does not exclude foreign firms as domestic preference is not applicable
Shopping
Can be undertaken at both international and national levels. It is generally used when: values to be procured are small; procuring off the shelf goods; the specification of commodities to be procured is standard. Under shopping the GoNU/GoSS is only required to obtain written quotations
Direct contracting
Relates to small value proprietary items. It is also used exceptional cases (i.e. response to natural disaster) or to extend an existing contract
Community participation
Is factored into some projects/programs to achieve sustainability and/or social objectives, or to promote the use of: local know-how; labour intensive means; and local technologies. It is less rigorous than ICB, LIB and NCB
Procurement from UN agencies
Acting as suppliers, pursuant to their own procedures, this may be the most appropriate way of procuring: small quantities of off-the-shelf goods, primarily in the fields of education and health; and specialised products where the number of suppliers is limited such as for vaccines or drugs
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Where GoNU/GoSS lacks the necessary organisation, resources, and experience, it may wish (or be required by the World Bank) to employ, as their agent, a firm specialising in handling procurement. The agent shall follow all the procurement procedures provided for in the GA and as further elaborated in the procurement plan approved by IDA on behalf of the GoNU/GoSS, including use of World Bank’s Standard Bidding Documents (SBD), review procedures, and documentation. This also applies in cases where UN agencies act as procurement agents. Management Contractors may be employed in a similar manner for a fee to contract for miscellaneous works involving reconstruction, repairs, rehabilitation, and new construction in emergency situations, or where large numbers of small contracts are involved. The GoNU/GoSS Procurement Regulations provide details of the procurement thresholds and the corresponding methods that are used for the procurement of goods, works and services financed by project/program counterpart funds or items specified in the GA. This information is provided in Table 5.3 (for the GoNU) and Table 5.4 (for the GoSS). It is important to note that the procedures for all procurement methods are identical for GoNU, GoSS and the World Bank. It is only the thresholds at which procurement methods used differ. Table 5.3: Procurement methods and thresholds as per the GoNU procurement guidelines Procurement Procurement threshold Procurement method category All Above SD20 million ICB Between SD15 million and SD20 million NCB Between SD15 million and SD7.5 million Limited NCB Below SD7.5 million Quotations Source: Republic of Sudan, Community Development Fund, Operations Manual, March 2006
Table 5.4: Procurement/selection methods and thresholds as per the GoSS procurement guidelines Procurement Procurement Procurement/selection method category threshold Goods
Works
Above US$150,000
International Competitive Tendering
Between US$20,000 – US$150,000
National Competitive Tendering
Below US$20,000
Quotations
Above US$300,000
International Competitive Tendering
Between US$50,000 – US$300,000
National Competitive Tendering
Below US$50,000
Selective Tendering
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Procurement category
Procurement threshold
Procurement/selection method
Consultancy Services – Individuals
Any value
Comparison of qualifications
Consultancy Services - Firms
Above US$50,000
QCB or Least Cost Selection (in case where EOI has been advertised)
Between US$10,000 and US$50,000
QCB Selection or Least Cost Selection (in case of direct short listing)
Below US$10,000
Comparison of qualifications
Source: GoSS Interim Public Procurement and Disposal Regulations, 2006
5.5
Summary of procurement process An implementing agency uses the GoNU’s/GoSS’s or the World Bank’s procurement procedures when a particular expenditure is to be financed by Government or the grant respectively. Furthermore, the procurement method to be used is specified in the procurement plan. When the GoNU/GoSS undertakes procurement using its own regulations, the procurement process is not subject to a prior review by the World Bank. However, irrespective of whether a procurement process is subject to a prior review or not, all procurement is subject to a post review by the World Bank.
5.5.1
Procurement using World Bank procedures The procurement cycle is illustrated in Figure 5.1. In summary, procurement using World Bank procedures entails the following: •
Planning – this is covered under Section 5.4.1
•
Issue of procurement notices: o
General Procurement Notice (GPN) - shortly following negotiations, the implementing agency must prepare a GPN. The World Bank needs to clear the GPN before its publication online in the UN Development Business (UNDB) and the Development Gateway Market (dgMarket). The GPN should also be advertised in a national Sudanese newspaper of wide circulation. The purpose of the GPN is to give all prospective bidders and candidates advance notification of the services, works and goods to be acquired through ICB and inviting them to express their interest
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Figure 5.1: Procurement Cycle
START
Issue of procurement notices
Planning
END
Supervise / administer contract
Procurement Cycle
Evaluate bids / proposals / quotations
Award contract
o
Prequalify interested bidders
Prepare and issue bidding documents
Specific Procurement Notice (SPN) - when the pre-qualification or bidding documents are ready to be issued, a SPN must be published in a national Sudanese newspaper of wide circulation. For ICB contracts, the SPN must be advertised in UNDB on-line, dgMarket and copied to bidders who have responded to the GPN. This may be supplemented by circulation of the SPN to embassies and trade representatives of countries of likely suppliers and contractors and publications of SPN in other international trade journals
•
Pre qualify interested bidders / consultants – prior to prequalifying bidders (under procurement of goods and works) and preparing shortlist of candidates (under selection of consultants), implementing agencies must advertise for a request for a prequalification of bidders and Expression of Interest (EOI) under procurement of goods / works and selection of consultants respectively in a national Sudanese newspaper of wide circulation and an electronic portal with free access. For consultancy contracts expected to cost more than US$200,000, EOIs must also be advertised in UNDB and dgMarket
•
Prepare and issue bidding documents and Request for Proposal (RFP) – bidding documents (under procurement of goods and works) and RFPs
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(under selection of consultants) are important as they translate requirements into specifications / terms of reference, and contractual conditions. The bidding documents and RFP contain all the information necessary for a prospective bidder or consultant to prepare their offer. The content, detail, and complexity vary with the type, amount and method of procurement. It is important that bidding documents and RFPs: o
Provide the same information to all prospective bidders and consultants, and ensure that equal opportunity is provided for all to obtain additional information on a timely basis
o
Specify that the project would provide reasonable access to project sites for visits by prospective bidders and consultants and if necessary arrange for a pre-bid conference
o
Define, where applicable, the tests, standards, and methods of inspection and assessment that will be employed to judge the conformity of equipment as delivered, or works as performed, with the specifications
o
Ensure that all drawings are consistent with the text of the specifications and are fully and properly described.
•
Evaluate bids / proposals / quotations. For bids, the GoNU/GoSS must open them immediately after the deadline date and time. Late bids must be returned unopened. Bid evaluation commences immediately after bid opening so that it can be completed within the bid validity period. The PSC appoints a team to evaluate bids. The evaluation is expected to secure goods / services / works at the most economical cost and at the same time evaluate bids in accordance with the criteria contained in bidding document. When procuring consultants, the team appraises technical bids before financial ones and only opens financial bids of bidders who have met the technical criteria and requirements (see Table 5.5)
•
Award contract. Contracts are generally awarded to the lowest evaluated bidder. The selected bidder should not be required to: reduce price; undertake work not specified in the bidding document; or modify its bid. Under selection of consultants, the GoNU/GoSS negotiates and signs a contract with the successful bidder. The successful bidder must provide a performance security. In addition, the GoNU/GoSS notify unsuccessful bidders of the outcome of the bidding process
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•
Supervise/administer contract. The PIU/PMT supervises the contracts to ensure that specified outputs are delivered to an acceptable standard and within specified times. The project/program TTL also has responsibility for supervising the process. Table 5.5: Indicative evaluation criteria for the selection of consultants Criterion Points Experience 5 to 10 Methodology 20 to 50 Key personnel 30 to 60 Transfer of knowledge 0 to 10 Participation by nationals 0 to 10 Total 100
It is noteworthy that the GoNU/GoSS is solely responsible for procurement using World Bank procedures. In this regard, the World Bank’s role is to monitor the procurement process, undertake prior reviews (e.g. of procurement plans, bidding documents, technical evaluation reports, draft contracts etc.), issue no objections, address complaints from firms on procurement matters and on the basis of material findings declare misprocurement. 5.5.2
Procurement of goods and works The World Bank guidelines with respect to goods and works embrace the principles listed in Section 5.2. In addition, quality is key. The process for procurement of goods and works is as follows: •
For the procurement of works, the PIU/PMT engages an external qualified expert (who may be an individual or firm) such as a Civil or Structural Engineer ( can also be a Quantity Surveyor) . The Engineer prepares a Bill of Quantity (BOQ) based on appropriate surveys and engineering.. The BOQ states the description of works, size, estimated quantities and unit costs involved in undertaking the construction activities etc.
•
The PIU/PMT in collaboration with Procurement Specialist/Procurement Agent prepares bidding materials using the World Bank’s SBD. Thereafter: o
Contractors/suppliers are invited to prequalify for bidding in undertaking the construction activity or in rare circumstances, in
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supplying goods, by placing an advertisement in the appropriate media
•
5.5.3
o
Contractors/suppliers are pre-qualified on the basis of information pertaining to their: experience, past performance on contracts of similar type and size, under similar conditions; financial status; liabilities/assets; contract commitments; legal status etc.
o
Prequalified contractors are invited to submit bids. Depending on the complexity of the work, bidding is by way of either a single stage (for majority of civil works, where contractors submit a combined technical proposal and priced bid) or two-stage (for turnkey or large complex contracts, where contractors initially submit an unpriced technical proposal and after clarifications and adjustments, submit a combined technical proposal and priced bid). Bidders may also be required to provide a bid/performance security. Bid opening is public
o
The Procurement Specialist/Procurement Agent and their teams examine bids to determine amongst others that they are substantially responsive to the bidding documents. The teams also evaluate and compare bids to determine the cost of each bid. The evaluated costs are compared to determine the least cost bid. It is important that evaluators ensure that the results of the evaluation remain confidential
o
On the basis of post qualification criteria contained in the SBD (e.g. experience, annual turnover, line of credit, availability of adequate equipment, etc.) a contract is prepared and awarded to the preferred bidder. There are no negotiations for goods and works
The evaluation team must also ensure that there are no material deviations from the SBD. In looking at priced bids, the team ensures that there are no errors (i.e. figures match words, the correct unit rate has been applied, decimal places are not misplaced, consistent currency has been applied etc.). They also compare bids, ensuring that the necessary adjustment (e.g. to variations) are applied consistently.
Selection of consultants Selection of consultants differs from procurement of goods and works in that the former is knowledge based, competition is more restricted and quality is a major
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factor in evaluation. The process for procurement of consultancy services is as follows: •
A shortlist of three to six firms of consultants is prepared on the basis of Special Procurement Notice (SPN). The shortlists normally comprise firms with a wide geographical spread with no more than two firms from any country and at least one firm from a developing country, unless qualified firms from developing countries are not identified
•
Using the expertise skills of the available sector and in-house specialist, the implementing agency’s PIU/PMT prepares Terms of Reference (TOR) for the required services. Using the TORs and in collaboration with the Procurement Specialist/Procurement Agent, PIU/PMT prepares Request for Proposals (RFPs) and includes the TOR together with the following additional information: tender submission deadlines, proposal formats to be used, evaluation criteria, dates for any pre-bid conferences, and contract conditions. These are issued to consultants
•
Proposals are opened in two stages. Unlike goods and works, the opening of technical proposals is closed to the public, however financial proposal opening is conducted publicly
•
Proposals are evaluated. Again, ensuring confidentiality is vital – evaluation results should not be disclosed to bidders or others not officially concerned until the award is announced. Six selection methods are used: (1) Quality and Cost Based Selection (QCBS); (2) Quality Based Selection (QBS); (3) Selection under a fixed budget; (4) Least Cost Selection (LCS); (5) Selection based on consultants’ qualifications; (6) Single-source selection. The method used is dependant on factors such as: technical complexity of the assignment; value of the assignment; whether the impact of poor performance by the consultant is high or low; whether the proposal leads to comparable results
•
Where a prior review by the World Bank is required, the evaluation team submits its technical evaluation, proposed selection details and draft contract to the TTL. Financial proposals can only be opened on receipt of a no objection by the Bank
•
A variety of contracts can be issued to consultants: lump-sum; timebased; success fee; percentage; and indefinite delivery.
In the cases where the GoNU/GoSS procures consulting services from UN agencies, the World Bank guidelines clearly state that they should not receive any Sudan Multi Donor Trust Funds
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preferential treatment in a competitive selection process, “except…immunities granted…under existing international conventions”. To neutralise any privileges the World Bank recommends the Quality Based Selection (QBS) method. However, single-source selection can be used in the situation listed in Section 5.4.2. The World Bank guidelines are also specific about the use of NGOs as consultants on assignments with a participatory element and demanding local knowledge. QCBS is recommended, but, single-source selection may be used. Table 5.6 lists recommended selection method for particular types of consultants. One or more of these consultants is procured by the GoNU/GoSS. Table 5.6: Selection method for particular types of consultants Organisation Recommended selection method Procurement and inspection agents
QCBS [50% for cost]
Banks
QCBS or Retainer and Success Fee
Auditors
QCBS [40 – 50% for cost]
Service delivery contractors
To be defined in GA
When coordination or collective responsibility may become more difficult due to the number of individuals, it is advisable to employ a firm as consultant. However, where the following conditions apply, individual consultants are employed: •
team of personnel are not required;
•
no additional outside (home office) professional support is required
•
the experience and qualifications of the individual are the paramount requirement
Such selection is through comparison of qualifications of at least three candidates among those who have expressed interest in the assignment or those who have been contacted by the PIT/PMT. A selected individual must be capable of carrying out the assignment. Capacity is judged on the basis of academic background, experience, and, as appropriate, knowledge of local conditions. Although advertisement is not required, PITs/PMTs are encouraged to advertise. Individual consultants may be selected on a sole source basis with due justification e.g. the following:
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•
Tasks that are a continuation of the previous work carried out by the same consultant selected competitively
•
Assignments with total expected duration of less than six months
•
Emergency situations
•
When the individual consultant is the only consultant qualified for the assignment
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6 Financial management 6.1 Introduction As the administrator of the MDTFs, the World Bank has a fiduciary responsibility to donors. In particular, the World Bank must ensure that trust funds are used for their intended and specified purpose. To this end, all grants are administered and supervised in accordance with due diligence to economy, efficiency and effectiveness, and compliance with the World Bank’s financial management policy and guidelines. This chapter provides an overview of financial management requirements and process for MDTF financed projects/programs.
6.2 Financial management system requirements The World Bank’s operational policy for financial management (OP 10.02) requires the PIU/PMT to maintain adequate financial management systems – including accounting, financial reporting, and auditing – to ensure that accurate and timely information can be provided regarding project resources and expenditures (see Figure 6.1). The requirements set forth in this policy call for a financial management system that can deliver the following: •
Ensure all transactions and balances relating to the project/program are recorded correctly and completely
•
Ensure that funds are used only for their intended purposes in an efficient and economical way
•
Ensure that funds are properly managed and flow smoothly, adequately, regularly, and predictably in order to meet the objectives of the program
•
Enable the preparation of accurate and timely financial reports to provide the World Bank with information it needs to meet its fiduciary responsibilities
•
Enable project/program management to monitor the efficient implementation of the project/program
•
Safeguard the project/program assets and resources.
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Figure 6.1: Characteristics of a financial management system
n tio g a is fin an taf g s Or nd a
Internal control
Pl a bu nn dg ing et an in d g
Financial Management
Ac co u
nt
ing
Au
ti di
ng
Reporting
In order to deliver the requirements above, the following conditions must be met: •
The project/program implementing institution should have an adequate number and mix of skilled and experienced staff
•
The internal control system should ensure the conduct of an orderly and efficient payment and procurement process, and proper recording and safeguarding of assets and resources
•
The accounting system should support the project’s/program’s requests for funding and meet its reporting obligations to fund providers, including the GoNU/GoSS.
