Financial Management, Disbursement Arrangements and Procurement A. Overview of Current Fiduciary Arrangements

Additional Financing to Third Primary Education Development Project (RRP BAN 42122)
FINANCIAL MANAGEMENT, DISBURSEMENT ARRANGEMENTS AND PROCUREMENT
A. Overview of Current Fiduciary Arrangements
1. Third Primary Education Development Project (PEDP3) uses the Government of

Bangladesh systems for budget execution, financial management and monitoring. The program
follows an agreed combination of government and Development Partner (DP) systems for
procurement. Under this financing model (referred to as the treasury model), DPs place their
contributions into a Consolidated Fund under the Ministry of Finance (MOF) where these mingle
with funds from many other sources. The decision to adopt the treasury model was made after a
full scope assessment of government systems and capacity in financial management and
monitoring was conducted during the design stage of PEDP3. This assessment concluded that
in the context of the progress in the Government systems (since the design of PEDP II), and the
need to finance both development and non-development expenditures to render the results of
this sector-wide program, the proposed fiduciary arrangements for PEDP3 trigger lesser
fiduciary risk, compared with use of a parallel financial management system.
2. The Ministry of Primary and Mass Education (MOPME) and Directorate of Primary
Education (DPE) prepare an Annual Operational Plan (AOP) followed by an Annual
Procurement Plan (APP). During the year, MOPME can re-allocate within its budget, i.e. within
the total allocation for development and non-development expenditures. An increase in the total
budget, however, can only be made during budget revision. MOPME is also one of the largest
employers in the civil service, and since salaries and allowances constitute the major share of
expenditures with payments made to individuals, regular reviews of the payroll through the
Annual Fiduciary Review (AFR) are a critical element to mitigate risks.
3. Government monitors budget execution for the entire primary education sub-sector
through the Integrated Budget and Accounting System (IBAS). Interim Unaudited Financial
Reports (IUFR) are prepared from the IBAS and approved by MOPME before submission to the
DPs. Disbursements by the DPs are restricted to the amount reported in the IUFR showing that
Governments contribution on eligible expenditures for a given period exceeded the total
disbursements made by all DPs, as mentioned in the JFA. Non-development expenditures are
recorded in the Program Budget Heads (PBH) identified in the Joint Financing Arrangement
(JFA) and development budget program activities are recorded through 29 operational codes.
Both PBHs and operational codes are part of the Governments economic heads of account
which are used to track expenditure on both non development and development sides of the
budget.
4. The Government is accountable for all procurement of goods and services under PEDP3
and is responsible for all contracts signed. All goods and services procured using the National
Competitive Bidding (NCB) method are carried out in accordance with the Government Public
Procurement Rules (PPR) 2008, with certain agreed exceptions specified in the PAD of the
existing project and in the JFA to which government and all DPs are signatories. Goods with
estimated cost of US$ 600,000 and above, and works with estimated cost of US$ 5,000,000 and
above, are procured using International Competitive Bidding (ICB) methods following the World
Banks [International Development Association (IDA)] guidelines. All consulting services are
selected and engaged following the Asian Development Banks (ADB) Consulting Services
Guidelines. All procurement of goods and services under ICB and all engagement of consulting
services are subject to prior-review by IDA and the ADB, respectively.
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5. Following an original estimated cost of US$ 8.337 billion for a five-year program, PEDP3
is expected to be extended by another year, for an overall revised estimated cost of US$ 10.9
billion (at old exchange rate) for the six years. This makes PEDP3 one of the largest
implemented programs in Bangladesh.
B. Summary Assessment of Experience to Date
6. Use of treasury model and reliance on country system
(i) A series of full scope assessments in 2010 and 2011 had concluded that the
adoption of the treasury model (pooling all funds into the consolidated fund of the
Government) would be the least risky and therefore most appropriate mechanism
to channel DP funds under the PEDP3. Progress in country systems, particularly
in budget execution, management, reporting and auditing provided reasonable
levels of assurance for reliance on these as the core systems of program
financial management. A specific Procurement and Financial Management
(PFM) Action Plan was developed and agreed upon to mitigate remaining risks
and to augment capacity, with the more medium term goals of strengthening
country systems, lowering fiduciary risks, increasing government ownership and
lowering transaction costs of program reporting, implementation and monitoring.
(ii) Three years into implementation, there is continued assurance that the use of the
treasury model and reliance on country systems for financial management, audit
and procurement was indeed the most appropriate approach to pursue. Some of
the reasons for this assessment include:
a. The IBAS system has delivered 11 credible budget management reports,

and the quality of each report has improved incrementally over the last 3
years.
b. The IBAS system was customized to: (i) monitor timeliness of payment
processing, (ii) reconcile expenditures of 1,112 MOPME drawing and
disbursement officers (DDOs) and approximately 500 MOF accounts
officers (AOs) and (iii) track advances on development expenditures.
c. These customized reports are regularly generated and monitored by

Controller General of Accounts (CGA) and DPE.
d. The timing of budget release to field officers has also improved

significantly due to intensive ongoing training which resulted in greater
awareness of the program among the implementing agencies. For
example, allotment letters are available in most offices in August each
year, one month into the new FY, as opposed to in November, which
used to be the normal practice. This has resulted in consistently higher
budget execution over the last three years.
e. The expected reduction in transaction costs in moving to the treasury

model has been realized. All expenditures are incurred using the regular
government system through decentralized DDOs. No dual payment is
required. Maintaining copies of records and reconciling multiple checks
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per contract is no longer required by a centralized project management

team but fully decentralized to DDOs and AOs.
f. The combination of the treasury model and the need to consistently meet
the sector finance Disbursement Linked Indicator (DLI), together, have
encouraged adequate financing for the program and for primary
education.
g. Overall, the approach of merging DLIs with the treasury model has been
very complementary in increasing government ownership for meeting key
sector results and providing adequate and predictable financing to meet
these results.
h. There has been strong commitment to collaboration across multiple

agencies of the Government, including MOPME, the CGA, Ministry of
Finance, Economic Relations Division (ERD) and the Office of the
Comptroller and Auditor General (OCAG). MOPME has benefitted
tremendously from this collaboration and support and there is a
noticeable improvement in the fiduciary dialogue across these agencies.
For example, a special Government Order was issued by the MOF in
recognition of the need to advance funds to deliver program results. CGA
has consistently customized the IBAS to incorporate program monitoring
and reporting requirements, which has enabled the generation of the
quarterly IUFRs including payment processing, DDO reconciliation and
advance tracking. CGA has also enabled DPE to a read-only access to
IBAS so as to facilitate timely monitoring of funds. A single audit report of
development and non-development expenditures has been delivered for
two years by the OCAGs Foreign Aided Project Audit Directorate
(FAPAD). The PEDP3 audit was included in the 3 pilot audits last year
that received enhanced capacity support and oversight through the
Strengthening of Public Expenditure Management Project (SPEMP).
i. Almost threefourths of the agreed 2011 PFM Action Plan has been
completed. These include: implementation of the Audit Review Meeting,
customization of IBAS to systematically and thoroughly monitor
expenditures, implementation of acceptable guidelines for international
procurement and agreement on NCB guidelines including threshold and
exceptions.
(iii) The independent financial management review of the PEDP3, which was
conducted as part of the program MidTerm Review, noted the progress made
and affirmed MOPME as a pioneer line ministry that has successfully
implemented financial management activities.
(iv) Therefore, the program will continue to pursue this funding and reporting
modality in its remaining years.
7. Procurement Performance. During the last three years, the following positives by
National Curriculum and Textbooks Board (NCTB), Local Government Engineering Department
(LGED) and Department of Public Health Engineering (DPHE) are noteworthy and summarizes
performance by some key agencies:
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(i) National Curriculum and Textbooks Board:
a. 360 million primary and pre-primary books contracted out, printed,

delivered and distributed
b. As per World Bank Guidelines, the procurement was closely monitored
and more than 90% children availed the books on time with at least 20%
savings by the Government on procurement of primary and pre-primary
textbooks.
(ii) Local Government Engineering Department:
a. Ten thousand class rooms constructed and handed over to DPE till June
2014.
b. Majority of the school buildings constructed following aesthetic and age-
sensitive designs
c. Electronic Government Procurement (e-GP) implemented in DPs funded
program for the first time in Bangladesh at sub-district (Upazila) level.
d. DPE and School Management Committee personnel involved in school
construction. Regular coordination meetings held involving end-users,
LGED and contractors showing stakeholder ownership.
e. Debarred around 15 colluding bidders based on findings from the first
AFR.
(iii) Department of Public Health Engineering:
a. Safe water points installed for ensuring arsenic safe drinking water supply
to school users, namely children, teachers and administrators.
b. Completed 15,055 drinking/utility water points until June 2014
c. Constructed sanitary latrines/wash blocks for ensuring adequate
sanitation facilities for primary schools
d. Completed 4778 male and 2822 female wash blocks
e. Generally followed 72 hour service standard for maintenance of any
damaged safe water point or wash blocks.
8. Intensive Fiduciary Oversight
(i) The PEDP3 implementation period over the last 3 years has been accompanied
by rigorous fiduciary due diligence and oversight by the joint Government-
Development Partner Procurement and Finance Working Group (PFWG) and
through the contracting of independent consulting firms. The PFWG is chaired by
the Government and co-chaired by the World Bank (IDA) and the Asian
Development Bank (ADB).
(ii) The main mechanisms for fiduciary oversight include: Quarterly reviews of the
IUFRs, Quarterly Fiduciary Reviews (QFR), AFR including post procurement
reviews, Special Post Procurement Reviews, regular monitoring of the PFM
Action Plan and annual regulatory audits. In addition, MOPME has recently
launched a quarterly review of audit in an effort to proactively monitor and
resolve audit observations.
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(iii) The AFR for PEDP3 is unique in the sense that it covers a large proportion of
MOPME expenditures on an annual basis. By reviewing the accuracy of the
PBHs, which constitute the bulk of MOPME expenditures, the AFR provides
additional assurance to the quarterly IUFRs. In addition, special areas are
selected annually for rigorous review depending upon the nature of the ongoing
policy dialogue and fiduciary concerns emerging from the audit reports or QFRs
or PPRs. In the first year, fund availability for NAPE was reviewed. Under the
second AFR (on-going), the unadjusted advances are being scrutinized. The
AFR also provides concrete recommendations for improvement and value
addition in the areas of special review. The agreed Terms of Reference of the FY
20132014 are attached to this Annex.
(iv) Field verification is being conducted on a random sample basis for the civil works
under PEDP3. Such audits are mainly intended to verify whether the construction
work was undertaken as per the approved design and drawing and also to check
the quality of work and provide feedback to all concerned. So far, reports on the
visits have been shared with concerned agencies, especially MOPME, DPE,
LGED and the joint GovernmentDP Disparity Working Group (DWG) so that
appropriate actions can be taken in a proactive manner.
(v) Technical assistance has been provided to fiduciary staff engaged in the
program, including staff of the MOPME, DPE, MOF, OCAG, CGA, and other
implementing agencies. This has included training and workshops and
development of electronic tools (bid evaluation tools), risk mitigation matrices,
and a bid rotation matrix. MOF staff in the field were provided mentorship for an
extended period to support quality enhancement of reporting and monitoring of
expenditures in the field.
(vi) In addition, the World Bank and the Asian Development Bank, as co-chairs of the
PFWG and as the two MDBs responsible for joint fiduciary oversight of the
program, continue to provide intensive implementation support to strengthen
fiduciary due diligence, knowledge transfer and capacity development on a day-
to-day basis. The PFWG also meets frequently to review the fiduciary aspects of
the program, ensure quality control of the various fiduciary reviews, assess and
discuss implications and next steps to be taken as a result of findings of the
multiple oversight reports and arrangements and reviews the PFM Action Plan.
The PFWG also actively and regularly participates in dialogue with the wider
government to support quality fiduciary management of the program and the
ministry.
9. Areas of further development. Although fiduciary management of PEDP3 is well

