Public Disclosure Copy

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1 Public Disclosure Authorized SOUTH ASIA Afghanistan Governance Global Practice Recipient Executed Activities Technical Assistance Loan FY 2011 Seq No: 12 ARCHIVED on 15-May-2017 ISR28000 Implementing Agencies: Public Disclosure Authorized Key Dates Key Project Dates Bank Approval Date:14-Jun-2011 Planned Mid Term Review Date:01-Nov-2013 Original Closing Date:31-Dec-2014 Project Development Objectives Effectiveness Date:09-Aug-2011 Actual Mid-Term Review Date:01-Nov-2013 Revised Closing Date:31-Dec-2017 Public Disclosure Authorized Project Development Objective (from Project Appraisal Document) The proposed PDO is to strengthen public financial management through effective procurement, treasury and audit structures and systems in line with sound financial management standards of monitoring, reporting and control. Has the Project Development Objective been changed since Board Approval of the Project Objective? Yes Board Approved Revised Project Development Objective (If project is formally restructured)phrpdodel To further strengthen the efficiency and effectiveness of Afghanistan s procurement, treasury, and audit systems. Components Public Disclosure Authorized Name Reform Management:(Cost $3.72 M) Procurement Reform:(Cost $32.46 M) Audit Reform and Performance:(Cost $34.27 M) Financial Management Reform:(Cost $39.84 M) Revenue Mobilization:(Cost $3.84 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory 5/15/2017 Page 1 of 12

2 Overall Implementation Progress (IP) Satisfactory Satisfactory Overall Risk Rating Substantial Substantial Implementation Status and Key Decisions This ISR is being raised to record the approval of the extension of the project closing date by six months, from June 30, 2017 to 31 December, This is the third extension of the project closing date, with a cumulative extension period of 36 months. The extension was requested by the MOF on February 19, It is required to give the project enough time to complete implementation of ongoing activities in PFMR II and also to complete the preparation of a new Public Financial Management (PFM) project. This will help to avoid any gap in Bank PFM support in Afghanistan and ensure sustainability of key results achieved under PFMR II. Effective PFM remains of key importance to Government, given the overriding current need to prioritize interventions within tight budget constraints. The Project Development Objective (PDO) remains relevant and achievable, and remains the same following this closing date restructuring. The project has made significant progress towards achieving the PDO and targets set for the key performance indicators. Overall, the project s performance is rated Satisfactory (S) for both Project Development Objective (PDO) and Implementation Progress (IP). The results framework has been updated in this ISR and a formal ISM is planned to take place to coincide with preparation of the new PFM project. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance -- Substantial Substantial Macroeconomic -- Substantial Substantial Sector Strategies and Policies -- Substantial Substantial Technical Design of Project or Program -- Moderate Moderate Institutional Capacity for Implementation and Sustainability -- Substantial Substantial Fiduciary -- Substantial Substantial Environment and Social -- Low Low Stakeholders -- Moderate Moderate Other -- High High Overall -- Substantial Substantial 5/15/2017 Page 2 of 12

3 Results Project Development Objective Indicators Donors shift their off-budget official development assistance to Afghanistan to on-budget. (Percentage, Custom) RIMU states that the current working figure is around 60% but data is incomplete. This indicator will be updated when RIMU receives complete data and is likely to then change. In light of this, the results framework will be further updated in next ISM. Reduction in number of days taken by the National Procurement Committee (NPC) to dispose of cases presented to it. (Days, Custom) Date 31-Oct Jun Mar Jun-2017 NPC continues to show strong performance, with an average of 7 days for cases to be processed. The NPC has held over 90 sessions. NPA is developing an online mechanism for tracking submitted cases to NPC. This mechanism will create user accounts for PEs, NPC members and even Donor agencies to track submitted cases and share comments and information. It is envisaged that this system will developed in 4 months Establish a database of, and publicly disclose, National Procurement Committee (NPC) decisions. (Days, Custom) Date 01-Dec Jun Mar Jun /15/2017 Page 3 of 12