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•
The system should be capable of providing financial data to measure performance when linked to the output of the project/program
•
An independent, qualified auditor should be appointed to review the project’s/program’s financial statements and internal controls.
To ensure that a project/program has an adequate financial management system, during the appraisal of the IPP/FPP, the World Bank’s Financial Management Specialist (FMS) conducts an assessment. The financial management assessment determines the mitigating measures required, risk ratings and intensity of supervision. The FMS uses a standard financial management assessment questionnaire prepared by the Bank (see Annex A10-A19) as the basis for the assessment. During the visit to the project entity/entities, the FMS completes the questionnaire or may decide to have the recipient’s staff complete it. Following completion of the assessment questionnaire, the FMS discusses the findings and the type of improvements that need to be introduced to bring the entity’s financial management system to a level that is acceptable to the World Bank. Typically, the assessment results in the development of a time-bound action plan to strengthen financial management. The action-plan may require one or more of the following steps to be taken: •
Appointment of qualified accountants
•
Appointment of an external auditor
•
Implementation of a computerised accounting system
•
Design of Financial Management Reports (FMRs)
•
Implementation and training in accounting system
•
Development of financial management procedures.
Following appraisal, the FMS provides the World Bank’s TTL and the Country Lawyer with the financial covenants to be included in the GA, the action-plan, and any conditions of effectiveness or disbursement. The agreement of the recipient to the covenants, plans, and conditions must be obtained at negotiations, and included in the minutes of negotiations, and in the GA (see Section 4.3.4). In the event that an action, such as the appointment of project accountants, is not completed before negotiations, they may be made conditions of Grant effectiveness. The FMS monitors progress against any financial management conditions of effectiveness and, with the support of the Technical Secretariat, assists the recipient Sudan Multi Donor Trust Funds
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in meeting the required actions. When a project/program is launched, the FMS reviews progress in implementing the action plan. He/she also assesses developments during implementation through periodic supervision missions (see Chapter 9).
6.3 Planning and budgeting Each project’s/program’s financial period corresponds to the GoNU/GoSS fiscal year which runs from January to December. Prior to commencement of each financial year the PIU/PMT is expected to, on the basis of the work plan (see Section 4.3.6), prepare an annual budget on a cash basis. The budget which should indicate costs by component must be reviewed and approved by the PSC. The “cash budget” determines each project’s cash flow requirements, and informs disbursements from parent to child accounts (see Section 3.4). Each PIU/PMT is encouraged to further breakdown the annual budget into expected monthly or quarterly costs. With detailed budgets, the PIUs/PMTs are able to determine the timing of, and therefore plan for, cash outflows.
6.4 Accounting policies, procedures, controls and information systems Each project/program is expected to have its own manual containing detailed financial and other operational procedures. However, to ensure that all key aspects are covered in this manual, this section provides an overview of the MDTFs’ accounting policies, systems and accounts structure. Accounting policies are broadbased assumptions that form the basis for preparation of financial statements and include specific principles, bases, conventions, rules and practices adopted. 6.4.1
Basis of accounting MDTF resources are accounted for on a cash basis. That is: income is recognised for bookkeeping purposes: (i) by the World Bank when amounts are deposited into the IBRD’s “T” accounts; (ii) by GoNU/GoSS when amounts are deposited into the designated accounts; and (iii) when an eligible and approved outflow of cash relating to MDTF occurs. UN agencies and NGOs implementing MDTF projects may adopt different basis of accounting. However for the purposes of the overall reporting for the MDTFs, the cash basis of accounting is used.
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6.4.2
Accounting systems Each project/program is required to maintain an accounting system which can record and report on all commitments and expenditures, and comply with the terms of the GA. This includes both project/program recurrent and capital expenditures financed by the MDTFs and GoNU/GoSS. In addition the system should be able to ensure separate tracking of funds for the various projects being implemented by the recipient. It should also be documented in a manual. The accounting system must be approved by the World Bank. In cases, in which the World Bank assesses GoNU’s / GoSS’s / other recipient’s systems as inadequate, a project/program specific accounting system may need to be adopted.
6.4.3
Chart of accounts The chart of accounts structure reflects the type of project/program, funding sources, and relevant expense accounts, disaggregated by the type of expenditure. Some of the analysis dimensions that are required include: •
Source of funds (GoNU, GoSS, MDTF)
•
Projects, (where the recipient is handling more than one project)
•
Project components (as defined in the FPP). For example the project components for the Sudan 5th Population Census Project are as follows: o
Component 1: Procurement of goods and services
o
Component 2: Works (infrastructure),design scope of works and preparation for construction of offices and data centres
o
Component 3: Operations technical assistance
•
Project activities within each component
•
Categories of Expenditure (as provided in the GA). For example, the expenditure categories for the Judiciary Capacity Building Project are as follows: o
01 – Works
o
02 – Goods and vehicles
o
03 – Consultants
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•
6.4.4
o
04 – Sub-contracts for Parts A and B of the project
o
05 – Training , workshops and study tour
o
06 – Operating costs
o
07 – UNDP management fee.
Expenditure types, which may be the same budget line items. These are normally used for cost control purpose (e.g. travel costs etc).
Accounting for goods, works and services procured Prior to making any payments, each Project Manager must ensure that goods, works and/or services, have been appropriately procured and delivered by contractors/suppliers. To this effect, the Project Manager must ensure that:
6.4.4.1
•
Quotations and contracts negotiated with contractors/services provider have been duly approved
•
Purchase Orders (POs) have been generated and issued to suppliers of goods
•
Details of quotations and contracts have been entered onto the project’s/program’s accounting system
•
Amounts totalling the quotations and contracts have been committed.
Delivery of works Payments for works are normally made in stages, unless the work is very small such as minor repairs etc., the construction plan and the contract will have clearly stipulated various stages at which payments can be made. This could for instance be a certain percentage of the works item being complete. The contractor also issues a certificate of works at each interval. Project/program implementers must carefully compare the certificate of works with the construction plan and the contract. Also physical inspection of the works item must be carried out in order to establish its genuine status. Project/program implementers must be satisfied with all of these conditions before they request the contractor to provide an invoice/certificate of payment relating to the completed stage of the construction activity.
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6.4.4.2
Delivery of goods Payments for goods are normally made only after all goods have been delivered according to specifications. On receiving goods and equipment from suppliers, they must immediately be verified by the Project Manager and/or other members of the PIU/PMT. The Project Manager must immediately notify the supplier of any irregularities (e.g. defects). If there are no irregularities, the receiving officer must sign the Goods Received Note (GRN) or the Delivery Note (DN) and retain one copy. Also the supplier’s invoice must be carefully compared to the PO and the GRN/DN to verify that: the amount is correct; and goods received match with the description on the documents.
6.4.4.3
Delivery of services Payments for services are also phased. A services contract typically indicates the stages at which payments can be effected. This is normally linked to the delivery of specific outputs such as reports, training and installation of systems etc.
6.4.5
Accounting for expenditure Payments for works, goods and services procured using MDTF financing are made either by the GoNU/GoSS or directly by the World Bank.
6.4.5.1
Payments made by GoNU/GoSS Payments are made on the basis of properly and fully supported Payment Vouchers (PVs). Project Managers and/or other members of the PIUs/PMTs or an Architect must authorise suppliers’/contractors’ invoices by signing them. Authorised invoices signify that: (i) works, goods and services have been accurately delivered; and (ii) details on the invoice such as the amount and payment conditions are accurately reflected. In addition, signed invoices act as an authority for payment. For projects implemented by the GoSS, the Project Manager submits the authorised invoices to the PAA to process payment. For projects implemented by the GoNU, the Project Manager submits the authorised invoices to the Financial Management Specialist in the PIU/PMT to process payment. On receiving an authorised invoice from the Project Manager, the PAA/Financial Management Specialist prepares a PV against funds committed during procurement. The PAA/Financial Management Specialist signs the PV and the Project Manager counter signs it. Depending on the value of the invoice, the PAA/Financial Management Specialist takes one of the following steps: •
Instructs the bank (where the designated account is held) to make a telegraphic transfer directly into the supplier’s/contractor’s bank account
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•
Prepares a cheque in favour of the supplier/contractor. The cheque is drawn on the bank where the designated account is maintained, and given to the supplier/contractor. The supplier/contractor must sign in a register as evidence of receipt of payment
•
Prepares a petty-cash voucher for very minor value purchases, and pays the supplier in cash. Official receipts must be obtained for all payments made in cash.
Good financial management practice commands segregation of duties amongst projects/programs accounts/finance staff. To this end, the PAA/Financial Management Specialist must ensure that there is clear segregation of duties amongst their staff with regards to: •
Withdrawals and deposits of cash
•
Reviewing/receiving bank statements and reconciling bank statements with cashbooks
•
Approving purchases/payments and issuing cheques.
In addition to adhering to the principles of good financial management practice, segregation of duties: •
Helps prevent errors and the misuse of project/program funds
•
Helps limit the management of burdens carried by any one individual in the project/program
•
Prompts projects/programs to build the capacity of their members
•
Complies with audit requirements – auditors look for appropriate segregation of duties during an audit.
The PAA/Financial Management Specialist must maintain a separate file for each project/program, and file all payment vouchers together will all supporting documents in a sequential order. 6.4.5.2
Direct Payments made by the World Bank Authorisation procedures are exactly the same as those described in Section 6.4.5.1 above for direct payments made by the World Bank. However, the PAA/Financial Management Specialist submits the authorised invoice and supporting documentation (such as purchase orders and goods received notes and Sudan Multi Donor Trust Funds
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contracts) together with the Withdrawal Application Form 2380 to the World Bank. The World Bank makes payment directly to the consultant/supplier. The World Bank notifies the respective MoFNE/MoFEP of payments made on their behalf by issuing a ‘Payment Advice’. A Payment Advice provides the following information:
6.4.5.3
•
GA number
•
Application number (assigned by the GoSS/GoNU)
•
Value date of payment
•
Withdrawal authorisation number (assigned by the World Bank)
•
Category charged
•
Currency and amount of payments
•
Exchange rate used and the equivalent amount charged to the Grant in the currency of commitment
•
Undisbursed balance of the Grant account.
Reconciliation At the end of every quarter the PAA/Financial Management Specialist or his/her delegated officers undertakes a reconciliation of the project funds by: obtaining bank statements from the bank where the designated account is held; and preparing a bank reconciliation statement to agree the cash book balance to that shown on the bank statement. In addition, at the end of every quarter, the PAA/Financial Management Specialist provides each Project Manager with a schedule which specifies all transfers from the project designated account. Projects Managers are also supplied with copies of bank statements and the bank reconciliation statements.
6.4.6
Replenishments to designated accounts Procedures for initial deposits to designated accounts are described in Chapter 3, Section 3.4. Replenishments to designated accounts follow the same procedures. However, grant recipients must attach a Statement of Expenditure (SOE) together with the application for withdrawal. A SOE summarises eligible expenditures incurred during a stated period, based on individual transactions. The expenditures are normally grouped by expenditure Sudan Multi Donor Trust Funds
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category. The statement may be a summarised statement or a more detailed statement that lists all expenditures incurred during the reporting period. The degree of detail required by the World Bank depends on the project/program. In order to be eligible to use SOE, the grant recipient must have: •
The administrative and accounting capability to prepare and maintain appropriate records, and make them readily available for inspection
•
A record-keeping system that allows for efficient retrieval of the corresponding original records (e.g., invoices, receipts)
•
Adequate internal control systems to ensure procedures are followed.
6.5 Reporting As part of its fiduciary supervision function, the World Bank requires grant recipients to prepare and submit reports that are necessary for the effective project monitoring and evaluation. Collectively referred to as FMRs, these are based on standardised formats and include sources and application of funds, financial performance, physical progress, and procurement reporting. The content of FMRs is agreed during project preparation, and prepared on the recipient’s chart of accounts and underlying systems. 6.5.1
Government institutions Government institutions implementing MDTF projects/programs are required to prepare and submit FMRs on a quarterly basis within 45 days of the end of the period, in a format provided in Annex A (see A20). FMRs comprise the following: •
An introductory narrative discussion of developments and project/program progress
•
Financial reports, which include a statement showing for the period and cumulatively (project life or year to date), inflows by sources and outflows by main expenditure classifications, beginning and ending cash balances of the project, and supporting schedules comparing actual and planned expenditures. The reports also include cash forecast for the next two quarters
•
Physical progress reports, which include narrative information and output indicators (agreed during project preparation) linking financial
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information with physical progress, and highlight issues that require attention •
Procurement reports, which provide information on the procurement of goods, works, and related services; the selection of consultants; and compliance with agreed procurement methods. The report compares procurement performance against the plan agreed at negotiations or subsequently updated, and highlight key procurement issues such as staffing and building capacity.
FMRs encompass the total project/program, and not just the MDTF financed portion. The currency of the FMRs is that used for maintaining the project/program books of account. 6.5.2
The World Bank The World Bank maintains separate records and ledger accounts in respect of funds deposited by the donors with the World Bank for the MDTFs. Within ninety days of each March 31, June 30, September 30, and December 31, the World Bank prepares on a cash basis, an unaudited statement of receipts, disbursements, and fund balances with respect to each MDTF and forwards a copy to each donor. In addition, the World Bank furnishes the MDTF donors18:
6.5.3
•
On a semi-annual basis, with a consolidated report describing the operations of the MDTF (including contributions, disbursements, and implementation progress) in the preceding six months
•
Every two years, with a management assertion, together with an attestation from the World Bank’s external auditors, concerning the adequacy of internal controls over cash-based financial reporting for the trust funds as a whole.
MDTF Technical Secretariats As Administrators of the MDTFs for Sudan, the World Bank has agreed to furnish to the donors, on a semi-annual basis, a report describing the operations of the MDTFs during the preceding reporting period, including contributions, disbursements, and implementation progress (see Section 4.3.6). The report serves four main objectives:
18
World Bank, (1997), Trust Fund Hand Book, Annex C: paragraph 9
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6.5.4
•
To outline the operational strategy of the MDTFs in the context of the CPA and the JAM Framework
•
To describe the functions and working modalities of the MDTFs, as well as achievements to date of the Technical Secretariats that administer the Trust Funds
•
To keep key stakeholders informed and updated on implementation progress and the sources (including donor pledges and commitments) and uses (allocations and disbursements) of the MDTFs
•
To report critical issues/constraints and how they are to be addressed
•
To establish a written record of MDTF activities and outputs for partners and others with interest in Sudan’s post-conflict recovery and development.
Other institutions Reporting requirements for other institutions such as a UN agency or an NGO are stipulated in the relevant GA or sub-GA. More details on reporting requirements are also provided in Section 7 and 8 of this manual for UN agencies and NGOs respectively.
6.6 Project/program audit Each GA specifies project/program audit arrangements. Typically: •
The recipient is responsible for appointing an independent external auditor acceptable to IDA
•
Audits should be undertaken in accordance with consistently applied auditing standards approved by IDA
•
Project/program financial statements accompanied by an audit opinion should be submitted to IDA within six months after the financial year-end.
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7 United Nations in MDTF implementation 7.1 The role of UN agencies UN agencies, on the basis of their experience in Sudan and elsewhere, are expected and welcomed to contribute to MDTF financed reconstruction and development projects/programs. Sections 4.3.1 and 4.3.2 describe their possible roles during project/program identification and preparation. During implementation they also participate as: •
Direct recipients of MDTF resources especially for grants targeted at political, governance, security and early recovery assistance. One such example is the GA between IDA and the United Nations Development Program (UNDP) for a Capacity Building Project for the Sudan Judiciary
•
Implementing agencies for the recipient through sub-grant agreements. This arrangement also enables the GoNU/GoSS to tap UN agencies’ areas of expertise. For instance, UNOPS provides operations management, contracting, and procurement services for the Sudan 5th Population Census Project under a sub-grant agreement with the Government.
