Second Year Progress Report April 1, 2012 March 31, 2013

Transcription

1 Second Year Progress Report April 1, 2012 March 31, 2013 May 2013 Page 1

2 TABLE OF CONTENTS Contents 1 EXECUTIVE SUMMARY Background and Context Content and Purpose of the Work Plan Highlight of the Results Achieved SEMCAR Status and Key Next Steps RESULTS ACHIEVED Narrative Summary of the Results Achieved Performance Measurement Framework Matrix Changes in Context and Potential Impact on Results PROJECT MANAGEMENT Steering Committees Meetings Human Resource and Management Issues Constraints, Mitigation Measures and Lessons Learned FINANCIAL REPORT Reporting Against Annual Budget and Variances Annex Annex 1: SEMCAR Logic Model Annex 2: SEMCAR Web Portals Annex 3: Risk Management Strategy Annex 4: List of Missions Undertaken Annex 5: An Example of a Risk Management Map (March 2013 Actual Field Simulation) Page 2

3 ABBREVIATIONS AND ACRONYMS ASYCUDA C4D CARTAC CATT CERT CIDA COUSINS CTRTF DGST HLM ICT ICT-RTSC IFMIS IMARS IMF IMF GFS IPSAS IRD LOU LTA M&E MoF PD PEFA PFM PMF RM RMF RMM RMW SC SEMCAR SIGTAS SmartStream Automated System for Customs supported by UNCTAD Collaboration for Development Caribbean Regional Technical Assistance Center Customs Assessment Trade Toolkit Computer Emergency Response Team Canadian International Development Agency Comprehensive Underlying Systems for SEMCAR countries World Bank Trust Fund Division Department of General Sales Tax High Level Meeting Information Communication and Technology Regional Training and ICT Support Center Financial Management Information Systems Interim Monitoring and Reporting System International Monetary Fund IMF Government Finance Statistics International Public Sector Accounting Standards Inland Revenue Department Letter of Understanding Long Term Advisor Monitoring and Evaluation Ministry of Finance Project Document Public Expenditure and Financial Accountability Public Finance management Performance Measurement Framework Risk Management Risk Management Framework Risk Management Maturity Risk Management Workshop Steering Committee Supporting Economic Management in the Caribbean Standard Integrated Government Tax Administration System Integrated Public Finance Management System developed by INFOR Page 3

4 SMF SPR SRMRM STX TA TSA UN COFOG UNCTAD WB Strategic Management Framework SEMCAR Progress Report Standard Risk Management Reference Model Short Term Expert Technical Assistance Treasury Single Account United Nations Classification of the Functions of Government United Nation Conference on Trade and Development World Bank Page 4

5 1 EXECUTIVE SUMMARY This SEMCAR Progress Report (SPR) provides information on advancements achieved in the execution of SEMCAR s second year work plan (from April 1, 2012 to March 31, 2013). The SPR presents the activities programmed for the second year work plan and details the status of their corresponding implementation. 1.1 Background and Context SEMCAR, initiated with generous funding from Canadian International Development Agency (CIDA), is a program to support enhanced regional tax and customs administrations, as well as public financial management in the Caribbean. SEMCAR s strategic objective is to improve economic management, regional integration and competitiveness in 12 Caribbean countries 1. Within this strategic context, the Program will contribute to more efficient, effective, accountable, and regionally integrated Tax, Customs and PFM institutions, policies, processes and Information and Communication Technologies (ICT) systems. SEMCAR takes regional integration into high consideration. Therefore, the Program s approach is to develop synergies through regional cooperation. In addition, SEMCAR focuses on increasing the opportunities for economies of scale, providing common solutions and standards to foster regional integration through the modernization of tax, customs, and public financing management practices framed by the improvement of the ICT systems. The region as a whole has a much better chance to modernize processes and institutions and develop flexible and sustainable ICT systems if countries seek to share experiences, and where possible, develop same or similar initiatives. SEMCAR was designed to be implemented in two phases. Phase I ( ) focuses on identifying the key changes in policies, institutional reforms, improvements in formal processes, and actual work practices that are needed to take place quickly in tax, customs, and PFM to effectively implement the ICT systems. These will be undertaken during the first phase along with basic work on ICT and the planning of a Regional Training and ICT Support Center. The immediate outcomes after phase I include increased ability of institutions and staff to manage processes and ICT systems in tax, customs and PFM areas in at least 4 or 5 countries; as well as improved access to regional training and ICT technical support for tax, customs and PFM administrations. The planned Phase II would then focus on continuation of reform agendas, the more detailed upgrading of processes and ICT systems, including an integrated solution for Customs/Tax/PFM systems and establishing a fully operational Center, as identified as one of the main needs for countries during the scoping virtual missions for Tax, Customs, and PFM. In other words, the activities proposed under the first phase will pave the way for the larger scale modernization of ICT systems in the second phase of the SEMCAR program. SEMCAR strategic approach is framed by: Participatory approach in decision making of the work program and use of resources; 1 SEMCAR beneficiary countries are Antigua and Barbuda, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, and Trinidad and Tobago. Page 5