advanced, there are areas of further development and improvement. Key among these include:
(i) Internal controls

(ii) Capacity development of key agencies
(iii) Accounting and maintenance of accounting records contract management and
proactive procurement
(iv) Risk mitigation
10. The following sections of this document detail implementation experience, lessons learnt
and highlight areas of further development by topic. While most of the recommendations are
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agreed upon already with Government, the recommendations provide a sound basis for
continued dialogue in the area of fiduciary management.
C. Fiduciary Capacity
11. The range of accomplishments to date in procurement and financial management under
PEDP3 include:
(i) 11 approved IUFRs covering FY 2011/2012, 2012/2013 and 2013/2024: these

reflect notable improvements in quality and completeness, and they have met the
disbursement requirements of the DPs;
(ii) Two annual statutory audits by OCAG/FAPAD, for FY2011/2012 and 2012/2013,
covering all PEDP3 expenditures;
(iii) Two AFRs, covering FY2011/2012 and 2012/2013;
(iv) A special Post Procurement Review for FY2011/2012;
(v) Five QFRs conducted by the Procurement and Finance Working Group (PFWG)
of PEDP3;1
(vi) Substantial completion of the procurement plan for goods, services, and works
including timely and high quality textbook procurement following IDA ICB
Guidelines;
(vii) 20 percent of contracts in the Annual Procurement Plan 2013/2014 processed

through the recently inaugurated electronic Government Procurement system (e-
GP) and a higher percentage initiated for 2014/20152; and
(viii) Good progress accomplishing steps in the PFM Action Plan that was agreed at
the start of the program as one of its risk mitigation measures. An updated PFM
Action plan is attached as Table 4 to this fiduciary assessment. In addition, a
fiduciary action plan for additional financing has also been developed as part of
this assessment and attached as Table 3.
(ix) Moreover, the allotment letter to release budget for FY 20132014 was obtained
earlier than previous two years. This is allowing more scope for utilization of
budget and completion of PEDP3 activities within established timelines.
12. Following up on recommendations of prior QFR and AFR reports, the World Bank in
collaboration with other DPs has arranged several capacity building opportunities, including
financial management training at field level and international training for key government
officials to enhance their knowledge of financial management procedures in the unique sector-
wide approach (SWAp) that PEDP3 constitutes in the Bangladesh context. In addition,
1
The PFWG comprises both DP and Government members.
2
This is a web-based system of the Ministry of Planning Central Procurement and Technical Unit that encompasses
the total procurement life cycle and records all the procurement activities.
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technical assistance supported implementing agencies to ensure effective achievement of

program results.
13. The procurement and financial management functions in PEDP3 differ according to
government agency. While the procurement functions are managed, respectively, by the
individual agencies DPE, NCTB, LGED, and DPHE the financial management is handled
mainly by DPE. DPE is responsible for the budget allocation of development expenditure of
PEDP3 to all DDOs. As the country system is used, this implies that DPE issues allocation
letters to the respective IAs and their field offices. In order to strengthen capacity, the PEDP3
has a common Technical Assistance Plan through which the DPs in collaboration with the
Government, are supporting various fiduciary areas to strengthen line ministries, directorates,
and other IAs (Table 3 below).
14. In preparation of the Additional Financing for PEDP3, a fiduciary capacity assessment
was conducted for each IA. The following paragraphs summarize the main findings:
(i) DPE: Six staff of DPE have taken formal international training on procurement.
There are still opportunities to improve capacity and performance within DPE. In
spite of numerous requests by the DPs, DPE has not recruited a full-time senior
procurement consultant. For the additional financing, DPE would require inputs
from a well experienced, full-time, senior procurement consultant (local) at a rate
consistent with senior procurement consultants in other projects of similar
complexity. The overall experience to date, particularly for contracts subject to
NCB procedures, is that DPE has faced challenges in striving to uphold the
integrity of the procurement process which have prompted a decision to change
location of bid submissions to MOPME Secretariat. DPE will need to consider
moving to e-GP over the next few years and this will be discussed further in the
PFWG.
(ii) LGED: This agency has one of the highest procurement capacities in
Bangladesh. However, they still have some challenges at decentralized level
(Upazilla), which LGED in collaboration with DPE, the PFWG, and DPs are trying
to resolve. The original financing for PEDP3 suffered from misprocurement cases
at LGED.3 The evaluation committees organized by LGED need rigorous training
on the red flags of fraud and corruption, and it is essential that 100 percent of
the civil works contracts shift to e-GP by FY 2016. In terms of financial
management, since DPE is responsible for releasing budget to all DDOs, and
LGED as a DDO is responsible for ensuring adequate book keeping of
expenditures, it is also subject to the regulatory audit under PEDP3 as per
provisions of the JFA. A Memorandum of Understanding (MoU) has been signed
between LGED and DPE providing guidelines on the civil works performed as
well as on financial reporting and monitoring. It is important that continuous
financial management training is ensured for LGED DDOs in order to maintain
proper compliance on best practice financial management rules applicable to
them.
3
Through the due diligence of the AFR FY2011/2012 and special Post Procurement Review on 2011/2012
contracts, the Consortium of DPs noted deviations in contracts valued at approximately US$2.984 million out of the
total 238 contracts reviewed (valued at US$19.2 million).
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(iii) NCTB: From a procurement perspective, this agency has performed relatively
well, especially after proactive resolution of procurement issues in year 1. For
three consecutive years (20122014), the agency successfully completed
procurement of textbooks. Two people from NCTB took international
procurement training, but there is still scope for strengthening capacity within this
agency. It will continue adhering to specific procurement risk mitigation measures
agreed with the World Bank, including the timebound action plan and
contracting the service of a local procurement consultant. NCTB is adequately
staffed to comply with PEDP3 financial management regulations and receives its
yearly allocation in the AOP. There are no capacity issues in regard to availability
of human resources, but specific training in VAT and TAX is required. Another
consideration is that NCTB does not have accounting software, although records
are maintained electronically in excel spreadsheets. NCTB has an internal audit
in place regularly to monitor bills and vouchers, and regularly reports monthly
expenditures to the Ministry of Education.
(iv) DPHE: Though this agency has been involved in PEDP3 from the beginning, a
formal capacity assessment was not conducted prior to program launch in 2011.
After the PEDP3 Joint Annual Review Mission (JARM) in mid2014, a capacity
assessment was carried out which revealed strengths as well as weaknesses. In
terms of staff strength, DPHE officials have adequate training to conduct
procurement under PEDP3 and the service of a procurement consultant is not
required. Even though the AFR FY2011/2012 did not reveal any serious
observations in the procurement processes of DPHE, due to its decentralized
nature, DPHE is no less vulnerable than LGED to bidders attempts to exert
improper pressure. The major advantage in the control points of DPHE over
LGED is that the former invites, evaluates and awards contracts at district level.
During the formal assessment of this agencys capacity, representatives
expressed interest in shifting to e-GP. Further dialogue and assessment will be
required to introduce e-GP in DPHE. The DPHE, similarly to LGED and NCTB,
has received its allocation through the AOP and makes payments to contractors
per the financial rules of Bangladesh. DPHE staff need training in VAT and TAX,
to ensure proper deductions from bills paid to contractors per National Board of
Revenue (NBR) guidelines.
15. Based on the above summary, specific support is needed for better procurement
operation and performance of the program as follows:
(i) Senior Procurement Consultant full-time for DPE and Procurement Consultant
support part-time for NCTB.
(ii) Expansion of LGEDs use of e-GP to 60 percent of civil works contracts for
2014/2015 and 100 percent for 2015/2016 and beyond.
(iii) Future assessment and possible introduction of e-GP in DPHE and DPE.
(iv) Time-bound action plan to be implemented for all ICBs of DPE.
(v) Implementation follow-through on recommendations of the AFR and special Post
Procurement Review, emphasizing fraud and corruption abatement and
prevention measures.
16. For financial management, there is significant progress in line with the PFM Action Plan
developed and agreed during the original financing of PEDP3. An updated Action Plan is
appended in Tables 2 and 3, below. All agencies have adequate human resource capacity to
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implement the program, but there is scope to provide additional support in order to achieve even
better results. Specific support needed for better performance in financial management of the
program is as follows:
(i) Field office FM and procurement training for all DDOs.