7.2 UN agencies’ operational modalities 7.2.1
Procurement arrangements The World Bank has assessed UN financial management and procurement procedures to be adequate. Against this assessment, goods and services financed by the proceeds of MDTF grants, are procured in accordance with the rules and procedures of the UN agency concerned. This arrangement, noted in the World Bank’s MDTF Board paper of 17 March 2005, implies a waiver of the World Bank’s Operational Policy OP 11.00 which requires that procurement of goods, works, and services financed out of the proceeds of any trust fund administered by the World Bank for activities executed by the beneficiary, should be carried out in accordance with the Procurement and Consultant Guidelines described in Chapter 5 of this manual. In this regard, the GAs signed with implementing UN agencies, both as direct recipients of MDTF resources, and sub-grantees of the GoNU/GoSS, are explicit on the observation of the procurement rules and procedures of the agencies.
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7.2.2
Financial management arrangements The World Bank and the UN signed a Financial Management Framework Agreement (FMFA) which allows the use of own financial regulations and rules. The FMFA requires each contracted UN agency to: •
Ensure it operates adequate financial management systems, including satisfactory records and accounts for transactions related to MDTF activities in accordance with the financial regulations and rules of the United Nations(ST/SGB/2003/7,dated 9 May 2003)
•
Maintain a separate account (the Grant Control Account), and records which contain a complete, true and fair record of all advances from the proceeds of the grant, and all expenditures paid from such advances
•
Prepare unaudited interim financial reports in accordance with accounting standards established pursuant to the UN financial regulations and in a format agreed with the MDTFs’ Administrators
•
Retain all supporting records (contracts, orders, invoices, bills, receipts and other documents), evidencing expenditures in respect of which withdrawals from the grant were made, for a period of at least one year after the World Bank has received the final interim unaudited financial report
•
Notify the World Bank of any changes to UN financial regulations and rules as soon as reasonably possible (within 30 days of their coming into effect). This is to enable the World Bank to check the implications of the change on its ability to fulfil its fiduciary obligation.
The GAs between the MDTFs and UN Agencies are based on an agreed standard language in line with the FMFA provisions. This is well illustrated in the World Food Program (WFP) GA summarised in Section 7.3.1 below. The FMFA refers to UN agencies as direct recipients. However, as all other agreements must meet terms acceptable to the MDTF Administrators, the FMFA’s provisions are likely to be taken on board in sub-grant agreements issued by the GoNU/GoSS. This practice has been adopted for a sub-grant agreement between the GoNU and UNOPS for the 5th Population Census project. In future, UN agencies that want to become signatories to the FMFA, must sign and deliver a written request to the World Bank. The form of letter of acknowledgement and accession is provided in Annex 4 of the FMFA. Sudan Multi Donor Trust Funds
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7.2.3
Audit The audit requirements with respect to UN agencies implementing MDTF funded projects/programs are governed by the UN financial regulations and rules (ST/SGB/2003/7 dated 9 May 2003) and the FMFA. The UN regulations provide for: •
Accounts to be maintained and prepared in compliance with UN system of Accounting Standards (Revision VI dated 21 April 2004), and for the UN General Assembly to appoint a Board of Auditors to perform the external audit
•
UN Board of Auditors to consist of three members, each of whom must be the Auditor General (or officer holding equivalent title) of the member state
•
Audit to be conducted in conformity with generally accepted common auditing standards
•
Audited financial statements to be submitted to the UN General Assembly at its main session.
Based on the UN financial regulations and rules, the World Bank obtains assurance that MDTF proceeds have been used appropriately. It has access to external audit reports from the UN agencies. The World Bank also retains a right to request an independent audit. The FMFA provides procedures to be observed, should the World Bank fail to receive assurance equivalent to what it would have received under World Bank procedures for independent audits.
7.3 UN agency implementation arrangements – some examples This section provides the key features of agreements signed by IDA/Government and WFP, UNOPS and UNDP. The agreement between IDA and WFP is likely to be used as a template for future agreements with other UN agencies that are signatories to the FMFA. 7.3.1
The WFP agreement The grant from MDTF-S to the WFP responds to a specific request from the GoSS. The grant finances emergency road repairs, construction, supervision, maintenance and de-mining activities. This includes: design work; procurement of de-mining contractors; oversight and management of implementation; and a WFP service fee. The key provisions contained in the GA are summarised below. Sudan Multi Donor Trust Funds
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7.3.1.1
Grant disbursements The WFP is required to maintain a separate account, the Grant Account (see Section 3.4). Disbursements from the MDTF-S parent account to this account, are made on the basis of withdrawal applications and any supporting documentation submitted to the IDA on behalf of WFP’s Chief Finance Officer. The GA also stipulates that:
7.3.1.2
•
Prior to 12 months before grant effectiveness, the WFP can incur expenditure up to a limit of US$3 million
•
The grant is to be disbursed in two instalments, one on effectiveness, and the second by 31 December 2006
•
Withdrawals can be suspended on account of non-fulfilment of obligations or if alternative financial management arrangements are not mutually acceptable, or, if the WFP’s financial regulations are assessed to be inaccurate and/or incomplete
•
The GA can be terminated if project implementation has not commenced within six months.
Procurement arrangements The WFP procurement regulations and procedures are observed. In this regard, the WFP is required to: •
Give due regard to economy and efficiency
•
Ensure highest integrity in prevention of fraud and corruption
•
Retain all documentation with respect to the project activities for examination by IDA for a period of up to two years
•
Ensure timely and appropriate action is taken to remedy any corrupt practices in accordance with WFP established procedures, financial regulations and rules and in consultation with IDA. IDA reserves the right to take necessary action in line with the FMFA provisions (clause 9), if dissatisfied
•
Ensure adequate insurance for imported goods up to the place of use or installation
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• 7.3.1.3
Ensure prompt maintenance and repair of facilities relevant to project activities.
Implementation The GA sets out several factors that the WFP needs to take into account during implementation. Factors evolve around ensuring: due diligence and efficiency; timely disbursements; information is readily available to share with IDA and other stakeholders; IDA access to various sites in Southern Sudan; MDTF resources are used for their intended purpose. In addition, to the above, the GA specifies six reports to be submitted to IDA. Reports include: (1) a WFP monthly progress report; (2) supervising company progress reports; (3) de-mining contract monthly reports; (4) progress maps; (5) interim unaudited financial statements (see financial management below); (6) a completion report when the scope of work is complete. The GA provides a standard reporting format to be used for the WFP monthly progress reports.
7.3.1.4
Financial management and audit arrangements The GA allows the WFP to use its own financial regulations (2004 Edition). Furthermore, the agreement requires WFP to:
7.3.2
•
Maintain a record of all advances from the proceeds of the grant, and expenditures incurred from such advances in a grant control account
•
Prepare annual interim unaudited financial reports, in accordance with accounting standards established pursuant to the WFP financial regulations, and in the format agreed with IDA. These are to adequately reflect the operations, resources and expenditures related to the grant activities
•
Retain all records evidencing expenditures in respect of the activities for a minimum of one year after IDA has received the final interim unaudited financial report
•
Ensure the audit of the grant is governed by WFP financial regulations and the FMFA.
UNOPS memorandum of agreement The Memorandum of Agreement (MOA) between the Government and UNOPS covers the procurement of goods and services, construction of government buildings, and provision of logistics advice and operational planning support to Sudan Multi Donor Trust Funds
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assist in the timely delivery of Sudan’s 5th population census. The MOA contains information on the following: UNOPS’s brief; available budget; responsibilities of the GoNU/GoSS agency and UNOPS; reporting requirements/relationships; financial management and audit arrangements. The MOA’s key provisions are as follows. 7.3.2.1
Disbursements Government is required to obtain a no objection before signing the agreement. On signing of the contract, Government issues both IDA and UNOPS with an original and copy respectively, of a blanket application for withdrawal in favour of UNOPS. The Government makes an initial disbursement into an exclusive project account on the basis of a claim made by UNOPS. It makes subsequent disbursements on the basis of withdrawal applications and SOE.
7.3.2.2
Implementation Government maintains overall responsibility for the project. However, unless a variation is made to the MOA, it requires UNOPS to procure goods and undertake civil works within the predetermined budget ceiling and timeframes specified. In this regard, UNOPS is expected to:
7.3.2.3
•
Identify cash requirements and commitments in cash management and commitment control plans respectively
•
Put forward and implement a physical progress plan for monitoring purposes
•
Report on financial and physical progress
•
Brief and obtain strategic guidance from a Project Task Force comprising ministry, donor and MDTF-S representatives.
Procurement arrangements A timebound procurement plan prepared by UNOPS details items and quantities to be procured, and procurement methods to be used. Where the ICB procurement method is applied (see Chapter 5, Table 5.3), UNOPS can use its own standard bidding documents. Further, UNOPS must submit a quarterly procurement report to Government.
7.3.2.4
Financial management The main provisions with respect to financial management are as follows:
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7.3.2.5
•
All financial transactions are recorded in a separate ledger account established for the project, denominated in US dollars
•
UNOPS provides transaction level details, through SOEs in agreed formats and frequency, to the PAA/Project Accountant. UNOPS also submits a cumulative SOE each calendar quarter to the GoNU/GoSS using its standard expenditure report format. The GoNU/GoSS includes the expenditure reported by UNOPS in its financial report to the MDTF Administrator
•
All project related accounts are reconciled with bank statements on a quarterly basis and submitted to the PAA/Project Accountant
•
Any funds received and uncommitted on completion of the services and after payment of agreed UNOPS costs, are promptly refunded to the GoNU/GoSS.
Audit Financial accounts and statements are audited by UNOPS’ internal audit function and the United Nations Board of Auditors. Audits are carried out in accordance with the financial regulations and rules applicable to UNOPS. UNOPS provides the GoNU/GoSS with the audit report on request. Audit reports should be available not less than three months after the annual financial statements are completed, or, seven months after the close of its fiscal year (whichever is earlier). To facilitate effective audit and monitoring, UNOPS co-operates fully with the PAA, MA and the External Audit Agent (EAA) for any reasonable requests for verification of the nature of transactions. The audit arrangements are aligned to the FMFA except for the reference to an ‘EAA’ with respect to co-operation (paragraph 9 of the agreement). No such agent is required as the external audit is conducted by the UN Board of Auditors.
7.3.3
UNDP/MDTF Capacity Building of Sudan Judiciary UNDP is providing technical assistance to the Capacity Building of the Sudan Judiciary project. As part of this project, the UNDP manages MDTF-N funds for three components: (1) Support the National Judicial Service Commission to build capacity in managing an independent and decentralised judicial system; (2) Judicial training at the central and state levels; (3) Rehabilitation of court facilities in selected states. A number of contractors support project implementation. Contractors include
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the International Labour Organisation, construction contractors, management consultants and a Project Support Office. The UNDP/MDTF agreement for the project complies with the Memorandum of Understanding between the World Bank and UNDP of 17 November 2003 which is valid for a period of four years. It is also aligned to the UN procurement arrangements, but not to the financial management provisions in the FMFA. Accounts and audits comply with IDA, rather than UN requirements. Below is a brief description of the key features. 7.3.3.1
Grant disbursements Withdrawal from the grant account is on the basis of reports submitted to IDA which include unaudited quarterly FMRs and other reports that IDA may request (ReportBased-Disbursement). To make the first request, the GA requires UNDP to submit to IDA only a statement with the projected sources and applications of funds for the grant for the six-month period following the date of the request. Withdrawal applications are signed either by the UNDP Resident Representative or an ‘authorised representative’ whose specimen signature must be submitted to IDA with the first application. On receipt of the withdrawal application, IDA withdraws from the grant account and deposits funds into the UNDP deposit account the amount equal to the lesser of the amount requested and the amount it determines on the basis of the supporting reports.
7.3.3.2
Implementation The GA requires UNDP to carry out project activities with due diligence and efficiency, ensure timely disbursements and use of MDTF resources as intended, and provide progress reports to IDA. Also the GA stipulates that the Government and UNDP must establish a Project Executive Board to monitor progress reports, and facilitate IDA mission periodic visits to project sites and facilities.
7.3.3.3
Procurement UNDP applies its own procurement guidelines and procedures for procurement of goods and services for the project. Administration of funds is conducted with due regard to economy and efficiency and the need to uphold the highest standard of integrity in the administration of public funds, including prevention of fraud and corruption. UNDP is required to retain all information with respect to each contract up to two years after the closing date for examination by IDA. On review, IDA would take appropriate action with respect to any cases of fraud, corruption or departure from agreed procurement procedures.
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7.3.3.4
Financial management arrangements UNDP maintains financial management systems including records and accounts, and prepares financial statements in accordance with consistently applied accounting standards acceptable to IDA. UNDP must retain all supporting records (contracts, orders, invoices, bills, receipts and other documents), as evidence of expenditures in respect of which withdrawals from the grant account, are retained for a period of not less than one year after the World Bank receives the final interim unaudited financial report.
7.3.3.5
Audit The GA requires the audit of project accounts to be conducted by independent auditors acceptable to IDA. The audit should be undertaken in accordance with auditing standards acceptable to IDA. Furthermore, the audit report needs to be submitted to IDA within six months of the request for audit. The audit report must include:
7.3.3.6
•
Certified copies of the financial statements by the said auditors, in scope and detail satisfactory to IDA
•
The auditors’ opinion on the statements, in scope and detail satisfactory to IDA
•
Other information on the financial statements and auditors that IDA shall reasonably ask, including for example, a management letter which sets out weaknesses discovered during the audit, and associated remedial actions. The letter should also include the recipient’s comments on issues reported.
Deviation from FMFA The UNDP agreement deviates from the FMFA which allows the UN agencies to observe UN financial regulations and rules with respect to accounts and audits as provided in Section 7.2.
7.3.4
UNDP/MDTF Police and Prisons Support Projects UNDP is likely to receive MDTF-S financing for the police and prisons support projects which constitute part of its “Rule of Law Program” for Southern Sudan. In this regard, the MDTF Board Paper stipulates that as law enforcement is outside the World Bank’s mandate, special procedures need to “be adopted to allow the MDTF
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to finance agreed security-related expenditures…[Furthermore] an organization competent in these areas would be designated to oversee these expenditures19.” In the context of the above, IDA will draw up an agreement with UNDP on financing expenditures related to the two projects. The agreement will cover the following: •
The role of the Bank, which must be strictly confined to that of a fiscal agent
•
The responsibilities of the UNDP. These will probably include: preparation, appraisal, implementation, supervision and monitoring of the projects
•
The role of the OC. Given the nature of these projects, its role is likely to be delimited
•
Eligible and ineligible expenditures.
19
World Bank, (2005), Memorandum of the President of the International Bank for Reconstruction and Development to the Executive Directors on a Proposal for the World Bank to administer Two Multi Donor Trust Funds for Sudan.
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8 NGOs in MDTF implementation 8.1 Context for NGOs participation As indicated earlier in this manual, the MDTFs support sectors and activities that sustain peace in Sudan, as well as, deliver social services in war affected, traditionally neglected and marginalized areas. The MDTFs seek to collaborate and partner with local, national and international NGOs with adequate staff, that have been involved in policy consultations, project/program implementation, advocacy, providing logistical support and service delivery in priority areas. Partnerships with NGOs are amenable to MDTF financing when projects/programs demand one or more of the following attributes: •
Social proximity to the community at the grassroots level
•
Field-based development expertise
•
Important specialised knowledge or skills at the community level
•
The ability to innovate and apply locally adapted solutions
•
The ability to bring grassroots experience to discussions of development on a national scale
•
Participatory methodologies and tools
•
Long-term commitment to, and emphasis on, sustainability
•
Cost-effectiveness.
