Public Disclosure Copy The World Bank Implementation Status & Results Report Public Financial Management Reform II (P120427) Public Financial Management Reform II (P120427) SOUTH ASIA | Afghanistan | Governance Global Practice | Recipient Executed Activities | Technical Assistance Loan | FY 2011 | Seq No: 12 | ARCHIVED on 15-May-2017 | ISR28000 | Implementing Agencies: Key Dates Key Project Dates Bank Approval Date:14-Jun-2011 Effectiveness Date:09-Aug-2011 Planned Mid Term Review Date:01-Nov-2013 Actual Mid-Term Review Date:01-Nov-2013 Original Closing Date:31-Dec-2014 Revised Closing Date:31-Dec-2017 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 Objective? Yes Board Approved Revised Project Development Objective (If project is formally restructured)PHRPDODEL To further strengthen the efficiency and effectiveness of Afghanistan’s procurement, treasury, and audit systems. Components Name Reform Management:(Cost $3.72 M) Procurement Reform:(Cost $32.46 M) Audit Reform and Performance:(Cost $34.27 M) Financial Management Reform:(Cost $39.84 M) Revenue Mobilization:(Cost $3.84 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO  Satisfactory  Satisfactory 5/15/2017 Page 1 of 12 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Public Financial Management Reform II (P120427) Overall Implementation Progress (IP)  Satisfactory  Satisfactory Overall Risk Rating  Substantial  Substantial Implementation Status and Key Decisions This ISR is being raised to record the approval of the extension of the project closing date by six months, from June 30, 2017 to 31 December, 2017. This is the third extension of the project closing date, with a cumulative extension period of 36 months. The extension was requested by the MOF on February 19, 2017. It is required to give the project enough time to complete implementation of ongoing activities in PFMR II and also to complete the preparation of a new Public Financial Management (PFM) project. This will help to avoid any gap in Bank PFM support in Afghanistan and ensure sustainability of key results achieved under PFMR II. Effective PFM remains of key importance to Government, given the overriding current need to prioritize interventions within tight budget constraints. The Project Development Objective (PDO) remains relevant and achievable, and remains the same following this closing date restructuring. The project has made significant progress towards achieving the PDO and targets set for the key performance indicators. Overall, the project’s performance is rated Satisfactory (S) for both Project Development Objective (PDO) and Implementation Progress (IP). The results framework has been updated in this ISR and a formal ISM is planned to take place to coincide with preparation of the new PFM project. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance  --  Substantial  Substantial Macroeconomic  --  Substantial  Substantial Sector Strategies and Policies  --  Substantial  Substantial Technical Design of Project or Program  --  Moderate  Moderate Institutional Capacity for Implementation and Sustainability  --  Substantial  Substantial Fiduciary  --  Substantial  Substantial Environment and Social  --  Low  Low Stakeholders  --  Moderate  Moderate Other  --  High  High Overall  --  Substantial  Substantial 5/15/2017 Page 2 of 12 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Public Financial Management Reform II (P120427) Results Project Development Objective Indicators PHINDPDOTBL  Donors shift their off-budget official development assistance to Afghanistan to on-budget. (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 62.00 60.00 20.00 Date 01-Sep-2011 30-Jun-2016 31-Mar-2017 30-Jun-2017 Comments RIMU states that the current working figure is around 60% but data is incomplete. This indicator will be updated when RIMU receives complete data and is likely to then change. In light of this, the results framework will be further updated in next ISM. PHINDPDOTBL  Reduction in number of days taken by the National Procurement Committee (NPC) to dispose of cases presented to it. (Days, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 10.00 7.00 7.00 7.00 Date 31-Oct-2015 30-Jun-2016 31-Mar-2017 30-Jun-2017 Comments NPC continues to show strong performance, with an average of 7 days for cases to be processed. The NPC has held over 90 sessions. NPA is developing an online mechanism for tracking submitted cases to NPC. This mechanism will create user accounts for PEs, NPC members and even Donor agencies to track submitted cases and share comments and information. It is envisaged that this system will developed in 4 months PHINDPDOTBL  Establish a database of, and publicly disclose, National Procurement Committee (NPC) decisions. (Days, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 2.00 1.00 1.00 1.00 Date 01-Dec-2015 30-Jun-2016 31-Mar-2017 30-Jun-2017 5/15/2017 Page 3 of 12 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Public Financial Management Reform II (P120427) Comments The NPC decisions are widely reported immediately the next day after the NPC. NPA is in the process of publishing list of all NPC decisions in a tabulated format on its website. PHINDPDOTBL  The Supreme Audit Office commences development of a mechanism for citizen participation in audit. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Preparation for citizen participation in audit during FY16 leading to development of The SAO is looking at SAO has developed a mechanism for best practice and is in mechanism for citizen citizen contact with other participation in audit / participation in No citizen participation in SAIs. It expects that Value issued a policy audits and audit the mechanism will be governing citizen issuance of developed and Policy participation in public policy prepared by December oversight. governing 2016. citizen participation in public oversight pf public funds by June 30 2017. Date 01-Dec-2015 30-Jun-2016 31-Mar-2017 30-Jun-2017 PHINDPDOTBL  Increased number of functions carried out by regular ministry staff that were previously carried out by contracted staff. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Plan in place for FY17 to Plans currently work in Plans currently work in modify progress. On target: progress. On target: Tashkeel to Treasury has Treasury has succeeded include succeeded in in transitioning some key functions that Plans currently work in transitioning some key Value functions from advisors are currently progress. functions from advisors to civil servants; NPA undertaken by to civil servants; NPA now carries out key national now carries out key managerial functions consultants. managerial functions through civil servants. Equivalent through civil servants. FY16 Plan implemented. Date 01-Dec-2015 30-Jun-2016 31-Mar-2017 30-Jun-2017 5/15/2017 Page 4 of 12 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Public Financial Management Reform II (P120427) PHINDPDOTBL  Improved coverage and quality of internal audit. (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 49.00 50.00 30.00 50.00 Date 01-Sep-2011 01-Oct-2015 31-Mar-2017 30-Jun-2017 Comments End target is that MOF audits 50% of budgeted expenditure % (for entities which collect) revenue 25% within its mandate, as per recognized standards. During the ISM mission of July 2016, the figures were 25% (budgeted expenditure) and 15% Revenue. As at March 31st 2017 the cumulative figures have improved to 30 % (budgeted expenditure) and 18% Revenue. However progress has been slower than expected as no audit has performed in provinces in recent periods due to factors outside of control of IAD. This was reported in Closing Date extension restructuring paper and was one of the reasons for justification of extension. However the IAD is still on target to meet the indicator. PHINDPDOTBL  Improved coverage and quality of external audit. (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 49.00 75.00 71.03 75.00 Date 01-Sep-2011 30-Jun-2016 07-May-2017 30-Jun-2017 Comments During 1395 SAO covered 71.03% of annual government expenditure. Of this 47.62% was covered by central budgetary audit directorate and 23.41% was by local budgetary audit directorate. Overall Comments The project has made significant progress towards achieving the PDO and targets set for the key performance indicators. 5/15/2017 Page 5 of 12 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Public Financial Management Reform II (P120427) Intermediate Results Indicators PHINDIRITBL  Legal framework, legal documentation and disclosure policy completed and Appeal and Review Committee and the dispute resolution system is functioning (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target The new committee successfully started operation in early September 2015 . As of Feb 2017, the ARC has received and reviewed 517 cases. Debarment notices are updated weekly and published in a separate section on NPA website. Debarment Committee Semi-annual The new committee online. As of Feb 2017, report on has successfully 145 Debarment Cases Appeal and started operation in had been received, out Review early September 2015 of which 110 have been Legal framework in place Committee Value and held 5 sessions. debarred, 15 have been but not operational activity. Debarment notices are rejected, and 20 are Debarment published by a under debarment notices, if any separate Debarment process. publicly Committee online. A half yearly Appeals disclosed. and Review Committee disclosure report for each period now needs to be published in accordance with the agreed PDO indicator. A comprehensive section on ARC will be included in NPA’s Annual Report . Date 01-Sep-2011 30-Jun-2016 31-Mar-2017 30-Jun-2017 PHINDIRITBL  Number of line ministry and mustofiats procurement staff completing duty-specific procurement training. (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 732.00 7,938.00 7,800.00 Date 01-Sep-2011 30-Jun-2016 31-Mar-2017 30-Jun-2017 Comments 6000+ staff trained in life of project up until Additional Financing was approved, As of Feb 2017, NPA has provided training to 1938 staff of line ministries. Number of Male Staff Trained: 1778 5/15/2017 Page 6 of 12 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Public Financial Management Reform II (P120427) Number of Female Staff Trained: 160 1334 Staff have been trained in Kabul and 604 staff in 12 Provinces. PHINDIRITBL  Numbers of human resource management staff completing duty-specific training in their respective specialties (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 956.00 586.00 750.00 Date 01-Sep-2011 30-Sep-2016 30-Sep-2016 30-Jun-2017 Comments Target achieved. RIMU reported 956 staff trained in Period October 2015 to September 2016. A further 586 are reported to have been trained between October 2016 and March 2017 (345 between October 2016 and December 2016 and 241 between January 2017 and March 2017). PHINDIRITBL  LM PFM assessment (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 14 Value 2 assessments underway 14.00 14.00 assessments completed Date 01-Sep-2011 30-Jun-2015 30-Jun-2015 31-Dec-2015 5/15/2017 Page 7 of 12 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Public Financial Management Reform II (P120427) PHINDIRITBL  Number of internal audits done to acceptable standards. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 138. In FY 1395 115 audits were undertaken and in the first quarter of Value 4.00 111.00 34.00 1396 23 audits have been undertaken. Total = 138 Date 01-Sep-2011 30-Jun-2016 31-Mar-2017 30-Jun-2017 Comments The target has been achieved. PHINDIRITBL  Number of external audits verified as done to international auditing standards (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target SAO has completed the audit of all World Bank ARTF projects for the fiscal year 2015, and With the support of two submitted the reports to consulting firms SAO World Bank and MOF. has completed the SAO is now in the following audits as per process of conducting INTOSAI auditing the audits for fiscal year standards; i) all WB 2016. The reports will be All WB grant grant audits (except submitted by end June audits and 9 Value Just WB grant audits one which was 2017. SAO with the compliance completed shortly after assistance of its audits mission); and ii) contractor has, to date, compliance audit of 9 completed 9 audits in ministries representing line ministries (-MOD, more than 75% of MOI, MOE, MRRD in government first year- MOMP, expenditure MOEW, MOHE in second year- MAIL, MOPW in third year) . Date 01-Sep-2011 30-Jun-2016 31-Mar-2017 30-Jun-2017 5/15/2017 Page 8 of 12 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Public Financial Management Reform II (P120427) PHINDIRITBL  Timely dissemination of in-year budget execution reports. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 30 days from month end 15 days 15 days 14 days Date 01-Sep-2011 30-Sep-2016 31-Mar-2017 30-Jun-2017 Comments The current figure of 15 days is the median. Reports are posted between 12 and 18 days. To be followed up during next ISM. PHINDIRITBL  AFMIS upgrade to web based version evaluated (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target The AFMIS web based system (v7) is being Assessment underway. implemented in all Implementation Demonstration of budgetary units in center of version 7 capabilities and in provincial Web based version of recommendatio Value provided by supplier mustofiats. The first AFMIS not implemented ns of the and test script report stage activities as assessment shared with the World specified in contract with completed. Bank. vendor were almost complete as at 31st March 2017. Date 01-Sep-2011 30-Jun-2016 31-Mar-2017 30-Jun-2017 PHINDIRITBL  Legal framework and structures for development and regulation of an accounting profession drafted and training plans for professional accountants established (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Final Version of Law submitted to Ministry of Training of Justice (MOJ) on 09 accountants April 2016. The MoJ The Cabinet has underway. have now agreed on approved a new Monitoring the content of the law Accountancy Law to Reports, and will process it. establish the legislative detailing no legal or oversight Currently MOJ is Value basis for a regulated performance framework amending the accounting profession in against target expressions, translated Afghanistan and to be split by words and format to in submitted the new law to gender in order bring in line with MOJ Parliament. that baseline standards. This can be process may take one established. more month and then will be sent to the 5/15/2017 Page 9 of 12 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Public Financial Management Reform II (P120427) institute of MoJ for their review and obtain Minister’s approval Date 01-Sep-2011 30-Jun-2016 31-Mar-2017 30-Jun-2017 PHINDIRITBL  Timeliness and quality of annual audited financial statements submitted to the legislature and donors (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Qatia audit report for FY Qatia and 1394 was submitted to Annual Cash the president and Based Audited Qatia statements parliament on 31/3/1395 Financial submitted to National The revenue account as per the legal Statements and Assembly within 6 months was submitted to SAO requirement. The Qatia info on of the close of the financial on June 10, 2016 and audit team is currently liabilities, year but they do not subsequent to the Value auditing the assets and include cash position of mission, Qatia audit consolidated Qatia cash position controlled entities, third report was submitted to accounts of the fiscal submitted to party payments and the Parliament on year 1395 and is the legislature information about assets & September 21, 2016. expected to complete within 6 months liabilities the report by 25th June of the close of 2017. the financial year. Date 01-Sep-2011 30-Jun-2016 31-Mar-2017 30-Jun-2017 PHINDIRITBL  Disaster recovery plan and testing (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Revised workplan has been Disaster submitted.Disaster recovery plan Disaster Recovery plan Value no plan in place Recovery plan still tested and in still pending. pending. IT adviser place/implemen being recruited to ted. develop. Date 01-Sep-2011 30-Jun-2016 31-Mar-2017 30-Jun-2017 Comments Pending completion. 5/15/2017 Page 10 of 12 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Public Financial Management Reform II (P120427) PHINDIRITBL  Number of internal audit staff trained and accredited (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 112.00 388.00 400.00 546.00 Date 01-Sep-2011 30-Sep-2016 31-Mar-2017 30-Jun-2017 Overall Comments 227 staff trained and accredited in Period January to March 2017 (first quarter FY1396). 173 staff were trained and accredited in previous quarter (October to December 2016). Number of staff trained since last ISR report is therefore 227 plus 173 = 400 Cumulative figures show target achieved with number of IA staff trained over the life of the project is approaching 3000.Annual figures prior to AF can be extracted from the Aide memoire for ISM mission October 18-November 4 2015. Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed P120427 TF-10024 Effective USD 114.13 114.07 0.05 91.88 22.19 81% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P120427 TF-10024 Effective 09-Aug-2011 09-Aug-2011 09-Aug-2011 31-Dec-2014 31-Dec-2017 Cumulative Disbursements 5/15/2017 Page 11 of 12 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Public Financial Management Reform II (P120427) Restructuring History Level 2 Approved on 01-Sep-2014 ,Level 2 Approved on 19-Dec-2015 ,Level 2 Approved on 19-Apr-2017 Related Project(s) P150632-Second Public Financial Management Reform Project (PFMRP II) - Additional Financing 5/15/2017 Page 12 of 12 Public Disclosure Copy