(ii) TA support for PEDP3 External Audit, in case such support is requested by the
OCAG; TA support for the CGA office in financial accounting and reporting
functions.
(iii) National TA to support IT and accounting systems at DPE.
(iv) National FM Consultant to support financial management in DPE.
(v) Enable DPE IBAS access to budget management report (restricted and read-
only) for monitoring budget execution among all DDOs.
(vi) TA for strengthening internal audit capacity of MOPME.
(vii) Specific training in VAT and TAX for NCTB, LGED, DPHE, and DPE
17. While most of these TA are agreed with the Government, items (vi) and (vii) need to be
discussed in more detail.
D. Planning and Budgeting
18. The budgeting of all PEDP3 additional financing expenditures would continue to be part
of the government budgeting process and expensed through the existing treasury model. The
DPs would finance both development and non-development expenditures. The detailed annual
budget for PEDP3, to be prepared and endorsed by MOPME by the end of May each year will
ensure appropriate allocation is provided for all critical activities in accordance with government
Delegation of Financial Powers and released to the spending units within the first two weeks of
the fiscal year. DPE via the IUFR generated from the IBAS terminal will monitor the
monthly/quarterly/semi-annual budget for the entire primary education sector to ensure that
budget execution keeps pace with the approved budget. In addition, a computerized accounting
system is being piloted in DPE to monitor expenditures of the DDOs and ensure regular
reconciliation. The computerized system would also enable DDOs to submit their Statement of
Expenditures (SoE) online to DPE, who would then be able to track down performance of its
field offices.
19. In terms of procurement, there needs to be more proactivity in planning. The APPs are
developed with significant delay. Relevant issues and suggested mitigation measures are as
follows:
(i) LGED: LGED spends the major portion of PEDP3s development budget but
does not receive an approved list of schools (for new construction or major
renovation of existing classrooms, provision of water supply, etc.) from DPE in a
timely manner to initiate the annual procurement process. Furthermore LGED
implements by awarding contracts at its lowest tier, the Upazila (sub-district)
level. Significant issues of fraud and corruption, and other technical concerns
were uncovered through technical site visits and in the AFR FY2011/12 and
special Post Procurement Review (PPR) on 2011/2012 contracts. This resulted
in DPs taking remedial action (declaring misprocurement) on 21 such cases. The
LGED has taken several important initiatives to strengthen and improve capacity.
LGED, with the assistance of the Central Procurement Training Unit (CPTU) has
launched a nation-wide electronic procurement for contracts covering the period
of FY 20132014 and beyond. In addition, capacity building for engineers in the
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field is ongoing including dissemination workshops on the findings of the AFR

20112012 and providing practical tools to improve the reviews conducted by the
Technical Evaluation Committee. LGED analyzed the findings from the reviews
and took its own actions: in several cases, they confirmed the findings; 17 firms
were debarred from contracting for 45 years, and actions against involved staff
have been initiated. The following measures will take place in FY2015 and
beyond, including the additional financing: (i) Review of the MoU between DPE
and LGED; (ii) review of the spend profile and procurement strategy including
capacity assessment, risk management, planning and execution of LGED in
PEDP3; and (iii) NCB contracts implemented through e-GP (60 percent of
contracts in FY2015 and 100 percent in FY2016 and beyond).
(ii) NCTB: NCTB must strictly adhere to the procurement plan in order for textbooks
to be delivered to schools by 31 January each year. To achieve this, the delivery
of textbooks has to be completed up to district level generally between October
and December of the previous year. Considering the need for 100 days for
publishers to complete printing, all contracts need to be signed and printing
materials made available to contractors by midJuly. This requires that bid
evaluations are completed by early June, bids received by early May, that the
invitation for bids is published by end February or early March. In PEDP3
implementation to date, there have been instances of inviting bids as late as
midMarch, which puts enormous stress on the remaining timeline to meet the
deadline for books to be available in schools on January 1. During the period of
the additional financing, greater efforts need to be made to adhere to the annual
procurement plan and timebound action plans. To facilitate this, the option for
NCTB to hire its own procurement consultant using a portion of the PEDP3
proceeds it receives as royalties for publishing the books for DPE should be
assessed. Royalties represent from three to four percent of the cost of each
textbook.
(iii) A procurement plan typical for Investment Project Financing (IPF) projects, rather
than agreeing on a template, is the minimum requirement for DPs financing. With
a view to harmonization with the ADB and World Bank, DPE has prepared an 18
month procurement plan as well as a 36month plan to cover both the
requirement of the additional financing and Governments Revised Development
Project Proforma (RDPP). The summary of the 18month plan for the lead
agency DPE is below (Table 1). There will be similar procurement plans from
NCTB (textbooks), LGED (Civil Works) and DPHE (water and sanitation facilities
in Government Primary Schools).
Table 1: Summary of the 18month plan for Directorate of Primary Education
Item Name and Description Units Quantity

Laptops for 6 PTIs number 96
Desktop for URCs, UEOs and PTI number 1,069
Multimedia Projector for URCs, DPEO and DD number 352
Multimedia Projector for NAPE number 5
Laptops for DPE, DD, DPEO number 121
Desktop Computers for DPE number
Printers for URCs, UEOs and PTI computer Sc. Ins number 933
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Item Name and Description Units Quantity