NGOs participate in MDTF activities at two main levels. Firstly, in thematic groups established by the GoNU/GoSS to discuss, review and define sectoral strategies, policies and programs. Secondly, NGOs participate in MDTF supported projects/programs: (1) as direct recipients (subject to the GoNU’s/GoSS’s endorsement); and (2) in partnership with GoNU/GoSS organisations at a local, state and/or central level. All proposals are submitted in collaboration with, or, via the GoNU/GoSS (see Sections 4.3.2 and 4.3.3). Once a project/program is approved, NGOs can be engaged as consultants, contractors or grant/sub-grant recipients. The next section describes their role as sub-grant recipients and contractors.
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8.2 Guiding principles in engaging NGOs as sub-grant recipients The entry point for implementing NGOs is at the project/program level. It is expected that operational requirements will be specified by the recipient who will remain responsible for the project implementation (see Box 8.1). For instance, NGOs implementing UN Agency grant activities would be expected to adhere to the UN project procedures whilst this may not apply to those contracted by Government Agencies. Irrespective of the project specific considerations, there are some basic principles that need to be adhered to as provided below: •
The recipient, either UN Agency or the Government Agency remains responsible for project implementation and is fully accountable for all MDTF resources extended to the project/program. It is therefore, the recipient’s responsibility to take necessary measures to ensure subgrantees effectively implement project activities and account for the funds in line with the project agreement
•
A project evaluation team with a clear mandate to call, review and approve NGOs’ proposals for project activities should be appointed by the PSC
•
A structured approach should be used to make ‘calls for proposals’ to avoid endless inflows of unsolicited and substandard proposals (see Section 5.5.1). The project should issue clear guidelines for preparation and submission of proposals specifying: date of submission, project objective, geographical coverage minimum qualification requirements, proposal approval date and other relevant information to ensure efficient review of the proposals
•
The project evaluation team must document the outcome of their evaluation, and the reasons for selecting the preferred NGO(s)
•
To the extent possible, regional NGOs should be encouraged to serve as intermediaries to co-ordinate and build capacities of smaller NGOs and CBOs, who can deal effectively with community activities at the grassroots. In this regard, where feasible, NGOS are facilitated to organise meetings to develop proposals in a participatory manner
•
Once proposals are evaluated and a preferred bidder selected, the recipient should enter into legally binding agreement with the qualifying
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NGO(s). Legal agreements specify the outputs to be delivered per the FPP/PAD and a disbursements schedule. It also contains provision for: legal action and recovery of funds where the contract is violated; and access to project records by the recipient. In addition it lists accounting, reporting, procurement, monitoring and audit requirements •
To facilitate effective and efficient monitoring, assessments and reporting, the recipient must develop and disseminate the project’s operational manual to guide coordinators and implementers.
Box 8.1: NGO engagement in the Community Development Fund (CDF) project For the CDF the GoNU channels funds to service providers for the benefit of target beneficiary communities using NGOs and other actors. Funds are used to cover a range of activities including promotion, participatory planning and sub-project preparation and implementation. There are specific contracting arrangements at the planning and implementation stages. For example, in order to be eligible to implement projects, NGOs must submit proposals for a particular sector which meet criteria specified in the project’s operational manual such as the need to: Have clearly written implementation procedures Be officially registered Be established at village level Have at least two years of experience in the proposed sector etc. Source: GoNU, (2006), Community Development Fund Operations Manual
8.3
Minimum operational requirements for NGOs During proposal evaluation and prior to implementation, the MDTFs’ recipients independently assess each NGO against minimum requirements with respect to organisational, financial management, procurement and service delivery. The recipient may offer NGOs support in addressing any exceptions identified.
8.3.1
Organisational arrangements The NGO is expected to be legally established, credible, and well equipped with relevant knowledge and skills. The basic requirements are provided in the Table 8.1 below. Table 8.1: Organisational requirements Requirement
Met? Yes
No
• Legally registered with formal recognition or registration by the relevant authorities • Clear mission and goals, preferably contained in strategic plan • Expertise in specific sector and in support areas (e.g. finance, procurement, M&E etc.) • Well equipped with local knowledge Sudan Multi Donor Trust Funds
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Requirement
Met? Yes
No
• Wide representation in the community • Organisational structure with transparent leadership, clear segregation of duties and decision-making processes • Adequate capacity to discharge contractual obligations • Stable financial standing
8.3.2
Financial management arrangements There may be projects/programs that cater for NGOs to implement agreements/contracts according to their own financial management policies and procedures. To ensure full accountability for the sub-grant, the NGO should have simple but reliable financial management and reporting systems. At a minimum the NGO should have the basic accounting and control features provided in the Table 8.2 below. Table 8.2: Basic financial management requirements Requirement
Met? Yes
No
• Reliable accounting records which adequately address the project requirements • Effective budgeting and budgetary controls to ensure realistic budgets and avoid budget overruns • Proper cash management system to ensure receipts are promptly and accurately accounted for and banked intact • Adequate segregation of duties to ensure effective internal controls and record reconciliations, including timely bank and cash reconciliations • Cash requirements forecasts and timely submission of replenishment requests to avoid project delays • Proper payment controls to ensure adequate verification and avoid multiple payments of invoices • Adequate document filing and storage system to support audits and references • Consistency in recording and classifying of accounting transactions to facilitate efficient data consolidation • Established mechanism to safeguard financial and physical assets • Timely preparation and submission of periodical project reports (financial as well physical progress) • Independent and external auditing arrangements for project funds • Proven financial accountability to external stakeholders • Financial regulations and procedures documented to facilitate independent reviews and provide reference material for staff
8.3.3
Procurement arrangements NGOs are required to have simple but comprehensive procurement regulations and procedures for procuring, receiving, storing and issuing goods/services. The adequacy of these procedures will be gauged against the extent to which the Sudan Multi Donor Trust Funds
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recipient plans to delegate local procurement responsibility. At a minimum the NGOs’ procurement arrangements should meet the criteria included in the Table 8.3 below. Table 8.3: Procurement requirements Requirement
Met? Yes
No
• An efficient procurement planning process • Comprehensive budgets for the procurement activities related to the project • Procedures to select suppliers in a transparent manner • Adequate internal control policies and mechanisms to ensure fair procurement of project goods and services • Efficient administration of supply contracts • Effective goods and service receipt procedures • Secure and efficient storage facilities • Functional inventory record-keeping systems • Effective security systems to prevent theft and product diversion
8.3.4
Service delivery Some NGOs receive MDTF financed sub-grants for service delivery, particularly, in the social sector. For example, the GoSS Umbrella Health Program plans to contract NGOs to “expand service delivery coverage, fill gaps, and assist…in rationalising the existing patchwork of NGO-supported services”20 (e.g. through a basic package for health services). Against this backdrop, Table 8.4 sets out minimal service delivery criteria. Table 8.4: Service delivery requirements Requirement
Met? Yes
No
• Expertise recognised by: • GoNU/GoSS • Donor partners • Other NGOs • NGO has a track record in service delivery in this area • NGO has local knowledge: in terms of formal and informal structures, networks and local values • Can perform a community needs assessment (incl. Identifying problems and solutions) • Collects baseline and trend data • Can mobilise community/communities • Compiles regular progress reports • Able to perform participatory monitoring and evaluation assessments
20
GoSS, (2006), Southern Sudan Umbrella Program for Health System Development, Final Project Proposal
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9 Monitoring and evaluation 9.1 Introduction “Government officials, development managers and civil society are increasingly aware of the value of monitoring and evaluation (M&E) of development activities. M&E provides a better means of learning from past experience, improving service delivery, planning and allocating resources, and demonstrating results as part of accountability to key stakeholders. Yet there is often confusion about what M&E entails”21. This chapter provides some M&E definitions. It also gives an overview of how the M&E system operates in the context of MDTF funded projects/programs.
9.2
M&E definitions According to the OECD’s Development Assistance Committee Working Party on Aid Evaluation22:
9.3
•
Monitoring is defined as: “A continuing function that uses systematic collection of data on specified indicators to provide management and the main stakeholders of an ongoing development intervention with indications of the extent of progress and achievement of objectives and progress in the use of allocated funds”
•
Evaluation is defined as: “The systematic and objective assessment of an on-going or completed project, programme or policy, its design, implementation and results. The aim is to determine the relevance and fulfillment of objectives, development efficiency, effectiveness, impact and sustainability. An evaluation should provide information that is credible and useful, enabling the incorporation of lessons learned into the decision–making process of both recipients and donors”.
Overview of recipient’s monitoring and evaluation activities At the FPP/PAD preparation stage (see Section 4.3.3), the project design team is expected to develop a framework for conducting M&E which with time interfaces with national and sectoral systems. As part of this task, it should consider and provide for measures which ensure that the project/program has adequate: professional capacity to undertake M&E through training, recruitment, technical
21
http://www.worldbank.org/ieg/ecd/me_tools_and_approaches.html
22
OECD, (2002) Glossary of Key Terms in Evaluation and Results Based Management
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assistance, manual development etc.; data collection/quality strategies; coordination with similar initiatives which promote complementarities; and information systems (see Box 9.1). The World Bank Independent Evaluation Group’s website (see http://www.worldbank.org/ieg/ecd/?intcmp=5261691) provides useful guidance in this area. Box 9.1: Extracts from the South Sudan Umbrella Program for Health System Development’s FPP “This component will develop the Ministry of Health’s monitoring and evaluation (M&E) capacity and establish its M&E system, as well as measure the performance of this program itself. It will support technical assistance to the Ministry M&E department, training at the central, state and county levels, and data collection and analysis to evaluate the performance of all the components of the program. Quarterly and semi-annual reviews of the program, depending of the level, will produce reports on findings and recommendations. The year-end review will provide significant input to the Ministry’s plan and budget for the subsequent year of the program. Government will contract a firm/organization to provide technical assistance and training as well as to measure the performance of other contracted agents”.
During implementation, each project/program implementation team monitors and evaluates progress and results against a work plan and results framework. At least once a month, the PIU/PMT team members meet to discuss progress in implementing the detailed work plan developed at the commencement of the project/program (see Section 4.3.6). The specific aims of these meetings are to monitor timeliness in the completion and delivery of scheduled activities and outputs respectively, and highlight exceptions. At these meetings team leaders assigned to implement various components, table a report on for example: •
The proportion of scheduled activities that commenced and were completed on time
•
Planned against actual duration of activities
•
Costs of implementation
•
The specifics of activities that have started or finished late
•
Any problems that they have experienced or anticipate, including, proposed remedial actions
•
Major activities planned for the next month.
In addition to the above, the FPP/PAD contains a simplified results framework, which, sets out the expected linkages between project/program interventions, and the Project’s/Program’s Development Objective (PDO). This framework delineates Sudan Multi Donor Trust Funds
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outcome and output indicators for each PDO and associated intermediate outcomes. Project/program implementers use outcome/output indicators to support effective planning, management and reporting of a project/program. In particular, they provide a basis for collecting evidence which determines whether or not a project/program is achieving its PDO. To avoid collecting redundant, or, an excessive volume of under utilised data, indicators are prioritised to include a manageable set of measures. In particular, indicators should: •
Correspond to the PDO/intermediate outcome/output
•
Be credible
•
Be derived from reliable data that is currently or can be easily collected
•
Be straightforward.
Each indicator is linked to baseline and target values. A baseline value represents the value of the indicator at the outset of, or, prior to implementation of a project/program. The project design team ascertains each baseline through a concerted data collection effort. The team sets a target value only once a baseline is established. Target values provide a basis for monitoring, evaluating and reporting performance over time through the collection of trend data. The PMT/PIU should periodically review targets for reasonableness, and where necessary revise them. The FPP/PAD format requires that arrangements for monitoring and data collection are articulated. Teams responsible for project/program design need to be precise about: how, where and when baseline and trend data is to be collected; and who is responsible for data collation, analysis and preparation. Baseline and trend data are collected through a variety of methods including mining existing data repositories, rapid appraisal methods, surveys, expert panels, key informant interviews, extraction from other data sources, ad hoc studies etc. There are trade-offs associated with the data collection methods above. But the two most important trade-offs are data quality vis-à-vis cost. Formal data collection methods (e.g., large-scale random sample surveys) typically deliver excellent quality data, but, the cost of data collection is high. Informal methods (e.g. key informant interviews) typically produce low quality data but also cost much less.
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Irrespective of which method is used the PMT/PIU is responsible for ensuring that it devotes time to understand the limitations of the data collected, correcting any limitations wherever possible. Moreover, data collection should not just be an end in itself. Rather, the PMT/PIU must examine data collected on a continuous basis to establish whether project/program operations are satisfactory and/or if any modifications are required. The PIU/PMT should provide for a Management Information System (MIS), (preferably a computerised one), which can be used to store baseline, target and trend data, and generate reports. Specific issues to address in developing a MIS include: •
How information is to be reported and disseminated depending on stakeholder needs
•
Reporting formats
•
Internal and external target audiences
•
Frequency of reporting
•
Where the MIS is stored etc.
The PIU/PMT is expected to prepare quarterly reports which specify the activities completed, and outputs and outcomes delivered by the programme highlighting: successes; constraints; and an assessment of whether planned targets will be achieved. The report also presents actual against planned output targets for the quarter on a component by component basis. This analysis will be supported by brief narratives and graphical illustrations. In addition to its own initiatives, during project/program implementation and after completion, the PMT/PIU relys upon the results of qualitative research. In particular, external evaluations (e.g. desk reviews, impact evaluations, participatory assessments etc.) to mitigate any risks associated with not meeting the PDO. To ensure impartiality, the PSC in collaboration with stakeholders, draws on the feedback from World Bank supervision missions (see section 9.5), and/or engages external consultants or institutions to undertake project/program evaluations. The independent evaluators draw on the PMT/PIU generated reports to gauge/advise on one or more issues as follows: •
If the project’s/program’s essential elements are in place
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•
Whether the PDO and other targets are likely to be met (see Table 9.1)
•
Any unexpected developments that have arisen
•
Impact on project/program beneficiaries and whether positive impacts can be sustained
•
Feedback on steps needed to enhance a project/program as implementation progresses.
Table 9.1: Checklist used by the Bank to appraise a project’s/program’s M&E arrangements • Is the PDO expressed as measurable changes in the behavior or condition of the target group? • Are results indicators relevant and measurable? • Do the indicators have baseline values and targets? • Are the PDO and indicators linked to Poverty Reduction Strategy Paper and Country Assistance Strategy objectives? • What are the institutional arrangements for data collection? Source: M&E Checklist from OPCS
9.4
Overview of project monitoring agent’s activities At another level, the Bank has appointed a Monitoring Agent (MA) for each MDTF to determine progress, and compliance with project/program GAs and other agreements. In this regard, the administrative agreement between the Bank and each development partner, contains a provision for “IDA to engage a [MA] to monitor expenditures related to activities financed under the MDTFs” (see Box 9.2). Box 9.2: MA’s role “The responsibilities of the Monitoring Agent will include monitoring the procurement of goods, services and other items, screening and recommending withdrawal applications for IDA’s approval and payment, monitoring all expenditures financed by the Contributions, and pre-screening the financial management capacity of potential Grant Recipients so as to ensure that Contributions are disbursed only for the purposes specified…and according to applicable IDA procedures. To the extent possible, the Monitoring Agent will also proactively seek to strengthen local capacity with respect to the areas of responsibility listed above. However, the role of the Monitoring Agent with respect to expenditures related to activities financed under Grants to United Nations Agencies will be specified in separate arrangements to be entered into between IDA and the concerned United Nations Agency”. Source: Administrative Agreement
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Each project/program GA contains a similar provision, and specifies the recipient’s obligations with respect to reporting and sharing information with the MA. However there are differences. Specifically, for: •
The GoSS/GoNU: the GA expressly states the role of the MA as described in Box 9.2. In addition, GA requires the GoNU/GoSS to “submit to the …[MA], quarterly progress reports and audit reports on Project implementation”
•
UN agencies: the bank considers the UN implementation regulations adequate under normal circumstances and does not require close supervision of activities implemented by the UN Agencies. So for example, the GA between IDA and WFP under the SETIDP (see Section 7.3.1) does not spell out the MA’s role. However, the MOA between the GoSS and UNOPS (see Section 7.3.2) provides for the MA “to monitor the physical implementation of the project”.
