Document of The World Bank Report No. 14890-PAK STAFF APPRAISAL REPORT PAKISTAN IMPROVEMENT TO FINANCIAL REPORTING AND AUDITING PROJECT August 5, 1996 Infrastructure Operations Division Country Department I South Asia Region CURRENCY EQUIVALENTS (as on March 1996) Pakistan Rupee = 100 paisa Currency Unit = Rupee (Rs) Rs 1.00 = US$ 0.03 US$ 1.00 at appraisal = Rs. 34.5 (March 1996) PRINCIPAL ABBREVIATIONS AND ACRONYMS AAT - Association of Accounting Technicians AATI Audit and Accounts Training Institute AG - Accountant General AGPR - Accountant General Pakistan Revenues DAOs - District Accounts Offices ECNEC - Executive Committee of the National Economic Council FY - Fiscal Year GOP - Government of Pakistan HRM - Hluman Resource Management MIS - Management Information Systems MOF - Ministry of Finance PAC - Public Accounts Committee PAD - Pakistan Audit Department GOP FISCAL YEAR July I - June 30 PAKISTAN IMPROVEMENT TO FINANCIAL REPORTING AND AUDITING PROJECT STAFF APPRAISAL REPORT Table of Contents Page No. CREDIT AND PROJECT SUMMARY .............................i I. THE SECTOR BACKGROUND . .1 A. Government Accounting and Audit . B. Status of Governments' Financial Reporting and Auditing .2 C. Government's Strategy .3 D. Lessons from Previous IDA Involvement .5 1I. THE PROJECT ..6 A. Project Origin and Borrower Ownership .6 B. Objectives .6 C. Project Description .6 D. Performance Monitoring Indicators .10 E. IDA's Strategy .1 F. Environent .11 G. Project Cost and Financing . 1 H. Procurement .13 I. Disbursement .15 III. INSTITUTIONAL ARRANGEMENTS .................................... 17 A. Assessment of Current Arrangements .................................... 17 B. Addressing Institutional Constraints ....................................1 7 This report is based on findings of an appraisal mission to Pakistan in March 1995. Project team members included: Mr. G. Lee (Senior Municipal Financial Specialist, SAIIN), Task Manager and Mission Leader; Ms. Antoinette Sayeh (Macro Economist, SAlCA); Mr. Ali Hashim (Senior Information Technology Specialist, EMTDR); Mr. Akbar Khawaja (Informatics Specialist, ITSIE); Messrs. Omer Morshed, Riyaz Bokhari and Vinod Sahgal (Consultants). The project is endorsed by Ms. Mieko Nishimizu, Director, Country Department I, South Asia Region, and Ms. Marie Robinson, Chief, Infrastructure Operations Division. The Peer Review team comprised Messrs. John Graves (Training and Staff Development), George Russell ( Financial Management); Al Kennefick (Accounting Systems), Pervaiz Rashid (Audit), and Eduardo Talero (Information Technology). Ms. Bina Duggal and Mr. Jack Williams (SA1IN) assisted in the production of this report. IV. PROJECT IMPLEMENTATION . ........................... 21 A. Organizations Responsible for the Project .21 B. Implementation Responsibilities .22 C. Implementation Strategy .23 D. Status of Preparation .28 E. Project Sustainability .28 F. Accounts and Audit .29 G. Monitoring and Evaluation .29 V. BENEFITS AND RISKS ..31 A. Benefits .31 B. Economic Analysis .32 C. Risks .32 VI. AGREEMENTS REACHED ..... 35 ANNEXES 1. Project Costs 2. Government's Vision Statement for Financial Reporting and Auditing 3. Scope of Work for Systems Consultants 4. Information Systems Architecture for Government Fiscal Management 5. Training Plan 6. Implementation Plan 7. Disbursement Schedule 8. Project Milestones and Performance Indicators 9. Supervision Plan 10. Technical Assistance Objectives, Classification, Activities and Outputs 11. Documents in Project File Map IBRD No. 27293 PAKISTAN IMPROVEMENT TO FINANCIAL REPORTING AND AUDITING PROJECT Credit and Project Summary Borrower: Islamic Republic of Pakistan Implementing Agencies: Pakistan Audit Department, Ministry of Finance and the Planning Commission Beneficiaries: Pakistan Audit Department, Ministry of Finance, and the Planning Commission Poverty: Not Applicable Amount: SDR 20.1 million (US$28.8 million equivalent) Terms: Standard, with 35 years maturity. Commitment Fee: Standard (a variable rate between 0% and 0.5% of the undisbursed credit balance, set annually by the Executive Directors of IDA) Financing Plan: See Table 2.2 Economic Rat of Retu: Unquantified map: IBRD No. 27293 Project Identification Number: PK-PA-36015 PAKISTAN IMPROVEMENT TO FINANCIAL REPORTING AND AUDITING PROJECT STAFF APPRAISAL REPORT I. THE SECTOR BACKGROUND A. Government Accounting and Audit 1.1 The Government of Pakistan's financial management cycle begins with planning and programming and runs through budget formulation, budget execution, accounting, financial control and audit/evaluation. The cycle is iterative; new plans are influenced by past results. Reliable financial information is a key requirement for all phases. 1.2 The Constitution of Pakistan prescribes that all government expenditures, revenues, loans and their repayments shall form part of provincial or federal consolidated funds and withdrawals from the consolidated funds shall be regulated by law. The system of financial control and budgeting is based on federallprovincial secretaries being designated as the principal accounting officers of their respective departments, with the responsibility to ensure that funds allotted to their departments are spent for authorized purposes and that expenditure is not incurred in excess of budget allocations. 1.3 The Pakistan Audit Department (PAD) plays a key role in government financial management. The functions of the Auditor General of Pakistan are defined in the Constitution of Pakistan and regulated by statutory orders issued from time to time. The most recent of these is the Pakistan Audit and Accounts Order 1973. Under this authority, PAD is responsible for keeping the accounts of the federal and provincial governments, with the exception of certain departmentalized accounts, defense, and railways. PAD is also responsible for audit of all expenditure and income of the federal and provincial governments. As a crucial part of budget preparation and execution, PAD prepares the accounting information which is used by executive agencies for planning and programming purposes, and which forms part of the payments control process. PAD's audit function maintains public accountability by auditing the accounts of government entities and presenting audit findings to the legislature's Public Accounts Committee (PAC). 1.4 PAD's responsibility for accounting for both the Federation and the Provinces is discharged through a network of offices under five Accountant Generals (AGs), one for each province and the fifth, Accountant General Pakistan Revenues (AGPR), for the federal government, with each office supported by District Accounts Offices (DAOs) and/or Treasury Offices which are functionally responsible to it. The governments' accounts are prepared by PAD at the respective AG's office located in each provincial capital, and by the AGPR in Islamabad for the Federation. The accounts are based upon the primary financial transactions of payments and receipts which take place at DAOs/Treasuries, the process being as follows. The executive agencies submit claims for payment to the local DAO/Treasury, which authorizes payment by the local branch of the National Bank of Pakistan, acting as the government's cashier. In case of receipts, the depositor is required to deposit the amount in the bank/treasury. The bank sends a daily record to the local DAO/Treasury which records the transactions. Transaction information, complied into accounts by DAOs or in the form of individual transactions from Treasuries, is submitted to the AG, who compiles an account of aggregate receipts and expenditures for reconciliation with departmental records and government information. 1.5 PAD produces monthly and annual (Civil) accounts on the basis of information received from the DAOs, Treasury offices, agencies with departmentalized accounts and inter- government and inter-office adjustments. At the year end, annual appropriation accounts, annual finance accounts and the combined finance and revenue accounts are prepared and supplied to the federal and the provincial governments. B. Status of Governments' Financial Reporting and Auditing 1.6 The government's fiscal reporting system and the institutional arrangements for accounting and auditing were reviewed by a diagnostic consultancy financed under the Third Technical Assistance Credit (Cr. 1755-PAK) to assess the adequacy of current institutional arrangements, systems and procedures and to formulate a long term strategy for improvement. The key findings of this study are: a) reports produced by the PAD do not meet the objectives of a fiscal reporting system. Crucial financial information such as budget data and revenue collection details are not reported. Financial information is fragmented between various agencies and a reliable cohesive picture cannot be obtained. As a result the reporting system does not provide government with an effective method to: (i) monitor the fiscal deficit and its financing for aggregate control; (ii) manage its cash and debt position; (iii) monitor expenditures in relation to appropriations; or, (iv) provide analyses of spending and revenue trends to assist with policy formulation and performance measurement; b) because of serious deficiencies in the financial systems, financial data for financial planning, budgeting, reporting and control is unreliable. Financial reports and final accounts, mostly based on manual accounting systems, are neither timely, complete nor designed to meet user needs; c) PAD's audit function is viewed as a means of detecting irregularities and fraud rather than as a management control function. The focus is to verify transactions regardless of their value. Reviews of internal controls for system weaknesses are norrnally not carried out. Audits have limited coverage due to lack of resources and quality suffers due to a lack of expertise. Revenue audits do not have a major role in PAD's audit function. Only a small proportion of Drawing and Disbursement Officers are audited each year and purposeful parameters, such as potential risks or weaknesses in internal controls, are not used as selection criteria for audits. - 3- Certification audit has made little progress due to the volume of transactions and lack of expertise within PAD. In the absence of auditing standards and quality assurance, the quality of audit work is low; d) PAD, the Supreme Audit Institution of Pakistan, is compromised due to the agency's dual responsibility of maintaining the accounts of entities and being responsible for their audit. Separation of the accounting and auditing functions within government is viewed as a primary requirement for establishing the independence and credibility of audit; and e) the existing human resource management functions in PAD are limited in scope. Personnel at the accounts offices are frequently not adequately qualified or trained. The effectiveness of training programs is undermined by lack of application of training. 1.7 The absence of accurate, comprehensive and timely financial information in Pakistan's federal and provincial governments hampers efforts to improve resource allocation, monitoring and control of expenditure, cash flow and debt management, and casts uncertainty on the financial data underpinning public sector management decisions and the macro economic dialogue. 1.8 As major internal financial controls are not functioning, governance, based upon accountability for use of resources, is being undermined. The accounting weaknesses further limit the usefulness of audit, in addition to the technical shortcomings noted above. C. Government's Strategy 1.9 Vision Statement The Government of Pakistan recognizes that as it proceeds to open up its economy and free it from regulatory controls, the need for modern financial management systems and good governance becomes paramount. Instead of direct intervention it has to design appropriate fiscal and monetary responses to changing conditions. To be able to do so, the government recognizes the need for a modern set of tools to provide it with comprehensive, accurate and timely financial information. As government strives to attract private foreign investment the issues of transparency and accountability become even more important in the context of a global economy. Agreeing with the thrust of the recommendations of the diagnostic consultancy, the govemment has developed an overall vision statement for financial reporting and auditing (see Annex 2) stating its intention to: a) adopt and implement a modern accounting system designed according to recognized accounting principles and standards and based on modern information technology; b) implement a governance structure and legal framework for an independent and effective audit function; c) improve the professional capacity of the elements of the civil service responsible for fiscal management; - 4 - d) make increasing use of the private sector to supplement public sector resources; and e) adopt improved standards for private sector financial disclosure. 1.10 The redefinition of public/private roles which forms a core element of Pakistan's structural reform program requires a diminished public sector involvement in productive activities but imposes increased demands on the government for economic policy coordination and economic information. However, the current capacity of the Ministry of Finance and the Planning Commission to prepare medium-to-longer term policy options on key development finance issues and to monitor the implementation of related reforms is weak and requires strengthening. In particular, improved skills and policy formulation capacity are needed to: a) manage an increasingly open economy in the face of large capital inflows and outflows; b) implement policies to improve and make more competitive the enabling environment for the private sector; and c) develop more efficient resource allocation and expenditure utilization structures required for the expansion of basic social services. 