6 Ensuring high quality diagnostic work and recommended solutions; Promoting regional participation of public officers in implementing the work program; Recommending a menu of options to overcome identified issues; Bringing the best international expertise to assist the countries; and Ensuring proper and effective coordination among countries. The Program is divided into five components. The first three components relate to tax, customs, and PFM. The fourth addresses the development of a Regional Training and ICT Support Center. The fifth component relates to project management, quality assurance, and monitoring and evaluation. Special emphasis will be given to fundamental process reforms and change management issues. ICT elements will work hand-in-hand to create synergies with other technical elements of tax, customs, and PFM. Enhanced Regional Tax Administrations: The objective of this component is to support the implementation of tax administration reforms through capacity building and technical assistance for the implementation of institutional modernization and restructuring of tax administration procedures. Regional risk and strategic management frameworks will be completed and models will be implemented in a selected number of countries. In addition, user business requirements and detailed requests for proposals for an enhanced regional tax administration system will be developed, using state of the art ICTs. Enhanced Regional Customs Administrations: The main goal of this component is to increase the ability of Customs administration institutions and staff to better manage processes and ICT systems. The Customs Assessment Trade Toolkit (CATT) is the main tool to evaluate the relative strengths and weaknesses of Customs administrations, compare them to good practices, and produce action plans to overcome the main weaknesses identified by the CATT assessments. Regional risk model has been developed and implemented in a selected number of countries. Enhanced Regional Public Financial Management: The aim of this component is to reform PFM processes and institutions to ensure that future ICT systems are geared to sound business processes. For most countries, there is still ample scope to strengthen existing budget processes. Therefore, on-the-ground technical assistance for modernizing and restructuring of PFM processes including budget formulation, budget execution, treasury management, cash accounting standards, fiscal reporting and internal audit will be delivered. In addition, business requirements for Integrated Financial Management Information Systems (IFMIS) upgrades will be prepared and a data warehousing system and interoperability modules across the three main systems will be implemented in a selected number of countries. Regional Training and ICT Support Center: This component is designed to develop the design of the business model for the Regional Training and ICT Support Center, along with actual delivery of regional training programs. The intention of the regional training center is to provide development programs and seminars for tax and customs administrations as well as PFM staff. Training activities would be linked to Components 1, 2 and 3, in order to create synergies between ICT and business-related support activities. Page 6

7 Project Management: The fifth component of SEMCAR is composed of project management, quality assurance, and monitoring and evaluation. SEMCAR has been initiated with funding from CIDA. It is managed by the World Bank and implemented in partnership with the IMF. To effectively supervise and manage the coordinated implementation of the wide range of desired activities included in the SEMCAR, the governance and implementation structure considered the following criteria in developing the approach for project management: (1) cost-effective implementation; (2) coordination between TA provision in the region and ICT development; (3) coordination of SEMCAR and CARTAC technical assistance delivery; (4) adequate balance between centralized coordination and implementation on-the-ground to ensure visible results; and (5) alignment of program implementation with both WB and IMF internal processes. 1.2 Content and Purpose of the Work Plan First year s work program was oriented at implementing the key activities in a selected number of countries. Specifically, the first year work program was designed to carry out inter alia: in-depth assessment missions and workshop events in Tax, Customs and PFM areas. To identify the weaknesses and the need for technical assistance, the SEMCAR team prepared comprehensive questionnaires covering the areas of tax, customs, PFM and ICT training center. These questionnaires were reviewed and their information fine-tuned through individual virtual country scoping assessment missions. In the second year, the first years experience was extended and implemented in some other SEMCAR countries. Also, on-the-ground technical assistance and action plans were carried out for the countries that were at the scope of the in-depth assessments during the first year of the Program. In addition, the Program aimed at initiating the process to identify the requirements for the establishment of a regional ICT center. Additionally, the COUSINS (Comprehensive Underlying Systems for SEMCAR Countries) concept was introduced and scoping missions were carried out during the second year. 1.3 Highlight of the Results Achieved All activities included in the second year work plan were initiated and most of them were completed. At the request of CIDA, this progress reports covers the period of April 1, 2012 March 31, 2013 to correspond with CIDA s fiscal year. Table 1, presented below, provides a snapshot of the work plan achievements detailed by components and activities. 1.4 SEMCAR Status and Key Next Steps To date, the SEMCAR team carried out the following key activities: (i) Four Steering Committee (SC) meetings, questionnaires and 12 virtual country scoping assessment missions to agree on the SEMCAR approach to be taken, identification of the key areas for technical assistance, as well as reporting, and implementing the first 2 years work program; (ii) in-depth and follow-up assessment missions, action plans, on-the-ground technical assistance, and workshops in Tax, Customs and PFM areas with ICT focus. The fifth SC meeting is scheduled to be held on May 9-10, The main goals are to review the progress for the second year implementation, as well as to endorse the work plan, including: activities, budget, and outputs, for the next 12 months (April 2013 March 2014). Page 7

