Contents 5 I. 12 II. 18 III. 19 IV. 21 A. FINANCIAL MANAGEMENT 21 B. PROCUREMENT 23 C. FRAUD AND CORRUPTION 24 V. 24 A. FINANCIAL MANAGEMENT 24 B. PROCUREMENT C. FRAUD AND CORRUPTION D. COMPLAINT-HANDLING MECHANISMS VI. A. Addressing Fiduciary Risk B. Proposed Fiduciary inputs to the Program Action Plan C. Undertaking Audit 54 VII. A. Reviewing Implementation Progress Annual assessment of minimum conditions B. Monitoring Fiduciary Risks A: PEFA (2010): B: 26 C: 26 D: ULGDP: E: ULGDP EFY 2001 – EFY 2004 F: ULGDP I G: 26 AND AND AND IN
Accounting Chart of accounts need to be harmonized and clarified IBEX, computerized accounting system utilization need follow up Staff turnover is an issue at all levels CoA will be clarified and documented in the Program Operating Manual and Training will be conducted The program includes measures to use IBEX and all cities will use IBEX and training will be conducted on IBEX/IT The Program will allocate adequate financial management staffing at MoFED, MUDHCo and ULGs to perform the program duties. The total FM staff database will be submitted in the first six months of effectiveness and 75 percent of vacant professional positions will be filled with in two years. PAP DLI PAP As per dates set in DLIs and PAP Internal Control Internal audit is weak at all levels and controls in place but need strengthening Inspection Directorate at MoFED in coordination with all entities will conduct audits once per year The Program includes requirements to address internal audit and internal control challenges/ concerns at ULGs PAP DLI 2/3 As per dates set in DLIs and PAP Treasury management and Funds Flow - Delays in liquidating advances emanating from project implementation issues and thus lead to delay in the utilization of funds Disbursement will happen twice a year to ensure that regular flow of funds happens and that disbursements are linked to the achievement of DLIs. Review of semiannual reports to identify poor implementation and budget utilization Reconciliation of fund disbursed to the Program with the expenditure will be conducted at the end DLI PAP FA (Financing agreement) As per dates set in DLIs and PAP Program Financial Reporting Delay in Report could exist as a result of the level of decentralization Training will be conducted in report preparation PAP As per dates set in DLIs and PAP
Program Audit There could be a delays in Program Financial Audit report Value for money audit has not been adequately conducted Significant audit back logs exist for the new cities and qualification issues of the all cities are not well followed up The program will conduct a Financial Audit annually on the basis agreed upon TORs Value for money audits will be conducted. The Program includes measures to follow up on audit backlogs and follow up of past audit issues. Covenant DLI/PAP As per dates set in DLIs and Procurement Compliance with national and regional directives There is laxity or lack of knowledge of the bylaw and therefore incompliance with national and regional governments directives with regards to procurement planning, use of direct contracting without appropriate safeguards, failure to use standard bidding Documents and subsequently contract documents and inconsistent use of committee systems for approval of contract award. Use of direct contracting is common and national competitive bidding used above thresholds as required by Directives Program minimum access condition (MC) will check on the availability and functionality of the minimum systems, including legal documentation; The PAP will include familiarization training and the mobile support team will support the ULGs to address most of the issues related with awareness/capacity issues; The Borrower will conduct Annual Performance Audit (APA) for the first two years and Independent Procurement audit after the second year and deliver procurement audit reports with management corrective measures addressing the findings of the audit; MC/ DLI 1 APA and DLI 1 DLI 1 and 2 Program Program Annually and continuous Procurement capacity There are capacity limitations in terms of skilled staff to handle procurement and contract administration. As this is a PfoR operation, project units which facilitated procurement processes under ULGDP I may not be available thus further deteriorating the capacity of cities to implement the program. The cities are also experiencing high staff turnover. In most cities, most procurement staffs have been in position for less than 2 years. Minimum access conditions will check the availability of the minimum procurement staffing (two) in each city; The MUDHCo will maintain its project team and the mobile support team similar to ULGDP I; The program will provide intensive procurement contracts management training to the staffs of the MC/ DLI 2 and 9 DLI 4 DLI 8 Program
ULGs as in PAP Transparency and Fairness Most cities use incomplete bidding documents without preset qualification and evaluation criteria and complete conditions of contract for the tender which would impact on transparency and fairness in bid evaluation and contract administration. Though it is the requirement of the procurement regulations of all regions, the contracts administration and Complaints handling set up and mechanism, in most cities, is inadequate. The cities have agreed to institute all procedures and avail legal document before effectiveness MC will check on this; Familiarization training will be conducted on the use of the program systems; Annual Performance Audit and IPA will be conducted and deliver an acceptable Annual Independent procurement audit report along with a satisfactory Management response as to how the audit issues have been resolved; Continues capacity building will be provided following the Program Action Plan (PAP); All regions will institute/establish complaint management Board , following the requirement of their RPP laws; MC/ DLI 1 PAP DLI 9 PAP/ DLI 4 PAP/ DLI 2 Program Annually and continuous Continues Program Competitiveness There are some government owned enterprises in sectors of supply of goods, works and services and there have been observed preference to use them or allow them to compete alongside private sector. High margin of preference of up to 18 percent are applied in bids evaluation and in many regional states, there are mandatory provisions to support medium and small enterprises through reservations or preferences. Though this approach has a lot of strategic benefits, it has to be balanced with the principle of fairness to the private sector competitors’ as well. ULGs will (a) justify to the BoFEDs the use of government owned enterprises where private sector suppliers exist in advance of contracting; (b) exclude award to Bank debarred firms through providing regular information; and (c) MUDHCo will provide guidance to ULGs on policies on support to micro and small enterprises (MSEs) and the level of preferences that would be acceptable across board to ensure uniformity and minimize abuse (this guidance will be part of participatory and performance agreement, PPA and Program Operating Manual.) Covenant Program
- Annex E: Utilization of ULGDP funds EFY 2001–EFY 2004 Round 1 drawing rights from IDA Grant ULG Contribution Regional Contribution Total ULGDP Funding in USD ULGDP utilized and allocated amount for 2001 and 2002 Total IDA allocated by end of 2002 million USD Remaining IDA Fund to be utilized in 03-04 EFY, million USD Percent remaining to be utilized from the first round Funds Utilized in 2001 EFY (AR) million birr ULGDP Plan in 2002 EFY million birr Total ULGDP allocated by end of 2002 million birr Total ULGDP allocated by end of 2002 million USD