1.11 In this connection, the government will need to follow through on the implementation of the recommendations of the 1993 Economy Commission on the administrative restructuring and organization of the Federal Secretariat. MOF and the Planning Commission -- which are the primary users of the financial information prepared by PAD -- have requested assistance to strengthen their analytical and policy formulation capacity in these and other areas of macroeconomic management. 1.12 Policy Changes To address problems in accounting and auditing described above, the government has agreed to introduce policy changes relating to: a) adoption of improved accounting principles and standards for the government sector; b) a phased transfer of responsibilities for government accounting from the Auditor General to the executive arm of government; c) enhanced independence, standards and capacity for government audit, including greater use of private sector firms in public sector finance; and, d) development of the skills and competencies of government finance staff, including revised human resource management and training policies. 1.13 Government has requested IDA's assistance to implement these strategies, which it is considered would require a sequence of projects. This project would address standards for accounting and auditing, design improved systems and start implementation of selected improvements (with greater initial emphasis on accounting), strengthen capacity, initiate institutional changes, such as the phased transfer of accounting responsibilities to the executive arm of government, and identify further strengthening of financial management, particularly with regard to audit. The project will provide a basis for improvements in governance and accountability. Private sector firms have been consulted during the design of this project, and the project includes assistance to increase further private sector participation in public finance. Subject to satisfactory performance, subsequent projects would, in conjunction with the executive agency created for government accounting, complete the replication of accounting systems across all accounting offices, and with the restructured Audit Department help to address matters to further enhance capacity and independence which need to be handled over the longer term, providing tools for further enhancing governance. In all, about a 10 to 15 year period of involvement in improving financial management is envisaged. D. Lessons from Previous IDA Involvement 1.14 IDA's past experience with similar projects demonstrates the need for: a) a high level of commitment on the part of the member country to project objectives; b) well defined objectives, consistent with the country's absorptive capacity; c) thorough preparation and accurate assessment of needs; and d) rigorous supervision. 1.15 IDA's previous experience of PAD is limited to project audit, and PAD's component of the Third Technical Assistance Credit (Cr.1755-PAK) which had four sub- components: a) computerization of accounting and payroll procedures through automation of existing procedures; b) enhancing research and development capabilities of the Department, including assessing the strengths and weaknesses of the existing system of fiscal reporting; c) reviewing and improving the Department's training arrangements and facilities; and d) preparing a development program for the next phase. 1.16 Experience gained in this project highlights the necessity of setting up appropriate mechanisms for involving and obtaining agreement from federal and provincial government at an early stage of the project. Project management requirements include setting up clearly defined project management structures, for proper planning in the use and development of new application software, and for developing appropriate performance indicators to judge effectiveness. Training programs need clear statements of objectives and benefits of training, local participation in course development, appropriate procedures for selecting trainees and deploying trained staff, training for senior officers, and use of in-country courses where appropriate since foreign training is expensive. - 6 - I. THE PROJECT A. Project Origin and Borrower Ownership 2.1 The project is based upon diagnostic analysis undertaken by PAD of the status of government accounting and audit, which resulted in the preparation of the strategies underpinning the project. Internal ownership of the project is strengthened as the project would build on PAD's own computerization initiatives and training undertaken prior to and as part of the Third Technical Assistance Project (Cr. 1755-PAK). The project concept has been widely discussed within PAD, to inform departmental staff of the objectives of change and the opportunities generated thereof. PAD has developed external ownership within the government, through discussions with and involvement of the main users of financial reports and information, the major intended beneficiaries of the improved accounting systems and financial reporting. The relevant agencies concerned with HRM, particularly the Establishment Division and the Federal Public Services Commission have also been consulted about project design. A Committee has been established comprising the key federal and provincial government users of financial information, to advise on the improvements to financial systems and to monitor implementation. .R Objectives 2.2 The overall objectives of the project are: a) to improve public sector accounting and financial systems; b) to provide the basis for enhancing public sector accountability; and c) to support improved institutional capacity for economic policy-making and management. C. Project Description 2.3 The project would comprise components for public sector financial management including accounting, auditing and institutional development, economic policy-making and management. 2.4 GovernMent Accounting and Financisl Reporting (base cost USS 12.3 millio) The government wishes to develop accounting standards, reporting systems and financial administration procedures conforming as far as practicable to internationally accepted principles. In view of the very high and continuously increasing volume of financial transactions, a completely manual recording and processing system for PAD's accounting and auditing needs is no longer feasible for the delivery of the type of information required for financial management. Therefore, the adoption of some degree of automation is inevitable. Properly designed computer based systems would, in addition to managing the processing of a large number of transactions and the corresponding information retrieval needs, efficiently, also help - 7 - ensure that controls prescribed for financial transactions are adhered to, thereby improving the effectiveness of public expenditure management processes. Accordingly, PAD wishes to implement a set of high priority computer based financial application systems. The project includes consultancy assistance to define a modem set of accounting standards, for implementation of the improved standards, and computer hardware, software, consultancies and training required for the design, development and implementation of the following high priority financial systems at about 21 of the total 95 sites: a) Core Accounting and Reporting System: This system would provide integrated government-wide accounting, encompassing the functional requirements for budget execution, and covering the appropriation, commitment, funds allocation, and payment processes for investment and current budgets. The system would be comprehensive in terms of coverage and provide a credible source of reliable and timely data. Accordingly, the Core Accounting System would be fully automated, interfacing with external data sources, such as external debt, on a periodic basis. This system, introduced along with a modem budget classification system and an appropriate chart of accounts, would enable expenditures and revenues to be recorded at a detailed level and related to specific programs and projects. The data would be amenable to cross classification for financial and economic analyses. It would be used by: (i) PAD (including its subordinate units and its successor organization) to perform the basic accounting functions; (ii) the federal MOF and the provincial Finance Departnents to perform the processes associated with budget execution, monitoring and control; implement cash limits, as may be required; (iv) the federal Planning Division and the provincial Planning Departnents to obtain the status of actual expenditures on ongoing programs and projects. Data would also be directly available for use by agencies/spending units for program and project management. b) Payroll and Pension Systems: The payroll of government employees constitutes a large portion of government expenditures. The need for an automated payroll and pension system is evident in view of the increasing volume of transactions. The proposed system would perform the full range of the payroll functions, and the expenditures processed would automatically update the core accounting and reporting system. c) Cash Flow Forecasting and Financial Analysis System: One of the MOF's main information needs is to establish a system for forecasting likely flows of payments and receipts, and the consequent impact on cash balances and issue of debt instruments. The cash flow and financial analysis system would be designed to meet this requirement. It would provide a powerful facility for retrieving current and historical data from the accounting system, and it would allow end- users to manipulate the data for forecasting and analysis purposes. - 8 - 2.5 A more detailed description of the information systems, their scope in terms of the functional processes and agencies they cover, how they fit in the context of the overall information systems architecture for fiscal management in Pakistan, and a description of the proposed technology architecture, is given in Annex 4 and shown schematically in Figure 1 in the Annex. 2.6 A study would also be made to assess the impact to date of departmentalized accounting, and to recommend future strategy options. PAD would also, within its existing resources, establish as needed continuous review of government rules and regulations to: a) identify changes required to bring the rules up to date; b) implement recommendations in audit reports; and c) reflect changes in systems and procedures. 2.7 Government Auditing (base cost US$ 6.6 million) This component focuses on audit systems improvement and systems development. It includes: a) Audit Standards and Techniques: Consultant services to prepare guidelines for the introduction of international auditing standards, to introduce modem auditing techniques and concepts, to review PAD's audit policies, processes and procedures, output, workload, efficiency and quality assurance for the audit function, to advise on methodologies to enhance PAD's communications with stake holders, for internal audit of PAD's systems under development, to assist in the use of automated audit tools and standard audit programs wherever appropriate, to improve communication of audit results and to develop quality assurance programs. b) Automated Tools: Provision of hardware and audit software for audit planning, sampling and documentation, and for audit of automated accounting systems. c) Capacity Development: Consultancy to support revised human resource management procedures through international training in a modem financial system environment and through arranging attachments with other Supreme Audit Institutions. d) Use of Private Sector Firms: Assistance with developing modalities for utilizing private sector firms, and finance for private audit firms' fees. 2.8 Institutional Development To sustain the above improvements to financial management systems, the project would assist in the introduction of revised human resource management policies, the strengthening of financial management training, the development of a Management Information Systems (MIS) wing of PAD, introduction of office automation to assist in the performance of day to day work, and put in place project management structures. - 9 - a) Human Resource Management (HRM) (base cost US$ 1.3 million): The HRM component would involve organizational and systems development. Although PAD would implement most components without external support, the project would provide consultant assistance for managing the process of change, for preparation of job descriptions and performance standards, and for installing an MIS system for HRM planning and monitoring. PAD would share the details and results of its HRM policies with provinces and the Establishment Division. b) Training (base cost US$ 6.0 million): The training component includes moving towards professional-level training, providing retraining associated with the changes introduced by the project, strengthening the quality of training and training facilities, and expanding the circle of beneficiaries. The project would provide refurbishment and some extension of existing facilities, equipment, computer hardware, materials, and consultants to assist in training needs assessments, course design, materials development and training of trainers. The component would also include international scholarships for faculty trainers, and seminars. In addition to including provincial staff in its training programs, PAD would share training course materials with provincial training institutes as appropriate. A detailed training plan is attached at Annex 5. c) Administration (base cost US$ 6.3 million): The project would include administrative capacity development as follows: i. MIS Wing: The project would support the creation of an MIS Wing and would provide for the following: * a Software Development Center; * selected posts to be staffed by contract professionals (such as the General Manager (MIS) and other technical specialists); * local training for PAD staff in systems development; and, * recurrent costs for systems maintenance. ii. Project Management: Strengthening the Project Directorate, through provision of staff, facilities, hardware and software, consultants and training. Assistance would also be provided for technical review of computerized information systems' development, and for a senior level advisory panel of international experts, which would at least meet annually. iii. Future