8 The finalization of the pending activities, as highlighted in Table 1, is the main priority. Additionally, the next year s work plan including its corresponding budget has to be consolidated. Table 1 Second Year Work Plan Progress Summary Components Outputs Target Progress Comments Component 100 Enhanced regional tax administration 120 Strategic Management Framework -High level meeting -Change management workshop -In depth and follow-up assessments (St. Kitts and Nevis, Antigua and Barbuda, Dominica, Grenada, St. Lucia, Trinidad and Tobago) 6/6 Completed 130 Strategic Management Framework -On the ground technical assistance (Grenada, St. Kitts and Nevis, Dominica, Antigua and Barbuda, Trinidad and Tobago) 5/5 September 2012 February 2013 May 12 February 13 Completed November 12 March 13 Component 200 Enhanced regional customs management Component 300 Enhanced regional public financial management Risk Management Framework -Risk management workshop -Focal group meeting -Field implementation (Jamaica, Dominica, St. Kitts and Nevis, Grenada) 140 User business requirements for a regional tax administration system 220 In-Depth Assessments and follow up action plans -CATT (Jamaica, St. Vincent and the Grenadines, Suriname, Trinidad and Tobago) 230 Risk Management Framework -Risk management workshop -Focal group meeting -Field implementation (Jamaica, Dominica, St. Kitts and Nevis, Grenada) 240 Technical assistance to support integration between the tax and customs administrations 320 In-Depth Assessments -Suriname, St. Kitts and Nevis 4/4 February 2012 June 2013 July 12 March 13 1/0 Partially Completed 4/4 Completed September 12 February 13 4/4 Completed February 2012 June 2013 July 12 March 13 0/1 Partially Completed 2/2 Risk Assessment Framework being developed by the Tax and Customs Components Completed August 12 October 12 Follow up Assessments -St. Lucia, Belize, St. Vincent and the Grenadines 3/3 December 12 March On the ground technical assistance 21/39 Partially Lower than planned expert (number of expert missions) Completed missions due to slow progress in St. Vincent and delayed take off in Suriname and St. Kitts. The TA delivery to these countries is expected to gain momentum in year Regional maintenance contract for 0/1 Largely Lead Negotiator has been Page 8

9 Table 1 Second Year Work Plan Progress Summary Components Outputs Target Progress Comments IFMIS Completed chosen. Negotiation and finalization of contract is planned to be done by May 2013 Component 400 Establishment of a regional training and ICT support center Component 500 Project management, quality assurance and monitoring & evaluation 350 Common framework for functional requirements of core and non-core IFMIS components 360 Reporting and data-warehousing 370 Interfaces and interoperability modules 410 Establishment of a sustainable regional training and ICT support center 420 Core elements for interoperability frameworks for PFM, tax and customs 430 Regional workshops and training curriculum developed for tax, customs and PFM system users 510 Adjustment of the SEMCAR Performance Measurement Framework Development and implementation of SEMCAR WEB pages Development and implementation of the monitoring and evaluation execution system 0/1 Initiated (Not yet due) 0/1 Partially Completed 0/1 Initiated (Not yet due) Initial scoping and detailed scoping missions carried out in Belize and St. Lucia in 2012 and 2013, including a COUSINS work shop in Barbados in November 2012 Selected ICT Advisor hired Initial scoping and detailed scoping missions carried out in Belize and St. Lucia in 2012 and 2013, including a COUSINS work shop in Barbados in November /1 Completed Workshop on ICT for Tax, Customs and PFM 1/1 Completed March /3 Completed September /1 Partially Completed Monitoring System is based on a spreadsheet matrix with indicators as had been agreed with CIDA. Page 9

10 2 RESULTS ACHIEVED 2.1 Narrative Summary of the Results Achieved Outputs 110, 210, and Scoping Assessment Missions: Work Plans continue to be driven by the priorities identified during initial virtual scoping assessment missions conducted at the start of the Project in 2011, which clarified the main needs of the beneficiary countries. Detailed questionnaires covering Tax, Customs, PFM and ICT areas were distributed to the 12 SEMCAR countries followed up by the virtual scoping assessments held by the SEMCAR component teams. The virtual scoping mission for Trinidad and Tobago was later completed at the convenience of the authorities. Component 100 and 200 Enhanced Regional Tax Administration and Enhanced Regional Customs Management: A) Regional Strategic Management Framework (SMF) for Tax Administrations Output 120 Follow-up Assessments for Tax Administrations The Program to institutionalize the SMF continues in four countries. Following on the Regional High Level Meeting (HLM) held in Jamaica September 13-14, 2012, and in conjunction with the SC approved work plan for the second six months of the year, activities continue through the work of shortterm experts supported by the Regional Tax Long Term Advisor (LTA) to support institutionalizing a regionally consistent strategic management process in the tax administrations of recipient countries. Given resource limitations, priority countries have been selected mainly from those that have demonstrated commitment to move ahead with the implementation of the SMF. Following on the Regional High Level Meeting (HLM) 2 held in October 2012, the way was cleared to proceed with the high-level support of each country, having achieved the objectives outlined at the start of the meeting to: 1. Establish the business case for a sustainable process for strategic management in the 12 SEMCAR recipient countries; 2. Adopt the Strategic Management Framework (SMF) as a standard within the SEMCAR recipient countries; 3. Secure commitment from the regional leadership present, to provide adequate additional resources, as necessary, to support a time-bounded implementation of the SMF system. Change Management Workshop (January 30 to February 1, 2013). In response to requests by recipient countries to fill a knowledge gap in the area of change management, a workshop was conducted, targeted at officers from the five countries approved for support for the SMF by the Steering Committee. The workshop was graciously hosted by the Inland Revenue Department of Grenada. 2 Nine of the twelve countries participated with Antigua and Barbuda being represented by the Minister of Finance, the Hon. Harold Lovell and the Permanent Secretary, Mr. Sean Cenac. St. Kitts and Nevis, Barbados, Belize, Jamaica were represented by Financial/Permanent Secretaries and Deputy Permanent Secretaries. St. Lucia, Grenada, and Dominica were represented by other senior officials from the Ministry of Finance, with the Chairman of the Board of Inland Revenue representing Trinidad and Tobago. Page 10