Printers for DPE, DD, DPEO number
Re-configuration of upgradation of server room of MOPME number Need based
10 KVA online UPS-2, AC for server room, Smart board-1, Server number Need based
room environment & network renovation, Scanner-2, Color printer-
1, IP camera-4, Central ICT Lab for 20 users, reinstall video
conference.
Laptops for GPS number 14,004
Multimedia Projectors for GPS number 14,004
Sound systems for GPS number 8,002
Sound systems for GPS number 7,002
A
Laptop for GPS number 7,000
A
Multimedia Projector for GPS number 7,000
A
Sound system for GPS number 7,000
Note A: The procurement will be made in line with the strategy for ICT in Primary Education to be developed in
partnership with the Access to Information Project of the Prime Minister's office
E. Internal Control (Including Internal Audit)
20. As with other government expenditures, payments under PEDP3 will be subject to the
normal preaudit verification at accounting offices before payments from the Treasury are
approved. This means that existing control mechanisms of the Government are in effect. In
addition, an AFR, including a PPR and QFR will continue to be conducted every year as
mitigation measures by the PFWG. If required, special PPRs can be undertaken, as was the
case in 2012. Several TPVs, expenditure tracking surveys and other means of auditing (e.g.,
forensic audit of infrastructure) will continue through the PFWG. Continuous training in financial
management and procurement is expected to be carried out annually all through the period of
the AF to ensure the Program contributes to a continually improving control environment within
the government system. The AFR review may also include the post procurement review of
transactions, among other verification, and validations from a procedural perspective. All
pending actions on internal control and fiduciary strengthening would be monitored on a regular
basis through the PFM Action Plan (Tables 2 and 3). TORs for the AFRs and QFRs would be
reviewed by the Government and DPs at the Joint Annual Review (JARM) each year and
tailored to evolving knowledge of, and need for further attention to, fiduciary risks.
21. Social Audits. The program has a number of mechanisms for external verification, such
as third party validation (infrastructure, textbook delivery, annual school census, SLIP funds,
etc.). Findings from these reviews need to be integrated with findings of AFR as a part of the
PFWG dialogue.
F. Contract Management
22. LGED does not employ supervision consultants for civil works related to primary schools
or other physical facilities (e.g., primary training institutes) since the works under PEDP3 take
around 6-9 months to complete and LGED Upazila engineers are technically capable to perform
the supervision. However, the technical reviews revealed many instances of poor maintenance
and acceptance of poor quality works by contractors, which are clearly contract management
issues. The on-going forensic audit has highlighted a number of issues, which are being
addressed by MOPME and LGED. Systematic improvements in contract management are
outlined in the PFM Action Plan (Table 4). As a result of further assessments and conclusions
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reached by the PEDP3 MTR, the LGED supervision methodology will be enhanced to reduce
the number of poor quality school buildings and ensure finished, well-functioning schools.
G. Governance and Oversight Arrangements
1. External audits
23. The Foreign Aided Project Audit Directorate (FAPAD) under the Comptroller and
Auditor-General (CAG) of Bangladesh completed the external audits of the program for
FY2011/2012 and FY 2012/2013, benefiting from SPEMP B technical assistance for the latter
audit. There is no overdue audit report and the audit report submitted for FY 2011/2012 and FY
2012/2013 are acceptable to DPs. Audit arrangement has been agreed by OCAG that FAPAD
will conduct the Audit of PEDP3 for FY 20132014 and onwards based on Revised Statement
of Audit Needs (SoAN). Going forward, DPs would continue to receive a single audit report as
agreed in the original and proposed in the revised Statement of Audit Needs. The audited
financial statements, along with the Management Letter, would be submitted to the DPs within
six months after the close of the fiscal year, as stated in the JFA. All spending agencies within
the primary education sector will provide the auditors full access to the related documents and
records.
2. Unsettled Audit Observations
24. As of August 2014, 87 audit observations remained to be settled from the FY2011/2012
and FY2012/2013 audits, along with six other observations relating to PEDP II. A letter was sent
to MOPME requesting a review and further actions to clarify these observations. It was agreed
that under the leadership of MOPME, audit issues will be reviewed on a quarterly basis and
appropriate actions will be taken to follow up the audit observations. The Bank team, together
with the PFWG, will assess the responses received against the 76 audit observations reported
in the FY2012/2013 audit and determine next steps.
3. Audit Review Meeting
25. Quarterly review meetings comprising of at least one member from each IA will be
established to follow up on all regulatory audit issues including but not limited to those raised by
AFRs and external and social audits. The Terms of Reference and the effectiveness of this audit
review meeting will be assessed through the PFWG. These meetings will include high level
officials from each Line Ministry engaged in the program and chaired by the Joint Secretary
(audit), MOPME. The normal country systems which have been followed to date under PEDP3
for resolution and settlement of audit observations will be equally applicable to the additional
financing. Within three months after the date of the audit report, the Government will provide the
ADB, World Bank and all the other DPs evidence of action taken to resolve financial
irregularities. The DPs will closely monitor the timely resolution of any irregularities identified
and rigorously follow up on the Governments compliance on audit observations. The DPs will
reserve the right to commission financial and compliance audits as well as special purpose
audits. As far as possible, the scope of these audits will be agreed upon by all the DPs.
13
H. Budgeting and Counterpart Funding Arrangements
1. Flow of funds
26. Under the additional financing, the budgeting of all PEDP3 expenditures will continue to
be part of the government budgeting process and DPs would finance both development and
non-development expenditures and transfer funds directly to the Government treasury account
based on the IUFR submitted and DLIs achieved.4 All fund flow arrangements and reporting
requirement between implementing agencies, including those for fund transfer to NNGPS will
continue to follow existing government systems, which have been in place and implemented
satisfactorily under the existing program. Every disbursement will be contingent upon meeting of
DLIs and fixed tranche requirements for respective DPs. In this way, the Government would
continue to pre-finance the government expenditures of the additional financing.
27. In the 4th quarter IUFR, all expenditures are reconciled and any back dated calculation
is undertaken. Similarly, the PFWG also performs quarterly reconciliation of DP disbursements,
to ensure all disbursements are appropriately captured in the IUFR. This reconciliation would be
based on a consolidated financial management report and accompanying reports. The
DDOs/cost centers would be responsible for submitting the adjustment claims against any
advances in a timely manner. The advances will need to be adjusted within the due dates, and
the outstanding advances will not be included in the program expenditure statements to be
submitted for the purpose of reimbursement. IUFR includes details of advances given, adjusted
and unadjusted.
2. Accounting and maintenance of accounting records
28. Accounting records under the additional financing will continue to be maintained within
the government-wide IBAS in accordance with the country accounting procedures and policies.
Advances to DDOs will be separately booked under a separate economic code outside PBHs as
part of the IBAS++ in order to be distinctly identified. The upcoming IBAS ++ will be based on a
cash basis, double entry concept and feature strong accounting and a General Ledger. There
would be additional ledgers, to include the Budget preparation module, Budget execution
module, Financial Report Module, Budget upload option, Advance payable / receivable. In
addition, the treasury model requires accounting and maintenance of accounting records as per
the General Financial Rules (GFR) and Treasury Rules (TR) prescribed by the Government of
Bangladesh.
3. Financial Reporting
29. The systemgenerated accounting records will be the basis for preparation of quarterly
and yearend financial reports for additional financing. Quarterly reports include the sources of
project funds and their uses together with adequate notes and disclosures. Disbursements will
be made against IUFRs to be submitted by the Government to the World Bank and the other
DPs within 45 days after the end of each quarter. These submissions would also include the
detailed budget execution reports by detailed heads of accounts for the entire primary education
sector, for continuous expenditure monitoring. The already agreed template for IUFRs, which
has been in use for the last three years and which is annexed to the JFA is sufficient for
additional financing purposes. DPE will have primary responsibility for preparing these
4
This decision was facilitated by the MOF Economic Relations Division at a meeting on 17 December 2013, at
which time it was agreed that there is no need for PEDP3 to alter its ongoing financing modality.
14
statements. The DPE, with the assistance of the Chief Accounts Officer (CAO), MOPME, would
also prepare and submit the yearend annual financial statements of additional financing by
drawing data from the government accounting system, using Budget Management Reports from
IBAS as the primary source of information. Adequate notes and disclosures in accordance with
the International Public Sector Accounting Standard Cash Basis is to be provided.
4. Disbursements
30. ADB disbursements under the additional financing will be made both for DLI and Fixed
Tranche. The disbursements will be based upon the submission of IUFRs which DPE will
prepare quarterly from IBAS as mentioned above, and these must be endorsed by the Chief
Accounts Officer before finally being approved by the MOPME. The authorized signatory will
sign the Withdrawal Applications based on the IUFRs, and ADB will disburse funds to the
government in the Account indicated in the Withdrawal Application.
31. The pricing of DLIs will be finalized in USD during negotiations. As in the original
program, any unmet DLI under AF will not hold back disbursement of others which are met. If
fewer than all the DLIs are achieved by an annual cycle, withheld amounts against unmet DLIs
will be available for disbursement at a future date, subject to confirmation that the said DLIs
have been satisfied and the applicable IUFR has been submitted to ADB.
I. Risk
1. Procurement Risk
32. The overall procurement risk is assessed as High for DPE and LGED, and
Substantial for NCTB and DPHE. However, taking into account close implementation support
by ADB, World Bank and the PFWG, and based on the successful implementation of special
risk mitigation measures in process including rapid transition to nationwide electronic
Government Procurement (e-GP) and several important initiatives to strengthen and improve
capacity, the residual procurement risk will be moderate. As noted above, training and technical
assistance, ensuring that red flags related to fraud and corruption are effectively
communicated to field level officers, as well as ongoing oversight of the PFWG and independent
post reviews are planned to strengthen the procurement process under additional financing.
2. Financial Management Risk
33. The financial management risk is assessed as Substantial given the risk factors of the
wide range of activities which are being carried out by various government agencies including
implementing agencies across the country. A number of technical supports will be provided
under the program to reduce the FM risks, based on the successful implementation of these
actions along with the implementation of country PFM action plan, the overall FM risk will be
moderate.
34. The Technical Assistance Plan to help mitigate procurement and financial management
risks is given below.
15
Table 2: Technical Assistance Plan, Joint Annual Review Mission 2014
Program If Consultancy
Year Specific issue for TA Intermittent or No. International Potential Any further
Budget support Continuous or National Source remarks
4.1 PEDP3 Management and Governance
Year 4
4 Program Management Continuous 1 National AOP
Consultant (National)
4 Consultants for PSO- MOPME Continuous 7 National AOP
Year 5
Year 6
Sub-Total of 4.1
4.2 PEDP3 Financial Management
Year 4
4 National TA to support Continuous 1 National AOP FM
Financial Management in DPE Consultant
4 National TA to support IT and Continuous 1 National AOP IT & Accounts
Accounts system (DPE A/C Specialist
System implementation)
4 National TA to support IT and Continuous 1 National DPs IT & Accounts
4 National TA to support Continuous 1 National AOP Procurement
Procurement Specialist
4 National TA to support Continuous 1 National DPs Accounts
Financial Management in DPE Officer
4 International TA support to Intermittent 1 International DPs PFM
PFWG-PFM consultant
4 Firm to conduct Annual Continuous Firm International DPs Fiduciary &
Fiduciary Review Post
Procurement
Review
4 Field office FM & Procurement AOP &
training to all DDOs DPs
4 TA Support to CGA office ( If Continuous 1 National DPs IBAS
required by MOF) Specialist
4 TA support for PEDP3 Audit Continuous 1 National DPs Consultant,
(If required by C&AG's office) Audit
Year 5
5 National TA to support Continuous 1 National AOP FM Specialist
Financial Management in DPE
PFWG-PFM consultant
16
Program If Consultancy
Year Specific issue for TA Intermittent or No. International Potential Any further
Budget support Continuous or National Source remarks
Procurement
Review
Year 6
6 National TA to support Continuous 1 National AOP FM
Financial Management in DPE Consultant
PFWG-PFM consultant
Procurement
Review
Sub- total of 4.2
4.6 Public Private Partnerships (PPP)
Year 4
4 TA support for customization 1 National AOP Consultant
of PPP framework
Year 5
5 TA support for implementation 1 National AOP Consultant
of PPP framework
Table 3: Fiduciary Action Plan for Additional Financing
Issue to
SL No Subject address/Action Details Deadline
01 External Audit Reach agreement PEDP3 requires one audit report in October 2014
Arrangement with OCAG on the compliance with Statement of Audit Needs
external audit (SOAN) covering both Non-development
arrangements and Development Expenditures.
02 Finalize the Get formal approval The proposed SOAN have been shared October 2014
Statement of on the SOAN from with the OCAG office and informal
Audit Needs the OCAG discussion has been conducted.
03 Immediate TA Reached External support will be provided to CGA March 2015

support to CGA agreement with in order to generate IUFR on a timely
CGA to strengthen basis
financial reporting
capacity
04 Strengthening A separate review Prepare financial reports and track December 2014
DPEs will be carried out expenses and advances
accounting to further assess
reporting and the accounting
monitoring system of DPE, as
part of the next
QFR
05 Interministerial Establishment of As of June 2014, a number of 87 audit By December
group to monitor the group to observations remained unsettled from FY 2014
17
Issue to
SL No Subject address/Action Details Deadline
audit issues address audit 20112013 along with 10 other
issues in a observations relating to PEDP II.
disciplined manner
06 TA support to Reached External support will be provided to OCAG March 2015
OCAG(if agreement with in order to carry out external audit as
requested by OCAG to agreed.
OCAG) strengthen audit
capacity
07 FM and Strengthen FM and Continuous training will be carried out on Annually within
Procurement Procurement an annual basis throughout the project life June
Capacity system within
Building MOPME and all IA
08 Modification in To add other An Annual Fiduciary Review (AFR) will Every year within
the ToR of AFR functions as continue to be conducted every year as a June 30.
needed mitigation measure
09 Integrating Audit and fix issues PFWG will regularly raise issues emerging every year within
findings of relating to physical from ongoing forensic audit of June
various audits verification of construction, TPVs, PETS, etc.
and TPVs into PEDP III
PFWG dialogue Constructions
Table 4: Procurement and Financial Management Action Plan as of Joint Annual Review
Mission 2014
Need/Rationale/ Issue to Date of

Area of concern address Update and recommended actions completion
1. Accounting Ensure FAPAD raised questions about the accounting and September
and Reporting proper reporting system of PEDP3 in the 20122013 Audit Report 2014
system of PEDP3 accounting
and reporting Recommendation: At an ERD chaired meeting in
system of December 2013, the continued use of the PEDP 3 FM
PEDP 3 system was confirmed. The MTR financial management
analysis review and discussions to date have further re-
affirmed the importance of using and strengthening the
PEDP 3 FM system. During the next QFR, a diagnostic
review of the accounting and reporting system of PEDP 3
is planned to inform this discussion further, particularly with
a view to: (1) support the ongoing discussion between
MOF, MOPME and OACG on the record keeping and
accounting requirements at DPE as the office of the
Program Director (PD) and (2) buttressing support to the
IBAS in absence of the SPEMP-A project technical teams.
2. Audit a) Ensure PEDP3 requires a single audit report in compliance with a ASAP for FY
Arrangement of timely audit Statement of Audit Needs (SOAN) covering both Non- 20132014
PEDP3 and report Development and Development Expenditures. At present, audit and no
finalization of the available as the practice in Bangladesh is that the Foreign Aided Project later than
Statement of safeguard of Audit Directorate (FAPAD) conducts audits of Foreign September
Audit Needs DPs Aided Projects, which support Development expenditures 2014 for FY
(SOAN) disbursement and Non-Development expenditures are audited by the 2014 onwards.
Local Audit Directorate (LAD). Under a temporary
b) Agree with arrangement, FAPAD conducted the PEDP3 audits for
the OCAG on 20112012 and 20122013. A permanent arrangement for
the revised auditing of PEDP3 from FY 20132014 onwards is
SOAN required.
through
formal DPs have reviewed the current SOAN and suggested
acknowledge amendments. As the fundamental requirements of the
ment SOAN remain the same, amendments were proposed to
further clarify the requirements in certain areas (e.g.,
18