Project Preparation: Assistance for preparation of the follow-up project if grant funds are not available. iv. Office Automation: Provision for a local area network and associated office software for PAD. -10- 2.9 Other Policy Support for Economic Management (base cost US$ 1.7 million) MOF and the Planning Commission would manage selected studies on economic and financial policy issues related to the on-going macroeconomic and structural reform program, a diagnostic study of the institutional arrangements for macroeconomic policy-making, and technical assistance/training to upgrade staff skills. Specific areas include international capital markets, foreign asset/liability management, improving the revenue yield of certain taxes, on-the-job specialized training in macro modeling, and assistance for establishment of a nucleus in the Planning Commission for analyzing and monitoring poverty. The project would finance the costs of (mostly local) consultancy services required for the studies and short-term technical assistance for staff training. Terms of reference for key studies would be completed prior to negotiations. D. Performance Monitoring Indicators 2.10 To measure implementation performance, and to monitor the project's impact, the following key indicators, discussed and agreed with government, would be selected from the project's implementation plan (Annex 6) and milestones and performance indicators (Annex 8): a) Implementation Performance i) revised accounting standards adopted by May 1997; ii) pilot implementation of core financial systems completed by December 1999; iii) province-wide replication of core financial systems completed by December 200 1; iv) identification of public/private audit cooperation opportunities by December 1997; v) introduction of Accounting Technicians and 2 year Probationers' training by April 1998 and January 1999, respectively; and vi) approval of proposals for functional separation of accounting and audit by December 1999. b) Outcome and Impact i) improved financial reports including budget, variance and project costs; ii) percentage of transactions automated, by value; iii) cash-flow forecasts introduced and efficiency of borrowing improved; iv) PAD staffs job rotation within 3 years reduced; v) more timely reports to Public Accounts Committees; and vi) improved training impact evaluation results. - 11 - E. IDA's Strategy 2.11 The proposed project is consistent with IDA's Country Assistance Strategy (CAS) discussed on December 15, 1995. The CAS stresses the centrality of fiscal adjustment to Pakistan's reform and development efforts. Addressing these concerns involves, inter alia, improved resource mobilization, public expenditure reform, more effective use of government resources, and improved public sector management. The project would focus on developing more effective financial accounting, reporting, control and monitoring systems, and would therefore provide an essential support for these activities. The policy support component would assist achieve CAS objectives by contributing to improvements in macroeconomic management. 2.12 The CAS, in support of the establishment of a more competitive enabling environment, also seeks to improve governance in Pakistan. The proposed emphasis on improved accounting and financial reporting will have a direct impact in this regard. Sound accounting is the first line of good governance. Governance would also be assisted by the improved transparency of the linkages between budgeting, internal controls and accountability resulting from the new systems, and the improved financial systems would help ensure the routine application of all prescribed controls on financial transactions. In the longer term, the measures to enhance the auditor's independence and strengthen audit capacity would also contribute to improved governance. 2.13 IDA's involvement would build upon its existing dialogues with PAD, relating to project audit and the preparation of this project. The proposed project complements and reinforces Bank group operations such as the Sindh Special Development Project (Cr. 2558-PAK) which assists Government of Sindh's efforts to reform provincial policies and programs. The project would also support government's effort to seek greater involvement of private sector firms in government financial management. IDA is well placed to provide assistance because of its continuing dialogue with government on fiscal adjustment, its involvement with executive departments of both federal and provincial government, and its ability to provide, subject to satisfactory performance, longer termn support to undertake subsequent stages of reform. F. Environment 2.14 There are no environmental problems anticipated for this project, which has received a C rating under the IDA's Environmental Assessment Operational Guidelines. G. PoJect Cost and Fa 2.15 The total cost of the proposed project, including physical and price contingencies, is estimated at US$ 37.2 million equivalent, of which taxes and duties amount to US$1.8 million equivalent. Summary estimates are given in Table 2.1 and detailed estimates are given in Annex 1. Full details are contained in the project file. The foreign exchange component is estimated at US$17.1 million equivalent or 46% of total project costs. - 12 - Table 2.1: SUMMARY COST ESTIMATES PRS Million USS Million % %/. Total Local Foreign Total Local Foreign Total Foreign Base Exch. Costs r , _ _ ... . . .~~~....................... ........... ......... ....................... ........ ......... . A. Gove.nment Accounting..... and Financial Reporting 174.3 250.5 424.8 5.1 7.3 12.4 59 36 B. Government Auditing 108.2 120.5 228.6 3.2 3.5 6.7 53 19 C. Human Resource Management 23.4 21.1 44.5 0.7 0.6 1.3 47 4 D. Training 135.9 71.6 207.5 3.9 2.1 6.0 35 18 E. Administration 156.5 59.9 216.5 I 4.5 1.7 6.2 28 18 F. Other Policy Support 30.9 28.6 59.5 0.9 0.8 1.7 48 5 |TotalBaselineCosts 629.2 552.2 1181.4 18.3 16.0 34.3 47 100 | Physical Contingencies 16.5 15.6 32.1 . 0.4 0.5 0.9 49 3 Price Contingencies 168.4 118.6 287.0 1.4 0.6 2.0 31 6 Total Project Costs 814.1 686.4 1500.5 20.1 17.1 37.2 46 109 (Totals may not add due to rounding) US$ I = Rs. 40.4 (average) 2.16 The base cost estimates reflect price levels in March 1996. Estimates for materials, equipment, vehicles and technical assistance have been based on recent quotations from suppliers, market surveys of manufacturers, and contracts. Physical contingencies of 5% on computer hardware and purchased software, and 10% on software development services have been allowed. Price contingencies and foreign exchange conversions have been calculated in accordance with Bank guidelines, using World Bank estimates prevailing at the time of appraisal. Foreign inflation rates are estimated as 3.6% for the calendar year 1996, and about 2.4% annually thereafter. Domestic annual inflation is estimated to be 12% for calendar year 1995 and 7.5% annually thereafter. No price contingencies have been included for hardware. Price contingencies amount to 5.4% of the total estimated project cost. Estimated exchange rate parities between US dollars and Pakistan Rupees result in an average Rs. 40.4 per US dollar over the course of the project. 2.17 The proposed IDA credit of US$28.8 million equivalent would finance about 77% of project costs, covering 100% of foreign exchange and 56 % of local currency requirements. Federal govemment (23 %) would finance the balance. The government's contribution would include finance for duties, taxes, and recurrent costs, including incremental staff salaries, maintenance, consumables and other recurrent costs. The project financing plan is summarized in Table 2.2 below. - 13 - Table 2.2: PROJECT FINANCING PLAN US$ million Foreign . oal ,~~~~~~~~~~~~~~.......... ............................................................... ...... . Government of Pakistan 8.4 - 8.4 23 ~~~~~~~~~~.................................................................... ........................................ ........................................................ IDA 11 7 17.1 .2 I 77 Tota21i i 17.1 37;2 100 2.18 The IDA credit would be made available to GOP on standard terms. US$26.9 million equivalent would be passed to PAD, US$0.7 million equivalent to the Planning Commission and US$1.2 million equivalent to MOF through normal budgetary procedures. H. Procurement 2.19 Procurement of goods and civil works would be carried out in accordance with World Bank procurement guidelines, with arrangements as indicated in Table 4.1 below. 2.20 Works: Procurement of civil works for site preparation at the 12 sites where computer systems would be installed and renovation of training facilities would be in accordance with national competitive procedures acceptable to IDA. The estimated cost of civil works for site preparation and renovation is US$ 0.9 million equivalent inclusive of contingencies with individual contracts under US$ 100,000 equivalent. The small scattered nature of the work would limit the interests of foreign bidders. Existing procurement procedures of the implementing agency have been reviewed to ensure adequate competition and encourage economy and efficiency. 2.21 Goods: The estimated cost of goods (mainly computer hardware and software, office furniture and equipment, and vehicles) is US$10.0 million inclusive of contingencies. Procurement of the main computer systems would be in accordance with IDA's procurement guidelines. A total of 12 computer systems are to be procured for accounting and financial reporting; one system for the Software Development Center, and the remaining 11 for accounting offices nationwide. The computer system required for systems development and testing at the Software Development Center, about two years prior to the main procurement, would be procured as a separate item following national competitive bidding procedures (NCB). The technical specification for this system would be based on UNIX and OPEN system standards, thereby not pre-determining the procurement of the remaining 11 systems. These will be packaged as a single international competitive bidding (ICB) procurement, with phased delivery of equipment. Other contracts over US$ 100,000 equivalent would be awarded on the basis of ICB, including the procurement of vehicles and equipment. Local suppliers and manufacturers competing for the supply of goods under ICB would be granted a margin of preference of 15% of the CIF bid price for locally manufactured goods or the applicable custom duties and taxes- whichever is lower-during bid evaluation. Other procurement of vehicles and equipment in contracts of less than US$ 100,000 equivalent would be carried out under NCB procedures - 14- aggregating not more than US$ 2.8 million. Minor items including office furniture and equipment, personal computers, vehicles and items in small quantities which would not attract the interest of foreign suppliers, would be procured through local shopping obtaining price quotations from not less than three suppliers, in packages not exceeding US$50,000 equivalent, and not exceeding US$ 0.3 million equivalent in aggregate. Table 2.3: PROCUREMENT ARRANGEMENTS (US$ Million) Procurement Method Total Project Element ICB NCB Other NIF Costs Works 0.9 0.9 (0.8) (0.8) Goods 6.9 2.8 0.3 10.0 (5.7) (2.3) (0.2) (8.2) Service Contracts 5.9 5.9 (5.9) (5.9) Technical Assistance Implementation Assistance 1.9 1.9 (1.9) (1.9) Institutional Development 9.4 9.4 (incl. Training) (9.4) (9.4) Policy Support 1.8 1.8 (1.8) (1.8) Incremental Staff Costs 1.0 1.0 Operating Costs 5.5 5.5 Refinancing PPF 0.8 0.8 (0.8) (0.8) TOTAL 6.9 3.7 20.1 6.5 37.2 (5.7) (3.1) (20.0) (0.0) (28.8) NIF = Not IDA Financed Numbers in parentheses indicate IDA Financed Amounts - 15- 2.22 Consultancies. Incremental Staff and Operating Costs: The estimated cost of service contracts, consultants and training is US$19.8 million equivalent. Consultancies incorporating substantial international expertise include: development of accounting standards, financial systems design and implementation (base costs US$ 3.7 million); assistance to strengthen audit (base costs US$ 1.5 million); development of training and training materials (base costs US$ 0.6 million); and change management assistance for HRM (base costs US$ 0.3 million). Consultancies and service contracts incorporating mostly national expertise include: financial systems software coding (base costs US$ 1.7 million); fees for private sector audit firms (base costs US$ 2.0 million); economic management studies (base costs US$ 1.1 million); assistance to the Planning Commission (base costs US$ 0.6 million); and assistance to replicate systems implementation (base costs US$ 0.6 million). Training courses and attachments include international training in financial management/MBAs (base costs US$ 1.0 million) and attachments with SAIs (base costs US$ 0.5 million). Technical training of computer staff (base costs US$ 0.5 million) and seminars and conferences (base costs US$ 0.1 million) would be mainly national. Consulting services would be procured in accordance with The World Bank Guidelines for Use of Consultants. Incremental staff and operating costs would be financed by government. 2.23 Contract Review. All individual contracts for civil works and goods estimated to cost the equivalent of US$ 100,000 or more and contracts for the employment of consulting firms estimated to cost US$ 100,000 equivalent each or more and contracts for the employment of individuals estimated to cost US$ 50,000 equivalent each or more would be subject to IDA's prior review and approval. For consultants contracts below these thresholds, prior review would be required of: (a) terms of reference; (b) single source selection of firms; (c) assignments of a critical nature, as reasonably determined by the Bank; (d) amendments to contracts for the employment of consulting firms or individuals that would raise the contract values to these thresholds. It is estimated that 70% of the contracts for civil works and goods would be subject to prior review. Post review would be undertaken of the remainder on a random basis. I. Disbursement 2.24 The IDA Credit would be disbursed over a period of five years and would finance about 77% per cent of the cost of the project. The proceeds of the Credit would be disbursed against eligible expenditures, net of taxes and duties, as indicated in Table 4.2 below. The estimated disbursement schedule is shown in Annex 7. 