11 The workshop focused on the SEMCAR s SMF, and delivery was through presentations and work group sessions. The presentations included certain theoretical aspects of change management. Based on responses from participants and feedback obtained from the evaluation forms, the workshop met its objectives and was assessed as successful. In-depth and follow-up assessments SMF. In line with the approved work plan for FY 2013, SEMCAR s LTA visited six countries to carry out further assessments to deliver TA and to determine additional needs in the agreed countries in respect to the SMF. Table 2 below shows a summary of the LTA visits in that regard. Following on the visit by the LTA in July 2012 to Grenada, a short-term expert visit provided TA to the Inland Revenue Department (IRD) during the period September 27 - October 3, The primary purpose of the activity was to assist the department in drafting its 2013 operational plans in-line with the strategic plan that was developed earlier in the year with the assistance of the LTA. As a result of the above visit and upon request by the Comptroller IRD, a follow-up mission was conducted in November to assist the department in developing is work plans in-line with its operational plans, as well as begin the process to establish a performance management system by identifying key performance indicators. In May 2012, the LTA visited the federation of St Kitts and Nevis, one of the few countries within the SEMCAR group that has established a Planning Unit and assigned dedicated staff to the process of institutionalizing the strategic management process within the IRD. The unit requested substantial TA to assist them with implementation of the framework and create an effective and sustainable SMF process. As a result two other short-term expert (STX) TA visits were delivered during the fiscal year. The initial STX visit delivered in November reviewed the IRD s strategic plan and suggested amendments. During the week s activities, the expert focused mainly on assisting the department in drafting a 2013 operational plan in line with the strategic plan. The SMF implementation plan was reviewed and updated to incorporate the most recently completed activities. In February 2013, another STX visit was delivered to review the monitoring and evaluation systems, and make recommendations for improvement as necessary. The LTA s visit to Belize in June 2012, determined that a joint team from the two main domestic tax departments (Inland Revenue Department and the Department of General Sales Tax) was established and is being led by senior staff of the Ministry of Finance (MoF). A strategic plan was being developed based on proposals to create an integrated domestic tax department. The LTA assisted in the process, which the authorities later completed. In June and October, 2012, the LTA made assessment visits to Antigua and Barbuda, Dominica, and St. Lucia to assess progress made to implement the SMF. Little progress had been made to move the process forward. In the case of Dominica and St. Lucia, further visits and possible assistance will be considered upon request and upon demonstration of their commitment and support in moving the SMF process forward. Another such visit was made to Trinidad and Tobago and as a result of the assessment, further assistance was planned to develop operational plans in line with its draft strategic plan. At the High Level Meeting (HLM) that was held in Jamaica in September 2012, the Dominica representative identified developing change management strategies and performance and evaluation as two of the areas that they will require TA. In response a STX visit was planned for February to assess the department s TA needs. During the visit the expert took the opportunity to assess the department s Page 11

