The World Bank Report No: ISR15089 Implementation Status & Results Afghanistan Public Financial Management Reform II (P120427) Public Disclosure Copy Operation Name: Public Financial Management Reform II (P120427) Project Stage: Implementation Seq.No: 6 Status: ARCHIVED Archive Date: 30-Jun-2014 Country: Afghanistan Approval FY: 2011 Product Line: Recipient Executed Activities Region: SOUTH ASIA Lending Instrument: Technical Assistance Loan Implementing Agency(ies): Key Dates Board Approval Date 23-Jun-2011 Original Closing Date 31-Dec-2014 Planned Mid Term Review Date 01-Nov-2013 Last Archived ISR Date 17-Dec-2013 Effectiveness Date 09-Aug-2011 Revised Closing Date 31-Dec-2014 Actual Mid Term Review Date 01-Nov-2013 Project Development Objectives 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? Yes No Component(s) Component Name Component Cost Reform Management 2.95 Procurement Reform 22.47 Audit Reform and Performance 25.70 Financial Management Reform 24.88 Overall Ratings Public Disclosure Copy Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Satisfactory Overall Risk Rating Moderate Moderate Implementation Status Overview Moderately satisfactory Locations Page 1 of 7 The World Bank Report No: ISR15089 No Location data has been entered Results Public Disclosure Copy Project Development Objective Indicators Indicator Name Core Unit of Measure Baseline Current End Target PEFA Ratings for internal audit (P-21) improve Number Value 2.00 2.00 3.00 to B (3) . Date 01-Sep-2011 29-May-2014 31-Dec-2014 Comments While five more ministries revenue audited equal to 60% coverage it is questioned that this are done to recognized std because MOF was not free to choose subject or area of audit. While line ministry responses given to most MoF audits the indicator refers to internal audits generally. Donors shift 20% of off-budget ODA to on- Percentage Value 0.00 20.00 20.00 budget Date 01-Sep-2011 29-May-2013 31-Dec-2014 Comments On budget assistance in FY 2013 budgeted at US$ 4.1 billion. Actual assistance may be less than budget but project end target is likely to be realized in 2013. PEFA ratings for external audit (P26) improve Number Value 2.00 2.50 3.00 to B (3) Date 01-Sep-2011 29-May-2014 31-Dec-2014 Comments Based on PEFA Update 2013 All GoA entities, are covered by the financial audit. SAO’s Public Disclosure Copy audit coverage is at least 75 percent but not the Level 4 standards. C % of of procurement done by LM using stand- Percentage Value 0.00 48.00 50.00 alone procurment Date 01-Sep-2011 29-May-2014 31-Dec-2014 Comments 9 LM are fully certified . Min of Agriculture, Min of Education, Min of Public Health, Ministry of Energy and Page 2 of 7 The World Bank Report No: ISR15089 Water, Min of Labor and Social Affairs, Min of Urban Development, Min of Women’s Affairs, Min of Public Disclosure Copy Communications, Min of Counter-narcotics. Number of functions carried out by regular Number Value 0.00 17.00 20.00 ministry staff Date 01-Sep-2011 29-May-2014 31-Dec-2014 Comments At the outset of the PFMIRI, PPU was the only department exclusively run by the consultants with no official organization chart andpositions. During the life of the project, organization chart was developed and approved with a number of 30 positions out of which17 have been filled thus far Intermediate Results Indicators Public Disclosure Copy Page 3 of 7 The World Bank Report No: ISR15089 Indicator Name Core Unit of Measure Baseline Current End Target No of Procurement units of LMs and provincial Number Value 7.00 13.00 61.00 offices restructured Date 01-Sep-2011 29-May-2014 31-Dec-2014 Public Disclosure Copy Comments PPU, in coordination with IARSCS and IDLG representatives prepared and proposed a structure for all provincial procurement officesto be established in Governor office but due to non-availability of tashkeel (Human Resource) under IDLG structure the approval ofstructure of provincial procurement offices was postponed to the SY 1393. PPU is coordinating with IDLG to consider the establishmentof provincial procurement offices under its tashkeel and awaiting the enactment of new law to support this. No of staff completing procurement training Number Value 0.00 1400.00 1800.00 and accredited. Date 01-Sep-2011 29-May-2014 31-Dec-2014 Comments In line with plan; new arrangements for Kabul now established. No of HR staff trained Number Value 0.00 120.00 75.00 Date 01-Sep-2011 29-May-2014 31-Dec-2014 Comments good progress on HR training. Public Disclosure Copy LM PFM assessment Text Value 2 assessments underway 14 14 assessments completed Date 01-Sep-2011 29-May-2014 31-Dec-2014 Comments in line with plan; completed. Internal audit - no of audits evaluated as done Text Value 4 4 34 to acceptable std Date 01-Sep-2011 29-May-2014 31-Dec-2014 Comments MOF audits are done to std but the 5 LM audits done in FY 2013 were not selected on a risk basis as now MOF Page 4 of 7 The World Bank Report No: ISR15089 faces restrictions re change in Art 61. Plans in place to support LM own IA doing this work, none done to std yet. Public