Standard for Auditing, standard for accounting and specific
needs) and remove challenges that are beyond the audit
scope like textbook distribution, stipends, inventory and
asset validation and internal control. The proposed SOAN
have been shared with the OCAG office and informal
discussion has been conducted.
Recommendations: A documented policy dialogue with

MOF, ERD and OCAG for a permanent solution of PEDP3
audit from FY 20132014 onwards, resulting in a written
agreement is required. This discussion is on-going.
The revised SOAN for FY 20132014 audit should be

finalized and agreed in writing asap with the OCAG and
accordingly should be disseminated to the auditors through
workshop and presentations. Discussions on the longer
term arrangement for conducting PEDP 3 audits from FY
2014 onwards need to be well advanced (if not concluded)
before concluding appraisal of additional financing. These
discussions are being held in light of the expanded use of
the PEDP 3 FM model in the country.
3. Monitoring of Ensure The lengthy process of settlement of audit observations Ongoing
audit issues is settlement of resulted in a significant number of observations remaining process
extremely audit issues unsettled for long periods of time. As of June 2014, 10
important for in a more observations from PEDPII and 11 observations from
financial rigorous PEDP3 20112012 remain unsettled. During PFWG
accountability manner. session of JARM 2014 it was agreed that under the
leadership of MOPME (Budget & Audit Wing), audit issues
would be reviewed on a quarterly basis. As part of the
process an Audit Review meeting has been planned in July
2014 to expedite resolving unsettled audit observations of
PEDPII and PEDP3 20112012
Recommendation: PFWG should follow up the quarterly

review of audit issues under the leadership of MOPME
(Budget & Audit Wing).
4. Technical Ensure TA During 20122013 audit, FAPAD received support from Ongoing
Assistance in support to the SPEMP B, including training on International Standards Process
absence of OCAG and and assistance to comply with the provisions of the SOAN.
SPEMP the CGA on Similarly, SPEMP A was involved with providing ongoing
needs basis support to the IBAS system of the MOF. PEDP3 relies on
the IFR generated from the IBAS system for disbursement
purposes. With the closure of SPEMP A in August 2014 it
will be important to ascertain how MOF plans to maintain
the credibility of the IBAS reports. Dialogue is ongoing with
the MOF, MOPME CAO, CGA and the SPEMP team to
determine how to sustain the support to generate timely
and high quality reports.
Recommendation: TA support to both the OCAG and CGA

should continue in order to achieve a high quality IFR and
audit report. A dialogue between DPs and CAG and CGA
is currently ongoing to identify nature, scale and modality of
the TA.
5. Procurement Ensure To mitigate the findings of some serious irregularities in the Ongoing
Strengthening ongoing process of procurement of works identified during AFR, Process
strengthening QFR and Audit; 17 firms have been debarred by LGED
of from contracting for the next 45 years. LGED arranges
procurement quaterly meetings with Districts and Upazilla officials of
in PEDP 3 for LGED as well as for DPE to sensitize them about
19

goods, works Procurement Guidelines and Rules, and disseminates the
and services. findings of AFR, PPR and Audit reports. LGED has
processed 20% of APP 20132014 contracts through e-GP
and has initiated more for FY 20142015. In addition
LGED arranges trainings and workshops on capacity
building and strengthening the procurement process.
DPE also arranges some trainings/workshops for capacity

building. The current extent of DPEs progress in
procurement of goods also shows some challenges, many
of which can be mitigated through enhanced awareness of
procurement guidelines and their application.
Recommendation: Ongoing activities to strengthen

procurement process should continue emphasizing
implementation of e-GP for both LGED and DPHE and for
all contracts over the program period. Inclusion of bid
rotation matrix as integral part of the evaluation reports is
compulsory. In addition an independent review is
recommended to analyze the procurement process at DPE
to identify the weaknesses and make recommendation for
strengthening the process.
6. Maintenance Ensure QFR conducted in May 2014 observed that most offices Ongoing
of books of appropriate ensure adequate book keeping but do not follow the format process
records as per record prescribed in the Government Financial Rules (GFR) and
GFR and TR keeping as Treasury Rules (TR).
per the format
prescribed in Recommendation: Review the feedback of ongoing AFR
GFR and TR for FY20122013; incorporate detailed review of
compliance on books of records in the ToR for the next
AFR (for FY 20132014) to ensure appropriate record
keeping by each entity. In addition, training program on
financial management should address this as an ongoing
process.
7. DDO/accounts Ensure a) It is important to ensure preparation of more reliable a) Ongoing
office proper financial statements and regular reconciliation. FAPAD process
reconciliation reconciliation raised an issue that proper reconciliation is not being done
ensures accuracy of books of by a significant number of DDOs on a regular basis. For b) September
of expenditure as records as monitoring the status of reconciliation, a reporting template 2014
well as correct per GFR and has been developed by the CGA. The user interface to
classification of usage of enter the information required by all accounting offices of
accounts monitoring the CGA has also been developed and uploaded. Sample
framework for testing by the QFR team shows that the requirement (of the
monthly monitoring report) regarding reconciliation has still not been
reconciliation implemented fully. Most of the AOs and DDOs are not
between entering status of reconciliation into the system template.
DDOs and
accounts b) The IFR report on DDOs Reconciliation shows total
offices. DDOs to be 1,932 whereas in reality total number of DDOs
under MOPME is only 1,112.
Recommendations: a) CGA should advise all DAOs/UAOs

that requirement for reconciliation means complying with
the Government financial regulations for all sub-sector
expenditures, not only PEDP3 development expenditures.
Even if the expenditure in the account of AO (IBAS) is zero
for a particular month, it should still be confirmed by the
DDO. They should also instruct the AOs to ensure that
reconciliation is done after the close of each month and to
record the status into IBAS.
20

b) MOPME/ DPE as well as DPs should request CGA to

instruct all AOs to identify and delete inactive DDOs.
8. Reconciliation Ensure Several reviews, including AFR and QFR as well as the Ongoing
of advances proper audit, identified inconsistency of status of advances in process
accounting comparing the original advance statement and physical
and reporting verification. Evidence from the QFR showed that DDOs are
as well as adjusting advance in the manual books of records but not
compliance of booking the adjustment properly into the system. Moreover,
GFR and TR UAOs have no real time access to the system. The report
produced by the module/system provides incomplete
information. To strengthen financial management, a
computerized accounting system is being developed at
DPE, to cover its field offices.
Recommendation: DPE should monitor the status and

adjustment of advances at DPE-HQ, and its field offices on
a regular basis. In addition, the next QFR shall review the
issue and recommend practical arrangements/ solutions.
Moreover, training on financial management will focus on
advance adjustment as per GFR and on proper usage of
the advance-tracking module.
9. Efficient and Incorporation MOF uploads the total amount of Development budget of September
effective budget of the PEDP3 in the system. It is not segregated by PEDP3 2014
execution in line Development components, which could otherwise improve the value of
with Program Budget / the IBAS budget management reports as tools for financial
priorities Annual monitoring. However, future IBAS++ feature might have a
/activities Operational provision to include budget allocation at various levels.
Plan (AOP) in
the IBAS Recommendation: MOPME and DPs should request CGA
system by to upload the Annual Operational Plan (AOP) in the system
components by functional, operational and economic code for FY
will ensure 20142015. Then, at the end of the fiscal year, the
better usefulness of continuing the budget segregation by
monitoring component could be evaluated.
and reporting.
10. Adoption of International Under implementation as a component under SPEMP. June 2015
international Public Sector
accounting Accounting Recommendation: PFWG shall discuss with MOF how to
standards. Standards implement IPSAS (cash basis) for PEDP3.
(IPSAS)
(Cash Basis)
as the
reporting
framework for
the annual
program
financial
statements
11. Alignment of Customizatio During PEDPII, a computerized accounting system was June 2015
on-going reforms n of PEDPII developed for DPE and its cost centers. Later, hardware
of PEDP3 with accounting was installed at DPE and field offices, and training
new funding system to conducted but the system could not be made operational.
modality and meet the In the Program Completion Review Mission of PEDPII, it
avoid any subsidiary was agreed that the system would be customized for
st
duplication of accounting of PEDP3. During PFWG session of 1 JARM of PEDP3 in
datasets advances 2012, it was agreed that DPE would review options for
with cost effective use of existing resources within the Government
centers/DDOs system considering the cost of customization of the PEDPII
21

and related accounting system.
financial
monitoring From the experience of 3 years implementation of PEDP3,
DPE is recognizing the need to maintain a subsidiary
accounting system for monitoring financials and status of
advances with cost centers/DDOs. A new web based
computerized accounting system is being developed by
DPE, with the plan to implement it at DPE and its field
offices.
Recommendation: The system should be adjusted to

include all bills processed under the MOPME budget, not
only limited to PEDP3 development expenditures.
A regular training program should be conducted to ensure
efficient usage of the system.
12. Access to Enable IBAS DPE has been granted access to PEDP3 monitoring September
IBAS financial accounting reports like reports on payment processing and templates 2014
data will lead to data access for AO/DDO reconciliation and advances, but still has no
greater (restricted access to regular budget management reports.
confidence and and read-
system- only) by DPE Recommendation: DPE should be granted read only
ownership with for monitoring access to all relevant IBAS reports for effective monitoring
DPE of budget of budget execution and DDO compliance with
execution Government financial regulations. MOPME and DPs should
among all request CGA to provide access to DPE to Budget
DDOs and Management Report of MOPME.
their
compliance
with FR.
13. Preparation Ensure timely As per Section 6 clause 47 of the Joint Financing Ongoing
and Submission submission of Arrangement (JFA), a quarterly IFR showing expenditures Process
of Interim IFR. under each of the PBHs and comparing the actual and
Financial Report budgeted figures and other statements, as listed in Annex
(IFR) vi of the JFA, is required to be submitted within 30 days
st nd rd
after the end of each quarter. The 1 , 2 and 3 quarter
IFRs for FY 2013-14 were substantially delayed.
Recommendation: Timely submission of the IFRs is

