Piloting Fiduciary Control for Non-Commercial Organizations The objective of the Grant is to operationalize the fiduciary control framework for Non-Commercial Organizations in Armenia. Specifically the Grant will support the Ministry of Finance and Economy (MOFE) in (i) the risk assessment with recommendations regarding mitigation measures, to succeed with the implementation of the designed fiduciary control framework, as well as the gap analysis to assess whether the weaknesses identified in the current system by stakeholders may remain uncovered as a result of implementation of the designed fiduciary control methodology; (ii) piloting the methodology in the selected sectors, (iii) providing limited training to the staff in the NCO central monitoring unit (located in MOFE), and (iv) the legislation update. As a result of decentralization of the NCOs they have been pulled out of the treasury system and ex-ante commitment control system previously exercised by the treasury was abolished, while the ex-post controls over the funds spent by the NCOs have not been improved. The Bank has supported the government to assess the fiduciary control framework of NCOs and to develop the methodology to improve the framework. The Government lacks an institutional capacity to operationalize the methodology developed (which is a theoretical model) and needs further technical assistance. The need to support the government in this critical reform is also stated by all the donors active in the area. The grant will be build on the ongoing reforms towards program budgeting and decentralization in the public sector, and particularly the reforms undertaken in strengthening of the fiduciary control framework over NCOs. The risk assessment will help to reassess the approach adopted over NCOs fiduciary control and mitigate the possible risks of failure with these complex reforms. The assessment outcomes will be carefully considered during piloting of the methodology and as a result will be reflected in the updated fiduciary control methodology. The gap analysis will assist to identify the possible gaps which may not be covered as a result of operationalizing of the fiduciary methodology proposed, with the recommendations whether the gaps could be closed with enhancement of the existing methodology or through other mechanisms. Through the piloting, the methodology developed will be tested in the real environment and tailored to reflect the practical considerations of current system for NCO reporting and monitoring. The Bank has unique opportunity to continue supporting the government and use the momentum to advance in the NCOs reforms, as the government does not have a capacity to move with the reforms and a major setback would be observed if the reforms are put on hold in the short term. One of the possible implications would be the transfer of all the NCOs accounts back to the treasury reestablishing the full or partial commitment control process. Other donors at present either have no resources or enough competence to support the government in implementation of the reforms initiated. TF092616 The objective of the Grant is to operationalize the fiduciary control framework for Non-Commercial Organizations (NCOs) in Armenia. There are more than 1,800 NCOs under the central government which are similar to the "crown entities" in New Zealand and include schools, museums, libraries, universities, etc. Specifically the Grant will support the Ministry of Finance and Economy (MOFE) in (i) the risk assessment with recommendations regarding mitigation measures, to succeed with the implementation of the designed fiduciary control framework, as well as the gap analysis to assess whether the weaknesses identified in the current system by stakeholders may remain uncovered as a result of implementation of the designed fiduciary control methodology; (ii) piloting the methodology in the selected sectors, (iii) providing limited training to the staff in the NCO central monitoring unit (located in MOFE), and (iv) the legislation update.