Public Disclosure Copy The World Bank Implementation Status & Results Report Somalia PFM Capacity Strengthening Project (P146006) Somalia PFM Capacity Strengthening Project (P146006) AFRICA | Somalia | Governance Global Practice | Recipient Executed Activities | Investment Project Financing | FY 2014 | Seq No: 3 | ARCHIVED on 31-Mar-2016 | ISR23032 | Implementing Agencies: Key Dates Key Project Dates Bank Approval Date:04-Dec-2013 Effectiveness Date:17-Jan-2014 Original Closing Date:31-Mar-2016 Revised Closing Date:31-Mar-2016 Project Development Objectives Project Development Objective (from Project Appraisal Document) The Project Development Objective (PDO) is “to establish systems for more transparent and accountable management and use of public funds in Somalia”. Has the Project Development Objective been changed since Board Approval of the Project Objective? No PHRPDODEL Components Name Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO  Moderately Satisfactory  Satisfactory Overall Implementation Progress (IP)  Moderately Satisfactory  Satisfactory Implementation Status and Key Decisions Improved timeliness of financial reporting Annual Financial Statements for 2013, 2014 and 2015 were submitted for audit on 28 of March 2013, 30 of April 2014 and 30 March 2016 respectively to the Auditor General. The financial statements are prepared using International Public Sector Accounting Standards (IPSAS) format as opposed to the one-pager receipts and payments produced in the past. Somalia Financial Management Information System (SFMIS) 3/31/2016 Page 1 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Somalia PFM Capacity Strengthening Project (P146006) The bespoke Somalia Financial Management Information System (SFMIS) has been instrumental in supporting production of regular, timely, comprehensive, and accurate in-year and annual financial reporting. The SFMIS provides a platform to improve the efficiency, transparency and accuracy of the Government’s financial reporting. Currently all major financial reports such as Trial Balance, Budget Utilization, Revenue Performance, Source and Use of Funds by the various chart of accounts segments and sub-totalled by user-defined elements can be instantly produced with drill-down features. Furthermore, many charts and financial dashboards are available from the SFMIS to provide real-time financial information for decision making- http://mof.gov.so/index.php/2015-04-01-21-08-45 In-year reporting - coverage and classification of data allows direct comparison to the original and revised budget. Information includes all items of budget estimates. Transfers made to regions are included in the reports. An analysis of budget execution is provided by the various SCoA segments and dimensions. Information on expenditure is covered at both commitment and payment stages. There are concerns regarding data accuracy due to some miscoding of transactions at source of voucher preparation. Consolidation of cash balances - a Treasury Single Account (TSA) is in place at the Central Bank through which reported revenue collections are lodged. There is a high risk in the current payment process of transferring funds (advance) to MDA sub-bank accounts from where cash withdrawals are made to MDA officials outside the control of AGD. Also, this prevents the MoF to have a comprehensive consolidated cash balance position. Despite the Ministerial Decree on use of TSA and the requirements of section 3.3 (3) and (5) of the Appropriation Act 2015; there is very low compliance (between April and December 2015; only 23% of the total number of payment are made directly to suppliers and consultants from the TSA main account whilst 77 percent continue to be paid through MDA sub-bank accounts). Building on the improved payment control using the bar- coded Payment Instruction, functionality for CBS to generate instructions for direct deposit to beneficiary bank accounts is now available. CBS and the licensed financial institutions are designing the settlement modalities. Training - Extensive, hands-on training has been at the heart of the implementation plan. The team started with a Training-of-Trainers (ToT) approach to train a team of super users to be competent in supporting and maintaining the system in a sustainable manner. The super users were instrumental in training well over 180 civil servants form across the government. SFMIS Expansion - SFMIS network connected to 61 spending units (9 spending units are awaiting permanent offices for connection). The objective was to allow all users to be able to use the system directly from their facilities. Post Implementation Support - The SFMIS team implemented a comprehensive support and maintenance process with a suitable Service Level Agreement (SLA) for the infrastructure and the application. The support process provides a platform for the end users with multiple channels to communicate with the support team including an online support portal. PFM Education and Training Program There is a dearth of suitably qualified officers to perform critical PFM functions. 