required for each quarter. If any issue needs attention, then
inclusion of notes to the statements can be added for
explanation.
14. Delay in Monitoring of A template for monitoring payment processing has been Ongoing
payments is the payments incorporated into the system. The report contained a process
biggest concern processing summary for DAOs as per requirement. However, UAOs
while adapting to service are not included in this reporting format as they dont have
the treasury standards at any real-time access /direct transaction wise access to
system. accounts IBAS. In addition, some DAOs are still not able to generate
offices. the report on payment processing.
Recommendation: All DAOs shall be able to access reports

on payment processing time. This is for compliance with
the service standard, improvement of their performance,
and assurance of the quality of their services.
15. PFM Strengthening DPE conducts training programs with support from DPs on Ongoing
Capacity Building Financial financial management and procurement every year. LGED process
Management arranges dissemination workshops and training program on
of PEDP3 procurement rules for the officials of LGED and DPE
However, AFR, PPR, QFR and audits identified some
challenges in the area of monitoring, accounting and
22

reporting of financial management and procurement at
DPE and its implementing agencies. CAO-MOPME has
also expressed concerns over capacity constraints in
effectively performing their functions.
Recommendations: PFWG should monitor proper

implementation of TA Mapping jointly developed by the
Government and DPs during MTR process.
Training on Financial Management should include record

keeping, accounting and reporting of the program in
compliance with GFR and TR.
16. Review PFM Assess the PFM Action Plan has been developed to assess the Ongoing
Action Plan on a progress and progress of PFM of PEDP3 and to identify critical Process
quarterly basis actions areas/actions for follow up and further improvement.
required for PFWG updates the PFM Action Plan during JARM, QFR
strengthening and JCM.
Financial
Management Recommendation: PFWG should review the status of the
and PFM Action Plan on a quarterly basis. This will help to
Procurement assess the progress of PFM areas, to identify timing and
of PEDP3 critical areas for conducting QFRs and to improve timeline
of Annual Fiduciary Review (AFR).
23
TERMS OF REFERENCE
ANNUAL FIDUCIARY REVIEW FY 20132014
A. Background
1. The Government of Bangladesh and nine Development Partners (DPs) have signed a
Joint Financing Arrangement (JFA) to support institutional reforms and improved educational
outcomes in the primary education sector as described in the Primary Education Development
Program III (PEDP3) Program Document. Within the scope of the JFA, the development
partners will jointly commission an annual fiduciary review (AFR). The purpose of the review is
to provide additional assurance to the financial statements presented, to analyze areas of
substantial fiduciary concerns and to gradually improve the systems and processes by
implementing the concrete recommendations of AFR.
2. PEDP3 uses the Governments financial management (FM) system for management of
all funding of the program activities including DPs contributions. The use of Government FM
systems for DP disbursement to the Consolidated Fund requires that fiduciary risk can be
managed within levels acceptable to Government and DPs. In this respect, a comprehensive
fiduciary risk assessment of the primary education sector, with due consideration of both FM
and procurement issues, has been carried out during PEDP3 preparations. The level of fiduciary
risk was assessed by DPs as acceptable provided that agreed actions to improve the system
are implemented and maintained by the Government.
3. Government FM systems have been strengthened considerably in recent years and now
operate with sound controls in place. Reports are produced which provide Government and DPs
with the ability to monitor both budgeted and actual levels of expenditure in accordance with
their information needs. The Government Integrated Budgeting and Accounting System (IBAS)
has the capacity to generate reports upon request and to required levels of detail. It is expected
that the IBAS system will be strengthened further with support from the multi donor funded
SPEMP PFM reform project.
4. Risks identified within FM systems were identified and mitigating actions included in the
ongoing PEDP3 Procurement and Financial Management Action Plan. The Action Plan is being
implemented with full support from the Government and in liaison with SPEMP. The AFR
consists of two parts: a post-procurement review and a fiduciary review of the FM systems. The
results of the post-procurement review will be used to strengthen the procurement processes
and will also inform the fiduciary review.
B. Purpose of the Annual Fiduciary Review
5. The AFR will provide additional assurance to the information of Interim Financial Reports
(IFRs) presented and in addition focus on reviewing selected risk-areas each year including
areas identified by annual reports of the Comptroller and Auditor General (CAG), Quarterly
Fiduciary Reviews (QFR) and Post Procurement Reviews. The AFR will provide concrete
recommendations for improvement and value addition in the proposed risk areas subject for
review.
24
C. Scope of the Annual Fiduciary Review
6. The AFRs each year will be implemented with focus on some selected areas which will
be decided during the Joint Annual Review Mission (JARM) for PEDP3, normally held each
May. The following are suggested areas of focus for the AFR for the duration of PEDP3:
(i) Review of payment processing including sample testing using information from
the IBAS reports and cash books of a sample of DDOs.
(ii) Review of reconciliation between IBAS and DDO cash books and ledgers using
the IBAS reports on reconciliation including review of DDOs financial
management.
(iii) Review of booking and clearing of advances.
(iv) Internal controls over payroll processing and personnel data management.
(v) Release procedures for funding to schools (SMC funds and contingency funds)
and related financial management.
(vi) Review of stipends delivery.
(vii) Other issues arising from CAG annual audit reports, QFRs and post-procurement
reviews.
7. In addition to the above, the AFR should review relevant reports from CAG and in
particular, concerns in recurring observations from these audits which are both general and
specific to MOPME and sub-ordinated cost centers. The AFR should include but not necessarily
be limited to an assessment of the financial management system, including internal controls.
This would include aspects such as adequacy and effectiveness of accounting, financial and
operational controls, and any needs for revision; level of compliance with established policies,
plans and procedures; reliability of accounting systems, data and financial reports; methods of
remedying weak controls or creating them where there are none; verification of assets and
liabilities; and integrity, controls, security and effectiveness of the operation of the computerized
system. The assessment should be based on the sample as specified under the specific tasks
described below.
D. Specific tasks for the Annual Fiduciary Review FY 20132014
8. The AFR FY 20132014 will focus on the following 2 areas:
(i) Post Procurement Review

(ii) Fiduciary Review
1. Postprocurement Review
9. The postprocurement review will be conducted by procurement specialists. This review

includes selecting a sample of contracts, based on the programs procurement risk, from the
total amount of contracts awarded and performing a detailed review of the procurement
procedures followed to determine their compliance with the agreed provisions in the legal
agreement. Implementation of previous post-review recommendations under previous AFR will
be followed up by the consultant. In addition, post reviews examine the systemic processes and
controls surrounding the procurement practices of the borrower based on the contracts
reviewed and suggest measures for improvement, if any. Asset verification, end-use audit,
price comparability, and reporting indications of fraud or corruption are also parts of the
procurement post review. In part II (Post Procurement Review) of this TOR more details about
the background, the purpose and the scope are shared.
25
2. Fiduciary Review
10. The fiduciary part of the AFR consists of four areas. This part will be conducted by the
Financial Management Specialists. Sample size will cover 10% Pay-points of CGA including
10% cost centers of DPE; NAPE, BNFE, head office of LGED and DPHE.
3. Internal controls over payroll processing and personnel data management
11. The education sector personnel registers and associated payrolls are localized, and with
personnel and payroll information for schools in a given Upazila are maintained within the
Upazila by centrally-employed but locally-based DDOs operating under the DPE. As the
personnel and payroll registers are paper-based and manual, links between them are neither
automated nor automatic.
12. Overall, there are some clear areas of risk with regard to the payroll system for the
primary education sub-sector. With this background, the consultants are required to:
(i) review the payroll system for the primary education sub-sector (in particular the
staff of the primary schools);
(ii) assess the adequacy and effectiveness of the arrangements for budget allocation
and release, submission of pay-bill, release of payments by the accounts offices,
receipt of funds by the DDOs, and finally the disbursement to the staff;
(iii) perform detailed tests on randomly selected payroll transactions and check the
calculations of basic pay, allowances, and deductions;
(iv) check the staff attendance and leave record for the randomly selected
transactions;
(v) assess the linkages between the payroll system and human resource databases
and any points of differences leading to fiduciary risks;
(vi) map the complete process for release of funds, documentation of expenditures
and related accounting activities at various levels;
(vii) examine how the new recruitments, posting/transfers, and retirements are
recorded in the system and if there are any risks of duplicate payments,
leakages, over-payment etc.
(viii) evaluate related internal controls;
(ix) ascertain the integrity and reliability of operational, financial and other information
provided to management and stakeholders on primary education pay-bill;
(x) recommend how and what can be improved/changed for the future (way
forward); and
(xi) identify exactly what would be required to implement the recommendations which
may include a policy change, issuance of guidelines, capacity building support
etc.
4. Status of Reconciliation between DDOs and AOs.
13. Process of Reconciliation is a monitoring tool to reduce leakage of financial

management system. In practice the reconciliation takes place by the respective accounting
office of CGA printing out a financial statement each month from the IBAS system. It is then
presented to the DDO (MOPME/DPE/DPEO/UEO). The DDO subsequently confirms that the
IBAS records (bills processed and paid) are the same as the records (cash books) the DDO has
(bills presented).
26
14. The input module (user interface) has been introduced/uploaded into IBAS for PEDP3
where accounting offices are required to tick off a box in the screen (meaning yes) if they have
reconciled their records with the records of the respective DDOs.
15. AFR team will review:

(i) Whether the reconciliation has been done on a monthly basis both for Non-
development and development expenditures of MOPME
(ii) Whether the reconciliation has been done properly. Even if the expenditure in the
account of AO (IBAS) might show zero for a particular month, it should still be
confirmed by the DDO as an accurate statement. Every expenditure of the AO
should match with the expenditure of the particular DDO.
(iii) Whether the status of Reconciliation of the visited AOs has been matched with
the information of IBAS generated Reconciliation Report.
(iv) Whether the booking of expenditures by AOs have been made into IBAS under
the similar codes of bills, vouchers and other documents prepared or submitted
by the concerned education offices.
(v) Ensure that there is no inactive DDOs present in the IBAS generated report.
5. Review of booking and clearing of advances.
16. AFR Team will review:
(i) Activities for which advances have been given for FY 20132014
(ii) Government Financial Rules for Advance adjustment rules
(iii) Amount of advance given by DPE as well as recorded in the Advance Module of
IBAS
(iv) Detail of advance in the selected education offices
a. The date of advance withdrawn for each activity,
b. time of accomplishment of the activity,
c. date and amount of adjusted advance,
d. refund of advance to treasury,
e. Amount of outstanding advance if any,
f. reason for non-adjustment of outstanding advance within stipulated time
(v) The above information of the selected education offices will be verified with the
advance information in the related accounting offices.
(vi) Find out the reason of differences for advance information between Education
and Accounting offices.
(vii) Verify the information of the field offices with the information of IBAS provided by
CAO- MOPME
(viii) Review monitoring steps taken by CAO-MOPME and DPE for the adjustment of
Outstanding advance
(ix) Review the level of assurance of Advance Tracking Module developed for
PEDP3
17. The AFR Team will also review that the DDOs are maintaining proper books of records
as per format prescribed in the Government Financial Rules (GFR) and Treasury Rules (TR).
27
6. Other fiduciary issues arising from CAG annual audit reports, Quarterly
Fiduciary Reviews (QFRs), and Post Procurement Review
18. Issues will be identified later from CAG annual audit reports, Quarterly Fiduciary
Reviews (QFRs) and Post Procurement Review
E. Timing and reporting
19. The AFR will commence by December 2014, with an estimated total duration of the
assignment of maximum 24 weeks. The work is to be concluded by May 2015 with the
submission of a report presenting outcomes from the above tasks including a summary of
recommendations, actions for follow-up, timeframe for when they should be completed an
indication of the responsible entity/unit. The survey for the post-procurement review and the
fiduciary part of the review will be done concurrently. Specific outputs of the post-procurement
review are mentioned in chapter II -Post Procurement Review. The consultant, within ten (10)
days of signing of contract, will receive the electronic data entry forms from ADB and IDA for
compiling the post-procurement review report.
20. The results of the AFR will be discussed by the Procurement and Financial Management
Working Group (PFWG) of PEDP3 each year and ToRs for the succeeding years AFR will be
agreed in the Joint Annual Review Mission (JARM). The findings of the AFR will be subject to
follow-up by the QFRs and integrated into the QFR action plan.
21. The following time-frame is foreseen:
(i) Commence the assignment latest by December 2014,

(ii) Share Interim/ Progress report for post-procurement review and fiduciary review
within 2nd week of March 2015.
(iii) a comprehensive dissemination process (1 National and 3 regional workshops)
will be held in 3rd and 4th week of March 2015 involving MOPME/DPE, CGA and
other Implementing agencies (IAs) to present the findings and discuss the
solutions..
(iv) Complete draft report by 2nd week of April 2015 for both Post Procurement
review and Fiduciary Review
(v) Complete assignment by May 2015 with final report including the final post-
procurement review and Fiduciary review report.
22. The following deliverables are expected:
(i) Inception report (1 week)

(ii) Interim/ progress Report (14 weeks)
(iii) Draft report for Post-procurement review and Fiduciary Review (18 Weeks)
(iv) Final Report for Post-procurement review and Fiduciary Review (24 Weeks)
F. Qualifications of consultants
23. The assignment will be undertaken by a company who will employ adequate staff with
appropriate professional qualifications and suitable experience and with experience in
performing assessments of programs comparable in size and complexity to PEDP3.
28
(i) Financial Management specialist and team leader (international, 2 person-

months). The team leader nominated by the firm shall: (a) have at least a
graduate degree in financial management or be a certified accountant; (b) (d)
have experience with the Government of Bangladesh financial management
system, procedures, and regulations applying to central government, district, and
upazila (block) levels; (e) have experience undertaking financial, compliance, and
performance audits including design, management, and implementation of
surveys; (f) demonstrate team leadership, organizational, communication,
relational, and report writing skills; and (g) have an excellent command of the
English language.
(ii) Procurement specialist (international, 2 person-months). The specialist shall

have: (a) at least a graduate degree in public administration, business
administration, or related discipline; (b) at least 5 years of experience in public
and private procurement and capacity building in procurement, and (c)
experience in working with procurement guidelines from multilateral
organizations in relation to the national governments procurement guidelines is
highly preferred. Experience working in Bangladesh is an asset.
(iii) Financial Management specialists (2 nationals, 6 person-months; 3 person-

months each). The specialists shall (a) have at least a graduate degree in
financial management or be certified accountants and (b) have at least 5 years of
relevant working experience, preferably in government-executed donor-funded
projects, as accountants in Bangladesh. Experience with financial management
reviews in accordance with the guidelines from multilateral organizations is highly
preferred.
(iv) Procurement specialists (2 national, 6 person-months; 3 person-months each).

The specialists shall have (a) at least graduate degrees in public administration,
business administration, or other related disciplines and (b) at least 5 years
experience in public and private procurement and capacity building in
procurement. Experience working with procurement guidelines from multilateral
organizations in relation to the national governments procurement guidelines is
highly preferred.
29
TERMS OF REFERENCE FOR POSTPROCUREMENT REVIEW
A. Background of the PostProcurement Review
1. All local procurement under PEDP3 is carried out in accordance with the National
Competitive Bidding Method according to Public Procurement Rules (PPR 2003) and PPR 2008
with the six exceptions as outlined in the JFA. As part of a fiduciary assessment, DPs will
conduct post procurement reviews of procurement carried out by four implementing agencies
(Directorate of Primary Education, Local Government Engineering Department, National
Academy for Primary Education, and National Curriculum and Textbook Board).
B. Purpose of the PostProcurement Review
2. The purpose of the post procurement review is to examine the process that ensures:
(i) The procurement procedures agreed and outlined in the JFA are followed;
(ii) The funds provided for PEDP3 are used for the purposes intended [includes
sample site visits or physical inspection];
(iii) Economy and efficiency have been achieved in the procurement process
consistent with transparency;
(iv) Inappropriate significant departures from the acceptable procedures or fraud/
corruption/ collusion/ coercion have not been major issues of concern in general;
(v) Assets specified in procurement records provided by the relevant implementing
agencies exist on-site at their office locations;
(vi) Broadly validate that the assets are used for the purpose for which they were
acquired; and
(vii) Amounts claimed on the SOE are appropriate and supported by genuine
documents i.e. Procurement Plan, Contract Agreement, completion report etc.
C. Scope of the PostProcurement Review
3. The consultants will select a sample using the methodology outlined in Attachment 1,
below. Before the review begins, the selected sample may require clearance of the DPs. The
sample must cover 20% of the awarded contracts by DPE, DPHE and LGED (20% of e-GP and
20% of non e-GP contracts) during the fiscal year (2013-14) or around 500 contracts of FY
2013-14, whichever is higher. In case of e-GP Contracts, the procuring entity will print papers of
each stages of the procurement and maintain a file like non e-GP contracts for post
procurement review.
4. For each contract package, the key elements will be to:
(i) Verify eligibility;

(ii) Verify compliance with the outlined procurement procedures as indicated in the
JFA. When deviations or judgment were exercised, the consultants must
comment on whether these were reasonable. The consultants will also identify
contracts with serious deviations warranting consideration for declaring mis-
procurement;
(iii) Establish whether the documentation and record keeping systems which are in
place are adequate for ensuring the post review requirements; for example,
whether records are systematically maintained and are acceptable. At locations,
where a complete record of contracts is not being maintained, assist them in
30
starting a system to meet this important requirement. Also identify general issues
related to the procurement process and systems and provide recommendations
for improvement.
(iv) Verify whether goods and works exist at intended locations and are being used
for the purposes for which they were acquired.
(v) Examine reported corruption or red flags if any, from any source and substantiate
the irregularities. Also verify fraud prevention and detection mechanisms that
may exist in the Program and recommend such prevention and detection
mechanisms for future procurement under PEDP3.
5. The awarded contracts which are below the prior review threshold specified in the DPs
respective Financing Agreements as well as expenditures claimed for replenishment under
Statement of Expenditure [SOE], are to be post reviewed in the field on a representative sample
basis in respect of the following related documentation:
(i) Invitation of bids, advertising procedures and bidding period;

(ii) Bidding documents and addenda;
(iii) Sale of bidding documents, pre-bid meeting;
(iv) Receipt and opening of bids;
(v) Bid evaluation and recommendations for award of the contract;
(vi) Conclusion of contract;
(vii) Time taken for processing of the various procurement actions;
(viii) Material modifications to the contract during execution and the increase in the
value of contract;
(ix) Letter of Credit;
(x) Suppliers invoice and certificate of origin;
(xi) Shipping or import documents and inspection certificates;
(xii) Evidence of receipt of goods;
(xiii) Recurrent costs record;
(xiv) Authorization for payment;
(xv) Evidence of payment/bank statements, acknowledgement of payee;
(xvi) Accounting records of approval, disbursement, and balance available; and
(xvii) Where goods have been returned, evidence that refunds have been made by
suppliers and corresponding adjustments made in subsequent applications.
(xviii) Physical on-site verification of assets and their intended use, services rendered
as described in the payment documents or contracts and verify whether any
payments made before actual receipts of goods and services and beyond
contract clause. Evidence of work may include photographs of the goods and
works by the consultants, written acknowledgement from beneficiaries,
participants, stake-holders and other third parties, supporting documents from
venues for workshops, training center etc.
6. The documents are examined to ensure that each payment (including authorization for
payment) is properly supported and is eligible for DPs disbursement.
For verification of assets, the representative sample shall be selected by the consultant from the
preliminary list provided by the ministry unit responsible for overseeing procurement while
reviewing the contracts. Approximately 10-15% of assets acquired under the contracts are to
be reviewed. This selection shall be influenced by the following factors:
(i) Level of comfort obtained during the review of contract [s];

