The World Bank Report No: ISR14146 Implementation Status & Results Pakistan Second Improvement to Financial Reporting and Auditing Project (P076872) Public Disclosure Copy Operation Name: Second Improvement to Financial Reporting and Auditing Project Stage: Implementation Seq.No: 15 Status: ARCHIVED Archive Date: 20-Apr-2014 Project (P076872) Country: Pakistan Approval FY: 2006 Product Line: IBRD/IDA Region: SOUTH ASIA Lending Instrument: Specific Investment Loan Implementing Agency(ies): DEPARTMENT OF THE AUDITOR GENERAL OF PAKISTAN Key Dates Board Approval Date 06-Sep-2005 Original Closing Date 31-Dec-2010 Planned Mid Term Review Date 31-Jan-2008 Last Archived ISR Date 23-Nov-2013 Effectiveness Date 08-Nov-2005 Revised Closing Date 31-Dec-2014 Actual Mid Term Review Date 29-Feb-2008 Project Development Objectives Project Development Objective (from Project Appraisal Document) Overall project development objectives are to: (a) build capacity to improve accuracy, comprehensiveness, reliability, and timeliness of financial and fiscal reporting at all levels of government; (b) improve public financial management, accountability, and transparency; (c) enhance the capacity of public sector managers to use credible financial information for better and informed decision-making; and (d) facilitate oversight of the use of public monies, and increase the national and international credibility of government#s financial statements and assurance processes. Has the Project Development Objective been changed since Board Approval of the Project? Yes No Component(s) Component Name Component Cost 1. FABS+MOF/CGA 82.52 2. Capacity Building (OAGP) 22.46 3. Capacity Building (OCGA) 0.00 Public Disclosure Copy 4. Project Management 3.52 Overall Ratings Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Satisfactory Overall Risk Rating Moderate Moderate Implementation Status Overview The Project's development objective is to improve capacity, financial resource management, budgeting, expenditure control and accountability at national, provincial and district Page 1 of 11 The World Bank Report No: ISR14146 levels. Achievements to date include the establishment of an accounting, reporting, and audit system that covers core government entities at the federal, provincial, and district level and strengthening system internal controls over expenditure, greater use of country systems for foreign aid projects financial management, enhanced fiscal reporting to help improve delivery of services, facilitation of timely and reliable reporting of accounts and audit certification of financial statements which are now being finalized within 8 months of the financial year-end. Public Disclosure Copy Locations Country First Administrative Division Location Planned Actual Pakistan Sindh Khairpur Pakistan Punjab Vihari Pakistan Balochistan Uthal Pakistan Sindh Umarkot Pakistan Balochistan Turbat Pakistan Punjab Toba Tek Singh Pakistan Sindh Thatta Pakistan Sindh Tando Muhammad Khan Pakistan Sindh Tando Allahyar Pakistan North West Frontier Province Swat District Pakistan North West Frontier Province Swabi Pakistan Federally Administered Tribal Areas South Waziristan Agency Pakistan Balochistan Sibi Pakistan Sindh Shikarpur Pakistan Punjab Sheikhupura Public Disclosure Copy Pakistan Punjab Sargodha Pakistan Sindh Sanghar Pakistan Punjab Montgomery Pakistan Punjab Rawalpindi Pakistan Punjab Rajanpur Pakistan Balochistan Quetta Page 2 of 11 The World Bank Report No: ISR14146 Country First Administrative Division Location Planned Actual Pakistan Sindh Qambar Public Disclosure Copy Pakistan Balochistan Pishin Pakistan North West Frontier Province Peshawar Pakistan Punjab Pakpattan Pakistan Punjab Okara Pakistan Balochistan Nushki Pakistan North West Frontier Province Khyber Pakhtunkhwa Province Pakistan Sindh Naushahro Firoz Pakistan Punjab Narowal Pakistan Punjab Nankana Sahib Pakistan Punjab Muzaffargarh Pakistan Punjab Multan Pakistan Sindh Mirpur Khas Pakistan Punjab Mianwali Pakistan Sindh Matiari Pakistan North West Frontier Province Mansehra Pakistan Punjab Mandi Bahauddin Pakistan North West Frontier Province Malakand Public Disclosure Copy Pakistan Punjab Lodhran Pakistan Punjab Leiah Pakistan North West Frontier Province Lakki Marwat Pakistan Punjab Lahore Pakistan North West Frontier Province Kohat Pakistan Punjab Khushab Pakistan North West Frontier Province