37 students have passed the CIPFA IPFM certificate level and eligible to start the Diploma stage. Key progress include: improvement in pass rate from 5% to 44% between November 2014 and June 2015 and several universities achieving 70% or higher pass rates. Summary of students who have completed CIPFA Certificate University Financial Accounting Management PFM for Somalia Number passed whole of Cert Accounting Level Mogadishu 24 4 29 4 SIMAD 26 11 20 10 Puntland 37 8 45 7 EAU 35 18 38 16 Total 122 41 132 37 Using the Donald Kirkpatrick “Evaluating Training Programs” model, the results provide objective evidence of the impact of the training programme at Kirkpatrick Levels 1 and – Reaction and Learning. Somalia IPFM Certificate pass rates Exam Nov 2014 June 2015 Nov 2015 Financial Accounting 5% 44% 66% Management Accounting - 29% 43% The PFM for Managers (PFMfM) course has seen a very high take-up. As of March 14 some 284 participants were registered. Of these, 108 had actually commenced their studies (as indicated by their own record of progress on the website), and 25 had passed the Introductory Course test. A further 5 students have completed the whole of the Certificate level and have been provided with Certification of Completion for the Certificate Level. This is an internal course completed certificate and does not count towards the CIPFA IPFM, since the latter are externally examined. However, it does indicate that these successful students have gained significant PFM knowledge. 3/31/2016 Page 2 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Somalia PFM Capacity Strengthening Project (P146006) 3/31/2016 Page 3 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Somalia PFM Capacity Strengthening Project (P146006) Risks Overall Risk Rating Risk Category Rating at Approval Previous Rating Current Rating Overall  High  High  High Results 3/31/2016 Page 4 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Somalia PFM Capacity Strengthening Project (P146006) Project Development Objective Indicators PHINDPDOTBL Time taken to publish Annual Financial Statements (Months, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 12.00 4.00 3.00 3.00 Date 31-Dec-2013 30-Apr-2015 28-Mar-2016 31-Mar-2016 PHINDPDOTBL % decrease in difference between budgeted and actual aggregate expenditure (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 70.00 30.00 43.00 10.00 Date 31-Dec-2012 31-Dec-2014 28-Mar-2016 31-Mar-2016 Overall Comments This first PDO level result was highly satisfactory. Annual Financial Statements for 2013, 2014 and 2015 were submitted for audit on 28 of March 2014; 30 of April 2015; and 30 March 2016 respectively to the Auditor General. The annual financial statements are prepared using International Public Sector Accounting Standards (IPSAS) format as opposed to the one-pager receipts and payments produced in the past. In- year budget utilization reports including donor-funded projects using country systems are now published on the ministry of finance website. Comparison actual revenues and expenditure with the original approved budget over the past three years, reveal significant variances which demonstrate concerns in the realism of the budget. Total domestic revenue collection has been increasing year-on-year between 2013 and 2015. Non-tax revenue collection consistently exceeds target whereas tax revenue falls short of targets over the past three years. The shortfall in revenue targets has led to daily cash rationing and affected the realization of the end project target by a moderate 3 percent. PDO for “difference between budgeted and actual aggregate expenditure”. Revenue forecasting skills need strengthening to improve the credibility of the budget. The PFM phase II sub-components for strengthening planning and budget preparation, revenue mobilization and tax administration together with the division of labour assigned to AfDB and IMF in related areas is expected to provide the necessary tools and build capacity to improve the realism of the budget. Intermediate Results Indicators PHINDIRITBL Annual Work Plan on track (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 75.00 95.00 90.00 Date 31-Dec-2013 22-Sep-2015 29-Mar-2016 31-Mar-2016 3/31/2016 Page 5 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Somalia PFM Capacity Strengthening Project (P146006) PHINDIRITBL Comprehensive Operating Procedures Manual (COPM) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target PFM Bill endorsed by Council of Ministers on March 17th 2016 for submission to Parliament. Procurement Bill and Audit Bill passed by Parliament but not yet assented to by the President. Ministerial Orders and Treasury Circulars are issued to Appropration Act 2014 regulate the current specifies key PFM systems and provisions to processes. The PFM Comprehensive strengthen the control Bills when passed will Operating Inadequate guidelines on environment and strengthen the enabling Value Procedures PFM business processes reporting requirements. environment by Manual No evidence of issue of codifying the Ministerial (COPM) specific Ministerial Orders/Treasury Orders / Treasury Circulars in the Financial Circulars. Regulations and Comprehensive Operating Procedures Manual. This will support the sustainability of the reforms.With the non- passage of the PFM Law, the COPM will need to be concluded under the phase II project. Date 31-Dec-2013 22-Sep-2015 29-Mar-2016 31-Mar-2016 PHINDIRITBL Number of PFM accredited staff (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 28.00 37.00 50.00 Date 31-Dec-2013 22-Sep-2015 29-Mar-2016 31-Mar-2016 3/31/2016 Page 6 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Somalia