2.25 Disbursements would be fully documented except those for expenditures: (a) under contracts not exceeding the equivalent of: (i) US$ 100,000 each for goods and civil works, (ii) US$ 100,000 for the services of consulting firms, and (iii) $50,000 for the services of individual consultants; and, (b) for training. Such disbursements would be made against Statements of Expenditure (SOE), the documentation for which would not be submitted to IDA but retained by PAD in Islamabad and made available during the course of project supervision. It is estimated that about US$ 8.6 million equivalent would be disbursed through SOEs. Individual small contracts for works, goods, services and training can be claimed through submission of Statement of - 16- Expenditures. PAD would be required to keep all documentation relating to these activities for inspection by IDA and for audit. 2.26 Special Accounts. To facilitate disbursement, a Special Account would be opened by PAD, with an amount of up to US$1.2 million in the National Bank of Pakistan on terms and conditions acceptable to IDA. This would be used for IDA's share of project expenditures (equivalent to the requirement for about 4 months). The Special Account would be operated and maintained by PAD and would be used for payments of all eligible foreign and local expenditures. The Special Account would be replenished on a monthly basis or whenever 20% of the account has been utilized, whichever occurs first. Table 2.4: DISBURSEMENT BY CATEGORY Expenditures Catego Amount of Credit % to be Financed Allocation (US$ million) 1. Civil Works expenditures 0.8 90% 2. Goods and Equipment 8.2 100% of foreign expenditures, 100% of local expenditures (ex factory) and 70% for other items procured locally 3. Consultants Services and 19.0 100% of expenditures Training 4. Refinancing of Project 0.8 100% Preparation Facility TOTAL 28.8 - 17 - 111. INSTITUTIONAL ARRANGEMENTS A. Assessment of Current Arrangements 3.1 PAD, which is presently responsible for most of governments' accounting functions and for the external audit of government's financial transactions, has an established organization and structure, including decentralized offices providing accounting, treasury functions and audit for each of the federal and four provincial governments. Financial regulations and procedures are in place. PAD has some experience of introducing and operating computerized financial systems, although these have tended to automate the previously existing procedures rather than to amend systems to introduce modern financial management. It has a network of training institutes. Staff in PAD belong to the audit and accounts service, which is a recognized category (cadre) within the Civil Service of Pakistan. These features provide a positive base from which to develop PAD's capacity. Nevertheless, the detailed evaluation of current institutional arrangements for government's fiscal reporting and auditing (para. 1.6) highlights weaknesses in the outputs from existing financial systems. It identifies institutional constraints including the lack of arrangements to ensure that systems respond to users' needs, the limited availability of staff with up-to-date professional or technical skills, the lack of independence of audit from accounting, and poor human resource management practices within PAD. B. Addressing Institutional Constraints 3.2 The project scope and design addresses the institutional constraints through: a) initiating a gradual transfer of responsibility for accounting to the executive arm of government, separate from audit; b) strengthening the capacity of PAD by developing an MIS Wing; c) encouraging greater use of private sector audit firms to augment PAD's skills; e) developing PAD's staff through improved HRM policies and training; 0 close involvement of users in project systems' design and coordination; and g) use of consultants for design and implementation technical assistance. 3.3 Separation of Audit and Accounts As a first step towards separation of the audit and accounts functions, PAD has already initiated moves to bifurcate the two functions under the Auditor General to such an extent that the eventual transfer of the accounting function to the executive would not have any wide-ranging organizational implications. As part of the bifurcation process it would be necessary for the Auditor General to ensure that essential internal controls are in place and operating in the accounting wing. Following full implementation of this bifurcation PAD would, by 1997/98, set up a task force to identify and address issues (legal/regulatory, administrative and procedural) relating to the transfer of the accounting function to the executive. Regulatory changes would be prepared as required, and the separation would be planned to become effective from July 1, 2000 subject to government approval. Agreement was obtained at negotiations that GOP shall prepare a plan for the separation of the -18- Auditor General's accounting and audit functions by July 1, 2000, and to achieve the separation by that date, shall : (a) complete bifurcation of the audit and accounting functions by June 30, 1997; (b) complete detailed proposals for the functional separation of audit and accounting by March 31, 1999; and (c) thereafter take all measures necessary to effect the separation of these functions (para. 6.1). 3.4 Creation of an MIS Wing The project would strengthen PAD's capacity by reorganizing the existing Computer Directorate and creating an Management Information Systems (MIS) Wing, headed by a General Manager (MIS). The General Manager (MIS) would be a computer professional, recruited externally on a project post for a period of up to 5 years. During this period, PAD would attach officers to be trained to potentially take over this position by the end of the project. The General Manager (MIS) would have the status of a Deputy Auditor General, reporting to the Auditor General, with complete autonomy with respect to technical issues. 3.5 There would be three sections in the MIS Wing each headed by a Director General: a) a Standards and Policies Section would be responsible for defining and keeping under review PAD's standards and policies with regard to information systems, and also responsible for detailed technical aspects of any central acquisition of hardware and software; b) a Systems Development Section which would be responsible for the development and maintenance of the application systems with the assistance of consultants; and, c) an Implementation Section which would be responsible for the implementation of developed systems and the day to day operations of the computer installations around the country. 3.6 In the case of field offices, all personnel (including those responsible for day to day field operations) would report within the field office structure, (i.e. to the DAO or AG), except for a limited number of technical positions under the Director General Implementation, responsible for providing technical support, but located at AG offices. A key factor in the overall implementation strategy would be that the responsibility for implementation would be assigned to an end-user support group formed at each AG office which would be headed by a Deputy Accountant General and which would be dedicated to systems implementation. The end-user support group would be trained by the technical team and would thereafter be responsible for training all other personnel at the AG offices as well as at DAOs. 3.7 Involvement of the Private Sector Information about the project and its proposed approach is being made widely available and comments sought from the accounting profession in Pakistan. These comments have been incorporated in the project design. PAD has proposed a phased strategy to initiate further private sector participation based upon: a) study of potential areas for greater private sector involvement, including opportunities to reduce overlap and for more efficient use of audit resources, the - 19- scope for joint working between public and private sector auditors, and the comparative advantages of each sector; b) pilot introduction of audits by private sector firms under amended procedures, joint audits, staff exchanges, etc.; c) extension of trial public/private partnerships in government auditing, together with preparation of revised operating procedures, manuals, and quality control arrangements; and d) gradual expansion of the program as appropriate. 3.11 Human Resource Management To reflect its need for increased professionalism and specialization, PAD would implement revised HRM policies including: a) developing a structured career path for specialist staff including auditors and accountants; b) rotating staff on assignments in accordance with this career path and prior experience, and assigning jobs for a nornal period of at least three years; c) defining standard job descriptions for recruitment, deployment, training and evaluation purposes; d) enhancing the effectiveness of training, including requiring staff to be committed to remaining in PAD prior to receiving entry-level training, and relating training more closely to job descriptions and training needs assessments; e) developing a system of quantifiable and transparent evaluation and evolving an open, merit-based, promotion and reward system; and f) detailed manpower planning. 3.12 Training Key initiatives aimed at increasing the professional competence of PAD staff would include: a) replacing the current eight month entry-level training for probationary officers with a two year course; b) substitution of the SAS examination for mid-level staff by that of the Association of Accounting Technicians; c) substantial reduction in promotion of unqualified candidates from mid-level grades, and allowing direct-entry recruitment of individuals with appropriate MBA/graduate qualifications, subject to accountancy examination success within a prescribed period; d) training for officers due for promotion to B- 1 9; e) encouragement for officers to acquire an accredited financial qualification; and f) instituting a program of training for continuing professional education. 3.13 PAD is coordinating the proposed changes for its career officers with the Federal Public Service Commission and the Establishment Division. In addition to developing and delivering training for the above, PAD's training strategy would also address training needs related to the implementation of the new working arrangements and procedures to be introduced through the project. A third aspect of PAD's training strategy would be to extend financial - 20 - management training to include selected provincial and secretariat personnel within the circle of beneficiaries. 3.14 User Involvement A Steering Committee has been formed to ensure user involvement in the project and to perform the functions of interagency coordination. Representatives from MOF, Economic Affairs Division, Planning Division, Pakistan Computer Bureau, and all four Provinces will assist PAD to ensure that the financial accounting systems developed by the project are responsive to user requirements and interests, that users' training needs are met, and that systems and procedures relating to audit are effective. Other relevant agencies would be co-opted as necessary. PAD would also coordinate with the Federal Public Service Commission and the Establishment Division on aspects relating to the implementation of its human resource management strategy. Users would be directly involved in the definition of the financial reporting systems development, through consultation with the systems design consultants. PAD would extend its training to include users from outside the department. - 21 - IV, PROJECT IMPLF.1CENATION A. Orgaizations Responsible for the Project 4.1 The organizations responsible for implementation of sub-components of the project are: PAD, MOF, and the Planning Commission. The aspects of the project relating to government accounting and audit would be PAD's responsibility. MOF and the Planning Commission would implement the component for strengthening economic management. The institutional responsibilities for project implementation are shown below: COMPONENT AGENCIF.S Govenment FinancialManame Overall responsibility PAD (Project Director) xovmment AAcounting Overall responsibility PAD (CG (A)) Inter-agency coordination PAD (CG(A)) and Steering Committee Core Government Financial Systems Overall responsibility PAD (GM MIS) Inter-agency coordination PAD (CG(A)) and Steering Committee GQovemmentAudi Overall responsibility PAD (DAG GA) Tnstitutional Development and Proiect Pren-aration Training PAD (DG Training) HRM PAD (DG HRM) Project Management PAD (PD/ DG R&D) Future Project Preparation PAD (PD) Advisory Services Internal Steering Committee External Panel of Experts Other Policy Sport Economic Policy Studies MOF Assistance to Planning Commission Planning Commission - 22 - 4.2 Implementation arrangements in PAD are shown in Figure 1. Figure 1: Implementation Arrangements in PAD Auditor General | Project |! |Coordinato DGot Aui M(I)Controller General DAG | AGA |AG Baloc AG NWFP B. Implementation Responsibilities 4.3 PAD's components of the project would be implemented by the sections within the Department that are already responsible for the respective function, with suitable strengthening as required. Hence, the Controller General (Accounts) would be responsible for the accounting component. A new General Manager (MIS) would lead the computer systems development as head of the MIS Wing. Since the bulk of the work related to information systems development deals with the implementation of accounting systems, the Director General (Implementation) who is part of the MIS Wing would have a dual reporting relationship and would be functionally responsible to the Deputy Auditor General (Accounts & Payments) for implementation. The Deputy Auditor General (Government Audit) would be responsible for implementation of the audit component. The Director General of Training, head of the Audit and Accounts Training Institute (AATI), based in Lahore and with regional offices in Balochistan and NWFP, would be responsible for the training component. The Director General, Human Resource Management, would be responsible for the HRM component. - 23 - 4.4 For project administration and coordination purposes, the Controller General (Accounts), the DAG (Government Audit), the General Manager (MIS), the Director General (Training), and the DG (HRM) would report to the Project Director. The project director would be assisted by the DG (R&D) as project coordinator and head of the Project Directorate. Initially, the Auditor General would be the Project Director. 