Public Disclosure Copy The World Bank Implementation Status & Results Report Financial Reporting and Oversight Improvement Project (P130878) Financial Reporting and Oversight Improvement Project (P130878) AFRICA | Malawi | Governance Global Practice | Recipient Executed Activities | Investment Project Financing | FY 2013 | Seq No: 9 | ARCHIVED on 04-Apr-2018 | ISR31465 | Implementing Agencies: Republic of Malawi, Ministry of Finance Key Dates Key Project Dates Bank Approval Date:07-Mar-2013 Effectiveness Date:28-Mar-2013 Planned Mid Term Review Date:20-Jul-2015 Actual Mid-Term Review Date:31-Aug-2015 Original Closing Date:30-Jun-2016 Revised Closing Date:30-Apr-2018 Project Development Objectives Project Development Objective (from Project Appraisal Document) The project development objective (PDO) is to improve the internal controls, accounting, reporting and oversight of government finances at the central and decentralized levels in Ministries, Departments and Agencies (MDAs) in Malawi. Has the Project Development Objective been changed since Board Approval of the Project Objective? No PHRPDODEL Components Name Internal Audit:(Cost $2.80 M) External Audit:(Cost $4.70 M) PFEMRP Management:(Cost $1.60 M) Accounting and Financial Management:(Cost $9.20 M) Contingencies:(Cost $0.70 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO  Moderately Satisfactory  Moderately Unsatisfactory Overall Implementation Progress (IP)  Moderately Satisfactory  Moderately Unsatisfactory Overall Risk Rating  Substantial  Substantial 4/9/2018 Page 1 of 9 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Financial Reporting and Oversight Improvement Project (P130878) Implementation Status and Key Decisions 1 . Project Objectives: The Project Development Objective is to improve the internal controls, accounting, reporting and oversight of the Recipient’s finances at the central and decentralized levels in its ministries, departments and agencies (MDAs). The PDO continues to be relevant as it was conceived by the design of the of the project. 2 . Project Relevance: The Financial Reporting and Oversight Improvement Project (FROIP) is very relevant and it is helping to improve financial management, transparency and accountability for public funds for the GoM. The ‘cash-gate’ scandal of 2013 brought to the fore the need to address the long-lasting public financial management challenges, such as delays or the inability of the government to (i) prepare Bank Reconciliation Statements, (ii) prepare and publish in-year financial statements on quarterly basis consistent with the PFM Act; (iii) prepare and publish audited annual financial statements in accordance with the PFM Act; (iv) communicate budget ceilings to MDAs and enforce commitments control; (v) prevent misapplication of funds due to non-adherence with rules regarding budget virements; (vi) ensure adequate segregation of duties between end users and system administrators of the IFMIS; and (vii) enforce managerial accountability to ensure compliance with rules and regulations. More broadly, cash gate has presented the opportunity to revisit the support to the Government’s PFM reforms, especially to strengthen PFM internal controls. 3 . Key achievements: 1 . Government completed the audit of the civil service payroll system, reconciled the difference between establishment and payroll, for both salaries and allowances, and deleted erroneous entries. 2 . National Audit Office completed and published the back log audited financial statements for the FYs end June 2012, June 2013, June 2014, June 2015 and June 2016; bringing the status of audited financial statements to current. 3 . Ministry of Finance submitted to Parliament the amended Public Audit Bill with a view to strengthening the operational independence of the National Audit Office in conformity with INTOSAI standards and LIMA declaration. 4 Key challenges: 1 . The procurement challenges for Government’s plans to replace the existing EPICOR based IFMIS system with a new IFMIS system, which was expected to be partly financed through the FROIP project. The procurement process was prolonged than the expected initial timeline due to complaints by one of the bidders. Government is proceeding on their own to procure the new IFMIS and the project will not support the procurement. This development presents the risks for a long-term plan for effective implementation of new IFMIS for GoM. 2 . Government has indicated its intension to request for the extension of FROIP to December 2018. The GoM to expedite the reprioritizing and implementation of the project activities for the achievement of project objectives. 