In order to reduce fiduciary risks during project/program implementation, the MA has developed fiduciary standards. In summary, fiduciary standards ensure that: (1) expenditure is eligible and within budget; (2) prescribed procurement practices are followed; (3) goods/services/works are delivered to target beneficiaries. In addition to fiduciary standards, by drawing on the information contained in each FPP/PAD, the MA monitors processes, developments and physical outputs for effective and approved projects. The MA’s scope of work includes visits to states to confirm delivery of goods and equipment, and assess the progress in the construction of works. The MA also monitors financial management and procurement processes, and provides feedback on issues and recommends remedial actions. The MA’s findings and recommendations are reported to the MDTF Administrators on a monthly, quarterly and annual basis.
9.5
Overview of Bank’s supervision activities The Bank also supervises implementation of MDTF financed projects/programs. It supervisory role is not limited to official missions and formal reports. It is a continuing and flexible process that is specific to the needs of the particular operation and intended to foster a close partnership between the Bank and GoNU/GoSS/ other project recipients. Supervision can be categorised in two phases. The start-up phase generally begins when the grant is approved and ends at effectiveness, but may overlap with earlier and subsequent phases. The implementation phase spans the execution period of Sudan Multi Donor Trust Funds
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the project/program, ending with project/program completion and Bank/Recipient preparation of the ICM (see Chapter 4, Section 4.3.7). 9.5.1
Supervision at project start-up Once a grant is approved, the TTL updates the Bank’s supervision plan for the next 12 months to be consistent with project/program work plan. In addition, one of his/her team members prepares various reports, including the initial Grant Reporting and Monitoring (GRM), and Audit Reports Compliance System (ARCS) documents. The: •
GRM facility supports grant administration through compliance monitoring of the status of each project’s/program’s implementation. It is web-based, integrated with other World Bank systems and provides a central information repository by period
•
The ARCS “monitors the status of audited financial statements due from borrowers and project implementing entities for all projects under implementation”23.
The TTL also organises a project/program launch workshop to re-emphasise and clarify its key elements, requirements of the GA and Bank/recipient responsibilities. The main aspects covered at each workshop are as follows: •
PDO, components, and expected outputs and outcomes
•
Interagency coordination arrangements
•
Financing arrangements, including the availability and flow of funds
•
Monitoring and evaluation arrangements, including reporting to the Bank
•
Bank social and environmental safeguard policies and arrangements for information disclosure, public consultation, and participation during implementation
•
Bank fiduciary requirements and procedures, including procurement and financial management and disbursement and audit procedures
•
The project work plan and the immediate actions required.
23
See http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/EXTPOLICIES/EXTOPMANUAL/0,,contentMDK:20066617~page PK:64141683~piPK:64141620~theSitePK:502184,00.html Sudan Multi Donor Trust Funds
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9.5.2
Supervision during implementation Supervision is usually most intensive during project/program implementation. At least twice a year, the Bank’s Task Team visits project /program sites. The team and counterpart staff spend the majority of their time: •
Examining issues related to the achievement of the PDO and project/program benefits
•
Reviewing problems related to physical progress and financial status. In this regard, they perform sample reviews of the documentation supporting statements of expenditure, review FMRs, carry out ex-post reviews of procurement, and obtain additional information
•
Assessing implementation quality (particularly the implementation of plans bearing on safeguard policies)
•
Interacting with the staff of implementing agencies, beneficiaries, and as appropriate, UN agencies, donor representatives NGOs and other stakeholders to obtain a broad understanding of project/program implementation and results to date.
When problems are identified (such as failure to comply with legal covenants or safeguard policies), the Task Team (a) helps to develop realistic and workable solutions, and (b) reaches agreement with the recipient on who should take what corrective actions and when. At the completion of the mission, the Task Team prepares an Aide-Memoire, detailing their findings, decisions, recommendations, and remedies agreed jointly with the Recipient. The Aide-Memoire includes a specific and clear program of actions that provides adequate guidance for the recipient. The project/program TTL and, as appropriate, the MDTF Technical Secretariat, MA, and Country Office staff follow up progress made by the recipient in implementing the actions contained in the Aide-Memoire and any subsequent correspondence. PMTs/PIUs are expected to report progress in their quarterly reports. The TTL updates the GRM every six months or whenever there are significant supervision findings. In particular, he/she prepares project/program grant implementation status reports, which rate the status of grant implementation, and document the completion of deliverables and outputs. For each MDTF-funded project/program, the Bank rates seven performance parameters (see Table 9.1). A project/program is awarded a:
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•
Highly Satisfactory (HS) rating for a parameter, when the degree of compliance/systems/arrangements in place is/are in line with best practices
•
Satisfactory (S) rating when there are minor shortcomings which have a negligible effect on operations
•
Moderately Satisfactory (MS) rating if there are moderate shortcomings that do not materially affect operations; and/or are being addressed by the PIU/PMT
•
Moderately Unsatisfactory (MU) rating when there are moderate shortcomings that jeopardize operations, but their resolution is likely
•
Unsatisfactory (U) rating if significant shortcomings have been identified, and their resolution is uncertain
•
Highly Unsatisfactory (HU) rating if major shortcomings have been identified and their resolution is unlikely.
Table 9.1: Rating of performance parameters - illustrated Performance parameter Project 1
Rating Project 2
Project 3 Overall progress rating Achieving grant objective MS MS MS Implementation of grant S U MU Implementation performance rating Project management HS MU S Financial management S HU NR Provision of counterpart funding S MU HU Procurement administration S MU NR Monitoring and evaluation NR NR NR Overall status 2.0 4.3 3.8 Key: 1=Highly Satisfactory (HS); 2=Satisfactory (S); 3=Moderately Satisfactory (MS); 4=Moderately Unsatisfactory (MU) 5=Unsatisfactory (U); 6=Highly Unsatisfactory (HU); NR=Not Rated; NA=Not Applicable Source: GRM
Each of the above ratings has a score assigned to it. Scores range from 1 (for HS) to 6 (for HU). The GRM system aggregates scores for each project’s/program’s parameters and computes an average score, which is referred to as the overall status. So for example, an overall status of 3.8 on project/program indicates that performance, on the whole, ranges between MS and MU, but tends towards MU.
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9.5.3
Mid-term reviews In addition to regular supervision activities and periodic site visits, mid-point in a project’s/program’s life, the Bank together with the recipient and stakeholders, undertakes a comprehensive mid-term review. The review entails a systematic reassessment of the implementation experience to date, progress in achieving the agreed performance indicators, the PDO, its relevance in light of new circumstances, and the likelihood of achieving it. The review may result in modifications to the PDO, components and scope, and/or implementation arrangements.
9.5.4
Trust fund and project/program audits The administrative agreement between IDA and the MDTF donors stipulates that the trust funds’ financial statements must be audited by its external auditors on a biannual basis, and the auditors’ reports shared with each donor. However, should the MDTFs be “scheduled to close within a year of the normally scheduled audit, the audit is deferred until the closing of the trust fund”. In addition to the above, the administrative agreement also provides for donors to request special audits of the trust funds’ financial statements. In such circumstances, the donor and IDA discuss the need for the audit and agree Terms of Reference. Each project’s/program’s GA specifies IDA’s requirements with respect to audits and the retention of records. In this regard, projects/programs need to be audited by independent auditors acceptable to IDA, and using consistent auditing standards. Audits are conducted on an annual basis, and the recipient must ensure that it submits audit reports within six months of the end of the financial year.
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Sudan Multi Donor Trust Funds Operations Manual – Annexes
i
Sudan Multi Donor Trust Funds......................................................................................i Annex A – Forms and reporting formats ................................................................... A1 Annex B – Terms of Reference for Project Accounting Agent................................ B1 Annex C – Terms of Reference for Procurement Agent........................................... C1 Annex D – Terms of Reference for Monitoring Agent .............................................. D1 Annex E – List of key references ................................................................................ E1
ii
Annex A – Forms and reporting formats
A1
Initial Project Proposal South/National Sudan Multi Donor Trust Fund Initial Project Proposal (IPP) _________________________________________________ (Name of Project) ___________________________________ (Date) Cover Sheet
Applicant:
Brief Description:
Project Development Objective:
Sector:
Location:
Total Project Cost:
Implementing Agency (ies):
Implementing Period:
Contact for further information:
A2
Section 1 – Government endorsement
Section 2 – Strategic context, key development issues, rational for MDTF involvement
Section 3 – Proposed project development objective(s)
Section 4 – Preliminary project description and costs
Section 5 – Preliminary institutional arrangements (including procurement and financial management)
Section 6 – Expected outcomes/results
Section 7 – Potential risks and issues to be addressed during preparation and appraisal
Section 8 – Proposed detailed project preparation schedule
A3
Final Project Proposal South/National Sudan Multi Donor Trust Fund Final Project Proposal (FPP) _________________________________________________ (Name of Project) ___________________________________ (Date) Cover Sheet
Applicant:
Brief Description:
Project Development Objective:
Sector:
Location:
Total Project Cost:
Implementing Agency (ies):
Implementing Period:
Contact for further information:
A4
Section 1 – Strategic context and rational (a) Key development issues
(b) Rational for MDTF involvement
Section 2 – Project description (a) Project development objective and key performance indicators
(b) Project components
(c) Project cost by component
Section 3 – Implementation (a) Institutional and implementation arrangements
(b) Procurement arrangements
(c) Financial management arrangements
(d) Monitoring and reporting
(e) Sustainability and critical risks
Section 4 – Social issues
Section 5 – Environmental issues
A5
Section 6 – Staffing issues and key consultants/advisors (a) Status of key staff in PIU/PMU
(b) Status of critical consultants / technical advisors (without whom project implementation cannot be commenced)
Section 7 – Comprehensive assessment of risks, mitigating actions already taken and residual risks (only those in hand or what will be in hand by negotiations)
Section 8 – First year’s detailed work program
Section 9 – Conditions of negotiations, effectiveness and disbursement
A6
Annexes
Annex 1 – Detailed implementation arrangements
Annex 2 – Project / Program costs
Annex 3 – Initial implementation plan
Annex 4 – Procurement assessment, arrangements, and initial procurement plan
Annex 5 – Detailed financial management arrangements
Annex 6 – Economic and financial analysis
Annex 7 – Social and environmental safeguards policies
Annex 8 – Government letters of endorsement
Annex 9 – MDG indicators, South/National Sudan
Annex 10 – Facilities related to the projects in South/National Sudan e.g. Health facilities
Annex 11 – Detailed description of project components
Annex 12 – Letter of sector development policy
A7
Procurement Plan Works and Goods Project/Program: ________________________________________________________________________________ Grant No.:______________________________________________________________________________________ Basic Data
No. Description Package Number
01 02 03 04 05 06 07 08 09
Lot Lumpsum Procurement Estimated Pre or Post Prior or Amount in Qualification Post Number or Bill of Method US$ Review Quantities
Draft bid documents, including specification and quantities Plan Preparation NoAdvertisement vs. and Objection Online, UNDB, Actual Submission Date National Press by Plan
Bidding period
Bid Invitation Date
Bid evaluation
Contract finalisation
Bid Submission NoContract Date of Date of Closing Bid Objection Amount in Contract Contract US$ Award Signature Date Evaluation Date Report
Actual Plan Actual Plan Actual Plan Actual Plan Actual Plan Actual Plan Actual Plan Actual Plan Actual Plan
10
Actual Actual Actual
A8
Consultants Project/Program: ________________________________________________________________________________ Grant No.:______________________________________________________________________________________ No.
Description
Selection Method
01
Contract type Lump-Sum or TimeBased
Estimated Amount in US$
Prior / Post Review
Plan vs. Actual Plan
Preparation Request for EOI RFP (when required) Preparation & No-objection Date Lead Time Submission Date Published Before by Shortlist
Short list Submission No-objection Date Date
Invitation Submission Date Opening Date
Actual Plan
02
Actual Plan
03
Actual Plan
04
Actual Plan
05
Actual
Con’d… No.
01 02 03 04 05
Description
Plan vs. Actual
Proposal evaluation Technical (T) and Financial (F) Submission No-Objection Opening Submission Evaluation Evaluation (F) Evaluation Report (T) Report (T) report (T) (F)
Negotiations No-objection Negotiations Evaluation Report (T) (F)
Submission Draft Contract
Contract finalisation No-objection Negotiations
Contract Amount in US$
Contract Award
Contract Signature
Plan Actual Plan Actual Plan Actual Plan Actual Plan Actual
A9
Financial Management Questionnaire Summary Risk Assessment Project : ____________________________________________________________ Date: ______________________________________________________________ Key:
H – High
S – Substantial
M – Moderate
N – Negligible or Low
Risk Assessment H
S
M
N
Comments
Inherent Risk [list specific country, entity, and project inherent risks]
Overall Inherent Risk Control Risk 1. Implementing Entity 2. Funds Flow 3. Staffing 4. Accounting Policies and Procedures 5. Internal Audit 6. External Audit 7. Reporting and Monitoring 8. Information Systems Overall Control Risk
A10
Project: __________________________________________________________ Self-Assessment completed by: _______________________________________
Date: ______________________
Bank Review / Assessment completed by: _______________________________
Date: ______________________
Note: If there is more than one implementing entity, a Questionnaire should be completed for each entity Topic
1.Implementing Entity 1.1 What is the legal status/registration of the entity? 1.2 Has the entity implemented a Bank-financed project in the past? 1.3 What are the statutory reporting requirements for the entity? 1.4 Is the governing body for the project independent? 1.5 Is the organizational structure appropriate for the needs of the project? Risk Assessment (Implementing Entity) 2. Funds Flow 2.1 Describe the funds flow arrangements, including a chart and explanation of the flow of funds from the World Bank, government, and other financiers. 2.2 Are the arrangements to transfer the proceeds of the loan (from the government/ministry of finance) to the entity satisfactory? 2.3 Have there been major problems in the past in receipt of funds by the entity? 2.4 In which bank will the Special Account be opened? 2.5 Does the PIU have experience in the management of disbursements from the World Bank?