PFM Capacity Strengthening Project (P146006) PHINDIRITBL Timeliness of bank reconciliation (Days, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 90.00 30.00 7.00 7.00 Date 31-Dec-2013 22-Sep-2015 29-Mar-2016 31-Mar-2016 PHINDIRITBL Multi-dimensional chart of accounts produced and used for planning, budget execution, accounting and reporting (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Chart of Accounts (CoA) expanded from two segments (organization and economic) to a multi-dimensional Standard Chart of Accounts (ScoA) structure including (i) organization; (ii) fund; (iii) programs/projects; (iv) economic; and (v) geographic locations. Upgraded the Standard Chart of Accounts The SCoA allows (SCoA) from two linkage to the Economic segments (organization Recovery Plan (ERP) Function and economic) to a and the organization Organization and (program) Value multi-dimensional segment is mapped to economic segments only segment structure including (i) allow for production of implemented organization; (ii) fund; reports by Classification (iii) programs/projects; of Functions of (iv) economic; and (v) Government (COFOG) geographic locations and Peace and State Building Goals (PSG). The donor-funded projects using country systems are aligned to the ERP sub-sectors and reports produced to show programs and components and the source of funds supporting the relevant programs. Date 31-Dec-2013 30-Sep-2014 29-Mar-2016 31-Mar-2016 3/31/2016 Page 7 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Somalia PFM Capacity Strengthening Project (P146006) PHINDIRITBL % value of central government budget executed through SFMIS (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 100.00 100.00 100.00 Date 31-Dec-2013 22-Sep-2015 29-Mar-2016 31-Jan-2016 PHINDIRITBL Treasury Single Account (TSA) (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value N Y Y Y Date 31-Dec-2013 22-Sep-2015 29-Mar-2016 31-Mar-2016 PHINDIRITBL Transparency, comprehensiveness and competition in the legal and regulatory framework (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Request for Proposals (RFPs) posted on government website which has been The MoF website is upgraded to also post used to post procurement procurement Low public access to opportunities and opportunities for the Simplified complete, reliable and awards. project but not for the procurement Value timely procurement main government processed opportunities and award Leveraged on DFID budget. Awards were adopted information EFO to produce not posted on the Procurement, website but this will be Concessions and done going forward. Disposal Manual (Rules and Procedures) December 2015. Date 31-Dec-2013 22-Sep-2015 29-Mar-2016 31-Mar-2016 3/31/2016 Page 8 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Somalia PFM Capacity Strengthening Project (P146006) PHINDIRITBL Time taken to publish quarterly unaudited reports (Days, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 90.00 30.00 7.00 7.00 Date 31-Dec-2013 22-Sep-2015 29-Mar-2016 31-Mar-2016 Overall Comments All transactions for the approved budget including civil service payroll are processed through the SFMIS. The budget execution and payment process is well documented in the SFMIS Conceptual Design and User Guide and includes step-by-step flow charts. The web-based SFMIS went live in April 2015 with real-time end-to-end process flow with approval hierarchy and in-built audit trails and drill-down reporting functionality. Treasury Single Account (TSA) concept introduced and tracked through Vendor Payment Report. MDA sub-bank accounts in CBS yet to be closed. User Guide and includes step-by-step flow charts. The web-based SFMIS went live in April 2015 with real-time end-to-end process flow with approval hierarchy and in-built audit trails and drill-down reporting functionality. MoF has daily access to consolidated cash balance before authorizing payments. Central Bank of Somali (CBS) provides Ministry of Finance (MoF) with monthly bank statements. Bank auto-reconciliation functionality has been introduced in the SFMIS. Reconciliation takes place manually in parallel within the auto-reconciliation within 30 days of the month-end. The target for 50 professional accountants was overly ambitious considering the context context and international norms. However, the gradual professionalization of the PFM cadre is on course with 37 staff completing the Certificate Stage of the Chartered Institute of Public Finance and Accountancy (CIPFA) International Public Financial Management (IPFM) qualification and eligible to start the Diploma Stage. A PFM cadre scheme of service based on the concept of the competencies required for roles within PFM in government has been developed awaiting further discussion with National Civil Service Commission. Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed P146006 TF-16181 -- USD 4.50 4.50 0.00 4.32 0.18 96% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P146006 TF-16181 -- 12-Dec-2013 12-Dec-2013 17-Jan-2014 31-Mar-2016 31-Mar-2016 Cumulative Disbursements 3/31/2016 Page 9 of 10 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Somalia PFM Capacity Strengthening Project (P146006) Restructuring History There has been no restructuring to date. Related Project(s) There are no related projects. 3/31/2016 Page 10 of 10 Public Disclosure Copy