Public Disclosure Authorized SOUTH ASIA Nepal Financial Management Global Practice Recipient Executed Activities Specific Investment Loan FY 2012 Seq No: 3 ARCHIVED on 20-Feb-2015 ISR18017 Implementing Agencies: Public Disclosure Authorized Key Dates Key Project Dates Board Approval date:16-aug-2011 Planned Mid Term Review Date:-- Original Closing Date:30-Jun-2015 Project Development Objectives Effectiveness Date:23-Feb-2012 Actual Mid-Term Review Date:26-Jan-2014 Revised Closing Date:30-Jun-2015 Public Disclosure Authorized Project Development Objective (from Project Appraisal Document) The project development objective (PDO) is to enhance the quality and impact of public sector audit in Nepal Has the Project Development Objective been changed since Board Approval of the Project Objective? No PHRPDODEL Components Name Component 1: Enhancing the quality of financial statement audits Public Disclosure Authorized Component 2: Upgrading the capacity to conduct performance audits Component 3: Enhancing the impact of audits Component 4: Project Management Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Satisfactory Implementation Status and Key Decisions 2/20/2015 Page 1 of 8
Despite the initial delays, as of the date of the November 2014 review, the project is well underway. The PDO remains relevant, particularly considering the appointment of an Auditor General in November 2012 and the election of a Constituent Assembly in November 2013. Both Project Development Objective (PDO) and Implementation Progress (IP) are currently rated as Moderately Satisfactory. All audits reports have been received and there are no outstanding issues. As such, because of the continued difficulty in obtaining accurate data to measure results against the original Results Framework, Monitoring and Evaluation (M&E) has been rated as Moderately Unsatisfactory. There has been significant progress under all components of the project. In particular, considerable progress was noted with respect to risk based annual audit planning, conduct of financial audits, preparation of financial audit manual, conduct of performance audits, training related to performance audit and the design of the the Electronic Working Papers (EWP) Nepal Audit Management System (NAMS). Peer review report by the Supreme Audit Institution (SAI) of India has also been submitted and is expected to be finalized by December 15, 2014 a major output under project. In addition, the end-of-project target for the number of in-depth performance audits to be reported to parliament in a year has already been achieved. OAG was further noted to have enhanced public performance in the performance audit practice. The review team also noted that the Auditor General had transmitted a high quality annual report to parliament, and that for the first time in over two years, a Public Accounts Committee has been constituted to scrutinize that report. The area which is particularly lagging behind is the component relating to PAC.The time remaining is not sufficient to complete the implementation of these activities. Therefore, there is also a need to extend the closing date. Results Project Development Objective Indicators PHINDPDOTBL In-depth performance audit reports submitted to Parliament in year (Number, Custom) 2/20/2015 Page 2 of 8
Value 1.00 2.00 3.00 3.00 Actual December 2013: 2 performance audits reported + 3 in progress Actual November 2014: 3 performance audits conducted and reported to the parliament through annual report. Target achieved one year ahead. PHINDPDOTBL Current year audit observations implemented by the Executive within 1 year (Percentage, Custom) Value 35.00 -- 0.00 50.00 Not possible to determine with precision, but less than 10%. It is necessary to replace this indicator with one for which data is more readily available, and for one that is more directly within the control of the project to influence. Actual November 2014: Not possible to determine. Ministry wise data of audit observations is not being kept. Also no record kept of the replies received from the various audit entities.this indicator will be revised during proposed restructuring to capture results only for the audits which have been conducted under the project. PHINDPDOTBL Audits substantially meeting OAG financial statement auditing standards (Percentage, Custom) Value 35.00 40.00 -- 60.00 Note that the project is unlikely to meet future targets since the new financial and performance audit procedures will only begin to be rolled out in 2015. Actual November, 2014: Data not available across OAG - except for 13 pilot audits conducted under the project. On first 3 pilot audits, average quality assurance weighted score = 54.5%, and on second round of 10 pilot audits, average score is 71%. [SOURCE: consultant reports on results of reviews of pilot financial audit working paper files]. This indicator will be revised during proposed restructuring to capture results only for the audits which have been conducted under the project. Overall Intermediate Results Indicators 2/20/2015 Page 3 of 8
