(3) IEG recommends that, for the purposes of greater transparency and strengthening client capacity, the Bank set out in the project appraisal documents why country financial management systems cannot be used at the project and/or implementing agency level, identifying deficiencies in the existing systems for the client to address.
The Bank's current position is to use the country's financial management systems as the default option when the systems are assessed as adequate (that is, when their use does not pose significant risks). IEG finds that where country systems are not being used, the project documents often fail to identify specific shortcomings of those systems.
Original Response: Management agrees with the evaluation's emphasis on the importance of using country systems when appropriate, but disagrees with the specific action related to appraisal documents because this objective is pursued by the Bank's financial management specialists in discussion with partner countries, for instance through strategies/approaches to strengthen financial management systems at the country level, which in turn are reflected in Country Assistance Strategy products. As underscored in the paper ?Strengthening Country Systems and Expanding their Use in Bank-Supported Operation," management believes that this is a more appropriate mechanism for supporting countries in strengthening their financial management systems. - Management will continue to address strengthening of country systems in discussions with partner countries, for instance through diagnostic work and programs to strengthen financial management systems at the country level, which in turn are reflected in Country Assistance Strategy products. Management will monitor such diagnostic work and programs through periodic updates to the Board on the use of country systems.
Management initially disagreed with the recommendation and the update does not provide additional information, or specific actions undertaken in the general direction of the recommendation.
There is no change from the previous year. Management agrees with the evaluations' emphasis on using country systems when appropriate, but disagrees with the specific action related to appraisal documents. With the integrated approach to fiduciary risk, management does not consider it necessary to document in the appraisal documents why country financial management systems cannot be used at project and/or implementing agency level as this is not considered to be a deficiency in the system. Strengthening financial management systems and addressing weaknesses is an ongoing process that is undertaken throughout project cycle, and the Bank's Governance Global Practice staff maintain dialogue with implementing agencies and partner countries through a variety of ways - through implementation support, specific project initiatives and more broadly through strategies/approaches at the country level, which in turn are reflected in Country Partnership Framework. Management believes that strengthening country systems and expanding their use in Bank-supported operations is a more appropriate mechanism for supporting countries in strengthening their financial management systems. Management will continue to address strengthening of country systems in discussions with partner countries, for instance through diagnostic work and programs to strengthen financial management systems at the country level. Management will continue to monitor such diagnostic work and programs through periodic updates on the use of country systems.
Management initially disagreed with the recommendation and the update does not provide additional information, or specific actions undertaken in the general direction of the recommendation.
There is no change from previous year. Management generally agrees with the evaluations' emphasis on using country systems when appropriate. However, with the integrated approach to fiduciary risk management does not consider it necessary to document in the appraisal documents why country financial management systems cannot be used at project and/or implementing agency level as this is not considered to be a deficiency in the system. Strengthening financial management systems and addressing weaknesses is an ongoing process that is undertaken throughout project cycle, and the Bank's Governance Global Practice staff maintain dialogue with implementing agencies and partner countries through a variety of ways - through implementation support, specific project initiatives and more broadly through strategies/approaches at the country level, which in turn are reflected in Country Partnership Framework. Management believes that strengthening country systems and expanding their use in Bank-supported operations is a more appropriate mechanism for supporting countries in strengthening their financial management systems. Management will continue to address strengthening of country systems in discussions with partner countries, for instance through diagnostic work and programs to strengthen financial management systems at the country level. Management will continue to monitor such diagnostic work and programs through periodic updates on the use of country systems.
Management has been taking steps to strengthen client capacity for financial management through such means as implementation support and specific initiatives. However, as noted in last year's IEG update, the management disagrees with the specific action under this recommendation. In addition to strengthening the client capacity, the recommendation suggested the need to increase the transparency on how the decision not to use the country management system has been reached, and what the team implementing the project must do to improve its FM systems. It would be useful if the status on transparency side of the recommendation could be provided in the future update.
As previously indicated, management agrees with the evaluationï¾s emphasis on the importance of using country systems when appropriate, but disagrees with the specific action of documenting in appraisal documents why country financial management systems cannot be used at the project and/or implementing agency level, and deficiencies in the systems. Strengthening financial management systems and addresses weaknesses is pursued by the Bankï¾s financial management specialists with implementing agencies and partner countries through a variety of ways ï¾ through implementation support, specific project initiatives and more broadly through strategies/approaches at the country level, which in turn are reflected in Country Partnership Strategy products.
In 2014, a set of Public Sector Governance Core Sector Indicators were established and these include specific indicators for measuring the impact of our work at the project level and aggregate it across project in relation to Public Expenditure and Financial Management (http://intresources.worldbank.org/INTOPCS/Resources/380831-117759958312…)
The establishment of the World Bankï¾s Governance Practice brings together the public service, financial management and procurement technical providing the opportunity to combine the deep knowledge of country PFM and procurement systems obtained through projects and analytical work, with global knowledge on good practices in public financial management. The new approach aims to maximize deployment of existing technical expertise in support of implementation of projects and institutional strengthening at the country levels. Support for public policy and institutional strengthening will be provided across the entire cycle from policy making, budget planning and formulation, procurement, accounting, recording and reporting, external oversight and scrutiny, and fiscal transparency in projects as appropriate, and at country level.
Management's indication to CODE that it partially agreed with this recommendation appears misleading. In practice, Management disagrees, and took no steps to implement it. Instead of identifying shortfalls in country financial management systems in project-level documents, Management indicated the appropriate space for this discussionis through dialogue and in country strategies. For countries where the quality of financial management systems at the project or implementing agency level are considered substandard, it is thus unclear whether the Bank has made any effort to be more transparent regarding how it reached these conclusions, and what the team implementing the project must do to improve its FM systems to the Bank's satisfaction.
Management agrees that it is important to use country systems when appropriate, but disagrees with the specific recommendation to present the rationale for non-reliance in project appraisal documents. This objective is pursued by the Bankï¾s financial management specialists in discussion with partner countries, through approaches to strengthen financial management systems at the country level, which in turn are reflected in Country Assistance Strategies. Much progress has been made in expanding the use of country systems; OECD-DAC Survey noted that 69% of Bank-funded projects rely on country systems for PFM. As underscored in the paper "Strengthening Country Systems and Expanding their Use in Bank-Supported Operations,ï¾ management will continue to address strengthening of country systems in discussions with partner countries, through diagnostic work and programs to strengthen financial management systems at the country level. Management will monitor diagnostic work and programs through periodic updates to the Board on the use of country systems. And at the project level, new tools have been developed and will be rolled in in FY14 to track and report on the use of country PFM systems.