12 state of implantation of the SMF. In the absence of an active strategic plan to guide the operations of the department, the mission met with senior members of the audit and collections teams to arrive at a set of strategic objectives and supporting operational plans for the period February 2013 to June During the September 2012 HLM, the Minister of Finance of Antigua and Barbuda accepted a request from SEMCAR to be the Regional SMF Spokesperson at the political level to assist the process of garnering commitment and support at the political level, and supporting the business case for providing the necessary resources to fully regionalize the SMF across SEMCAR recipient countries. Next steps in this process will agreed in the upcoming work program. The Minister also committed to providing the necessary resources to IRD-Antigua to enable the department to move forward with its own implementation of the SMF. As a result of the minister s commitment, the Permanent Secretary has agreed to establish a road map with SEMCAR to mobilize the initiative. A visit by the LTA during December followed-up on the next steps in this initiative. Table 2 below highlights the mission conducted by the LTA during the reporting period in line with the approved work plan. Table 2 - TAX Technical Assistance summary Countries Technical Assistance St. Kitts and Nevis 1. May 2012 The LTA reviewed the work plan for institutionalizing the SMF that was developed during the strategic management workshop (SMW) in October 2011 and subsequently updated by the department. The mission also assessed the technical assistance needs, gave guidance in the process and assisted the department in updating the SMF implementation action plan accordingly 2. November 2012 The mission reviewed the IRD s strategic plan and suggested amendments to it. During the week s activities, the mission focused mainly on assisting the department in drafting a 2013 operational plan in line with the strategic plan. The SMF implementation plan was reviewed and updated to incorporate the most recently completed activities. Belize 3. June 2012 The LTA reviewed the status of SIGTAS within the Inland Revenue Department (IRD) and Department of General Sales Tax (DGST) and assessed the TA needs of the two departments in that regard. The mission also reviewed the progress made to date in institutionalizing the SMF that was developed during the SM workshop that was held in Jamaica in October 2011, guided the process and assisted in updating the action plans accordingly 4. February 2013 the LTA worked with Barbara Hebert to review of the current status of the monitoring and evaluations systems of the IRD and suggestions made to management about improvements to the current processes. Antigua and Barbuda 5. June 2012 The mission briefed the Ministry of Finance officials on the activities of SEMCAR in the region and more specifically as they relate to Antigua and Barbuda. The mission also reviewed the status of SIGTAS usage within the Inland Revenue Department (IRD) and to assess the technical assistance needs in that regard. Dominica 6. June 2012 The mission briefed the Financial Secretary and other Ministry of Finance officials on the activities of SEMCAR in the region and more specifically as they relate to Dominica and assessed the progress made to date in institutionalizing the SMF. The mission also reviewed the status of SIGTAS usage within the Inland Revenue Department (IRD) and assessed the technical assistance needs in that regard 7. February In the absence of an active strategic plan to guide the department, the mission met with senior members of the audit and collects teams to arrive at a set of strategic objectives and supporting operational plans for the period February 2013 to June Page 12

13 Table 2 - TAX Technical Assistance summary Countries Technical Assistance Grenada 8. July 2012 The mission assisted the department in finalizing its strategic plan. The mission also assessed the TA needs of the department in the process of institutionalizing the SMF. 9. September/October The mission assisted the IRD to develop its operational plan that will support the department s strategic plan. The mission also assessed the progress that the department has made in institutionalizing the SMF and assisted in updating the strategic management implementation action plan. 10. December The Regional Tax Advisor worked with Ms. Barbara Herbert, FAD Panel Expert, in assisting the Grenada - IRD in developing its sectional work plans in line with the operational plan previously developed. The mission also assessed the progress that the department has made in institutionalizing the SMF and assisted the department in updating its strategic management implementation action plan. An assessment of the state of implementation of the SMF was also done. 11. January/February 2013, - The LTA coordinated a Change Management workshop that was targeted at person involved in implementing the SMF within their departments. Participants were selected from countries that the Steering Committee has agreed to assist during this financial year Jamaica 12. September 2012 The LTA participated in the HLM that was targeted at the Ministers of Finance and other top officials of the MoF of the SEMCAR recipient countries St. Lucia 13. October The LTA was invited to participate in the E-GRIP workshop as the initiatives under E-GRIP are closely related to the broad objectives under SEMCAR. The mission also assisted the IRD in its next steps to establish the SMF in-line with the needs identified by its representative at the September HLM in Jamaica and to assess the TA needs in that regard. Trinidad & Tobago 14. January 2013 The LTA assessed the state of implementing the SEMCAR developed SMF and to determine the TA needs of the IRD in this regard. The LTA also reviewed the department s implementation action plan and assisted the authorities in updating it. Output 130 On-the-Ground Technical Assistance - Technical Assistance Delivered Through Short-Term Experts Grenada (September 2012) The mission assisted the IRD to develop its operational plan that will support the department s strategic plan. The mission also assessed the progress that the department has made in institutionalizing the SMF and assisted in updating the strategic management implementation action plan. The mission delivered the following outputs: An operational plan was drafted which is in line with the strategic objectives. An assessment of the progress achieved thus far in institutionalizing the SMF is contained in this report. In addition, advice was provided during the assignment to prioritize the activities to be pursued during the first year of operation of the Planning Unit and on how to ensure that managers and staff are engaged and aware of the division s overall thrust and progress. Together with the Comptroller, the action plan was reviewed and timeframes were updated. The Comptroller will revisit the allocation of responsibilities for this action plan. Page 13

14 St. Kitts and Nevis (November 2012) The expert assisted the IRD to review the draft strategic plan and offered suggestions to enhance the product. An initial operational plan for 2013 in support of the draft strategic plan was also drafted. During an assessment of progress achieved in institutionalizing the SMF, it was noted that the department made significant progress in its implementation. In addition, advice was provided on prioritizing the activities to be pursued by the Strategic Management and Coordination Unit that included a discussion on the role of managers versus the role of the Unit in the strategic planning process. Grenada (December 2012) The mission assisted the IRD in developing its sectional work plans in line with the operational plan. The expert also assessed progress that the department has made in institutionalizing the SMF and assisted the department in updating its strategic management implementation action plan. Grenada (January 2013) The STX was the main facilitator at a Change Management workshop that was targeted at officers within the IRD departments of the five countries for which the Steering Committee has approved support to implement the SMF. Dominica (February 2013) The TA delivered achieved the following outcomes: (1) assessed the progress that IRD had made in the process of institutionalizing the SMF and give further guidance in that regard, (2) assisted the department to review its strategic plan and (3) assisted the department to update its strategic management implementation action plan. The expert noted that the most recent strategic plan of the department expired a year ago with no action taken to execute the plan. In the absence of an active strategic plan to guide the department, the mission met with senior members of the audit and collects teams to arrive at a set of strategic objectives and supporting operational plans for the period February 2013 to June St. Kitts and Nevis (February 2013) A review of the current status of SMF implementation was undertaken and suggestions made to management about improvements to the current process. In particular this involved: Identifying more performance indicators with a focus on efficiency/productivity indicators, Encouraging managers to make full use of the reports currently available in SIGTAS and to pursue an automated time reporting system, Suggesting areas which could be both streamlined from and added to the current reporting format, and endorsing the current practice of monthly management team reviews of the performance results and also encouraging a push of the performance management framework focusing on accountability and feedback to the unit and individual levels of the organization. Page 14