4.5 The Project Directorate, which is already established for project preparation, would provide project coordination, administration and monitoring. It would have overall responsibility for monitoring project costs, funds flow, adherence to schedules and quality of work performed. It would receive monthly reports from heads of the units managing sub- components from which it would prepare overall project summary progress reports. These reports would summarize project expenditures by major project activities and category of expenditure, report work progress relative to the major project milestones and performance indicators, and would highlight any issues relevant to project progress. Summary reports would be provided to the Bank on a quarterly basis. The Project Directorate would be assisted by a local consultant, to provide backup services and peak-load facilities as required. 4.6 Agreement was obtained at negotiations that PAD would: (a) employ staff with qualifications satisfactory to IDA in the key posts of Controller General (Accounts), Deputy Auditor General (Government Audit), General Manager (MIS), Director General (HRM), Director General (Training); (b) designate and maintain a Project Director satisfactory to IDA, with overall responsibility for project implementation; (c) employ within the Project Directorate a Project Coordinator and a Deputy Project Coordinator, with qualifications satisfactory to the Association and other staff necessary for the carrying out of the Directorate's functions, and that these key staff, subject to satisfactory performance, would be retained in post for a minimum of three years (para. 6.1). 4.7 The MOF and the Planning Commission would set up project management arrangements for managing the studies carried out and the short-term technical assistance provided under their respective sub- components. Agreement was obtained at negotiations that MOF and the Planning Commission would set up by December 31, 1996, project management arrangements satisfactory to IDA for the studies carried out and the short-term technical assistance provided under their respective components (para. 6.1). C. Implementation Strategy 4.8 PAD's implementation strategy involves defining new standards for accounting and auditing, which move closer to international standards, and introducing improved systems in a phased manner with close involvement of end-users of financial reporting and auditing information. The focus of development would first be upon accounting systems, although measures for the initial strengthening of audit are also incorporated. 4.9 Accounting Standards and Financial Reporting This activity to improve financial reporting would define a modem set of accounting guidelines, including the introduction - 24 - of a double entry accounting model, and a set of policies and procedures for accounts payable, revenues and liabilities recognition, foreign loans, suspense accounts and development projects, and prepare a plan for implementation government-wide. It would also review the financial reporting needs of government and broadly determine the content, timing and distribution of financial reports. This work is a prerequisite for the commencement of the main information systems development consultancy, and would need to precede the design and development of the Core Information Systems. It would be undertaken by the systems development consultants, and financed up to Credit effectiveness by PPF P916-0 PAK. 4.10 Core Information Systems As PAD's account keeping operations for federal and provincial governments are conducted by its network of AG's offices, each supported by DAOs/Treasuries, PAD has overall control of the process, which enables flexibility during implementation. A factor affecting the implementation strategy is that all AG offices and several of the larger DAOs are already operating computer-based systems, and therefore would face less difficulty than a green field site in installing new software. 4.11 Accordingly, the core information systems will be implemented in a phased manner as follows: a) Phase I would cover requirements definition, functional and technical design, specification and procurement of the hardware and software required for implementation, with development centered at PAD's head office. b) In Phase II, the systems would be implemented at the federal government's main accounting office, the AGPR office in Islamabad, at the AG's office in Peshawar and at two DAOs reporting to this AG which are already computerized. This is referred to as the pilot implementation. c) In Phase III the systems will be replicated over the course of this project to a total of about 21 of the 95 sites, including all provincial AG offices, and selected DAOs within each province. This would include maximum coverage in at least one Province (presently identified as Sindh), referred to as the Province-wide system replication. The remaining sites would be selected with a view to maximizing the coverage of federal transactions. 4.12 For development of the applications software, the systems analysis and comprehensive functional design would be carried out by consultants, who would also carry out a search for suitable software packages. In the event of suitable packages being identified, the consultants would prepare specifications for, assist procure and supervise an ICB turnkey contract for acquisition and installation of the package, its customization, and acquisition and installation of suitable hardware and operating software. In the event of no suitable package being identified, the consultants would prepare specifications for, assist procure and supervise two contracts, one for the development and testing of software, and another for the provision/installation of the hardware. Supervision of implementation at about 12 sites (4 pilot sites and the first phase of replication - about 8 sites) would also be the responsibility of the consultants selected for preparing the design. - 25 - The scope of work for the consultants is described in more detail in Annex 3. The project would finance assistance from private firms for further replication of systems across the remaining sites. The implementation schedule shows possible time savings of 6-9 months if suitable application software packages could be identified. 4.13 Technology Strategy for PAD's Core Information Systems Computer systems would, as far as possible, be designed to: a) be open and portable to avoid becoming tied to a single supplier; b) facilitate adaptability and updating; and c) keep pace with emerging technology innovations. 4.14 The project envisages a distributed hardware arhitecture with computer processing power located at the various nodes of the network (the AGPR office, AG offices, and DAOs). Where facilities allow and data volumes justify, nodes would be connected via telecommunications facilities. Alternatively, data transfer would be via diskettes. The transaction processing and database management required at each node would be carried out by the computer at that node. Summary or detailed data, as required, would be transmitted to the computers located at the respective AG's office and AGPR in Islamabad. The advantage of such an architecture is that it distributes computing power, commensurate with needs, to different nodes of the network, thereby optimizing usage, and making it less vulnerable to malfunctions at a single central site. In addition, end-users at provincial AG and DAOs would have better control over their technology and data resources, strengthening systems' ownership. The size and distribution of computing power across the various nodes of the network would be determined by the volumes of data and transactions that are generated and stored, and the volumes and frequencies of data transmitted. Information gathered from PAD has been used to estimate the size and location of computers. This information would be progressively refined by the consultants during the preparation phase of the project, by undertaking surveys to gather data for each site. 4.15 The nature of the application systems requires that the application software be able to run on small or large computers without major changes (scaleable) and be able to operate on machines offered by several vendors (portable). The project proposes to use UNIX as the operating systems environment since, in practice, this environment comes closest to an OPEN systems environment and ensures a high degree of scalability and portability. In addition, the application development environment chosen will use Fourth Generation Languages and Relational Data Base Management Systems and associated development tools, Graphical User Interfaces to increase application development productivity and offer a user friendly environment for data access and usage. 4.16 Implications of large scale computerization on PAD staffing PAD recognizes that a department wide introduction of computer based information systems would have significant implications for staff. Although PAD does not expect overall staff reductions, it does expect significant staff reassignments, and based on its past experience with the introduction of - 26 - automated systems it appreciates the importance of appropriate manpower policies in order to achieve successful implementation of change. Several aspects would be catered for: a) the skills of staff who currently maintain the manual systems would be augmented so that they are able to operate and maintain the new automated systems; b) retraining or recruitment would provide for the jobs created related to the operation and maintenance of the systems (both in the functional and the technical areas); and, c) other staff would be re-trained and re-assigned, mostly to audit where additional staff are required. 4.17 As part of this project, PAD are concurrently looking at the staffing and training/ re-training aspects under the HRM and training components respectively. An extensive training program is envisaged for staff to enable them to operate and maintain the systems. In addition, facilities for re-training would be created or augmented as part of the training component, including training for reassignment. 4.18 Auditing Government plans to strengthen the legislative audit function, through the use of consultants, within a conceptual framework comprising the following: a) moving towards adopting international auditing standards developed by INTOSAI; b) developing the principle of public accountability; c) improving financial reporting and control systems; d) enhancing the scope and independence of audit; e) strengthening performance monitoring and evaluation capacity, through new procedures and computerized audit tools; f) increasing the competence and capacity of government auditors, including making greater use of the private sector; and g) building future capacity - through revised HRM procedures, international training in a modem financial systems environment, and arranging attachments with other Supreme Audit Institutions 4.19 In the move towards adoption of INTOSAI standards of auditing, PAD considers that it has adequate powers in respect of performance auditing and reporting to the legislature. The practice of PAD conducting performance audit has been in place since the early 1980s and resulting audit reports have been considered by the Public Accounts Committees of the federal and provincial legislatures. The executive and the legislature's support for performance audit indicates that PAD's mandate in the area is not disputed. This gives a firm basis to start the process of adoption of standards in the auditing area. 4.20 HEM PAD recognizes that the project cannot be successfully executed and sustained unless its human resources are efficiently deployed, are of substantially improved quality, and are properly motivated. It would therefore implement an HRM policy designed to raise the level of professional competence of staff, to institute a system of continuous professional education, to provide a structured career path, to evolve a promotion and reward - 27 - policy based on open and quantified performance standards and a recognized merit system, and to improve related management information systems. 4.21 Iraining The strategy for training addresses: a) the needs arising from introduction of changes in accounting and audit procedures; b) improving the quality of existing training (for example, relating training courses more closely to training needs assessments) and training facilities; c) expanding the circle of beneficiaries to include provincial staff and users in line departments; d) moving towards professionalism in training of government accountants and auditors (for lower and higher levels of staff), and upgrading facilities. 4.22 The Audit and Accounts Training Institutes (AATI) would provide formal training (for example, for accounting technicians and probationers), short courses, and provide course material and backstopping for field office training. PAD would strengthen the AATI and augment them by establishing Field Office Training Centers (FOTCs) at the larger accounting offices to provide training in revised procedures, and basic computer skills. The component would be implemented in the following sequence: a) preparation for the Accounting Technician qualification, which can be accommodated within the existing competence of the training faculty, updating existing training materials, upgrading the capacity of faculty staff, through training, to prepare for introducing the enhanced probationers training and retraining in revised procedures, and training quality control measures; b) introduction of Accounting Technicians training courses, training needs analysis, course and materials preparation, and training of trainers for the enhanced probationers and staff retraining courses, and renovation of facilities; c) introduction of enhanced probationers and staff retraining courses, equipping of computer training facilities, and initial annual impact evaluation. 