Support to BPKP on Pilot Implementation of COSO Framework Project description for a proposal for pilot implementation of COSO control framework in select departments or line ministries Background: With the issuance of Govt. Regulation PP 60/2008, BPKP has been given the responsibility for facilitating the implementation of COSO control framework in the line ministries. The mandate includes developing technical guidelines, dissemination of information, provision of education and training and providing guidance to line ministries. Project description: BPKP has sought support from the Bank to: (a)   Prepare an implementation strategy for COSO framework.  The preparation of strategy would involve receiving inputs from stakeholders and learning from implementation experiences elsewhere.  It would include determining suitable approaches to implementation (pilots followed by scaling up or alternate approaches), determining training requirements on an ongoing basis for various types of staff, determining a suitable communications strategy, determining the need for technical guidance (USD (100,000); (b)   Pilot implementation of COSO framework in a few departments in select line ministries.  The ministries/departments will be pre-selected and COSO framework will be piloted there.  The piloting would involve focused discussions in the pilot departments/ministries facilitated by BPKP and consultants leading to identification of key risks and building of control measures around those risks (USD 150,000) Linkage to CPS: The proposal relates directly to the CPS objective of strengthening country institutions and links in with the cross cutting engagement on strengthening central government systems and institutions.  Improvement in controls in line ministries through a self assessment process would contribute to improving governance environment in the line ministries on a self sustaining basis. Critical risks and mitigation measures: 1. Risk a. Procurement delays and DIPA issues like other recipient executed trust funds b. BPKP is in a bit of a transition right now without a Chairperson c. There could be funding for the same activity from multiple sources d. BPKP will not be able to execute the project in time on account of lack of experience on a Bank financed project 2. Proposed mitigation measures a. Procurement process to be started before the issuance of DIPA.  Consultancy contracts expected to be individual contracts. b. The mandate is clear in Govt. Regulation and there is support from top managers.  However, the grant concept will be discussed with the new head of BPKP before finalization. c. BPKP management has confirmed that the proposed activities are not a part of ADB's STAR SDP project d. The grant will go ahead only if BPKP sets up a dedicated project management unit to administer the project. Following the issuance of Government Regulation PP 60/ 2008 through which Government of Indonesia (GoI) has adopted COSO as its control framework, the proposed grant aims to assist BPKP in preparation of implementation strategy for PP 60/ 2008 (the COSO framework) and its piloting in select ministries. The preparation of strategy would involve receiving inputs from stakeholders and learning from implementation experiences elsewhere in the world, determining suitable approaches to implementation (pilots followed by scaling up or alternate approaches), determining training requirements on an ongoing basis for various types of staff, determining a suitable communications strategy and determining the need for technical guidance. The grant will also support COSO pilot implementation in selected ministries to ensure the strategy could be implemented effectively. BPKP expects to use the results of the grant to learn lessons for the roll out of implementation of PP 60/ 2008 to all the ministries and local governments in Indonesia.