FM and the CAS

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

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

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

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

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

6. 2001 Guidance on FM/PR in CAS • Summarize fiduciary and corruption risks in the Bank portfolio and actions to be taken • Identify policy actions and areas for PFM capacity building, • DPLs should be underpinned by up to date PFM/fiduciary AAA

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

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

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

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

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

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

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

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

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