4.23 Economic Management Agreed recommendations of the studies financed under this component would be used to draw up an agenda for policy and/or institutional reforms in specific areas. The strengthening of institutional capacities of and coordination between the MOF and the Planning Commission in economic management is a long-term endeavor requiring detailed diagnosis and follow-up to the 1993 Economy Commission recommendations. The diagnostic study of the institutional arrangements for macroeconomic management would assess options for strengthening capacity for the formulation of strategies on longer-term development finance issues. The study would look at institutional, staffing and financing arrangements for developing the government's forward planning and policy analysis capacity, including how to better link the policy work required by Finance with the longer-term development planning currently handled by the Planning Commission. It would also assess how to attract and retain the highly skilled and experienced staff required, as well as the related training requirements. GOP and IDA would jointly formulate action plans to implement the agreed recommendations of the economic, financial policy, and diagnostic studies. - 28 - 4.24 Implementation Plan The implementation strategy is reflected in the agreed implementation plan (Annex 6). Agreement was obtained at negotiations that GOP would implement the Project in accordance with the agreed implementation plan; and would by January 31, 1997 and by each January 31 thereafter review and update the implementation plan in consultation with the Association (para. 6. 1). D. Status of Preparation 4.25 The Project is in an advanced state of preparation and hence proposed project activities would commence without undue delay. Preparatory activities for the project, financed by a Project Preparation Facility (P916-0 PAK), include: a) initiating the consultancy for developing accounting principles, standards and a financial reporting framework to guide the detailed systems design; b) establishment of the MIS organization structure by appointment of a computer professional as General Manager MIS and other key staff in the MIS wing; c) undertaking a training needs analysis for provincial government staff including users of financial information, accountants and auditors; d) training for MOF, provincial and PAD's HRM, MIS and training institute staff; e) preparation of detailed designs and tender documents for civil works for site preparation and training facility renovation works; and f) project management training and assistance with setting up project management systems. 4.26 The project's Planning Commission Formn I (PC-1) has been approved by ECNEC. Consultants are selected for the accounting standards and systems design consultancy. (The scope of work is summarized in Annex 3.) It was agreed at negotiations that PAD's appointment of the accounting standards and systems design consultants (and of IDA to issue its no objection) would be a condition of Credit effectiveness (para. 6.2). The project management directorate is in place and PAD is in the process of recruiting key technical personnel. It was agreed at negotiations that appointment of the General Manager (MIS) to the satisfaction of IDA would be a condition of Credit effectiveness (para. 6.2). E. Project Sustainability 4.27 The sustainability of the project would largely depend upon project ownership and commitment to project objectives. Ownership is strengthened as the project builds upon initiatives already taken by PAD to computerize accounting. PAD has extensively discussed its development strategy internally within the department, including with middle management, to attempt to build a broadly based consensus. Under PAD's direction, project preparation has tried to develop participation through thoroughly canvassing user needs, and the development strategy has obtained the commitment of federal government and three of the four provincial governments, who would be directly involved in guiding and monitoring the project through - 29 - membership of the Steering Committee. Participation in the project's implementation includes Pakistan's professional accountancy bodies. Technology changes would be institutionalized through recruitment of specialists, departmental reorganization and structured training. Establishment of an MIS wing would provide the necessary technical skills for systems development and maintenance. Staff to be involved in systems maintenance would be initially associated with systems development. In areas such as information technology where PAD lacks suitable skills, it would recruit technical staff required for the implementation of the project from the open market. Human resource management policies would be amended to facilitate retaining specialist skills and to make better use of trained staff, and further institutional support would be arranged through training. Training would be extended to provinces and executive departments, to provide the skills to better use the improved financial information, thereby reinforcing the future demand for such data. It is recognized that systems operations will have an ongoing impact on recurrent costs, estimated to amount to about $1.3 million equivalent per annum. This will be provided for in the armual budget after the project is completed. Increased participation of the private sector would also help ensure sustainability. PAD has confirmed its intentions to involve private sector audit firms in the public sector,while remaining within the context of the Auditor General's responsibilities under the Constitution. IDA has already recognized that completing automation of all 95 sites will require a follow-up project, which will help further institutionalize the changes introduced in this project. F. Accounts and Audit 4.28 PAD, Planning Commission and MOF would maintain separate accounts for their respective parts of the project, and would keep all the documentation including that for the Statement of Expenditures. PAD would prepare consolidated project accounts annually. IDA would require annual audit reports from external auditors (independent and suitably qualified) for project accounts with a separate opinion on the Special Account and the Statement of Expenditures. The Audit Reports would be submitted to the IDA within six months after the end of a financial year. In order to assure transparency and independence, PAD has agreed that it would engage a private sector audit firm for this purpose, subject to the concurrence of government. PAD would prepare and submit to IDA within six months after the close of each fiscal year fully audited consolidated project accounts including an auditor's opinion and report for the project, SOEs and Special Accounts, undertaken by auditors satisfactory to IDA. G. Monitoring and Evaluation 4.29 Significant performance indicators and project milestones (para. 2.10 and Annex 8) will be used as a basis for monitoring and evaluating the project. A thorough mid-term review would be incorporated to assess performance achieved, and to review the appropriateness and continuing relevance of the project's design, including taking account of technology changes. PAD has developed a project implementation management system to monitor progress. A summary of its resulting implementation plan appears as Annex 6. Quarterly progress reports would be provided to IDA. A mid-term review would be scheduled three years after credit effectiveness, to coincide - 30 - with the completion of the pilot implementation phase, would be conducted by PAD, Planning Commission and MOF with IDA. Performance as assessed during the mid-term review would be an important consideration for preparation of a future project. Agreement was obtained at negotiations that PAD, MOF and Planning Commission would prepare, by April 30, 1999, a report evaluating progress to date, including recommendations to enhance implementation of the project, which would form the basis for a mid-term review by June 30, 1999 (para. 6.1). In addition to Headquarters supervision for the project, the anticipated heavy supervision demands would be internalized to the extent possible through use of consultancy firms to assist change management and for institutional development. 4.30 A senior level panel of internationally-experienced experts would be constituted to meet at least annually and advise the govermment on ways to continually enhance the project's contribution towards achieving its vision for financial management and public accountability (this panel would report to the steering committee). The panel of experts would comprise at least three international experts, having among them expertise in Government Accounting, Government Auditing, and Information Systems Development. Preference would be given to officers serving in (or just retired from) Supreme Audit Institutions/ Govenmment Accounting Organizations. The panel may also include two or three local counterpart experts. Agreement was obtained at negotiations that PAD would establish by December 31, 1996 and retain during the implementation of the project, an international panel of experts with membership and responsibilities satisfactory to IDA (para. 6.1). 4.31 In view of the significant complexity of the project, Bank staff and consultant supervision inputs are expected to be high and atypical as compared to average, but comparable to other similar projects. It is estimated that the requirement will be in the range of 25-30 staff weeks per year as indicated in the supervision plan attached at Annex 9. Supervision would include: a) general portfolio management - review of procurement and consultant contracting documents, progress reports and correspondence; b) formal reviews - participation in the mid-term and other reviews; and c) participation in regular progress meetings (by local consultants); d) routine biannual supervision missions. 4.32 Two supervision missions would be necessary annually, each for a period of two weeks on average. Supervision missions would normally require participation from the task manager, auditing, accounting, human resource and information systems specialists. Supervision of the policy support component would require participation from a macro economist. Total staff inputs for these missions would be about 20 staff weeks per year. The proposed level of supervision includes local as well as Headquarters inputs. The use of local consultants would reduce the total costs of supervision. The continued high level of supervision towards the end of the project reflects the timing of implementation of the pilot systems and their replication. - 31 - V. BENEFITS AND RISKS A. BENEFITS 5.1 Benefits would include improved, timely, accurate and consistent financial information from the 21 automated sites to assist resource planning, cash management, budgeting, management and control at provincial and federal levels of government, and improved fiscal information flows for macro-economic management. The improved financial informnation would assist Government in its efforts to complete fiscal adjustment. It would also provide a basis for enhanced governance. The project would also set the stage for subsequent initiatives to improve government financial reproting and auditing. 5.2 Basic accounting information underpinning financial management decisions would be prepared according to enhanced accounting standards, thereby providing the basis for more informed decision-making. Financial monitoring reports would be geared to users' needs, and would incorporate information presently missing such as budget and variance information, and details, by project, of development expenditure. This improved financial infornation would enable strengthened management and monitoring of public expenditures, and hence assist improved economic performance. Systems would provide the information required for cash flow forecasting, thereby improving cash management and reducing the costs of short term borrowing. 5.3 Government financial management performance would benefit through strengthened audit, by introducing modern audit techniques, reporting formats and quality controls. Financial management skills within government would also be developed by training, by improved human resource management policies, and by making greater use of the resources and capacity of private audit firms. Such improvements in financial management would gradually increase the effectiveness of public expenditures. 5.4 Governance would be assisted by the improved financial infornation and systems, which would provide clearer linkages between budgeting, use of resources, internal controls and accountability. The International Federation of Accountants considers that sound accounting is the first line of good governance. As the project would address many of the weaknesses in the present arrangements for government accounting, it would lay a stronger foundation for improved governance. Greater capacity and independence of governments' external audit would enhance transparency and accountability, thereby further assisting strengthened governance. 