Karak Page 3 of 11 The World Bank Report No: ISR14146 Pakistan Punjab Khanewal Pakistan Punjab Kasur Public Disclosure Copy Pakistan Sindh Kashmor Pakistan Balochistan Kalat Pakistan Punjab Jhelum Pakistan Punjab Jhang Pakistan Sindh Jamshoro Pakistan Sindh Jacobabad Pakistan Islamabad Capital Territory Islamabad Pakistan North West Frontier Province Haripur Pakistan North West Frontier Province Hangu Pakistan Punjab Hafizabad Pakistan Punjab Gujrat Pakistan Punjab Gujranwala Pakistan Sindh Ghotki Pakistan Punjab Faisalabad Pakistan Punjab Dera Ghazi Khan Pakistan Sindh Dadu Pakistan Balochistan Dadhar Public Disclosure Copy Pakistan North West Frontier Province Chitral Pakistan North West Frontier Province Charsadda Pakistan Balochistan Chaman Pakistan Punjab Chakwal Pakistan North West Frontier Province Bannu Pakistan Punjab Bahawalpur Page 4 of 11 The World Bank Report No: ISR14146 Pakistan Sindh Badin Pakistan Azad Kashmir Azad Kashmir Public Disclosure Copy Pakistan Punjab Attock City Pakistan North West Frontier Province Abbottabad Pakistan Punjab Bahawalnagar Pakistan Balochistan Dera Murad Jamali Pakistan Balochistan Mastung District Pakistan Balochistan Khuzdar Pakistan Punjab Bhakkar District Pakistan North West Frontier Province Tank District Pakistan North West Frontier Province Nowshera District Results Project Development Objective Indicators Indicator Name Core Unit of Measure Baseline Current End Target Effective and transparent fiscal administration Text Value Fully rolled out MTBF. No FABS supports MTBF. FABS support of MTBF. FABS configuration. Date 30-Nov-2010 07-Mar-2014 31-Dec-2014 Comments October 2010 Baseline taken MTBF servers delivered in Targets taken from Additional from Addl Financing PAD. Feb 2014. Road-map for roll- Financing PAD out of modules to further enhance support for MTBF is being developed. Public Disclosure Copy Effective and transparent financial reporting, Text Value Accounts to OAG 2 months OAG certification and audit OAG certification and audit control, and audit after year-end. OAG report within 8 months - report within 6 months. accounts submitted within 12 including 2 months quality months of year-end. Quality assurance. improved. Date 30-Nov-2010 07-Mar-2014 31-Dec-2014 Comments October 2010 Baseline taken For fifth consecutive year Targets taken from Additional from Additional Financing AGP has completed audit Financing PAD. PAD work within six months of the close of financial year. Quality Page 5 of 11 The World Bank Report No: ISR14146 reviews take a further two months after which reports are submitted to legislature Effectively tracked and managed poverty Text Value System produced PRSP 100% Achieved. System reports, PETS Public Disclosure Copy reducing spending reports, data entry to be established. further improved. Date 30-Nov-2010 07-Mar-2014 31-Dec-2014 Comments October 2010 Baseline taken 100% Achieved. Targets taken from Additional from Additional Financing Recommended workshop Financing PAD. PAD may lead to further enhancements. Effective corruption reducing measures related Text Value FABS issues checks and System reporting is full under System reporting fully under to accounts and budget control. provides regular reports on CGA and regular OAG Audit CGA and regular OAG audit. bill-tracking and other uses of (100%) system functionality. Date 30-Nov-2010 07-Mar-2014 31-Dec-2014 Comments Baseline updated from Project Targets updated from Project Paper for Additional Paper for Additional Financing. Financing. Establish stable FABS operations and Text Value FABS is now used across the All sites are up and running All sites on full work flow (e.g. maintenance support in GoP(implement a data country to prepare and except two in Balochistan for KP and Balochistan)*; FABS warehouse, an information security and compile the Annual Budget newly created districts. The support Unit established Disaster Recovery Plan) Estimates and process all quality assurance wing in under the CGA for ongoing government expenditure PIFRA provides FABS maintenance and support. (including payroll and receipt management and transactions) maintenance support to CGA. *subject to improvement in law and order situation. Date 30-Nov-2010 07-Mar-2014 31-Dec-2014 Comments Indicator added from Disaster Recovery Center Targets updated from Project Additional Financing PAD. (DRC) procurement Paper for Additional underway. Target for October Financing. 