Disclosure Copy External audit - no done to ISA Text Value Just WB grant audits 6 All WB grant audits and 9 compliance audits Date 01-Sep-2011 29-May-2014 31-Dec-2014 Comments Grants audits done to std with some issues on working papers for FY 2012/ 1391 but addressed in FY 2013/ 1392. The 6 compliance audits for the ARTF IP ( 1391 and 1392 were completed and accepted by the WB against ARTF IP benchmarks. Timeliness, quality of in-year execution reports Text Value 30 days from month end 25 days 14 days Date 01-Sep-2011 29-May-2014 31-Dec-2014 Comments Treasury continues to improve timeliness. Freebalance V 7 implemented Text Value not implemented Visit to FB for configuration of implemented for all sites demo version set for August Date 01-Sep-2011 29-May-2014 22-Mar-2013 Comments Treasury agree to run test script to determine if FB 7 will support provincial on-line operations. Legal Framework for Accounting Profession is Text Value no legal or oversight NSC has not yet met. Legal framework agreed and established framework training underway Date 01-Sep-2011 29-May-2014 31-Dec-2014 Comments Draft law and action plan to Public Disclosure Copy be presented the NSC in early 2014. Awaiting mobilization of qualified consultant. Timeliness and quality of audited statements to Text Value Sept 22 just budget execution On track to present 1392 Sept 22 budget execution and Parliament Qatia on time to Parliament IPSAS compliant Financials Date 01-Sep-2011 29-May-2014 31-Dec-2014 Comments 1391 Report to Parliament sent on time but not done to any acceptable std. Page 5 of 7 The World Bank Report No: ISR15089 Disaster recovery plan and testing Text Value no plan in place temp site in place plan in place and tested Date 01-Sep-2011 29-May-2014 31-Dec-2014 Comments A temporary Emergency Public Disclosure Copy Operations Site has been set up, supporting daily backup of AFMIS database and weekly backup of all data on Treasury servers, ensuring capability to launch emergency operations. The procurement process is ongoing for the permanent Emergency Operations Site, fully replicating the permanent AFMIS facilities at an alternative location. Internal Audit - no of staff trained Number Value 112.00 134.00 360.00 Date 01-Sep-2011 29-May-2014 31-Dec-2014 Comments All MOF staff participating in on-going training; 110 audits from MOF and ministries in the ATP course and 14 IT auditors in specialized training.Change in Art 61 has affected approach; now training must cover line ministries. Data on Financial Performance (as of 27-May-2014) Financial Agreement(s) Key Dates Project Ln/Cr/Tf Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date Public Disclosure Copy P120427 TF-10024 Effective 09-Aug-2011 09-Aug-2011 09-Aug-2011 31-Dec-2014 31-Dec-2014 Disbursements (in Millions) Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P120427 TF-10024 Effective USD 73.00 73.00 0.00 43.39 29.61 59.00 Disbursement Graph Page 6 of 7 The World Bank Report No: ISR15089 Public Disclosure Copy Key Decisions Regarding Implementation 1. Extension of Closing Date and Supplementary Financing. The Steering Committee requested the mission to extent the closing date of the project and to consider financing operations support activities to June 30, 2016 which would provide amble time to implement the sub components affected by the delay in funding . It also requested supplemental financing for the continuation of key operational support for the extension period which would provide ample time for the next administration to arrange financing for its reforms in public financial management. The supplemental financing would cover the equipment and training cost for country wide implementation of the AFMIS procurement and assets modules and the related IT upgrade in HQ as well as equipment replacement in line ministries. The total project costs to June 30, 2016 are estimated at US$ 113,284,863 implying additional financing needs of US$ 40,284,863. An initial Concept Memo to support this has been submitted to SARFM Manager. However, in order to consider the input from the new Administration, in power by August, the dates for the Decision review and Appraisal will be around September/October 2014 and RVP's approval by end of November 2014. 2. Private Sector Accounting. The action plan for the support of private sector accounting and auditing has to approved by the National Steering Committee by end of 2013 for action to initiate on time for sub component actions to be accomplished with the extension period. Public Disclosure Copy 3. Internal Audit. The modifications to Public Finance and Expenditure Management Law, Article 61 made in 2012, and Article 20 of the new external audit law inhibit progress on the overall improvement of internal audit units across ministries. These shortcomings in the legal framework should be addressed by a frank policy statement and prompt action on internal audit outside of the MOF undertaken. Restructuring History There has been no restructuring to date. Related Projects P150632-Second Public Financial Management Reform Page 7 of 7