15 Trinidad and Tobago (April 2013) The expert will deliver a one-day workshop and follow-up in the ensuing days with participation in another workshop to update the strategic plan and assist with developing the supporting operational plans. Antigua and Barbuda (April 2013) The expert will hold a one-day workshop to sensitize the senior management staff of the ministry of finance, and the revenue departments about the SMF, and work with designated staff thereafter to develop an SMF implementation plan and update the existing strategic plan. General Next Steps and Follow-up Actions: (1) Receive updated action plans as a result of SEMCAR's TA in the five countries; (2) respond to specific country requests for follow-up technical assistance (TA) under SEMCAR to support implementation. Based on available information, a proposed work plan has been developed and will be refined as the year progresses and as may be necessary due to budgetary constraints, and (3) SEMCAR SMF workshop planned for all 12 recipient countries in June 2013 hosted by Antigua (to be confirmed). B) Regional Risk Management Framework (RMF) for Tax and Customs Administrations Outputs 130, 220 and 230 On the Ground Technical Assistance Risk Management Workshop A Risk Management Workshop (RMW) for tax and customs administrations was held in Jamaica from February 8 15, The key workshop outputs included: 1. Formation of an interim SEMCAR region risk management focal group led by Jamaica, whose objective is to finalize the consolidated risk management framework draft developed during the workshop, and also, with the assistance of SEMCAR, spearhead the implementation of a harmonized risk management framework in the SEMCAR countries; and 2. A draft consolidated risk management framework (RMF) consisting of the following components: the policy framework; risk management guidelines for each of tax and customs administrations; and business requirements specifications needed to develop or evaluate a risk management software application. Focal Group Meeting A meeting comprising 11 regional focal group members and three SEMCAR team facilitators was held on June 7-8, 2013 in Barbados to refine the draft RMF developed in the February 2012 Jamaica workshop. The key meeting outputs were: 1. A refined RMF that was to be tested in Jamaica and Dominica, and updated as a result of the learning experience; and 2. Agreement to incorporate a risk management maturity (RMM) assessment tool (already piloted in Jamaica) into the RMF the objective was to enable the establishment of country baselines for Page 15

16 future performance monitoring and assessment. Field Implementation of the RMF A. Jamaica (July 23 - August 10, 2012) - produced the following outputs: 1. Developed a technology-driven risk management solution that spans both tax and customs administrations; 2. Drafted a SEMCAR Standard Risk Management Reference Model (SRMRM) that adapts as its core, methods used in Ethiopia (Customs) and Kosovo (Tax/Customs); 3. Provided hands-on technology training to: (i) pilot an enterprise-grade technology platform; (ii) transform data for risk analysis; (iii) automate the exchange of data between tax and customs administrations; and (iv) develop a standard compliance management model that sources data from within the tax and customs administrations and also from third parties; 4. Defined and developed an enterprise risk register was as well as capability to manage risk at the sub-organizational unit level; 5. Developed risk measurements for taxpayers (enterprises and individuals) and customs transactions; 6. Accessed and tested tax and customs administration data sources and held a workshop to demonstrate the pilot solution; and 7. Tested the RMM and related scorecards, incorporated it into the SRMRM and trained delegates from Dominica, Trinidad and Tobago and St. Vincent and the Grenadines in its use. B. Dominica (September 12 - October 3, 2012) St. Kitts and Nevis (February 18 to 28, 2013) Grenada (March 11 to 19, 2013) The above activities produced the following outputs using the same regional RMF and the SRMRM methodology applied in Jamaica: 1. Customized the SRMRM to the respective countries tax and customs administrations environment; 2. Developed measurements and supporting technology to calculate risk profiles for taxpayers / traders in the respective countries and assisted its deployment into the production environment; 3. The risk profiling mechanism was tested at both tax and customs administrations locations including a central portal platform, its underlying technology and an enterprise reporting dashboard; 4. Introduced the enterprise-wide risk management maturity model and piloted the approach in both the tax and customs administrations using recipient country staff as the lead implementers; and Page 16