2014 completion of DRC. Public Disclosure Copy Adequate numbers of trained staff in MoF and Text Value All operational staff of CGA/ 111 senior officers (finance 20 senior including operation, CGA to manage and apply system to fiscal and AG and DDOs trained in work managers and CFAOs) of staff; 20 CFAOs. financial management (trained MoF, CGA and practices at all level of Ministries/Divisions/ line ministry CFAOs) government. Few trained in Departments trained in the overall systems operations phase of AF. and management. Date 30-Nov-2010 07-Mar-2014 31-Dec-2014 Comments Indicator added from Project Target Value achieved ahead Targets updated from Project Additional Financing PAD. of schedule. Paper for Additional Financing. Page 6 of 11 The World Bank Report No: ISR14146 Intermediate Results Indicators Indicator Name Core Unit of Measure Baseline Current End Target Discrepancies between monetary survey credit Text Value Estimated statistical On Target. Full reconciliation Public Disclosure Copy and government fiscal deficit for 2004-5 = 1.2% discrepancy 2004/5- 1.2 % of of GDP GDP Date 31-May-2005 07-Mar-2014 31-Dec-2014 Comments Statistical discrepancy 0.3% of GDP during July - Sept 2013 quarter. Issue of reliable, timely budget execution Text Value No BERs - civil accounts only BERs are available at every 100% and full commitment reports (BERs) to PAOs level of Government through records the system. Commitment functionality has been fully developed by PIFRA through the implementation of FABS. However, commitments are not being recorded in a timely manner and in true spirit as commitments areraised at the same time as when the bill is received. Date 31-May-2005 07-Mar-2014 31-Dec-2014 Comments Application of IPSAS accounting standards Text Value Financial statenents did not Financial statements comply Road map being developed to comply with IPSAS with IPSAS cash basis. extend to accruals basis. Date 31-May-2005 07-Mar-2014 31-Dec-2014 Comments Implementation of commitment accounting Text Value No commitments recorded. System developed for full Full commitment accounting commitment accounting and and reporting reporting. Date 31-May-2005 07-Mar-2014 31-Dec-2014 Public Disclosure Copy Comments Commitment functionality has Implementation of real-time been fully developed by commitment recording/ PIFRA through the accounting is a critical action implementation of FABS. highlighted in management However, commitments are letter. not being recorded in a timely manner and in true spirit as commitments are raised at the same time as when the bill is received. Page 7 of 11 The World Bank Report No: ISR14146 Bills passed within 3 days (%) Text Value No bills tracking Bill Tracking Report within 03 80% days. Feb 2014 54%. December, 13 63% January, 14 56% Public Disclosure Copy February, 14 54% Total number of pensioners on DCS Jan, 14 Feb, 14 60756 63857 Monthly Increase=3101 Date 31-May-2005 07-Mar-2014 31-Dec-2014 Comments Improvement in bills passed Diagnostic analysis needs to within 3 days noted since last conducted to identify mission. Peaked at 63% in structural causes of delay so December 2013 that these can be addressed (see actions) All cheques issued by system Text Value Manual issuance of cheques 100% . Achieved Direct payments to all vendors Date 31-May-2005 07-Mar-2014 31-Dec-2014 Comments Comprehensive data entry coverage (% of Text Value Coverage of projects, SAEs, Most of the expenditure and 100% expenditure and receipts) foreign financed transactions receipts are recorded even- incomplete or non- timely though time lags occur. Date 31-May-2005 07-Mar-2014 31-Dec-2014 Comments Interfaces with SBP/NBP, FBR and EAD Text Value No interface exists to capture Interfaces with SBP and NBP All interfaces in place. established data electronically are established (100% completed). EAD on track to be fully functional in May. Date 31-May-2005 07-Mar-2014 31-Dec-2014 Comments FBR has been provided connectivity and training. Public Disclosure Copy However, transactional data recorded in FBR s system is not being communicated electronically to AGPR/PIFRA for an accounting entry. Application of modern audit practices Text Value Manual, transactions sample- Audit quality and assurance Second cycle quality control based audit. No staff trained arrangements have been framework