4 The NPC decisions are widely reported immediately the next day after the NPC. NPA is in the process of publishing list of all NPC decisions in a tabulated format on its website. The Supreme Audit Office commences development of a mechanism for citizen participation in audit. (Text, Custom) No citizen participation in audit The SAO is looking at best practice and is in contact with other SAIs. It expects that the mechanism will be developed and Policy prepared by December SAO has developed a mechanism for citizen participation in audit / issued a policy governing citizen participation in public oversight. Preparation for citizen participation in audit during FY16 leading to development of mechanism for citizen participation in audits and issuance of policy governing citizen participation in public oversight pf public funds by June Date 01-Dec Jun Mar Jun-2017 Increased number of functions carried out by regular ministry staff that were previously carried out by contracted staff. (Text, Custom) Plans currently work in progress. Plans currently work in progress. On target: Treasury has succeeded in transitioning some key functions from advisors to civil servants; NPA now carries out key managerial functions through civil servants. Plans currently work in progress. On target: Treasury has succeeded in transitioning some key functions from advisors to civil servants; NPA now carries out key managerial functions through civil servants. Plan in place for FY17 to modify Tashkeel to include functions that are currently undertaken by national consultants. Equivalent FY16 Plan implemented. Date 01-Dec Jun Mar Jun /15/2017 Page 4 of 12

5 Improved coverage and quality of internal audit. (Number, Custom) Date 01-Sep Oct Mar Jun-2017 End target is that MOF audits 50% of budgeted expenditure % (for entities which collect) revenue 25% within its mandate, as per recognized standards. During the ISM mission of July 2016, the figures were 25% (budgeted expenditure) and 15% Revenue. As at March 31st 2017 the cumulative figures have improved to 30 % (budgeted expenditure) and 18% Revenue. However progress has been slower than expected as no audit has performed in provinces in recent periods due to factors outside of control of IAD. This was reported in Closing Date extension restructuring paper and was one of the reasons for justification of extension. However the IAD is still on target to meet the indicator. Improved coverage and quality of external audit. (Number, Custom) Date 01-Sep Jun May Jun-2017 During 1395 SAO covered 71.03% of annual government expenditure. Of this 47.62% was covered by central budgetary audit directorate and 23.41% was by local budgetary audit directorate. Overall The project has made significant progress towards achieving the PDO and targets set for the key performance indicators. 5/15/2017 Page 5 of 12

6 Intermediate Results Indicators Legal framework, legal documentation and disclosure policy completed and Appeal and Review Committee and the dispute resolution system is functioning (Text, Custom) Legal framework in place but not operational The new committee has successfully started operation in early September 2015 and held 5 sessions. Debarment notices are published by a separate Debarment Committee online. The new committee successfully started operation in early September As of Feb 2017, the ARC has received and reviewed 517 cases. Debarment notices are updated weekly and published in a separate section on NPA website. Debarment Committee online. As of Feb 2017, 145 Debarment Cases had been received, out of which 110 have been debarred, 15 have been rejected, and 20 are under debarment process. A half yearly Appeals and Review Committee disclosure report for each period now needs to be published in accordance with the agreed PDO indicator. A comprehensive section on ARC will be included in NPA s Annual Report. Semi-annual report on Appeal and Review Committee activity. Debarment notices, if any publicly disclosed. Number of line ministry and mustofiats procurement staff completing duty-specific procurement training. (Number, Custom) , , staff trained in life of project up until Additional Financing was approved, As of Feb 2017, NPA has provided training to 1938 staff of line ministries. Number of Male Staff Trained: /15/2017 Page 6 of 12

7 Number of Female Staff Trained: Staff have been trained in Kabul and 604 staff in 12 Provinces. Numbers of human resource management staff completing duty-specific training in their respective specialties (Number, Custom) Date 01-Sep Sep Sep Jun-2017 Target achieved. RIMU reported 956 staff trained in Period October 2015 to September A further 586 are reported to have been trained between October 2016 and March 2017 (345 between October 2016 and December 2016 and 241 between January 2017 and March 2017). LM PFM assessment (Text, Custom) 2 assessments underway assessments completed Date 01-Sep Jun Jun Dec /15/2017 Page 7 of 12