Office-wide audit plan implements risk-based concepts (Text, Custom) Value N Partly Fully Y Actual December 2013: Partly Actual November 2014: Fully. Annual audit plan for 2014-15 has been prepared using the risk based concepts. It has been prepared using the NAMS module 1 which computerizes the exercise and uses risk-based considerations Numbers of financial audit teams included in pilot audits (Number, Custom) Value 0.00 13.00 13.00 15.00 Actual December 2013: 13 financial audit teams comprising 25 auditors assigned to pilot audits Actual November 2014: 13 Pilot financial audits conducted, of which 2 are for financial statements. Financial statement audits clarified with review team. Pilot audits for second round to be conducted during August February 2015. Peer review recommendations by an SAI (Text, Custom) Value N N Completed Implemented Actual December 2013: N. Peer review by CAG India is scheduled for completion May 2014. Actual November 2014: Peer review has been completed. Draft final report received and comments from OAG transmitted to Indian CAG. 2/20/2015 Page 4 of 8
Strategic plan for performance audit division prepared and updated (Yes/No, Custom) Value N Y Y Y Lessons learned from current year pilots documented and reflected in revised audit guides and training materials (Yes/No, Custom) Value N N Y Y Actual November 2014: Y. Workshop held in Daman May 9-10, 2014 to review lessons learned from financial pilots. Similar workshop for performance audit pilot experiences scheduled for July 25-26, 2014. Current year audit observations accepted by the Executive within 35 days (Percentage, Custom) Value 60.00 -- 0.00 75.00 Actual December 2013: Not possible to determine precisely, but less than 30% in dollar terms, and less than 5% if measured by number of observations. It is necessary to replace this indicator with one for which data is more readily available. Actual November 2014: Not possible to determine as the replies from the audit entities are not monitored systematically. 2/20/2015 Page 5 of 8
Strategy document prepared with actions for improving relations with Executive, PAC, media and other stakeholders (Yes/No, Custom) Value N N Y Y Actual November 2014: Y. A paper suggesting how to develop internal and internal communications strategy submitted and discussed in a workshop. OAG to take policy decisions. Computerized databank of audit observations produces monthly status reports (Yes/No, Custom) Value N N N Y Actual December 2013: N. Note that without a computerized databank of audit observations, it is not practicable for OAG to determine values for certain intermediate and PDO level indicators above. Targets in the originally approved RF now appear unrealistic, in that by MTR a decision had just been made to procure AMMS. Module 3 of AMMS will produce the database that could be used to produce routine status reports, but the software must be procured, configured and tested before it can begin to be populated and then used to generate status reports. Actual November 2014: Agreement reached with consultants developing a software utility which could be linked with NAMS. Annual work plan approved by Steering Committee (Yes/No, Custom) Value N Y Y Y 2/20/2015 Page 6 of 8
Inception report approved by Steering Committee (Text, Custom) Value N Y Y N/A Mid Term Report approved by Steering Committee (Text, Custom) Value N Y Y N/A Final Report approved by Steering Committee (Yes/No, Custom) Value N N N Y Actual November 2014: Not due Overall Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed P127040 TF-10455 Effective USD 2.30 2.30 0.00 1.73 0.57 75% Key Dates (by loan) 2/20/2015 Page 7 of 8
Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P127040 TF-10455 Effective 23-Feb-2012 23-Feb-2012 23-Feb-2012 30-Jun-2015 30-Jun-2015 Cumulative Disbursements Restructuring History There has been no restructuring to date. Related Project(s) There are no related projects. 2/20/2015 Page 8 of 8