Yes
No
N/A
H
S
M
Yes
No
N/A
Review *
Remarks/Comments
N Review *
A11
Topic
Yes
No
N/A
H
S
M
Yes
No
N/A
Review *
Remarks/Comments
2.7 Does the entity have/need a capacity to manage foreign exchange risks? 2.8 How are the counterpart funds accessed? 2.9 How are payments made from the counterpart funds? 2.10 If part of the project is implemented by communities or NGOs, does PIU have the necessary reporting and monitoring features built into its systems to track the use of project proceeds by such agencies? 2.11 Are the beneficiaries required to contribute to project costs? If beneficiaries have an option to contribute in kind (in the form of labor), are proper guidelines formulated to record and value the labor contribution? Risk Assessment (Funds Flow)
3. Staffing
N Review *
3.1 What is the organizational structure of the accounting department? Attach an organization chart. 3.2 Identify the accounts staff, including job title, responsibilities, educational background, and professional experience. Attach job descriptions and CVs of key accounting staff. 3.3 Is the project finance and accounts function staffed adequately? 3.4 Is the finance and accounts staff adequately qualified and experienced? 3.5 Is the project accounts and finance staff trained in Bank procedures? 3.6 What is the duration of the contract with the finance and accounts staff? A12
Topic
Yes
No
N/A
H
S
M
Yes
No
N/A
Review *
Remarks/Comments
3.7 Indicate key positions not contracted yet, and the estimated date of appointment. 3.10 Does the project have written position descriptions that clearly define duties, responsibilities, lines of supervision, and limits of authority for all of the officers, managers, and staff ? 3.11 At what frequency is the staff transferred? 3.12 What is training policy for the finance and accounting staff? Risk Assessment (Staffing)
4. Accounting Policies and Procedures
N Review *
4.1 Does the entity have an accounting system that allows for the proper recording of project financial transactions, including the allocation of expenditures in accordance with the respective components, disbursement categories, and sources of funds? Will the project use the entity accounting system? 4.2 Are controls in place concerning the preparation and approval of transactions, ensuring that all transactions are correctly made and adequately explained? 4.3 Is the chart of accounts adequate to properly account for and report on project activities and disbursement categories? 4.4 Are cost allocations to the various funding sources made accurately and in accordance with established agreements? 4.5 Are the General Ledger and subsidiary ledgers reconciled and in balance? 4.6 Are all accounting and supporting documents retained on a permanent basis in a defined system that allows authorized users easy access? A13
Topic
Yes
No
N/A
Review *
Remarks/Comments
Segregation of Duties
4.7 Are the following functional responsibilities performed by different units or persons: (a) authorization to execute a transaction; (b) recording of the transaction; and (c) custody of assets involved in the transaction? 4.8 Are the functions of ordering, receiving, accounting for, and paying for goods and services appropriately segregated? 4.9 Are bank reconciliations prepared by someone other than those who make or approve payments? Budgeting System
4.10 Do the budgets lay down physical and financial targets? 4.11 Are budgets prepared for all significant activities in sufficient detail to provide a meaningful tool with which to monitor subsequent performance? 4.12 Are actual expenditures compared to the budget with reasonable frequency, and explanations required for significant variations from the budget? 4.13 Are approvals for variations from the budget required in advance or after the fact? 4.14 Who is responsible for preparation and approval of budgets? 4.15 Are procedures in place to plan project activities, collect information from the units in charge of the different components, and prepare the budgets? 4.16 Are the project plans and budgets of project activities realistic, based on valid assumptions, and developed by knowledgeable individuals?
A14
Topic Payments
Yes
No
N/A
Review *
Remarks/Comments
4.17 Do invoice processing procedures provide for: • Copies of purchase orders and receiving reports to be obtained directly from issuing departments? • Comparison of invoice quantities, prices, and terms, with those indicated on the purchase order and with records of goods actually received? • Comparison of invoice quantities with those indicated on the receiving reports? • Checking the accuracy of calculations? 4.18 Are all invoices stamped PAID, dated, reviewed and approved, and clearly marked for account code assignment? 4.19 Do controls exist for the preparation of the payroll and are changes to the payroll properly authorized? Policies And Procedures
4.20 What is the basis of accounting (e.g., cash, accrual)? 4.21 What accounting standards are followed? 4.22 Does the project have an adequate policies and procedures manual to guide activities and ensure staff accountability? 4.23 Is the accounting policy and procedure manual updated for the project activities? 4.24 Do procedures exist to ensure that only authorized persons can alter or establish a new accounting principle, policy, or procedure to be used by the entity? A15
Topic
Yes
No
N/A
Review *
Remarks/Comments
4.25 Are there written policies and procedures covering all routine financial management and related administrative activities? 4.26 Do policies and procedures clearly define conflict of interest and related party transactions (real and apparent) and provide safeguards to protect the organization from them? 4.27 Are manuals distributed to appropriate personnel? Cash and Bank
4.28 Are there any project bank accounts opened yet? 4.29 Indicate names and positions of authorized signatories in the bank accounts. 4.30 Does the project maintain an adequate, up-todate cash book, recording receipts and payments? 4.31 Do controls exist for the collection, timely deposit, and recording of receipts at each collection location? 4.32 Are bank and cash reconciled on a monthly basis? 4.33 Are all unusual items on the bank reconciliation reviewed and approved by a responsible official? 4.34 Are all receipts deposited on a timely basis? Safeguard over Assets
4.35 Is there a system of adequate safeguards to protect assets from fraud, waste, and abuse? 4.36 Are subsidiary records of fixed assets and stocks kept up to date and reconciled with control accounts? 4.38 Are there periodic physical inventories of fixed assets and stocks? A16
Topic
Yes
No
N/A
H
S
M
Review *
Remarks/Comments
4.39 Are assets sufficiently covered by insurance policies? Other Offices and Implementing Entities
4.40 Are there any other regional offices or executing entities participating in implementation? 4.41 Has the project established controls and procedures for flow of funds, financial information, accountability, and audits in relation to the other offices or entities? 4.42 Does information among the different offices/implementing agencies flow in an accurate and timely fashion? 4.43 Are periodic reconciliations performed among the different offices/implementing agencies? Other
4.44 Has the project advised employees, beneficiaries, and other recipients to whom to report if they suspect fraud, waste, or misuse of project resources or property? Risk Assessment (Accounting Policies and Procedures)
N
5. Internal Audit
5.1 Is there a internal audit department in the entity? 5.2 What are the qualifications and experience of audit department staff? 5.3 To whom does the internal auditor report? 5.4 Will the internal audit department include the project in its work program? 5.5 Are actions taken on the internal audit findings? A17
Topic Risk Assessment (Internal Audit)
Yes H
No S
N/A M
H
S
M
Review * N
Remarks/Comments
6. External Audit
6.1 Is the entity financial statement audited regularly by an independent auditor? Who is the auditor? 6.2 Are there any delays in audit of the entity? When are the audit reports issued? 6.3 Is the audit of the entity conducted according to the International Standards on Auditing? 6.4 Were there any major accountability issues brought out in the audit report of the past three years? 6.5 Will the entity auditor audit the project accounts or will a separate auditor will be appointed to audit the project financial statements? 6.6 Are there any recommendations made by the auditors in prior audit reports or management letters that have not yet been implemented? 6.7 Is the project subject to any kind of audit from an independent governmental entity (e.g., the supreme audit institution) in addition to the external audit? 6.8 Has the project prepared acceptable terms of reference for an annual project audit? Risk Assessment (External Audit)
N
7. Reporting and Monitoring
7.1 Are financial statements prepared for the entity? In accordance with which accounting standards? 7.2 Are financial statements prepared for the implementing unit? 7.3 What is the frequency of preparation of financial statements? Are the reports prepared in a timely fashion so as to useful to management for decision making? A18
Topic
Yes
No
N/A
Review *
H
S
M
N
H
S
M
N
Remarks/Comments
7.4 Does the reporting system need to be adapted to report on the project components? 7.5 Does the reporting system have the capacity to link the financial information with the project’s physical progress? If separate systems are used to gather and compile physical data, what controls are in place to reduce the risk that the physical data may not synchronize with the financial data? 7.6 Does the project have established financial management reporting responsibilities that specify what reports are to be prepared, what they are to contain, and how they are to be used? 7.7 Are financial management reports used by management? 7.8 Do the financial reports compare actual expenditures with budgeted and programmed allocations? 7.9 Are financial reports prepared directly by the automated accounting system or are they prepared by spreadsheets or some other means? Risk Assessment (Monitoring and Reporting) 8.Information Systems
8.1 Is the financial management system computerized? 8.2 Can the system produce the necessary project financial reports? 8.3 Is the staff adequately trained to maintain the system? 8.4 Does the management organization and processing system safeguard the confidentiality, integrity, and availability of the data? Risk Assessment (Monitoring and Reporting)
A19
Financial Management Report
South/National Sudan Multi Donor Trust Fund Quarterly Progress Report _________________________________________________ (Name of Project) ___________________________________ (Date) Contents Executive Summary Provide an executive summary of the report including the project/programme: •
Highlights and successes
•
Key performance indicators
•
Constraints
Section 1 - Introduction Provide an introduction and purpose of the report by providing: •
Details of the period covered by the report
•
Brief details of the purpose of the report e.g. what is the focus of the report and what users should expect out of the report
•
Details of the layout of the report e.g. how many sections are there in the report and what each section deals with
Section 2 - Highlights Project/program highlights: •
Provide details of activities that have successfully been completed and outputs that have been delivered with the period. This can be presented in a tabular format with details of specific activities completed under each component
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Constraints and issues: •
Provide details of any constraints affecting the achievement of the project/program objectives and other issues affecting the project/program implementation such as changes in policies etc.
Section 3 – Component details Introduction: •
Indicate whether all components are covered
Components: •
For each component in consideration, provide a narrative of its status and details pertaining to the position of its planned and actual targets
Section 4 – Implementation Introduction: •
Provide an introduction for the section in terms of what it covers etc.
Scheduling: •
Provide details of project’s/program’s schedule of implementation i.e. whether the project/program is on or behind schedule
Financial management: •
Provide details with regards to bank accounts opened, applications for withdrawals made, amounts disbursed by MDTF and Government, expenditure incurred, payments made etc.
Procurement: •
Provide details of various procurement activities, describing its status, progress etc
Others: •
Provide details of various meetings held, such as the regular project progress meeting, joint missions etc.
•
Provide details of key internal events that occurred during the period e.g. whether PIM has been completed or not etc.
A21
Section 5 – Next steps •
Provide a plan of activities for the next quarter
•
Financial report
•
Physical progress report
•
Procurement report.
Annex:
A22
Financial Report Sources and Uses of Fund Receipts Date
Sources of funds
Reference
Amount US$
Total receipts Payments Date Payee / transfer to Reference
SDD
Amount US$
SDD
Total payments Balance
Expenditure Report Component Activity
Budget US$ / SDD
Actual US$ / SDD
Variance Amount %
Remarks
Total
A23
Physical Progress Report Activity completion status Activity M1
% complete M2
Remarks M3
Output delivery status Output
Planned target
Actual target (this quarter)
Variance
Actual target (last quarter)
A24
Procurement Report Part 1 Descriptive Summary: ……………………………………………………………………………………………………… ……………………………………………………………………………………………………… ……………………………………………………………………………………………………… 1. Procurement staffing: ……………………………………………………………………………………………………… ……………………………………………………………………………………………………… ……………………………………………………………………………………………………… 2. Complaints by bidders, constraints, how complaints were resolved, time taken to resolve complaints, and any pending complaints/issues: ……………………………………………………………………………………………………… ……………………………………………………………………………………………………… ……………………………………………………………………………………………………… 3. Contract amendments, variation order: ……………………………………………………………………………………………………… ……………………………………………………………………………………………………… ……………………………………………………………………………………………………… 4. Unsatisfactory performance by contractors/ suppliers/ consultants: ……………………………………………………………………………………………………… ……………………………………………………………………………………………………… ……………………………………………………………………………………………………… 5. Disputes which may lead to contractual claims, cancellation of contracts, arbitration or legal remedies: ……………………………………………………………………………………………………… ……………………………………………………………………………………………………… ………………………………………………………………………………………………………
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Part 2 Procurement of Consultants: Ref No. Project/Program Description Cost Estimate Selection method Prior / Post Review Plan
Actual
Plan
Actual
Plan
Actual
Plan
Actual
Plan
Actual
Plan
Actual
Start Document Preparation Advertise Bid Invitation Bid Opening Evaluation Complete No Objection Contract Signed Final Delivery Contract Amount Supplier Name
Procurement of Goods/Works: Ref No. Project/Program Description Cost Estimate Selection method P-Q Domestic Preference Prior / Post Review Start Document Preparation Advertise Bid Invitation Bid Opening Evaluation Complete No Objection Contract Signed Final Delivery Contract Amount Supplier Name
A26
Annex B – Terms of Reference for Project Accounting Agent
B1
Terms of Reference for Project Accounting Agent
To be the Project Accounting Agent (PAA) based in the Treasury of the Ministry of Finance and Economic Planning (MoFEP) and to take fiduciary responsibility for all projects funded by the Multi Donor Trust Fund (MDTF) as well as through counter part funds. The PAA would form part of the Project Disbursement Unit (PDU) of the Treasury of the Government of South Sudan (GoSS). The PAA would be responsible for ensuring that all project accounting activities are in strict compliance with •
The requirements of the Grant Agreement between the MDTF and the GoSS
•
The Project Implementation Manual (PIM) for the projects which is based on appropriate financial management best practice and international accounting standards.
The key responsibilities of the PAA will be the following: 1
2
Accounting 1.1
Review the financial management organisation and procedures applying to project receipts and payments, and ensure that project funds are used for the purposes intended, in an open and transparent manner; ensure the project managers are aware of risks arising from any weaknesses in the internal control system, and take steps to minimise the risks
1.2
Prepare and issue the PIM after having obtained approval form the MDTF. The PIM would specify the service standards to be maintained by the PAA. This would be formalised into a Memorandum of Understanding (MOU) between PAA and project implementing agencies. The PAA would also be required to issue such supplements to the PIM as may be necessary to meet the requirements of the sector specific projects that are currently under preparation such as the infrastructure, health, education and census projects
1.3
Ensure that the project’s classification system in compatible with the needs of projects’ management, the MDTF, the GoSS chart of accounts and IMF reporting of Government Financial Statistics, and that it is capable of clear and timely disclosure of project costs by components agreed on by the implementing agencies and MDTF, and operating costs analysed in enough detail to provide control of incremental budget expenditure. It should provide the basis for all claims for withdrawal from Project Accounts and the MDTF.
Reporting 2.1
Have quarterly Financial Monitoring Reports (FMR) (all four statements for each FMR) prepared, co-signed by the Project Manager, and sent to the
B2
implementing agencies’ Chief Accountant, Monitoring Agent, and MoFEP within 45 days of the end of each quarter
3
2.2
Determine what assistance will be provided to the project in kind (non-cash), and set up procedures to capture data on its cost and include its cost in the accounts
2.3
Provide reasonable financial management reports from the accounting software (Free Balance) to the implementing ministries as may be requested by the ministry officials to enable them to budget and monitor the implementation of projects’ activities
2.4
Provide detailed monthly reports regarding all aspects of PAA operations, acceptable to MDTF, that would be in he public domain
2.5
Prepare the formats for collection of data from donors on aid flow. Utilise the aid management features of the Free Balance package to monitor the channelling and utilisation of all donor resources to projects in South Sudan (viz. all external resources including the ones provided by MDTF).