17 5. Presented the results from the risk profiling exercise (composite tax and customs taxpayer risk scores and maps) at closing workshops attended by key stakeholders including senior Ministry of Finance officials and heads of the domestic tax and customs administrations. The portal-based reporting services were also demonstrated. Annex 5 illustrates a typical risk map derived for nearly 5,000 taxpayers using seven years of transactions data (tax and customs) and identifying their level of compliance from least to most deviant. General Next Steps and Follow-up Actions: (1) Ensure that the risk management solutions for the five countries already assisted are making progress in line with expected outcomes; (2) respond to specific requests from each country to deliver SEMCAR follow-up technical assistance; (3) ensure that the RM solutions are aligned with the COUSINS framework. C) Customs Assessment Trade Toolkit (CATT) Output 220 In Depth and Follow up Assessments In accordance to the agreed work plan 012/013, this activity has continued through the implementation of the Customs Assessment Trade Toolkit (CATT) in four countries. This time the selected countries were Jamaica in September 2012, Saint Vincent & The Grenadines in October 2012, Suriname in November 2012, and Trinidad & Tobago in February The assessments were supported by the evidence provided by the Customs officers, visits to Customs sites, and interviews with stakeholders. With the indicated CATTs, the SEMCAR program completed six CATTs in total. This allowed the SEMCAR team to get a representative sample of the situation of Customs performance and practice in the Caribbean. As mentioned, since November 2011 the SEMCAR program delivered six CATTs in the region. Overall they confirmed the regional tendency of customs performance either of underperforming or in progress according to the CATT classification. The weak performance might be responding to the fact that organizational and institutional aspects, including the legal ones, seem to be the dominant factors limiting the Customs development. The CATTs results show that regional integration is still confronting huge challenges at least from the perspective of the Customs performance. Customs in the region apply cumbersome procedures which impose high transactions costs to the trading community. Basically, the lack of strategic vision consistent with modern practices, risk management systems based on risk profiling of authorized operators, and strategic partnerships with the involved private sector are preventing Customs in the region from becoming world class customs administrations. From the regional perspective, this situation should call the attention of Government authorities because as a whole the region is lagging behind in comparison to the rest of the world which might imply difficulties to catch up with the global economy. As the region is lagging in Customs performance, the business climate, competitiveness, and investment attraction are performing poorly too. Therefore, to boost economic development in the future might require high political will not only at country level but also at regional level to modernize customs all around. Page 17

18 Output 230 On-the-Ground Technical Assistance Due to the fact that the CATT methodology is based on best practices, during the on-site assessment missions the SEMCAR team takes the chance to provide TA on the ground. The TA delivery is produced through the revision of the CATT scores in trying to figure out the main reason why the Customs office could not fulfil the CATT requirements. This dialogue allows counterparts to realize on the critical role of keeping proper documentation, produce regular operational reports, enhance the systems functionalities, interact effectively with main stakeholders, and train operational staff. From there Customs offices take decisions to overcome issues that are under their control and do not require additional resources. In addition, the SEMCAR team produced a proposal of action plans for the six countries based on final CATT scores. In the case of Barbados and Saint Lucia the action plans covered the overall weaknesses brought by the CATTs. However, the main focus will be the improvement of the strategic thinking and support the establishment of effective feedback mechanisms with main stakeholders. These activities are also the main focus for the rest of the countries for the SEMCAR program. The main objective of the TA will be to promote a quality of dialogue around the contributions of modern customs to the national and regional development. In addition, for Jamaica, Saint Vincent and the Grenadines, Suriname, and Trinidad and Tobago, the SEMCAR team produced action plan matrices to be discussed with the countries in order to prioritize activities and actions to overcome identified issues through particular TA. General Next Steps and Follow-up Actions: The next steps will be focused on the delivery of TA to improve the quality of customs. The main objective of the TAs will be to support the efforts to promote the regional integration through trade facilitation. Output 140 User Business Requirements Including a Detailed Conceptual Design for a New Regional Tax Administration System This task was initiated and a consultant has been working on this activity with a specific focus on Grenada. The Inception Report has been completed by late summer 2012 and submitted to the Bank for review and distribution. During the preparation of the inception report it became evident that providing a consistent requirement specifications followed by functional design, both aligned with best international practices, may be extremely difficult without also addressing the main Business Processes. The longexpected normalization of applying and using the unique identifier (TIN) will cause substantial changes to the taxpayer registration (in particular) and will have strong impact on the assessment, operational compliance control, audit selection and processing, et al. In addition, any future tax information system will have to deal with rapidly increasing transition towards the electronic rather than paper based processing in terms of filing, payments, compliance control, case management, etc. This transition necessitates the modernization and profound changes in modus operandi and consequently in adjustment of the affected business processes. General Next Steps and Follow-up Actions: The team is in touch with Grenada IRD to accommodate this additional activity, which is planned to be completed in Year 3 of the Program. Page 18