effectively in Financial Audit Manual or strengthened by implementing operational and used for the CAATS. Few with QMF (see Annex 3 of AM 14 FY 10-11 audit. IS audit on professional degrees. for further detail). job training for FAOs staff. Page 8 of 11 The World Bank Report No: ISR14146 Incorporation of QMF IS audit and AMIS into regularity audit practices Date 31-May-2005 07-Mar-2014 31-Dec-2014 Public Disclosure Copy Comments 28 Performance Audit AMIS procurement/ Specialists trained including implementation ongoing. audit officers, assistant audit Highlighted as issue in officers and directors based in management letter. the performance audit wing). Updated status of training:- FAM: 4006 against project end targets of 4744 (84% completed) CAATS: 2157 trained against project end target of 2618 (completed 82%) Local Training for degrees/ certification courses: 189 out of the project end targets of 204 (91% completed) Performance audit of policy-linked programmes Text Value Few policy oriented staff Achieved. Training of 30 PAAs officers (such as poverty reduction) on performance audit and supervision of 3 audits by consultant Date 31-May-2005 07-Mar-2014 31-Dec-2014 Comments Implementation of AMIS Text Value No formal audit management Procurement process of AMIS Roll-out to key sites information system (AMIS) ongoing. Date 31-May-2005 07-Mar-2014 31-Dec-2014 Comments AMIS procurement ongoing. Highlighted as key implementation issue in Public Disclosure Copy management letter. Training of PAAs staff to replace consultants Text Value During transaction roll-out- a On target Only audit experts and few heavy reliance on consultants supervisors to be retained till project end. Additional 24 PAAS officers trained on FAM performance and IS audit Date 31-May-2005 07-Mar-2014 31-Dec-2014 Comments Status of PAAS officers The need to finalize transition trained: plans highlighted as key Foreign degree- level trained: Page 9 of 11 The World Bank Report No: ISR14146 40 implementation issue in IFCE Certified: 78 management letter. MBA/CISA/ACCA/ACDA:19 SAP Certified/ Academy-level Public Disclosure Copy trained: 38 Training in Special Sectors (Performance Auditing, forensic auditing, environmental auditing, IS auditing, energy sector auditing etc.) : 42 ACL Master Trainers :6 FAM Master Trainers:8 Transfer of M&E and change management Text Value Limited skills transfer in Management Guidelines’ on Full take-over of M&E and CM skills to CGA/OAG trnsactions roll out phase of each process/activity of the functions by GOP PIFRA II system published for all officers/staff levels in OCGA and OAGP. M&E and CM Wings share the M&E and CM techniques and methodologies with CGA/ OAG/ MoF from time to time and are always available for any further assistance as and when required by any stakeholders. M&E team also visited AG offices and DAOs for knowledge transfer and training/day-to-day hand- holding. This is related more with reporting of achievements. Date 31-May-2005 07-Mar-2014 31-Dec-2014 Comments Public Disclosure Copy Data on Financial Performance (as of 21-Mar-2014) Financial Agreement(s) Key Dates Project Ln/Cr/Tf Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date P076872 IDA-41090 Effective 06-Sep-2005 23-Sep-2005 08-Nov-2005 31-Dec-2010 31-Dec-2014 P076872 IDA-48640 Effective 10-Feb-2011 02-Jun-2011 27-Jun-2011 30-Jun-2013 31-Dec-2014 Disbursements (in Millions) Page 10 of 11 The World Bank Report No: ISR14146 Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P076872 IDA-41090 Effective XDR 56.60 56.60 0.00 53.27 3.33 94.00 P076872 IDA-48640 Effective XDR 15.60 15.60 0.00 10.06 5.54 64.00 Public Disclosure Copy Disbursement Graph Key Decisions Regarding Implementation The Project is making good progress. However, with 9 months remaining to Project closure on December 31, 2014, a number of area require close attention, e.g., Finalization of Post-PIFRA sustainability strategy, completion of implementation of SAP Upgrade and implementation of Audit Management Information System . Concerted and coordinated efforts from all stakeholders will ensure the success and sustainability of PIFRA II achievements. Restructuring History Public Disclosure Copy Level two Approved on 23-Nov-2010, Level 2 RVP Decision on 03-May-2013 Related Projects P122635-Second Improvement to Financial Reporting and Auditing Project - Additional Financing Page 11 of 11