RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING STRENGTHENING INTERNAL AUDIT APPROVED ON SEPTEMBER 23, 2016

Transcription

1 Public Disclosure Authorized The World Bank REPORT NO.: RES31608 RESTRUCTURING PAPER Public Disclosure Authorized ON A PROPOSED PROJECT RESTRUCTURING OF STRENGTHENING INTERNAL AUDIT APPROVED ON SEPTEMBER 23, 2016 TO ASOSIASI AUDITOR INTERN PEMERINTAH INDONESIA (AAIPI) Public Disclosure Authorized GOVERNANCE EAST ASIA AND PACIFIC Public Disclosure Authorized Regional Vice President: Country Director: Senior Global Practice Director: Practice Manager/Manager: Task Team Leader: Victoria Kwakwa Rodrigo A. Chaves Deborah L. Wetzel Roberto Tarallo Novira Kusdarti

2 ABBREVIATIONS AND ACRONYMS

3 Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. BASIC DATA Product Information Project ID P Original EA Category Not Required (C) Approval Date 23-Sep-2016 Financing Instrument Investment Project Financing Current EA Category Not Required (C) Current Closing Date 28-Feb-2018 Organizations Borrower ASOSIASI AUDITOR INTERN PEMERINTAH INDONESIA (AAIPI) Responsible Agency ASOSIASI AUDITOR INTERN PEMERINTAH INDONESIA (AAIPI) Project Development Objective (PDO) Original PDO The primary objective of our engagement is to contribute to government's efforts to improve the capacity of the internal audit institutions to progress towards level 3 of IA-CM requirements. Internal Audit Capability Model (IA-CM) is a framework that identifies the fundamentals needed for effective internal auditing in government and the broader public sector. It illustrates the levels and stages through which an intern audit activity can evolve as it defines, implements, measures, controls and improves its processes andpractices. The IA-CM provides a road map for continuous improvement in processes and practices to establish effective internal auditing in an organization. There are 5 capability levels in IA-CM, where level 1 is the lowest with no sustainability and high dependency on individual efforts and level 5 is the inspirational level. Level 3 is where internal audit management and professional practices are uniformly applied and the practice generally conforms to the internal audit standards and an established Quality AssuranceImprovement Program (QAIP).

4 Level 3 of IA-CM requires advisory services and performance audit to be practiced uniformly and the use of risk based audit plan within the internal audit institutions. To ensure such internal audit professional practice, qualified IA-CM accessors and certified QAIP reviewers should be available to support such transformation. Summary Status of Financing TF Approval Signing Effectiveness Closing Net Commitment Disbursed Undisbursed TF-A Sep Sep Sep Feb Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No Note to Task Teams: End of system generated content, document is editable from here. I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING The project ratings on the progress towards achievement of the PDO and overall implementation progress (IP) are Satisfactory. Although there has been a significant delay in the initial stage, project implementation has significantly improved. Bank disbursements as of December 31, 2017 is 86% of the total allocated grants while AAIPI has utilized only 72% of the funds advanced by the Bank. Component 1: Internal Audit Capacity Enhancement: Three activities approved by the Donors. 1. Stakeholder Learning Workshop was completed. 2. Development of distance learning modules is currently ongoing and expected to complete by end of February The Capacity Building to Implement Audit Universe and Risk Based Planning is expected to complete by end of February Component 2: Piloting use of Technology in Conducting Internal Audit: Computer Aided Audit Techniques (CAAT) has been developed and piloted within the IG MoF. Plans are being made to implement the CAAT in IGs from other ministries. Further development of CAAT to be used by local inspectorates is also being considered. Component 3. Institutional Support and Project Management: Preparation of AAIPI s strategic plan is currently on going and is expected to be completed by end of February The Bank team will be seeking approval from the donor Management Committee of the remaining eight activities (six activities under component one and 2 activities under component 3) at their forthcoming MC meeting on early March The team believes that sufficient funds available in the TF to finance the remaining two activities.

5 The PDO indicators request for 20 internal audit units in level 3 IA-CM, while currently based on the information provided, 33 internal audit units already in level 3 IA-CM (8 Inspector Generals, 8 provinces and 17 municipality local inspectorates). PDO indicators also requested use of IT for conducting Internal Audit and currently it was reported that IG MoF is already use for its audit on SPAN. Development of Strategic Plan exercise is currently on going and expected to be completed by end of February, but possibly slip into March Extension of the closing date is required, the project has sent a request to extend the project closing date from February 28, 2018 to February 28, 2019 to allow for completion of ongoing activities as well as to seek additional financing from donors for activities already approved by the Bank. There were thirteen activities approved by the Bank in the project paper, of which five activities already either completed or on going and eight activities are yet to be endorsed by the donors. The eight activities are (a) performance audit guidelines; (b) training of Trainers Program for IA-CM Assessors Certification; (c) Training of Trainers Program for Quality Assurance Improvement Program (QAIP); (d) Independent Validation of BPKP IA-CM Self-assessment and QAIP; (e) Implementation Support on COSO and IA-CM at Local Government Level; (f) Internal Control Workshop; (g) Institutional Support to AAIPI; and (h) Development AAIPI Membership Database. The activities cost is USD 444,650. These activities are important to the achievement of level 3 of IA-CM and AAIPI required sufficient time to do it after endorsement achieved by the donors. Currently all ToRs of the above activities are already reviewed and NoLs have been issued. Advance procurement process is expected to start soon to expedite the project implementation. The project will go through interim extension up to April 30, 2018 while waiting for PFM MDTF (parent TF) extension process. Further extension up to February 28, 2019 will be granted after the parent TF extension completed. II. DESCRIPTION OF PROPOSED CHANGES As the eight activities are yet to be endorsed in next MC meeting (scheduled on March 7, 2018), the current project paper will only cover interim extension of the project. The project will go through interim extension up to April 30, 2018 while waiting for PFM MDTF (parent TF) extension process. Further extension up to February 28, 2019 will be granted after the parent TF extension completed. The change to include additional eight activities will be proposed after endorsement received from the donors in the upcoming MC meeting. Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. III. SUMMARY OF CHANGES Changed Change in Loan Closing Date(s) Not Changed Change in Implementation Schedule

6 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE The World Bank Change in Implementing Agency Change in Project's Development Objectives Change in Results Framework Change in Components and Cost Cancellations Proposed Additional Financing Proposed Reallocation between Disbursement Categories Change in Disbursements Arrangements Change in Disbursement Estimates Change in Overall Risk Rating Change in Safeguard Policies Triggered Change of EA category Change in Legal Covenants Change in Institutional Arrangements Change in Financial Management Change in Procurement Other Change(s) IV. DETAILED CHANGE(S) LOAN CLOSING DATE(S) TF Status Original Closing Revised Closing(s) Proposed Closing Proposed Deadline for Withdrawal Applications TF-A3211 Effective 28-Feb Apr Jun-2018 Note to Task Teams: End of system generated content, document is editable from here.