4/9/2018 Page 2 of 9 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Financial Reporting and Oversight Improvement Project (P130878) 4/9/2018 Page 3 of 9 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Financial Reporting and Oversight Improvement Project (P130878) 4/9/2018 Page 4 of 9 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Financial Reporting and Oversight Improvement Project (P130878) 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  --  Substantial  Substantial Institutional Capacity for Implementation and Sustainability  --  Substantial  Substantial Fiduciary  --  Substantial  Substantial Environment and Social  --  Low  Low Stakeholders  --  Moderate  Moderate Other  --  --  Moderate Overall  --  Substantial  Substantial Results Project Development Objective Indicators PHINDPDOTBL  Component 1: PEFA PI-23.4 (former PI-18)-Effectiveness of payroll controls (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value C+ C+ C+ B+ Date 30-Jun-2011 03-Nov-2016 03-Nov-2016 30-Apr-2018 4/9/2018 Page 5 of 9 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Financial Reporting and Oversight Improvement Project (P130878) PHINDPDOTBL  Component 1: PEFA PI-25 (former PI-20)-Internal controls on non-salary expenditure (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value C+ C C B Date 30-Jun-2011 03-Nov-2016 03-Nov-2016 30-Apr-2018 PHINDPDOTBL  Component 2: PEFA PI-26 (former PI-21)-Effectiveness of Internal audit (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value D+ C C C Date 30-Jun-2011 03-Nov-2016 03-Nov-2016 30-Apr-2018 PHINDPDOTBL  Component 1: PEFA PI-29 (former PI-25)-Accounting, recording and reporting (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value C+ C C B Date 30-Jun-2011 03-Nov-2016 03-Nov-2016 30-Apr-2018 PHINDPDOTBL  Component 3: PEFA PI-30 (former 26)-Characteristics of External Audit (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value D+ C C C Date 30-Jun-2011 03-Nov-2016 03-Nov-2016 30-Apr-2018 Overall Comments Intermediate Results Indicators 4/9/2018 Page 6 of 9 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Financial Reporting and Oversight Improvement Project (P130878) PHINDIRITBL  Component 3: Audit coverage and standards (PEFA PI-30.1) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value D+ C+ C+ B Date 30-Apr-2013 18-Mar-2016 03-Nov-2016 30-Apr-2018 PHINDIRITBL  Component 1: Payroll audits (PEFA PI 23.4) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value C B B B+ Date 30-Apr-2013 18-Mar-2016 03-Nov-2016 30-Apr-2018 PHINDIRITBL  Component 3: Supreme Audit Institution Independence (PEFA PI-30.4) (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 40.00 40.00 80.00 Date 30-Apr-2013 26-Jun-2017 03-Nov-2016 30-Apr-2018 PHINDIRITBL  Component 1: Compliance with payment rules and procedures (PEFA PI-25.3) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value C C C B Date 30-Apr-2013 18-Mar-2016 03-Mar-2016 30-Apr-2018 4/9/2018 Page 7 of 9 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Financial Reporting and Oversight Improvement Project (P130878) PHINDIRITBL  Component 1: Submission of reports for external audit (PEFA PI-29.2) (Months, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 48.00 4.00 4.00 3.00 Date 30-Apr-2013 26-Jun-2017 18-Mar-2016 30-Apr-2018 PHINDIRITBL  Component 2: Nature of audits and standards applied (PEFA PI-26.2) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value C B B B+ Date 30-Apr-2013 18-Mar-2016 18-Mar-2016 30-Apr-2018 Overall Comments Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed P130878 TF-13825 Effective USD 19.00 19.00 0.00 10.16 8.84 53% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P130878 TF-13825 Effective 15-Mar-2013 15-Mar-2013 28-Mar-2013 30-Jun-2016 30-Apr-2018 Cumulative Disbursements 4/9/2018 Page 8 of 9 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Financial Reporting and Oversight Improvement Project (P130878) Restructuring History Level 2 Approved on 17-May-2016 Related Project(s) There are no related projects. 4/9/2018 Page 9 of 9 Public Disclosure Copy