8 Number of internal audits done to acceptable standards. (Text, Custom) In FY audits were undertaken and in the first quarter of audits have been undertaken. Total = The target has been achieved. Number of external audits verified as done to international auditing standards (Text, Custom) Just WB grant audits With the support of two consulting firms SAO has completed the following audits as per INTOSAI auditing standards; i) all WB grant audits (except one which was completed shortly after mission); and ii) compliance audit of 9 ministries representing more than 75% of government expenditure SAO has completed the audit of all World Bank ARTF projects for the fiscal year 2015, and submitted the reports to World Bank and MOF. SAO is now in the process of conducting the audits for fiscal year The reports will be submitted by end June SAO with the assistance of its contractor has, to date, completed 9 audits in line ministries (-MOD, MOI, MOE, MRRD in first year- MOMP, MOEW, MOHE in second year- MAIL, MOPW in third year). All WB grant audits and 9 compliance audits 5/15/2017 Page 8 of 12

9 Timely dissemination of in-year budget execution reports. (Text, Custom) 30 days from month end 15 days 15 days 14 days Date 01-Sep Sep Mar Jun-2017 The current figure of 15 days is the median. Reports are posted between 12 and 18 days. To be followed up during next ISM. AFMIS upgrade to web based version evaluated (Text, Custom) Web based version of AFMIS not implemented Assessment underway. Demonstration of version 7 capabilities provided by supplier and test script report shared with the World Bank. The AFMIS web based system (v7) is being implemented in all budgetary units in center and in provincial mustofiats. The first stage activities as specified in contract with vendor were almost complete as at 31st March Implementation of recommendatio ns of the assessment completed. Legal framework and structures for development and regulation of an accounting profession drafted and training plans for professional accountants established (Text, Custom) no legal or oversight framework Final Version of Law submitted to Ministry of Justice (MOJ) on 09 April The MoJ have now agreed on the content of the law and will process it. Currently MOJ is amending the expressions, translated words and format to in bring in line with MOJ standards. This process may take one more month and then will be sent to the The Cabinet has approved a new Accountancy Law to establish the legislative basis for a regulated accounting profession in Afghanistan and submitted the new law to Parliament. Training of accountants underway. Monitoring Reports, detailing performance against target to be split by gender in order that baseline can be established. 5/15/2017 Page 9 of 12

10 institute of MoJ for their review and obtain Minister s approval Timeliness and quality of annual audited financial statements submitted to the legislature and donors (Text, Custom) Audited Qatia statements submitted to National Assembly within 6 months of the close of the financial year but they do not include cash position of controlled entities, third party payments and information about assets & liabilities The revenue account was submitted to SAO on June 10, 2016 and subsequent to the mission, Qatia audit report was submitted to the Parliament on September 21, Qatia audit report for FY 1394 was submitted to the president and parliament on 31/3/1395 as per the legal requirement. The Qatia audit team is currently auditing the consolidated Qatia accounts of the fiscal year 1395 and is expected to complete the report by 25th June Qatia and Annual Cash Based Financial Statements and info on liabilities, assets and cash position submitted to the legislature within 6 months of the close of the financial year. Disaster recovery plan and testing (Text, Custom) no plan in place Revised workplan has been submitted.disaster Recovery plan still pending. IT adviser being recruited to develop. Disaster Recovery plan still pending. Disaster recovery plan tested and in place/implemen ted. Pending completion. 5/15/2017 Page 10 of 12

11 Number of internal audit staff trained and accredited (Number, Custom) Date 01-Sep Sep Mar Jun-2017 Overall 227 staff trained and accredited in Period January to March 2017 (first quarter FY1396). 173 staff were trained and accredited in previous quarter (October to December 2016). Number of staff trained since last ISR report is therefore 227 plus 173 = 400 Cumulative figures show target achieved with number of IA staff trained over the life of the project is approaching 3000.Annual figures prior to AF can be extracted from the Aide memoire for ISM mission October 18-November Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed P TF Effective USD % Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P TF Effective 09-Aug Aug Aug Dec Dec-2017 Cumulative Disbursements 5/15/2017 Page 11 of 12

12 Restructuring History Level 2 Approved on 01-Sep-2014,Level 2 Approved on 19-Dec-2015,Level 2 Approved on 19-Apr-2017 Related Project(s) P Second Public Financial Management Reform Project (PFMRP II) - Additional Financing 5/15/2017 Page 12 of 12

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