Internal Controls 3.1
Implement and ensure compliance by implementing agencies and the staff of the PAA with procedures that will be documented in the financial management manual and approved by the World Bank. Report noncompliance to the Project Manager and the Monitoring Agent
3.2
Ensure the checking on receipt and safe custody of security documents such as check books, bid securities and official receipt books
3.3
Ensure that all financial documents relating to the projects (cash books, ledgers, registers, payrolls, bank statements, invoices, counterfoil receipts, and other vouchers) are retained by the PAA and implementing agencies and are available for inspection by external auditors and Monitoring Agent personnel as they may require. Such documents shall be filed and stored in a manner that facilitates retrieval by external auditors, Monitoring Agent, and World Bank supervision missions
3.4
Maintain a loose-leaf or computerised asset register showing the quantity and details of each type of asset held by the projects; ensure that appropriate entries are made in the asset register whenever assets are acquired, moved or disposed off; ensure that assets (such as vehicles) are insured in accordance with government policy; ensure that all physical assets are independently inspected at least once a year, and that their ownership, existence and condition is checked against the projects’ asset register; report results of inspection to the Project Manager, and the MDTF Secretariat. Regularly reconcile the projects’ asset register with projects’ assets nominal ledgers B3
4
3.5
Jointly with Project Managers, authorise payroll changes (additions and subtractions) where these are legitimate
3.6
Independently verify all payroll calculations
3.7
Maintain a receipts cash book and a payments cashbook, ensuring that they are written up daily with the details of receipts and payments
3.8
Maintain a general ledger, and a subsidiary ledger for each project component, and ensure that subsidiary ledgers remain in agreement with the respective accounts in the general ledger, and that the general ledger is in overall balance
3.9
Implement the project accounting system in a computerised environment, using the Free Balance IFMIS system that has been procured by MoFEP
3.10
At least monthly, for each bank account operated by the projects, ensure that a bank reconciliation is made and that differences are followed up and satisfactorily explained; attach copies of the bank reconciliation statements to withdrawal applications and FMRs
3.11
Ensure that all contracts and other commitments of MDTF funds are promptly entered in a running commitment control record so that the uncommitted / unspent balance on each activity and line item is readily known at any time
3.12
Ensure that effective control processes are in place. Circulate copies of internal audit reports to the Monitoring Agent, GoSS, and the MDTF Secretariat. Cooperate fully with the Monitoring Agent to ensure the effective functioning of the tasks assigned to the Monitoring Agent
3.13
Ensure that adequate fiduciary arrangements and systems are in place for the operation of the sub-treasury in the Ministry of Transport and Roads, and Ministry of Lands, Housing and Public Utilities (called the Infrastructure SubTreasury (IST)), and such other sub-treasuries as would be established. Fiduciary assurance regarding the use of MDTF and GoSS counterpart funds handled by the sub-treasuries would continue to remain that of the PAA.
Budgeting 4.1
Ensure that the annual budget for projects is prepared in accordance with the requirements of the GoSS, including the particular requirements of the MoFEP and the MDTF
4.2
Investigate any significant variances between the budget allocations and actual expenditures that are due to financial causes such as variation in prices or in the timing of payments; include the results of this analysis in the FMR each quarter B4
4.3
5
6
Initiate requests and provide justification for variations of the authorised project budget where this appears necessary.
Funds flow 5.1
With the approval of the Project Managers and MoFEP, open bank accounts as necessary
5.2
Jointly with Project Managers (or as authorised by the heads of the implementing agencies), sign checks for payments where the payment process has been fully and satisfactorily completed
5.3
Ensure that contractors and other agencies involved in the implementation of projects’ activities are paid within the time stipulated in the financial procedures manual
5.4
Prepare Withdrawal Applications and submit them as necessary to the Monitoring Agent and MDTF Secretariat, and follow them up to ensure timely receipt of funds (avoid delays in projects’ payments because of delays in preparing and sending withdrawal applications).
External Audit 6.1
Prepare annual financial statements of the project within three months of the end of the financial year according to accounting standards acceptable to the MDTF, and submit them through the Project Manager to the Chief Accountant of the implementing agency, Monitoring Agent, and the MoFEP
6.2
Cooperate with external auditors in the course of their audit; respond to Project Managers, and MDTF Secretariat on any queries raised or criticisms made by the external auditors, and ensure that errors and weaknesses are rectified (management letter issues are addressed promptly).
B5
Annex C – Terms of Reference for Procurement Agent
C1
Terms of Reference for Procurement Agent
Background information 1
Sudan has experienced a devastating civil war in the last twenty-one years. During the war years, more specifically on Southern Sudan, the major part of any available funds went to payments of salaries and war effort. There was little operational and development budget as evidenced by lack of a sound civil service structure and infrastructure (e.g. schools, public buildings, water and sanitation facilities, power and communications networks, health clinics, roads, etc.). The historic Comprehensive Peace Agreement (CPA) signed between the Government of Sudan and Sudan Peoples Liberation Movement (SPLM) on January 9, 2005 marks the end of the 21 year civil war and augurs a new era of peace, reconstruction and development for Sudan. The signed Peace Agreement calls for a 6 year interim period during which the parties to the CPA agreed on a reconstruction and development program
2
The UN, the World Bank, the Government of Sudan and the SPLM formed a Joint Assessment Mission (JAM) which prepared a “Framework for Sustained Peace, Development and Poverty Reduction (March 2005)”. This document establishes reconstruction and development requirements for the Sudan as envisaged in the Peace Agreement. The Peace Agreement includes a wealth sharing protocol which will transfer substantial amounts of oil and non-oil revenues to SPLM. In order to assist in the financing of reconstruction and development, Donors have agreed to contribute funds into two separate Multi Donor Trust Funds (MDTF), one for the North and the other for the South. Moreover, the parties have asked the World Bank to be administrator of the MDTF funds
3
The JAM identified public procurement system in Southern Sudan as non existent. Since the major part of the country’s budget went to war effort, there was little or no room for developmental financing that would generate procurement of goods, works and services. The Civil service itself is very weak and would be developed from a very low base. There are no official procurement procedures, institutional framework and capacity to support procurement under the SPLM-led administration. Other constraints that would affect procurement include: (i) severe lack of communications (postal and telecommunication services), (ii) physical infrastructure, (iii) limited media (e.g., to advertise), (iv) lack of local suppliers in the private sector and (v) a supporting regulatory environment (e.g., customs, banking) that has barely started to emerge. As these constraints will affect the GOSS absorption capacity in the early days of the reconstruction and development program, JAM recommended – as an initial interim measure - centrally managed procurement. As soon as a more comprehensive procurement system is put in place and capacity of government entities is built, the next step will be to phase out the centralized
C2
arrangements and transfer the procurement responsibility to line ministries and other decentralized arms of Government 4
JAM concluded that Southern Sudan would require assistance to build capacity in public procurement systems as well as to carry out procurement tasks under programs financed by Government and the MDTF funds. The Challenge for the Donors and the GOSS is to put in place mechanisms that will ensure that programs will be developed and implemented in a credible manner to ensure Government and Donor resources are used properly (achieve value for money) for the intended purposes with due care to economy and efficiency. Such mechanisms must also guard against the highly potential risk of corruption which could scheme off a lot of public funds and undermine the reconstruction and development programs
5
The desired situation in 2010 will be a culture of procurement based on transparency, efficiency and economy. There will be a system for regularly measuring performance and compliance, in addition to mechanisms to provide losing bidders and aggrieved citizens an effective way to submit protests. It is expected that in 2010, good governance in Southern Sudan will include sound public procurement policies and practices. Public procurement will be supported by a legal framework meeting international standards and in compliance with regional community agreements, covering all contracts using public funds (including concessions). Procurement will be decentralized appropriately to line ministries which will have demonstrated their procurement competencies while capacity building efforts would continue for others. The regulatory and control functions will be in place to measure performance and compliance. The growing private sector will have gained capacity in meeting the needs of public procurement and will operate in a fair environment.
Other Agents working for GoSS 6
The GOSS would be the focal point for implementation of the program financed by the MDTF. Since the Government capacity is low, GOSS will establish a Program Implementation Agent (PIA) as part of the Ministry of Finance. The PIA would not be involved in policy or in project implementation. The PIA would oversee the implementation of the MDTF-financed program and generally help create an enabling environment for efficient management of projects to be funded out of the MDTF. The PIA would also define the procedures that sector ministries and other technical agencies would follow to prepare and present proposals for consideration and financing under the MDTF
7
The World Bank as Administrator of the MDTF will establish a Monitoring Agent for recommending withdrawal applications, monitoring the procurement of goods, works and services, and monitoring expenditures out of the MDTFs to ensure that funds are disbursed only for the purpose intended and in accordance with acceptable accounting, financial reporting and auditing standards. The Agent will also provide technical assistance to the GOSS to help build its own capacity in the procurement and financial management areas. C3
The Monitoring Agent will report to the Bank and be responsible for: (i) prescreening and supporting the Bank in monitoring the procurement of goods, works and services ; (ii) pre-screening and recommending withdrawal applications for the Bank’s approval and payment and ensuring that reimbursements claimed are consistent with the Grant Agreement and eligibility criteria; (iii) supporting the Bank in monitoring all expenditures financed from the MDTFs and ensuring that funds are disbursed for the purposes provided; (iv) pre-screening the financial management capacity of potential grant recipients; and (v) monitoring the progress of the grant recipients in achieving fiduciary benchmarks. Establishing a sound procurement system 8
Procurement system will be installed in two phases. Phase one: as an interim measure a Procurement Unit will be put in place to carry out procurement tasks. The SPLM has recognized the importance of procurement in the delivery of the reconstruction program and has already initiated some actions. KPMG has been recruited to implement the UNICEF Capacity Building Trust Fund (CBTF) which includes procurement. The Secretariat of Finance and Economic Planning (SOFEP) has employed a Procurement Specialist to start establishing a Procurement Unit in the Ministry
9
An Advisory Unit1 will be established to act initially as the regulatory body. It will develop the procurement policy for the short and long term, carry out performance audit, prepare a capacity building plan and provide guidance to the Procurement Unit. It will progressively transfer all its functions to a main Regulatory body which will be created via procurement legislation. The regulatory procurement unit will prepare interim procurement procedures (including supporting manuals and bidding documents) and a Procurement Capacity Building Strategy with the objective of creating procurement skills, mechanisms for oversight and building capacity of national training institutions in providing procurement training. An assessment will be carried out at the end of the first two years to evaluate progress made and enable determination of Phase 2. The assessment will identify priority ministries which will be the first to be equipped and trained to conduct their own procurement. The Regulatory Unit and Donors will monitor procurement performance and compliance
10
1
Phase two will entail mainly continued implementation of systems designed in Phase one. Procurement function will be decentralized appropriately to line ministries and other decentralized arms of Government which will have demonstrated their procurement competencies. The Government will focus on developing a legal framework alongside the establishment of a Civil Service in Southern Sudan. The main activity will be preparing a procurement legislation, establishing the institutions created by a procurement legislation, and building
Under a separate contract financed by the LICUS TF, a Procurement specialist will be contracted to assist GOSS move in the direction of establishing an advisory procurement unit and preparation of a long term legal framework for public procurement. C4
procurement capacity at all levels. There will be gradual transfer of the procurement responsibility to decentralized entities. The Rationale for a Procurement Advisor 11
Given the non-existence of procurement capacity in Southern Sudan, a Procurement Agent (as indicated above) will be needed to carry out the procurement tasks for programs to be financed by Government and MDTF resources. The Agent will also build procurement capacity and provide Government and Donors, as well as the bidding community with assurance that procurement would be carried out in a sound (responsible, accountable and transparent) manner, which would avoid actual and perceived procurementrelated corruption. This assurance is critical for Southern Sudan.
Objectives of the Assignment 12
The objectives of the assignment are to put in place procurement capacity in order to facilitate rapid and transparent utilization of Government and donor resources for reconstruction and development. The Agent will carry out procurement on behalf of Line Ministries and other public agencies following the guidelines of funding agencies, for all goods, works and services under operations financed by Government as well as by Donors. The Agent will build local procurement capacity in order to enable the Line Ministries and other public agencies progressively carry out procurement on their own
Scope of the Services 13
The Procurement Agent will be responsible for carrying out procurement functions for all programs in Southern Sudan. The Advisor will not handle any procurement related to defense hardware for police, military or paramilitary. In carrying out the assignment, the Agent shall endeavor to be as pro-active as possible in providing solutions where obstacles and difficulties are encountered. More specifically, the Procurement Agent will be responsible for the following tasks (i)
Provide leadership to the Procurement Unit in SOFEP and ensure it functions as efficiently as possible
(ii)
Advise Government and Donors on all procurement-related matters to the extent procurement enhances service delivery and implementation of reconstruction and development programs
(iii)
Staff development; the Agent will build the capacity of the Procurement Unit in SOFEP as appropriate to meet the needs of the Government. The Agent will provide procurement training and coaching (including recommending external training) to staff recruited by Government for carrying out procurement functions either in the Unit or in the other Agencies C5
(iv) Procurement planning which will include contract packages, cost estimates, procurement methods to be followed and key processing dates till completion of each contract. The Procurement Plan will take into account available as well as allocated budget (v)
Preparing cash flow projections for contract payments and dates by when payments would be made
(vi) Procurement processing, i.e. preparing advertisement documents and advertising for contracts, preparing and issuing bidding documents, receiving and organizing bid evaluation, organizing negotiations for consultant contracts, ensuring contracts are awarded in a timely manner, obtaining all required procurement non-objections from the Donors, and preparing and having contracts signed (vii) Supervising contract performance; keeping custody of all procurement records, receiving and certifying receipt of goods, clearing goods from ports and customs, storage and issue of goods, preparing payment certificates and other payment documents, dealing with any disputes under contracts, supervise the work of consultants as appropriate and supervise minor works not delegated to engineering consultants2 (viii) Training Government officials/mangers in carrying out specific procurement tasks, e.g. evaluation of bids, negotiations for contracts (ix) Assisting the Government in attending to legal disputes arising out of procurement activities (x)
Respond to any request for clarifications/queries and from audits, and procurement reviews by Donors
(xi) Perform any other procurement related functions as directed by the Ministry of Finance. Reporting 14
The Procurement Agent will produce quarterly and annual reports of the assignment and a final completion report of the activities at the end of each contract period. The Procurement Agent will work in close collaboration with the PIA and the MA and will report directly to the Minister of Finance. Since the MDTF is administered by the World Bank, the Procurement Advisor will also report to the MDTF Administrator for MDTF related contracts.
2
Major works contracts will normally be supervised by engineers employed specifically for works preparation and supervision service C6
Qualifications 15
The Procurement Agent must be a firm with wide experience in all levels of procurement processing and management, particularly with capacity to carry multi-tasks of procurement activities. Specifically the Procurement Agent should have experience in African countries or similar developing countries. Experience in post-conflict countries will be a big advantage. The key personnel to be fielded for the assignment should have over 15 years experience in procurement, preferably public procurement. The Procurement Agent must be prepared to work in difficult situations and be able to use local (from the region) staff to the extent possible.
Location and timing of services 16
The Procurement Agent will generally be located partly in Nairobi and Juba. Offices will be provided in the Ministry of Finance. As the future capital of the GOSS is determined, the location of the Procurement Agent will move full time inside Southern Sudan. Nevertheless the Procurement Advisor will field a team in the field in addition to head office backup. It is estimated that the field team will have in a core team of senior procurement specialists and assistants, in addition to support staff. These numbers may be increased as the volume of procurement work builds up. The assignment will start about October 1, 2005. The contract will be for two years renewable, depending on progress made on providing the services under the contract.
Estimated level of expenditure 17
The estimated annual expenditure on procurement will range from USD 200 million in year one growing to as high as USD 1.0 billion in year three and up onwards The financial proposal must indicate costs for years 1, 2, and 3 separately, showing in detail staff costs, facilities costs and reimbursable expenditures. (Please note the contract will be for two years renewable one more year).
