Strengthening Financial Management in Africa Centers of Excellence - Key Procedures & Documents

Africa Centers of Excellence Africa Centers of Excellence- - IMPACT IMPACT Project Project Financial Management Financial Management VIRTUAL MISSION , VIRTUAL MISSION , OCTOBER 2020 OCTOBER 2020 1

Overview of the session Project Financial Management Disbursement Arrangements Results Based Financing (DLRs) FM Related DLR DLR 6 Reporting and Documentation Questions & Answer Session 2

Financial Management Systems. Project Financial Management Systems (Framework) for each ACE include: Budgeting Accounting Internal Control *(Processes>Procedures>Approvals etc.) Funds Flow Liquidity & Payments Financial Reporting (meet DLR) & Financial Covenants Auditing (Required for the DLR) These systems inform the control environment in which the ACE projects are being implemented and need to be monitored periodically by the Bank and Stakeholders 4/13/2025 3

Strenghting FM in the ACE Strenghting FM in the ACE DLR 6 DLR 6 Financial Management Action Plan-Seven (7) key parameter: Accounting Staff Internal Audit Functioning Audit Committee Computerized Accounting System Submission Timelines and Quality of Reports (DLR) External Audit Compliance Transparency & Disclosure in Financial Information *Dated Covenants & Action Plan 4/13/2025 4

Key Documents Key Documents For Implementation Applicable to your Project: Financing Agreement Project Appraisal Document Disbursement & Financial Information Letter Project Implementation Manual (PIM/POM) & Operations Manual These documents used together provide ALL the information that the project requires on financial management in answering questions such as eligibility of expenditure, how much is an implementing agency entitled to, processes for documentation and reporting etc. It absolutely important for all ACE Project Staff to read and understand the FA, 5 4/13/2025

procedures. . ACE Disbursement Arrangements ACE Disbursement Arrangements - - procedures Results Based Financing (DLI/DLR) - Based on achieving of DLRs Twice a year (or more, as necessary)-All ACE submit Withdrawal Application Request for approval by the Bank including evidence: i. Evidence confirming that the ACE has complied with the specific DLI/DLR The evidence is verified by the Independent Verification Agency or the RFU i.e. AAU ii. iii. Eligible Expenditure Program incurred and paid in the period preceding the request (EEP Spending Report) iv. A formal response from the Bank accepting the evidence as being satisfactory v. The Bank then reimburses the ACE with the funds for the DLR Achieved 4/13/2025 6

FM Related DLRs FM Related DLRs- DLI 6: DLI 6: Timeliness and quality of Timeliness and quality of fiduciary management fiduciary management Based on achieving of DLR #6, which measures FOUR key parameters i. Timely Financial Reporting 6.1 ii. Functional Institutional Fiduciary Oversight by Management- 6.2 iii. Transparency of ACE Expenses 6.3 iv. Quality of Procurement Planning 6.4 These indicators of fiduciary performance will be measured throughout project implementation and on a yearly/half yearly basis and the results will be rewarded as per the DLR Achieved 4/13/2025 7

FM Related DLRs FM Related DLRs . DLI 6 Quality of Fiduciary Management Quality of Fiduciary Management DLI 6: Timeliness and Timeliness and DLR 6.1: Timely Financial Reporting Guidance Notes: This includes timely submission of Interim Financial Reports (IFRs), Annual Financial Audits for the ACE. Timeliness implies the submission deadline dates as established in the respective Financing Agreement: for IFRs- not later than 45 days after the end of the half year (semester) and for Annual Audits i.e. both financial and procurement not later than six months after the year end. 4/13/2025 8