5.5 Assistance to MOF and the Planning Commission would enable the government to better fulfill its redefined role by increasing capacity to formulate and monitor policies for deepening macroeconomic and structural reforms, and by identifying the institutional changes required for better coordination of such policies. - 32 - B. ECONOMIC ANALYSIS 5.6 The following aspects of the project were selected from the range of possible alternatives in order to achieve a cost effective solution to Governments' financial information needs, and to provide a set of efficient and effective tools for public expenditure management: a) the financial systems improvements would initially focus upon improving the quality of accounting and financial information, thus strengthening the platform for existing financial management and control procedures, and all subsequent improvements thereto; b) the project would address a major structural weakness in present arrangements by separating functional responsibilities for accounting and audit, thereby creating independence which would enhance the contribution of both functions to improved public expenditure management; c) the project includes measures to increase institutional capacity through amending manpower policies, training, use of the private sector in areas of comparative advantage, and technical assistance, to enhance the development impact of improved financial information, and to ensure sustainability of the improved procedures; d) financial systems would be prepared in the context of an overall information architecture for government fiscal management, to ensure they are integrated amongst themselves and with other Government systems, and to avoid overlapping or duplication of functionality; e) the technological approach proposed in the project, based on distributed, OPEN and scaleable systems, strikes a balance between large mainframe systems which would be cumbersome and expensive and other PC-based options (e.g. stand-alone PCs) which could be under-powered and not scaleable to sites with a large number of transactions; and f) the phased implementation strategy of the computerized financial systems, restricting the implementation to 21 out of a total 95 sites, is a prudent approach to managing implementation risks. 5.7 The total cost of the project amounts to approximately 0.25% of annual public expenditure in Pakistan. The benefits of even minor improvements to the efficiency, effectiveness or management of public expenditure, which would arise from improved financial information and control, would exceed project costs. The net development impact of the project is therefore expected to be positive. The fiscal impact of the project's cost would be negligible. C. RISKS 5.8 Due to the extent of change envisaged, this project should be considered as high risk. Although identified risks and mitigating measures are summarized below, as the project would address sensitive areas related to control and reporting of financial transactions, would introduce structural changes within PAD, and would install new technology, reluctance and at times - 33 - even resistance to implementation should be anticipated to occur, and the full achievement of objectives should therefore be considered uncertain. 5.9 The main categories of risk facing the project are: a) Vested interests. By improving the quality of financial systems and reporting, the project would introduce controls which would affect those who benefit from weaknesses in present arrangements. These interests may act to delay the project, or to divert it from its objectives. The following would assist to manage this risk: (i) support from those senior levels of government which do acknowledge the need to improve and update governments' current financial systems; (ii) monitoring and guidance by a panel of international experts - drawn from other Supreme Audit and Accounting Institutions - to provide external perspectives and professional peer pressure; and (iii) the phased and relatively gradual introduction of new systems, allowing a wider appreciation of benefits to develop, enhancing ownership. b) Resistance to change. Organizational risks include PAD's capacity for managing the process of change, especially those aspects related to its union and staff concerns arising from the introduction of new procedures, technology and the functional separation of accounting and audit. The Auditor General understands the need for leadership, for clear direction and for keeping staff fully informed and involved, to reduce these risks. A change-management specialist would advise on processes and appropriate actions. The Steering Committee, comprising key users of financial information, would assist to ensure that end-users are fully involved and buy into the proposed changes. The project includes extensive training and retraining opportunities for staff within and outside PAD to prepare for change. c) Technology development and operation. Risks related to the development and operation of computer-based financial information systems arise as staff have limited technical skills and experience of technically more complex financial systems. These risks are mitigated somewhat by the fact that PAD already has some prior experience of developing and operating computer systems in its five Accountant Generals offices and several District Accounts Offices. These offices would also face less difficulty in installing new systems than a green-field site. The project also supports strengthening PAD's capacity to manage technology by creating an MIS Wing, headed by a General Manager recruited from the open market. Certain other key technical posts would also be filled by local staff on contract terms. The development of new systems would be under the control of internationally experienced consultants, with PAD staff involved in development to prepare for eventually operating and maintaining the systems. d) _ . Obtaining the benefits of improved technology requires skills to control the quality of financial data inputs, and to apply the financial information generated. The project includes three measures to address the risk of inadequate skills. Changes to HRM policies, to provide a structured career path for accounting and audit specialists, would underpin efforts for institutional development. - 34 - Upgrading of skills would be addressed by improved training, including for the users of financial information, and consultants would provide technical assistance in specific aspects. The project would support greater involvement of local private sector firns in public sector financial management to further increase capacity. e) Project management. The complexity of the project, and the likelihood of delays in decision-making and implementation, increase project management risks. A committed and stable team of senior management within PAD is considered a critical factor to deal with this risk. Many of these key staff have been involved during project preparation, thus developing ownership. Project conditionality limiting key staff transfers would help to retain a stable team. There is an existing Project Directorate, with experience of implementing a component of the Third Technical Assistance Project (Cr.1755-PAK) and this project's preparation, which will be strengthened further and given logistical support by consultants. Monitoring arrangements include a detailed implementation plan, performance indicators and intensive supervision. f) Policy Changes. There is a risk that policy changes or revised administrative arrangements could be introduced which would disrupt the project. To mitigate this type of risk, the government has approved a vision statement for financial reporting and auditing which is fully in line with project objectives. Two final risks are delays in initiating the economic management studies and of weak commitment to implement the policy and institutional changes recommended by them. To mitigate these risks, terms of reference for key studies will be submitted prior to negotiations, and action plans for implementing their recommendations will form part of the annual review and updating of the project implementation plan in a manner satisfactory to the Bank. - 35 - VI,AGREEMIENTS REACHEDI 6.1 inn the following were agreed with the GOP: a) GOP shall prepare a plan for the separation of the Auditor General's accounting and audit functions by July 1, 2000, and to achieve the separation by that date, shall: (i) complete bifurcation of the audit and accounting functions by June 30, 1997; (ii) complete detailed proposals for the functional separation of audit and accounting by March 31, 1999; and (iii) thereafter take all measures necessary to effect the separation of these functions. (para. 3.3); b) PAD would: (i) employ staff with qualifications satisfactory to IDA in the key posts of Controller General (Accounts), Deputy Auditor General (Government Audit), General Manager (MIS), Director General (HRM), Director General (Training); (ii) designate and maintain a Project Director satisfactory to IDA, with overall responsibility for project implementation; (iii) employ within the Project Directorate a Project Coordinator and a Deputy Project Coordinator, with qualifications satisfactory to the Association and other staff necessary for the carrying out of the Directorate's functions; and (iv) that these key staff, subject to satisfactory performance, would be retained in post for a minimum of three years (para. 4.6); c) MOF and the Planning Commission would set up by December 31, 1996, project management arrangements satisfactory to IDA for the studies carried out and the short- term technical assistance provided under their respective components (para. 4.7); d) GOP would implement the Project in accordance with the agreed implementation plan; and would by January 31, 1997 and by each January 31 thereafter review and update the implementation plan in consultation with the Association (para. 4.24); e) PAD, MOF and Planning Commission would prepare, by April 30, 1999, a report evaluating progress to date, including recommendations to enhance implementation of the project, which would form the basis for a mid-term review by June 30, 1999 (para. 4.29); f) PAD would by December 1996, establish and retain an international panel of experts with membership and responsibilities satisfactory to IDA (para. 4.30). 6.2 Before credit agrement effectiveness the following actions would be completed: a) appointment of the accounting standards and systems design consultants (para. 4.26); and, b) appointment of the General Manager MIS (para. 4.26). - 36 - 6.3 BRcmmndstion. On the basis of the above agreements, the proposed project is suitable for an IDA Credit of SDR 20.1 million (US$28.8 million equivalent) to the Islamic Republic of Pakistan. AtNlEX I Page I of 6 PkM Prqoj klw buqwoVing Fhiancil Fbponr9i *al Aud^iung ii GCoerm et of Pakidtan Compm odS P_ect Cos fluiny (PRM MElo) (uss MEon) % %Tgtal % % Tola Foi E ForeIgn Obe Local Foreign TOtW Excange Costs Local Foreign Tota Exucamge Casts A. Goermnmaen Accounting and Fiancia Raposting A.na.ng and Plcy SLridafds 13.524 10.350 23.874 43 2 0.392 0.300 0.692 43 2 Syshmns Develpnmen 160.806 240.084 400.892 60 34 4.661 6.959 11.620 60 34 SuhbStid 174.332 250.434 424.766 59 36 5.053 7.259 12.312 59 36 B. Governet Audting Audi Systnis inproveent 84.360 65.880 150.240 44 13 2.445 1.910 4.355 44 13 Syleun Develkqiqpn-i 23.853 54.560 78.413 70 7 0.691 1.581 2.273 70 7 subtl" 108.213 120.440 228.653 53 19 3.137 3.491 6.628 53 19 C. MHama Resource Manageonr (HiRE) Orgarmsrn.Ld Deipm len 15.674 3.002 18.676 16 2 0.454 0.087 0.541 16 2 System DevekOpank 7.717 18.060 25.777 70 2 0.224 0.523 0.747 70 2 Sublolal 23.391 21.063 44.454 47 4 0.678 0.611 1.289 47 4 0. Tdr*uh Prodssnum rrainwg 20.604 34.042 54.f46 62 5 0.597 0.987 1.584 62 5 Sub PrlmiunAlI daiing 11.275 9.007 20.282 44 2 0.327 0.261 0.588 44 2 FacFies 104.033 28.559 132.593 22 11 3.015 0.828 3.843 22 11 Sdtbkdl 13fi911 711N 207.520 35 18 3.939 2.076 6.015 35 18 E. Adis lralian MSming 91.503 21.815 113.318 19 10 2.652 0.632 3.285 19 10 Prnic Liredorale 55.070 11.729 66S799 18 6 1.596 0.340 1.936 18 6 PAD Office Audomnaion 9.886 26.446 36.333 73 3 0.287 0.767 1.053 73 3 S-Mbow 156.460 59.990 216.450 28 16 4.535 1.739 6.274 28 18 F. 1bnh Pocy Support Eauunuid PukLy SklaSh 19.320 17.871 37.191 48 3 0.560 0.518 1.078 48 3 Asaisl"uce go P-namg Coxrnmiesin 11.592 10.723 22.315 48 2 0.336 0.311 0.647 48 2 Subtka 30.912 28.594 59506 48 5 0.896 0.829 1.725 48 5 Total BASELINE COSTS 629.220 552.129 1.181.348 47 100 18.238 16.004 34.242 47 100 Physial Coiinjencies 16.531 15.637 32.168 49 3 0.479 0.453 0.932 49 3 Price C4x enawies 168.400 118.608 287.006 41 24 1.384 0.611 1.995 31 6 Total PROJECT COSTS 814.151 606.373 1.500.524 46 127 20.101 17.068 37.169 46 109 ANNFX I hac 2.l16 i p Fi_ " U M lin in G 6_ d P _036to fmco 8, bYvo - "Cl Bas Co" FMm . C.a o3S mm 3611111 Wm3 am 411101 Om Tomd 66*37 Wm7 Om 91I. 1111 Om 1 612 low AL GW#.S MACONWAW§ aM Fesedi bprn.g AC 183ar3P0A , I, D5 *4 4U-30 - 23614 0.300 0252 0140 - - 0652 S w __ ISIIwakwinsi111,413 57.077 6ZCS1 2301 33SS4 0.920 4032 GAI46 1.664 1.16 6072 0964 0606 11620 _ubbom 271W 65771 67461 2461 33294 206 424 M6 0.7D 16o 1956 6012 0964 060 12312 A.l,S _ h - 17.11 35.44S 3S.79 40.743 18320 150240 - 0517 1 an I0 1.181 0560 4355 s,- DM.,rn4g 1111.169 2.33 SUN UN9 6391 78L413 - 0.324 0069 1.564 0156 0156 2273 s*0d9 2901i 3IL 11s0.501 4S134 24711 226.613 0841 1.110 2623 1 337 0716 662 C. Ihea U.emwc* U 96p35"Po O __ _ 7-745 2164 2.164 2.164 2.164 2276 16676 0224 003 0053 0063 0063 0066 0541 - 1159 11735 18726 107I 16 25717 - 0034 0340 0311 0031 0031 0747 ' 7745 3323 1330 12110 3242 1354 44454 0224 O009 0403 0374 0094 0097 1268 D. T _ ra sei." _ 166W 14616 12117 5639 4352 0638 54646 0484 0429 0351 0169 0126 0004 1564 Sub S-_-^; INLA4361 10.617 ISo 1.611 1613 - 20262 0123 0310 0048 0049 0(64 - 0646 F~,s 36.214 22.625 27.241 33016 7.305 7.105 132.5W3 061 0656 0.790 1102 0.214 0206 3643 6S1.217 43127 41.044 4535 11611 7.11 207.520 1.45 1.395 190 1320 0395 0.230 601S "MV05V ias0 32 916 19567 1517 14757 1427 111318 0.523 094 0.566 056 0426 0244 3265 f gpUma aa 11245 7m3 7.113 2e36 8765 6L27 6s.7s o32. 