C7
Annex D – Terms of Reference for Monitoring Agent
D1
Terms of Reference for Monitoring Agent
Introduction 1
The historic Comprehensive Peace Agreement (CPA) signed between the Government of Sudan and Sudan Peoples Liberation Movement (SPLM) on January 9, 2005 marks the end of 21 year civil war and augurs a new era of peace, reconstruction and development for Sudan. The signed Peace Agreement calls for a 6 year interim period for a government of national unity at the end of which a referendum will be held on the political autonomy of South Sudan. During the interim period, the parties to the CPA had agreed on a reconstruction and development program elaborated through the Joint Assessment Mission (JAM) which was comprised of the UN, the World Bank, the Government of Sudan and the SPLM. To facilitate the financing of reconstruction needs by the international community, donor funds will be contributed into two separate Multi Donor Trust Funds (MDTF), one for the North and the other for the South. Moreover, the parties have asked the World Bank to assume the key role of administrator of these two MDTF funds. The present terms of reference are for the Monitoring Agent for the South Sudan MDTF
2
The South Sudan MDTF will provide coordinated financing of priority expenditures in the Government of South Sudan’s3 (GoSS) reconstruction program as identified in the JAM along the eight clusters developed in the Poverty Eradication Strategy paper. The overall implementation period of the MDTF is projected to last six years, with the disbursements for the South Sudan MDTF estimated to be between US$250-500 million
3
The South Sudan MDTF will finance the following activities under the eight clusters identified in the JAM: (a)
Institutional development and capacity building
(b)
Rule of law
(c)
Economic policy
(d)
Productive sectors
(e)
Basic social services
(f)
Infrastructure
3
GoSS refers to the Government of South Sudan whose official creation was agreed in the Power Sharing Agreement Protocol of May 26, 2004 in Naivasha, Kenya D2
4
(g)
Livelihood and social protection
(h)
Information and technology.
The Trust fund will also fund four cross-cutting themes (environment, conflict prevention, HIV/AIDS and gender). Eligible expenditures will be in three main broad categories and will be specified in the grant agreement. They will cover recurrent, capital, investment costs as defined below: •
“Recurrent Expenditures” means those recurrent expenditures set forth in the GoSS budget, whose eligibility for financing will have been determined by the Oversight Committee, relating to wages, benefits and other payments for civil servants, pension payments, operation and maintenance costs, but excluding military and paramilitary expenditures and police-related expenditures
•
“Capital Expenditures” means expenditures on account of goods, including, without limitation, office furniture and equipment, as set forth in the GoSS budget, whose eligibility for financing hereunder will have been approved by the Oversight Committee
•
“Investment Project” means a project whose purpose will be the carrying out of activities in the JAM covering the eight clusters (institutional development and capacity building; rule of law; economic policy; productive sectors; basic social services; infrastructure; livelihood and social protection; and information and technology) and the four cross-cutting themes (environment, conflict prevention, HIV/AIDS and gender). They should be part of an investment or sector program of South Sudan that will have been approved by the Oversight Committee.
Possible UN mandated activities 5
Law and order projects will be accepted as investment project if they fit the following definition: “Law and Order Project” means an Investment Project whose purpose, in whole or in part, will be the carrying out, in connection with the civil branch of the police force of the GoSS, of one or more of the following activities: (i) payment of salaries and benefits; (ii) provision of uniforms; (iii) provision of non-military vehicles; (iv) provision of computer equipment; (v) provision of fuel; and (vi) payment of operating and maintenance costs associated with said vehicles and computer equipment
6
Proposals to carry out a Law and Order Projects may only be made and carried out by the United Nations Development Programme, which will be the sole organization authorized to carry out Law and Order Projects financed hereunder. Sub-grants to finance Law and Order Projects will be made in accordance with terms and conditions acceptable to the Bank D3
7
Sub-grants will be used to finance expenditures for goods, works and services, as the case may be, in accordance with the Bank's "Guidelines for Procurement under IBRD Loans and IDA Credits" and the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency", as in effect at the date of the relevant Sub-grant agreement (hereinafter collectively referred to as the "Bank's Guidelines"). Any departure from the Bank’s Guidelines will have to be pre-approved by the Bank
8
The fiduciary arrangements for the investment and program component will be carried out in accordance with standard World Bank procedures as specified to the donors at the commencement of the South Sudan MDTF. Recipients of investment and program funds under sub grant agreements will, among other things, be required to maintain an appropriate financial management system. The Monitoring Agent will ensure that the financial management capacity of the recipient is assessed prior to release of funds and that adequate review of financial statements and audits take place. The role of the Monitoring Agent vis-à-vis UN agencies will be in accordance with framework agreement being negotiated between the UN and the World Bank
9
Investment projects to be financed will be carried out in accordance with guidelines contained in an environmental and social screening and assessment framework approved by the Bank. Any departure from the guidelines contained in said framework will have to be pre-approved by the Bank.
Assignment Objectives 10
The overall goal of this assignment is to review, support and report on the sound financial and efficient and effective utilization of the South Sudan MDTF funds. Specific objectives are to: (a)
Provide fiduciary assurance to Bank and donors
(b)
Assist quickly the GoSS to resolve repetitive mistakes and help reduce ineligible expenditures
(c)
Pre-screen bid documents and the procurement process of major contracts
(d)
Support the Bank in monitoring the procurement of goods, services and other items
(e)
Pre-screen and recommend for approval withdrawal applications submitted by non UN implementing agencies and ensure timely and sufficient replenishment of the different special accounts with correct bank reconciliation of the special accounts
(f)
Monitor expenditures and conduct periodic review of statement of expenditures to ensure that funds are disbursed only for the intended D4
purposes and in accordance with applicable World Bank financial management, disbursement and procurement policies and procedures (g)
Ensure timely production of financial statements by the implementing agencies in accordance with the grant agreement
(h)
Assess the financial management capacity of the Sub-grant recipients prior to release of funds and review the financial statements and audits provided for the Sub-grant expenditures
(i)
Raise issues to the Bank and GoSS for quick resolution
(j)
Spot trends, collaborate with and provide guidance to the GoSS on any action deemed necessary to improve the effective and sound execution of the MDTF financed expenditures.
Approach 11
This assignment must be carried out in a manner that is consistent with the existing state of GoSS reconstruction and capacity development. Building procurement and financial management capacity and develop audit practices by the government may take time. At the beginning, the Monitoring Agent may need to provide exceptional support to the GoSS to meet basic fiduciary standards and ensure timely replenishment of the special accounts. The Monitoring Agent will report on GoSS compliance with agreed upon fiduciary benchmarks. In addition to the reporting on the compliance, we expect professional and flexible response from the MA with open communications to identify and solve problems
12
As the GoSS continues to build capacity, it is expected that the role of the MA would be reviewed and possibly reduced. The development or lack of it on the ground due to the residue of the war, state of physical infrastructure in South Sudan and many GoSS and donor activities are factors which may impact on the assignment. The scope and nature of the assignment may, therefore, be subject to some changes
13
The assignment will take place in South Sudan with backstopping in Nairobi, Kenya.
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Scope of Services 14
The Monitoring Agent will report directly to the Bank on its performance of reviews and verification, on a sample basis, of the propriety of a total of about 25%4 ad valorem of the categories of eligible expenditure (components) and the performance of related accounting, payroll, procurement and payments systems. Verification should include: (a)
(b)
Recurrent Expenditures 1.
At the beginning, the GoSS will have a new and weak administration system. All personnel actions (recruitment, selection, post description, etc.) of the rosters of persons eligible for payments under the South Sudan MDTF will undergo review. The reviews shall include on a random basis the verification of the incumbents’ status and the categorization of posts (e.g., by ministry, title, function, salary level, civil status, etc.); the names of employees and the terms of assignment (such as full/part-time, daily, permanent/fixed term, professional/administrative/unskilled or other); level and frequency of pay; other payments (cash and/or in-kind); and other relevant attributes. Field tests are necessary on a sample basis to validate the records with staff, payrolls, purchase and physical progress
2.
All other eligible expenditures criteria: adequacy of supporting documentation, validity of the payment and eligibility for financing by the South Sudan MDTF
Contracts
For works, goods or services, to verify their consistency with the MDTF provisions, the tender process, the delivery of contracted quantities, and general adherence to contractual terms. In cases using shopping procedures, the review should verify the reasonableness of the prices paid, considering the prevailing market conditions (c)
Accounts The Monitoring Agent shall regularly examine these records and accounts to verify the propriety of financial procedures and management, proper entries of expenditures, and maintenance of underlying documentation (e.g., receipts, contracts, invoices, etc.) and
4
For sub-grants provided to UN agencies, the sampling approach may not be used at all (in such cases when the UN agency does not sub-allocate and contingent upon the finalization of the framework agreements), while for sub-grants to non-governmental organizations (NGOs), the sampling ratios may be a function of the Monitoring Agent’s assessment of the soundness and capacity of the financial management and procurement systems of the NGO in question D6
the carrying out of the audits as mandated in the grant agreements. The GoSS shall enable the Monitoring Agent ready access to all relevant records and accounts related to the utilization of MDTF resources in accordance with the relevant grant agreements (d)
Special Account Operations The World Bank’s initial and replenishment payments into the Special Accounts, from South Sudan MDTF resources, shall be examined by the Monitoring Agent so as to:
(e)
1.
Review the soundness of the GoSS Replenishment requests
2.
Verify that the amounts reported as expended were properly accounted for
3.
Follow up on the prompt resolution of any ineligible expenditures
4.
Refer promptly to the Bank its opinion and recommendation on carrying out the requested replenishment (partial replenishment may be recommended, pending resolution of any amount deemed to be in dispute)
Reporting 1.
The Monitoring Agent shall report to the Bank on a monthly and quarterly basis (or more frequently, if conditions so require). The reports shall be comprehensive, and provide both aggregated and detailed financial information, by electronic means, and use standardized formats so as to ensure comparative information and data presentation and analyses from month to month. The reports shall cover the categories of eligible expenditure (components) and (i) comment on GoSS performance, and any impediments to carrying out the Terms of Reference, (ii) make specific recommendations, and (iii) propose resolution of any issues. In addition, the MA should report on unmet needs which have an overall impact to the program
2.
Monthly reports should detail the overall operations under the MDTF for the previous month, including expenditures reimbursed, the status of withdrawal applications in process, status of the utilization of the special account, eligible and ineligible expenditures claims along with detailed explanations for ineligible expenditures. Quarterly reports should provide a more detailed analysis of eligibility trends, identification of problems in relation to execution of expenditures under the MDTF, and recommended actionable corrective actions. The Monitoring D7
Agent should specifically report on progress made over the quarter in meeting the fiduciary benchmark 3.
Reports should be prepared in such a way that they can provide information and actions to the different users. Reports should include full details relating to eligibility/ineligibility of expenditures and recommendations as to systems improvements to limit the submission of ineligible expenditures in the futures. They should provide clear recommendations on action that could be taken to improve fiduciary standards and budget execution over time. The report shall include details on the development impacts achieved by the reconstruction activities that it monitors
4.
A comprehensive final report shall be submitted within 30 days of completion of the assignment.
Review of Reports 15
The Monitoring Agent will review with the Secretariat of Finance and Economic Planning and the ministries receiving South Sudan MDTF resources their preparation and submission of reports, as specified in the South Sudan MDTF agreement with the Bank
16
The preparation of financial and other reports described in the Grant Agreement for reporting on detailed and overall progress of the South Sudan MDTF and to maintain transparency. The MA reports should be issue and action-based. The reports may include, but are not limited to:
17
a)
Monthly progress reports
b)
Quarterly financial reports, and work plans
c)
Monthly financial statements and related reports
d)
Statements of Expenditure from the Special Account (and any subsidiary accounts, and all related documentation)
e)
Quarterly procurement reports
f)
Quarterly reports on the regional and provincial payrolls, and civil service establishment numbers
In addition, there will be a monthly or quarterly face to face meeting with the MA for a presentation of the issues, trends and ways forward.
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Monitoring Agent Team 18
The proposed Monitoring Agent team would include, inter alia, experts in financial management, procurement of goods, work and services, disbursement and information technologies. Team members should have experience in similar countries and under conditions like those prevailing in South Sudan. It is recommended that the MA team include local and regional staff familiar with the local and regional conditions. The Monitoring Agent will propose the organization of the team (including geographical distribution of the staff) to best achieve the objectives of the assignment; however, it is recommended that a Senior Advisor be located in South Sudan.
Host Country Contributions and Undertakings 19
The GoSS shall facilitate the Bank and the Monitoring Agent’s ready access to all relevant personnel, records and accounts of the GoSS related to the utilization of the resources of the South Sudan MDTF.
Management Review 20
The Bank will cause an external management review of the Monitoring Agent’s performance to be carried out within six months of completion of the Monitoring Agent’s services. The Bank retains the right to have the MA performance reviewed every six months by staff or external firm. The Monitoring Agent will cooperate fully with the consultants when they carry out such reviews.
Conflict of Interest 21
The Monitoring Agent is responsible for providing assurance to the Administrator of the MDTF regarding proper use of MDTF funds. Firms interested in this assignment should not have any existing or future conflict of interest arising from their being involved in supporting the budget execution process of the National Government. Firms responding the invitation should provide an undertaking that they would not be involved in such conflict of interest during the term of the contract, or such period thereafter as may be mutually agreed to between the World Bank and the MA.
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Annex E – List of key references
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List of key references
1.
Government of National Unity, (1995), Financial and Accounting By-Laws
2.
Government of South Sudan, (2006), Interim Public Procurement and Disposal Regulation
3.
Sudan MDTFs website, see: www.mdtfsudan.org
4.
Sudan, (2005), Comprehensive Peace Agreement
5.
Sudan, Joint Assessment Mission, (2005), Framework for Sustained Peace, Development and Poverty Eradication
6.
United Nations, (2003), Financial Regulations and Rules (ST/SGB/2003/7)
7.
United Nations, (2004), System of Accounting Standards (Revision VI)
8.
World Bank and United Nations, (2006), Financial Management Framework Agreement
9.
World Bank, (2004), Guidelines for Procurement under IBRD Loans and IDA Credits, see http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/PROCUREMENT/0, ,contentMDK:20060840~menuPK:93977~pagePK:84269~piPK:60001558~theS itePK:84266,00.html
10. World Bank, (2004), Guidelines for Selection and Employment of Consultants by World Bank Borrowers, see http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/PROCUREMENT/0, ,contentMDK:20060656~menuPK:93977~pagePK:84269~piPK:60001558~theS itePK:84266,00.html 11. World Bank, (2005), Disbursement Handbook for World Bank Borrowers Volume I - Investment Lending 12. World Bank, (2005), MDTF Board paper 13. World Bank, (2006), Disbursement Guidelines for Projects (Loan Department) 14. World Bank, (2006), Strengthening Bank Group Engagement on Governance and Anti Corruption 15. World Bank, Best Practice (BP 11.00) see: http://wbln0018.worldbank.org/Institutional/Manuals/OpManual.nsf/toc2/BA6667 5E955249A185256A860054EB85?OpenDocument E2
16. World Bank, Best Practice (BP 14.40), see: http://wbln0018.worldbank.org/Institutional/Manuals/OpManual.nsf/0/214475b6b 9924bce8525672c007d081e?OpenDocument 17. World Bank, Client Connection, see: http://clientconnection.worldbank.org 18. World Bank, Independent Evaluation Group’s website, see: http://www.worldbank.org/ieg/ecd/?intcmp=5261691 19. World Bank, Operational Policy (OP 10.00), see: http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/EXTPOLICIES/EXT OPMANUAL/0,,contentMDK:20064659~pagePK:64141683~piPK:64141620~th eSitePK:502184,00.html 20. World Bank, Operational Policy (OP 10.02), see: http://wbln0018.worldbank.org/Institutional/Manuals/OpManual.nsf/tocall/38797 AAE78262D958525672C007D0825?OpenDocument 21. World Bank, Operational Policy (OP 11.00), see: http://wbln0018.worldbank.org/institutional/manuals/opmanual.nsf/tocall/2C9004 DCBC81968E85256E8B004E7A31?OpenDocument 22. World Bank, Operational Policy (OP 14.40), see: http://wbln0018.worldbank.org/institutional/manuals/opmanual.nsf/0/B9F162359 6832E478525672C007D081D?OpenDocument
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