FM Related DLRs FM Related DLRs . DLI 6.2 DLI 6.2: Timeliness and Quality of Fiduciary Timeliness and Quality of Fiduciary Management Management DLR 6.2: Functional Institutional Oversight of Fiduciary Management by the Participating University's (ACE) councils. Guidance Notes: This implies functioning (i)Internal Audit Unit and (ii)functioning Audit Committees of the University For the first withdrawal application requesting funding for this result: i. Guidelines/ Terms of Reference (ToR)s for the audit committee constituted under the governing body of the university; ii. Members of the audit committee have been duly constituted Subsequent Withdrawals Evidence (report or minutes of meeting) that the Committee has met and discussed the external audit for the ACE, copies of internal audit reports, and following up on issues raised to ensure management s attention and correction. Documentary evidence (report or minutes of meeting) that the Committee has met and discussed the audit for the University (ACE), the committee s role in the project, and risks associated with the project. Note-: The Audit committee should in principle carry out an institutional review of the audits and follow up. However, the term functioning will be interpreted only regarding review of the ACE aspects of the audit work. 4/13/2025 9

FM Related DLRs FM Related DLRs . DLI 6 DLI 6: Timeliness and Quality of Fiduciary Timeliness and Quality of Fiduciary Management Management DLR 6.2: Functioning Internal Audit Unit for the Participating University (ACE). Guidance Notes: For the first withdrawal application requesting funding for this result: i. Guidelines/ ToRs for the internal audit unit for the university (or college/school depending upon the structure of the university) has been formulated ii. Staff members of the internal audit unit selected iii. Functioning-Evidence (report or minutes of meeting) that the internal audit unit has discussed the university s participation and responsibilities under the Africa Centers of Excellence project, the unit s role in the project, and risks associated with the project. Subsequent Withdrawals Evidence (report or minutes of meeting) that the IAU has reviewed the ACE accounts and Internal controls systems using a risk based approach. Any changes or revisions to the guidelines/ToR should be included Note-: The Internal Audit should in principle carry out institutional reviews of the financial management of the University as a whole, however specifically for the project , the review will be limited to only that of the ACE. 4/13/2025 10

FM Related DLRs FM Related DLRs . DLI 6 DLI 6: Timeliness and Quality of Fiduciary Timeliness and Quality of Fiduciary Management Management DLR 6.3: Transparency on ACE Expenses (web access to audit reports, IFRs, budgets and AWP) Guidance Notes: There must be a link to the institution's website or portal which is publically available. to display approved annual work plans & budgets, interim financial reports including annexes detailing expenses , copies of audit reports (financial and procurement audits) For the first withdrawal application requesting funding for this result: i. This will be limited to the financial reports of the specific ACE i.e. interim financial reports, approved budgets and work plans, and annual audit reports- publically available on the website *For this year audit will be exempted- only the AWP, IFR and other documents Subsequent Withdrawals It is expected that in subsequent years, in addition to the specific ACE financial reports, the participating University should have it s annual audited reports also publically available online in order to qualify for the DLR 4/13/2025 11

FM Related DLRs FM Related DLRs . DLI 6 DLI 6: Timeliness and Quality of Fiduciary Timeliness and Quality of Fiduciary Management Management DLR 6.4: Quality of Procurement Planning Guidance Notes: the share of the originally approved procurement plan that was executed in the current period. The share is calculated in terms of value of contracts and NOT procurement activities. For the first withdrawal application requesting funding for this result: i. Timely submission of annual procurement plan for review and clearance by the Bank. Public disclosure of procurement plan on the website Subsequent Withdrawals It is expected that in subsequent years, this DLR will measure the percentage of the approved procurement plan that is being implemented in term of value of contracts, schedule of procurement related activities and contract management. 4/13/2025 12

Processing Withdrawals Collect details of evidence of achievement of DLRs Obtain Independent Verification of the DLRs Submit evidence (IVA) Report to the Bank (TTL) for review and clearance Submit the IFR with all relevant Annexes Submit the EEP Spending Report Prepare Withdrawal Application to Request for Earned DLRs Client Connection 4/13/2025 13

THANK YOU Open Discussions Questions??? 14