19 Component 300 Enhanced Regional Public Financial Management Output In-Depth and Follow up Assessments As of March 2013, 5 in-depth assessment missions to St. Vincent and the Grenadines (September 5-16, 2011), St. Lucia (October 19-28, 2011), Belize (December 6-16, 2011), Suriname (August 21-30, 2012), and St. Kitts and Nevis (October 1-12, 2012) have been completed and PFM Assessment Reports were produced as a result of these missions. In addition, a public expenditure and financial accountability (PEFA) assessment of St. Vincent and the Grenadines has been completed. This completes the overall program target of at least five diagnostic assessments. The results of the assessments have been used to develop TA work plans for the 5 countries that are being supported using the SEMCAR resources. The areas for SEMCAR support have been identified on the basis of: (i) reform priorities with clear linkage to ICT systems; (ii) the role of the TA in defining regional reforms; and (iii) SEMCAR resource constraints and the alternate TA availability. The work plans are coordinated with CARTAC to maintain complementarities in TA delivery. The initial scoping work and the preliminary results of the in-depth assessments suggest some common areas of concerns. These are: (i) comprehensiveness of the budget classification system and the chart of accounts; (ii) robustness of the budget preparation process and analytical rigor in selection of capital investments; (iii) comprehensiveness, completeness, and timeliness of in-year and year-end financial reporting; (iv) cash consolidation, forecasting and planning; and (v) effectiveness of the internal audit. A common issue in all the five countries is lack of optimal utilization of the financial information system for transaction processing. Manual processes still exist in varied degree in all the countries, affecting the control environment and the comprehensiveness and quality of data in the automated systems. Strengthening of commitment controls, cash consolidation through TSA, better cash forecasting and planning, adoption of IPSAS and improvement in the quality of financial reporting emerge as the priority areas. These areas are also the basic building blocks for introduction of modern sustainable and integrated ICT systems and fundamental to achieving a regionally harmonized PFM system consistent with the project s objectives. The assessments underline the need for technical assistance in a number of PFM areas, including procurement, internal and external audit and PFM HR management. However, SEMCAR can only provide limited support to the reform agenda in these areas. Considering SEMCAR s ICT focus, the focus of TA is maintained on improving core PFM processes, such as budget formulation, budget execution, financial reporting, and cash management. The assessments recommend addressing other TA needs, such as in the area of internal audit, at a more generic level following a regional approach. During the year, two short review missions to Belize (December 3-7, 2012) and St. Lucia (December 10-14, 2012) were also undertaken to review the progress of reforms and to assess the need for recalibrating the SEMCAR TA delivery. The review missions received very positive feedback from the authorities, who once again showed their commitment to continue the reform process in the identified areas. A third review mission to St. Vincent and the Grenadines is scheduled to take place from April 25 to May 2, Output 330 On the ground Technical Assistance The TA is being delivered through the SEMCAR Regional PFM Advisor, located in Barbados, with the assistance of external experts hired on peripatetic basis (two-three weeks each time) for focused inputs. Table 4 below presents a snapshot of the main focus areas of SEMCAR TA plan covering the five countries where in-depth assessments were carried out and Grenada where limited assistance has been Page 19

20 provided. The green boxes indicate areas where TA has been initiated and is ongoing; those in yellow indicate TA scheduled for operation in the immediate future. Given the relatively small staff strength in these countries, the TA delivery has been selective and focused on areas considered priority by the authorities. Budget Formulation Table 3: SEMCAR PFM TA Plan Budget Execution Cash Management Government Accounting PFM Legal Framework Belize X X X X X Chart of Accounts St. Lucia X X X X St. Vincent and the Grenadines X X X X X St. Kitts and Nevis X X X X X Suriname X X X X Grenada X In Belize, SEMCAR TA has contributed to significant advances in the planning and budgeting process as well as bringing Belize close to producing IPSAS compliant financial statements. In the budget planning area, the assistance has focused on introducing a revised budget formulation process with a multi-year approach using rolling forward estimates for the budget year plus two out years. TA in government accounting is focused on adoption of cash based IPSAS, which is also a legal requirement in Belize under the Fiscal Responsibility Regulations. A new comprehensive PFM legislation has also been drafted. In St. Lucia, notable progress has been made in establishing a formal cash management function in the government. TA has also commenced on accounting improvements targeted at adoption of cash based IPSAS for financial reporting. A significant development has been preparation of past financial statements that had been in arrears for a while. St. Vincent and the Grenadines received TA on introducing a simple program based budget structure and performance indicators in select ministries. Work was also initiated in the cash management area focused on development of a treasury single account and improving the cash flow forecasting capabilities. The budget execution and accounting TA revolved around improving the efficiency of treasury operations and simplifying the accounting procedures. The progress of TA has, however, been particularly slow in the last year, due to the preoccupation of the key counterparts and a reconsideration of the TA priorities by the authorities. The work is expected to resume with the review mission taking place in April In addition to the five countries that volunteered for receiving in-depth assessment missions and subsequent SEMCAR TA, Grenada received one off TA aimed at improving the efficiency of their treasury operations. Similar reviews of treasury operations were carried out at Belize, St. Lucia, and St. Vincent and the Grenadines. As is evident from the table, TA delivery is yet to start in St. Kitts and Nevis and Suriname. With regards to St. Kitts and Nevis, the TA delivery is scheduled to start in late April with initiation of work in budget planning and cash management areas. In Suriname, the TA delivery has been delayed due to the fact that the country is in the middle of the implementation of a new IFMIS, which is presently receiving the full attention of the Ministry of Finance. Starting May 25, 2013, an HQ-led SEMCAR mission is scheduled to visit Paramaribo to advise the authorities on issues relating to IFMIS implementation. TA in other identified areas is likely to resume thereafter. Page 20