(ii) Nature of asset [s];
31
(iii) Value of asset [s]; and

(iv) Geographical spread and accessibility of the location of asset
7. Based on the findings, the consultants will verify with the concerned implementing
agencies (IA) to obtain their views and concurrence with respect to the areas that need
improvements and agree on the approach and strategies to implement measures to improve the
existing system. Consequently, the consultants will prepare a proposal for system improvement
for each IA.
8. The consultants will conduct comprehensive needs assessments of concerned staff in
each IA and prepare a comprehensive proposal for capacity development including training
requirements for each staff or group of staff -- especially on the job training -- with clear
guidelines and directives.
9. Develop separate checklists for Upazila Offices, District Offices, Divisional Offices, as
well as DPE, LGED, DPHE, NCTB and NAPE.
10. The checklists will cover the following areas, among others, based on the weaknesses
identified in the system:
(i) How to minimize fiduciary risks

(ii) Requirements of books of records
(iii) Reporting requirements scope, contents, data, information, etc.
32 Attachment 1
SAMPLING GUIDANCE FOR POSTPROCUREMENT REVIEW
1. A sample of contracts shall be selected from the procurement plan by the Consultants
and subsequently approved by the DPs. LGED will be asked by the DPs to collect relevant
documentation and present it for review to the AFR Consultant. The following guidelines will
assist the Consultants in selecting a sample:
(i) The selected contracts for review should be representative of the overall
procurement by size, nature and complexity using the following
categories/scenarios:
(ii) Procurement: works, goods and service contracts, supply and installation, etc.;
(iii) Consulting services;
(iv) Complexity: simple, less complex and complex;
(v) Value: high, medium and low;
(vi) Critical items: for success of the program (less likely to be found under post
review)
(vii) Geographical spread: Some easily accessible locations and some difficult to
access locations
(viii) Package/Slice: single and multiple lots;
(ix) Price Adjustment: with and without application;
(x) Protests/Complaints/Claims: bidding and contract stages and how addressed;
(xi) Contract Modifications: with and without.
(xii) Distortions in the procurement process are frequently manifested in one or more
of the situations listed below. If patterns are identified in a series of contracts
which reflect any of the distortions, one or more of the contracts in the series
should be selected for more detailed review in the review sample
(xiii) low participation of bidders and reduced competition;
(xiv) one or more bidders winning a disproportionate amount of contracts in a program
over time;
(xv) Bid prices consistently over cost estimates and/or current market prices;
(xvi) Significant number of changes from bid to contract award and to final completion;
and
(xvii) Significant and recurring increases in the final contract price over the original bid
price and/or the original contract price.
Attachment 2 33
SAMPLE REPORT FORMAT AND CHECKLIST
FY 20xx Post Review Report for program name

Country: Bangladesh
Program:
TTL:
DPS:
Post review Conducted By:
Period Covered under Post Review:
Project Procurement Risk:
Implementing Agencies Covered under Post Review:
Date of Report:
A. Executive Summary
(i) Introduction: Describe the background, team composition, approach used for
post review, agreed threshold/procurement arrangements for the program, etc.
(ii) Major findings: This section would be useful for decision makers (both in the
DPs and Government), who do not have time to go through the details, should be
displayed using bullet points and reference to specific contracts where more
information can be obtained.
(iii) Sampling Procedure Used: Comment on the availability of contract data,

percentage selected for review including the total amount of post-review
contracts awarded, and whether the findings are representative of population
Summary of the Total Contract Population by each head of procuring entity

(DPE, LGED, DPHE NAPE, NCTB)
Consulting
Goods Works Services Total
Contract Value Value Value Value
type No BDT USD No BDT USD No BDT USD No BDT USD
ICB
NCB
Shopping
DC
Force
Account
QCBS
QBS
LCS
FBS
CQS
NGO
SSS
Firm
SSS
Individual
TOTAL
34 Attachment 2
Summary of the Contracts Reviewed
Consulting
Value Value Value Value
Contract US US US
Type No BDT D No BDT D No BDT USD No BDT D
ICB
NCB
Shopping
DC
Force
Account
QCBS
QBS
LCS
FBS
CQS
NGO
SSS Firm
SSS
Individual
TOTAL
Summary of the IA Reviewed
Consulting
Value Value Value Value
IA No. BDT USD No. BDT USD No. BDT USD No. BDT USD
TOTAL
B. Findings on the IA Capacity, Performance and Other Systemic Issues
1. Comment based on the review of contracts. Give an overall assessment as well as

separate section for each PIU reviewed.
Findings of Physical Inspections
No. of Physical Inspections

Category ICB NCB IS NS SS Total
Works
Goods
Services
Consulting firms
Individual
consultants
Total
Attachment 2 35
(i) Action Taken by the IS on the Findings of the Previous Review: Comment
on any improvements, delays or inaction.
(ii) Indicators of fraud and corruption (when F&C is suspected, copies of any and all
related documentation should be attached to the report including copies of the
losing bids).
(iii) Recommendations and Proposed Actions for the DPs and/or Borrower. Also
include whether IA suggested any corrective action to be taken during the post
review process
36 Attachment 3
RISK RATING AND RECOMMENDATION ON POST REVIEW INDICATORS
(i) The consultant will rate the risk for following three indicators in four point scale for each
project and overall risk of the project. The consultant will provide recommendations for each
indicator and for overall post review.
A. The indicators
1. Indicator 1: Systems
(ii) The consultants will provide risk rating on System after evaluating the points in the
below table.
Legal Framework: Suitability of the laws, rules and regulations applicable to the implementing agency
Organization / Staffing: Organization of the procurement unit and allocation of functions; quality and
adequacy of procurement staff
Controls / Manuals: Quality of internal administrative practices, including special anticorruption
initiatives, existence of dispute resolution systems, internal procedural manuals and instructions,
oversight and auditing practices, and code of professional behavior and ethics
Record-keeping: Availability, quality, security and completeness of procurement records and files
2. Indicator 2: Procurement Process
(iii) The consultants will provide risk rating on Procurement Process after evaluating the
points in the below table.
Publications: Assessment of quality of, and adherence to, advertising and contract award publication
requirements for applicable contracts
Bidding: Assessment of quality of, and adherence to, requirements for bidding documents, including
RFP's, LOI's, short lists, terms of reference, invoices, and other applicable documents
Evaluation: Assessment of quality of, and adherence to, bid evaluation requirements/criteria, including
draft contracts, technical and financial evaluation reports, and bid amendments, if applicable
Awards: Assessment of quality of, and adherence to, contract award requirements, including
amendments, variation orders, and extensions
3. Indicator 3: Contract Administration
(iv) The consultants will provide risk rating on Contract Administration after evaluating the
points in the below table.
Implementation: Assessment of quality of, and adherence to, contract implementation criteria,
including results of physical inspections
Payments: Assessment of adherence to contract payment schedules, including timeliness of
payments to contractors
Compliance: Assessment of adherence to all contractual compliance with agreed provisions;
adherence to all related anti-corruption practices
Attachment 3 37
Record-keeping: Availability, quality, security and completeness of contracts records and files
B. Overall Risk
(i) Overall risk rating for a report is not an average rating of all indicators combined
but rather a final rating based on reviewer's objective conclusions about the
findings as a whole.
C. Grading scale
(i) Rated against a 4-point scale
(ii) Low Risk, Medium Risk, Substantial Risk, High Risk
D. Recommendations
(i) Consultant will provide recommendations for each indicators and overall post
review report for each project.

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Additional Financing to Third Primary Education Development Project (RRP BAN 42122)

FINANCIAL MANAGEMENT, DISBURSEMENT ARRANGEMENTS AND PROCUREMENT

A. Overview of Current Fiduciary Arrangements

1. Third Primary Education Development Project (PEDP3) uses the Government of

B. Summary Assessment of Experience to Date

6. Use of treasury model and reliance on country system

a. The IBAS system has delivered 11 credible budget management reports,

c. These customized reports are regularly generated and monitored by

d. The timing of budget release to field officers has also improved

e. The expected reduction in transaction costs in moving to the treasury

per contract is no longer required by a centralized project management

h. There has been strong commitment to collaboration across multiple

(i) National Curriculum and Textbooks Board:

a. 360 million primary and pre-primary books contracted out, printed,

(ii) Local Government Engineering Department:

(iii) Department of Public Health Engineering:

8. Intensive Fiduciary Oversight

9. Areas of further development. Although fiduciary management of PEDP3 is well

(i) Internal controls

(i) 11 approved IUFRs covering FY 2011/2012, 2012/2013 and 2013/2024: these

(iii) Two AFRs, covering FY2011/2012 and 2012/2013;

(iv) A special Post Procurement Review for FY2011/2012;

(vii) 20 percent of contracts in the Annual Procurement Plan 2013/2014 processed

technical assistance supported implementing agencies to ensure effective achievement of

(i) Field office FM and procurement training for all DDOs.

D. Planning and Budgeting

field is ongoing including dissemination workshops on the findings of the AFR

Table 1: Summary of the 18month plan for Directorate of Primary Education

Item Name and Description Units Quantity

Item Name and Description Units Quantity

E. Internal Control (Including Internal Audit)

G. Governance and Oversight Arrangements

2. Unsettled Audit Observations

3. Audit Review Meeting

H. Budgeting and Counterpart Funding Arrangements

2. Accounting and maintenance of accounting records

2. Financial Management Risk

Table 2: Technical Assistance Plan, Joint Annual Review Mission 2014

Table 3: Fiduciary Action Plan for Additional Financing

03 Immediate TA Reached External support will be provided to CGA March 2015

Need/Rationale/ Issue to Date of

Need/Rationale/ Issue to Date of

Recommendations: A documented policy dialogue with

The revised SOAN for FY 20132014 audit should be

Recommendation: PFWG should follow up the quarterly

Recommendation: TA support to both the OCAG and CGA

Need/Rationale/ Issue to Date of

DPE also arranges some trainings/workshops for capacity

Recommendation: Ongoing activities to strengthen

Recommendations: a) CGA should advise all DAOs/UAOs

Need/Rationale/ Issue to Date of

b) MOPME/ DPE as well as DPs should request CGA to

Recommendation: DPE should monitor the status and

Need/Rationale/ Issue to Date of

Recommendation: The system should be adjusted to

Recommendation: Timely submission of the IFRs is

Recommendation: All DAOs shall be able to access reports

Need/Rationale/ Issue to Date of