0227 0227 0.604 0263 0269 1.3B PA D: - 4353 7962 67" 3447 5692 30.333 - 0.125 0232 0253 0274 01609 1053 111 24 3451 35412 49142 38W0 235S36 216.450 3 1.307 ' 1 1424 os0s 0669 6274 F. 0 Po"p Supoad Em p Pokey_ _ 7.43 7436 7436 7436 7435 37.191 - 0216 0216 0216 0216 0216 1076 AssanceiPLwd Cumm - 22315 - - - 22.316 - 0647 - - - 0647 - 23.S9 7.43 1 .436 7.6T 7.439 56 - 9.662 0.216 0.216 0216 0216 1726 T ammcoiTS 11S47 221.Z 6 2m&Si 414135 1363B S7J4 I.t8t.346 1347 S,410 590 12.W9 4010 Z547 34242 P lC_6bV- 711 31Q 53 lil 1663 1354 32 US 0611 0.162 0.t 0.440 8103 00W GM3 Local4546 16204 3036 4S.6 32.04 27.316 15223 132 0530 OW 1322 09Q3 0792 4.516 F_mn 0614 4f45 4S91 63S9 1770 8673 210W2 &018 0123 0146 016S 010 002S O611 S _ _"MbdLibm S.1510 22733 3636I 51.9S5 35Q84 2Q1t3 179235 0150 0.65 1.S 1.507 1G3C DS17 SIW owedrnm 2.21Z 11C3 1416 57= 143S 7.6 10.713 4.M 4317 4555 4.913 0696 4636 -3M20 PlwA C.gmacs 7.434 34.43 49.511 US3231 Se1 36.11 26705 8056G 0343 0470 05S4 0 343 0179 1.96S Tmr.oSTSrcvsi 123121 25D952 25 SW 539.5t5 tSZO 127.303 .OSD524 1434 663 am 13063 i 457 2S23 37.11 TOWN 42 am 7.O0 51254 1.31 8613 724721 am 0213 0Ga 1241 1iLO4 a0 I.7 F _ebp g1S3 U 27.562 m5s4 266D GRAM 38743 _D 1.690 1.374 2515 7.23D 1.62 OLM IG 1III ANNEX I age3ofr6 Pakistan - Pro lot Ior Iroving Fminaial Reporting and ALidting in Govefrmlent of Pakislat Project Conipoiteitts by Year -- Tota ls icluditig Contingencies Totals Including Conlingencies IPRS Million) Totals Including Conxtingencies (USS Million) -9617 97198 W99 S9/00 00101 01102 Total 96197 97199 OW19 991/00 00/01 01/02 Total A. Government Accounting and Financial Reporting Accounbi PlicyStanddads 10.800 10.188 6.084 - - 27.072 0.300 0.270 0.154 0723 Systems D)v.aogutldl 17.971 67.234 81.991 271.277 45 627 28.084 512.184 0 499 1.779 2.070 6.568 1.059 0.623 12 598 Subtotal 28.771 77.422 88.075 271.277 45.627 28.084 539.256 0.799 2048 2.224 6568 1 059 0623 13321 B. Govenuttent Auditinag Auysat SnysMInV kileill - 20545 44.153 49103 58053 29769 201 623 - 0544 1115 1.189 1347 0660 4854 SySkin; DIWI:h.lHWatI 13430 3.898 67.529 6C09 6841 98372 0355 0098 1 635 0155 0152 2395 Subk,jl - 33981 48051 11G.632 64722 3GG09 2J999G - 0899 1213 2824 1 502 0812 7250 ' C. Hurnitn Mesuu. .c MAii.agewne.it HRU) IgS eJlUk.W 0 bl 8.194 2.536 2.726 2.919 3120 3.469 22.964 0228 0.067 0.069 0071 0072 0077 0.584 Syslems Devedpognent - 1.358 15.193 13.508 1.334 1.368 32.759 0 O036 0.384 0.327 0.031 0030 0.808 Subtoul 8.194 3.894 17.919 18425 4 454 4.837 55.723 0.228 0.103 0 452 0.398 0103 0107 1.391 0. TraIing Potlsaomin .aa.101 17.757 17.134 15.002 7.818 6211 1.279 65.190 0.493 0.453 0379 0.189 0144 0028 1.687 SubProkesiuaw l.aungll 4.624 12.287 2.116 2.260 2.701 23.995 0.128 0.325 0.053 0055 0063 0624 Feokees 32.864 27.170 34.521 50.243 10.541 10.638 165.997 0913 0.719 0.872 1.217 0.245 0.236 4.201 Suboal 55.285 56.591 51.639 80.325 19.453 11.917 255.191 1.535 1.497 1.304 1.461 0451 0.264 6513 E. Adminiatration ..usMi 19.489 38489 24.558 26.218 20.982 12589 142325 0.541 1.018 0620 0635 0.487 0279 3.581 Proed Darectracte 11902 9175 9.855 27.852 14055 14.252 87091 0.331 0243 0249 0.674 0326 0316 2139 PAD OfIe AuatMa,on , 5.009 9.606 10.871 12.202 7.690 45.377 - 0133 0.243 0.263 02283 0.170 1092 subu" 31.390 52.673 44.019 84.942 47.239 34531 274.793 0872 1.393 1.112 1.572 1 096 0.768 6811 F. Other Poky Support Econonrs,lePySlu.Jsb 8 8.623 9.260 9.904 10.585 11.325 49.697 0.228 0.234 0.240 0.246 0251 1.198 Assiance o Plwaaiwj w.uainission - 25.868 - - 25 888 - 0.684 - - - - 0.684 Subtotal - 34491 9.260 9.904 10.585 11325 75.585 - 0912 0234 0240 0.246 0251 1883 Totl PROJECT COSTS 123.621 259.052 258.963 539.505 192.080 127.303 1.500.524 3.434 6.853 8.539 13.063 4.457 2.823 37.169 311196 Pagc 4 of6 P60 Pfqed k. h k ft Fwa _ R dw MWAWn _ _AWM d PA D _.df S"W- D _ D _ Dev_ *Xu. P=f. we F-W -W3 V" Dw-6" C b.w TOWa fw -xn L _b-_.k- C.M.s c. t . " ."w - 0241 eol2 - 00ss - - - 4131 - ~ ~ ~ ~ ~ ~~~~ ~~~~ 027 - 273 100 0027 H_n - ~~~ ~ ~ ~~~ ~ ~~~~~~~ ~~~ ~~02 1 " Geels a0273 Q Mz 0 144 100 007^ One-F F.r. & EuLv- * 3 1 - 0.148 -A 010--I135 04036 a 020 - -I7611 C _.W HMO-,˘ .- fiebw S- .. - i350 1.574 - §574 0689 a 338 a021 0800 74S5 S 0 0 37S V -- -- - - O 051 - 0SI _.A - a c"s O722 0036 I 190 0373 0 100 00 "C 9 *434 4 0 0 175 o -: 2§M- ---- 2016 C__el P-l 1211 1211 S_|B.bk* low 2016 _123 0 _ _0130 __ m 6_6b"" w-k *It12 3on IS1} - 491 fa4 92 *4 -m -*"S rwS*_ 2f~~~~~~~~~~~~~~4`12 h4.4 1613 649; JB34 42 0.334 9 40S 1.078 064T top- _ L Ila" ITo.v" _- so a - @70 I ----- in T_uWAO. IDIR 103 4.2 u o4111 " ° 4 1.oe ° .3U0 2.100 2142 0715 .00 I X76 OU47 281S0 22 0417 A _SN. -am-- - - *1 3 0 7/2 G AS a _.NM 1.31 84f SA a777s oWX 0 036 0253 3.151 10 0 9316 D _b~ C~' &C*-b . -- - --- 0120 0*224 *0 5o- Q^35 1 245 11dM.- , Ce b 1.t312 - a -5 0 OS 0.120 0.224 1 U5 0 U3T 1 201 0 253 - 082 * 2 _0o315 TedBSaL4rCOSTS 0012 so82 an 35 2 2n OUI4 0 77 15664 05|8 3443 3.2SS 1.96 1.OSX 1078 0U7 1U 22 2 7 OS322 Pb wCft".' .4n '134 §°^ '4 13' 0.051 *OOS9 *065 oSX2 rnse C__aw9x L-A *Ge0 106S 0954 00"7 0 10 Goss a 155 0.070 0637 0717 0 481 - a 197 oos sr 45 "~~~~~~~~~~~~~~~~~~~~~~~03 - 16 els 0020 eoo ooil oos 0012 ooall 0 002 onl1 - 0050 ool OS 0II 5~~~~~~~~~~~~~~~~~~1 ago0 12,, $ft Doou 0.111 Dow0 0 201 a0F ouZ 0 4 0719 0512 - 024 0 0* 5 197 D w ~~~~ ~ ~~~~ ~ ~~~ ~ ~~~4018 081 M OUS6 007S 40Um 408 Ole o07 Oo 0S 4429 04^74 40314 .0.027 40127 401a .3202 S fseP..C~V s 2 aos 401i 104^2 *021 eso *0s7 Gal ns1 02 5 OIS 49 0027 0 120 a*01 1 119 0 3 0o0o TrdrPAcIc l COT*m 1.SU *49 2M as" GM I.64 *624 4.201 *asl 2 17 1S2 1.11 *U 37 I" 2 5 e ra Taft *7750340 4.125 * 04 - 0.2U *.974 §|S 9.1@ - 111 4 2 0075 famf.dm 0200 1.4s 2074 11s 0.0- ssn 1032 027S3 ff eas .02 oun Gall esos4 Din 17.2 2 7 o na . . :~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~iIA ANNEXI Pagc 5 of' Prpd lx kiWrovng Fdwns Rpo"g nd AuSag In Govesnhnwl of Palusin Expenditure Accounts by Componnls - Totals Including Contingences fUSS MAn) Govenment Accounting and Olher Policy Suppon FIancial Reponing GoeWnmnent Audutmg Humnn Resource Managemnt1 framing Accounting Audit (HRM) Sub Admn.istralton Econo-ic Assistance and Polcy Systlem Systems Systeni Organisatinal Systes Profesionai Pfelssiona Project PAD Oicfe PoWliy to Planning Standaids DOx_iopunt bnl ro ment Eleop nemi t)Oetopmc.i Deopmen t n Tainmg T-ue i Faciliies MIS Wing Diecltrat. Auointion Studies Con...ssion T1al I Macstwm Csts A ViWks Co5t Si iPicyain - 0269 - 0096 0200 - - O I 51 0 56 Renooason - - -- 0322 - 0 322 Suslls - 0.29 - 0 - 0020 - - 0322 0151 - - - Bu 8 Goads 0xcaFumdtss&Eipn*T - 0435 0165 0033 - 1216 0038 0030 - 1il6 PuiccsAhsSuh.-c 3i875 - 16 -i 066 - 0725 0354 0022 0840 - 7SiI Veaks - 1- - - - - 0053 a- - 003 jel* . - - 0a 09004 - - - 0133 1S&6 - 4 110 - 1 t3 - 0 0 039 2 034 0 392 0105 640 10 012 , C Sentes - ,c eat.ob -j 2 03ft - - - - 2 036 AssI.cvo - - 2 303 - - - 2303 Cu_aii5 - - - - - - - - - I419- 1 419 A*stw rl - - - -- - - 0 142 -- 142 Sola - 2093 2.3 - - - - - - 1419 0142 9- 504 D. lecIca Assitance wneu AiMOA.uslw 0.303 0171 - - - - -- - 0450 I- 529 mzauls.V.u .l aoiool 0120 4065 1644 - 0536 0036 0310 0349 w060 Pi"scySugigisit - - - - - - - - - 1.126 0681114 16 3 .aot 0423 4150 1.644 053 0.036 0310 0349 - - 0.450 I I98 o84 10491 C. Tuing TiasyoigOcoosca -- 0S4 - 0820 1 720 TrMOgLeOaly - - - - - - 0262 - - ObQ - - 0 8e sosal - 090 - 1102 - 0606 - 2616 F Flehrameg ofPPF 0300 - - - 0046 - 0100 0029 0011 0204 0096 0792 TOWilsnssunsCols 0o7m 11.290 4684 1931 0.564 0715 1552 0.376 2371 2.772 0793 0640 119t 0664 306S94 L Racuinoe Cost A bic---da - - - a 0595 0359 - - 0955 a i_ ar I 31300 0464 0093 - - 0687 0213 0043 0252 3252 C Lii-a Lin- - - 0 70 - - - O 7D I- u 135 0 247 0 073 - 0 943 - 1 3W tal ews,ui. 1 390 0464 0093 0131 0247 1 630 0il0 1346 0252 6 475 hoaPROJI.I LU5tS o01m 12566 46054 2 395 0564 0608 1687 0624 4201 3581 2139 1092 I t 048 371N6 Tsies - 0775 - 0349 - 0128 0004 0264 0074 0025 0i86 - 1711 Fina. Gange 0300 7.406 2.074 161 o.on 0172 1032 0273 0a66 0662 0372 0611 0566 0.325 1i0o sbaes kg" Oet 31196 ANNE Page 6 of 6 PrOja kw kivWnng Famt RtaPM NW Asig na Govaninuat d Paalan Componntus by Ftuancla (PRS 3WOn) JUSS ftion) Oa'aanuuut u8 Local tovna11 ci Ldocal Pakistan IDA Total (EacL Duts & Pakistan IDA Total Foat (Eci. Dautas Amount % Amount % Amount % For. Each. Toots) Taoes Amnount % Amount 7 Amount V. Each. laes) la.*e A Goastnersl A;ountg a.ndt fmanciul Repotding AutgaW Pa.iySIu-,u.ds 27072 1000 27.072 1.8 Ł0800 16272 - 0723 1000 0723 19 0300 0423 SySIta r t9lpas 8lo9 174 42298t 8t26 512 1N4 341 299651 120544 31990 2103 167 10.495 8133 12598 339 7405 4419 0775 ShLad so81998 165 450.057 835 539256 359 310451 106816 31.90 2103 258 11218 84.2 13321 358 7705 48t42 0775 e Goenmew.n AudWitag A,.e:.y,i 1Ii4. -I i 0o00 :01 t23 1t000 201 623 Ł34 b4 344 II 275 0 000 4b54 1000 4 554 2J I 20/4 2 /bO S, s e.3lc c,u- 34 WIŁ 35 1 63 812 64 9 98 372 6 6 69 262 14 t3 24141 0 523 34 3 Ł 573 65 7 2395 6 4 1 622 0 J6 0 349 Ssblotu 3456Ł IIŁ5 265435 955 29999% 200 15360 1323242 14147 0623 213 6427 697 7250 19S 376S 312 0349 C. Hsenai euto i listS) Ortatasaa3 W-k'eWle - 22.964 tOOŁ 22.964 15 3636 Ł9326 - - 0.564 200r0 0584 16 0093 0491 Sysfrttiedons, l 9257 28.3 23502 171 32.759 22 23.233 4351 5175 0223 276 0 585 72.4 0808 22 0572 0107 0128 SbutoLaa 9257 261 46466 834 55 723 3.7 26t871 23677 5175 0223 160 1 168 8 0 1391 3 7 0665 0 598 0 128 0. Traemtn Pwless.wultI a.- 5754 88 59445 912 65219 43 39256 25.802 0141 0139 8i2 1548 918 1687 45 1032 0651 0004 SubPvo.-c.na RJIa.: 986Ł 41.1 14.134 589 23995 16 10319 13676 - 0.247 385 0378 805 0624 1 7 0273 0352 FacAas 85.35 51.4 05°9 46.6 165917 1121 36037 129566 10394 2 126 50.6 2.075 494 4201 213 o08 3049 0264 S.MNA 101.013 386 154176 60t4 256.191 270 65612 159.045 10535 2522 386 4002 624 6.513 175 2194 4051 026i E. AdAllreaon Ass V5no 36.822 257 105.704 74.3 142.325 9.5 25031 114.456 2110 08t96 251 2U83 749 3.58Ł 96 0662 28t44 0074 P lqd raO'te 5625i 848 30.833 354 87.091 5S 15306 70895 0891 1.371 641 0768 359 2139 56 0372 1741 0025 PAD OLCOsA~6lIa1. 17Ł777 390 27.700 610 45377 30 33649 4803 6925 0420 3it5 0672 6I 5 2092 2.9 0all 0113 0168 subiwal 110558 402 164237 598 274.7 16.3 73988 190.1i4 10624 288U 3.95 4 123 05 68812 Ł83 284 4868 0267 F. Der Poay SuppoRt Ecorro Ps S4"., 0eo0 49897 2000 4.9697 33 23564 26133 1 2296 100 0 2 196 3 2 0 S 0630 - A.Ustar- o P . . _ c. 25 86 200.0 25 96 17 12 284 13 514 . 0 684 100 0 0 664 1 8 0 325 0 359 61blotal 0000 7-5565 Ł000 75.565 50 35384 3971Ł - - 3 83 1000 2683 0Ł 0893 0990 Tot4aDl s wyne 344 5i6 23.0 1.155 93i 77 0 1500.524 100.0 6n 373 741 680 72 471 8 349 22 5 28.820 77 5 37 1689 00 0 17 0U t8 3135 1 78 3(2: 96 43 ANNEJX Page I of I PAKISTAN IMPROVEMENT TO FINANCIAL REPORTING AND AUDITING PROJECT STAFF APPRAISAL REPORT 'GOVERNMENT OF PAKISTAN VISION STATEMENT FOR FrNANCIAL REPORTING AND AUDITING Draft Prepared by PAD 1. As Pakistan proceeds to open up its economy and free it from regulatory controls, the need for good governance and modem financial management becomes paramount. Instead of direct intervention, the Government has to design appropriate fiscal and monetary responses to changing conditions, while in the context of a global economy, issues of transparency and accountabilitv have become even more important. In this environment, the synergy of greater public-private sector partnership has to be eXploited to accelerate and enhance the development process. 2. The effectiveness and credibility of government policies is critically dependent on the availability of timely and accurate financial and management information, the existence of a cadre of competent professionals in the public and private sectors, a framework of financial and accounting principles and procedures designed according to internationally accepted standards, and a system of public accountability that includes a strong and independent legislative audit function. 3. As part of its vision the Governnent intends to separate its accounting and auditing functions and re-engineer its economic and financial management function to include as key elements of its strategy: - a modem accounting system designed according to internationally recognized accounting principles and standards, functioning under the Executive, and based on modem information technology to ensure ready availability of relevant, accurate and timely information required by managers; - a governance structure and legal framework consistent with international standards for an independent comprehensive audit function which supports public accountability by timely reporting to the legislature for effective and appropriate action; - increasing professionalization of the elements of its civil services which deal wvith financial and economic management, requiring key competencies in staff training and appropriate human resource management policies emphasizing performnance, experience and knowledge: - increasing partnership between the private and public sectors in their respective areas of conmparaLtive advantage: and. - adoptiLn improved standards for private sector linancial disclosure. This drUiIltx rsion staternenL mtould be counlrined byv he Go%crnment at projeci negotiations 44 ANNIEX3 Page I of 2 PAKISTAN IMPROVEMFNT TO FINANCIAL REPORTING AND AUDITING PROJECT STAFF APPRAISAL REPORT SCOPE OF WORK FOR ACCOUNTING STANDARDS AND INFORMATION SYSTEMS CONSULTANTS The project will finance consultancies. computer hardware, software and training required for the preparation of revised accounting standards and reporting framework, and the design, development and implementation of elected high priority financial application systems at selected sites. These application systems include a Core Accounting and Reporting System, a Payroll and Pension System and a Cash Forecasting System. 2. The first phase of the systems consultancy would thus be directed towards the following objectives: a) revision of accounting principles and standards to meet, as far as considered practicable, with International Accounting Standards: b) revision of the financial reporting and accounts classification; c) reclassification of the chart of accounts to closely reflect users' financial needs; d) definition of reporting responsibilities between PAD and executive agencies; e) definition of key information for trend analvsis of expenditure and revenue, and cash flow forecasting systems; and f) establishment of procedures for coordination and integration of all financial information. Particular attention would be given to PAD's requirements for receiving financial infornation from other departments/agencies to feed into the accounting and reporting system, enabling PAD to produce reports which fulfill the financial information needs of the government (and particularly the MOF) completely. 3. The scope of work for the remaining phases of the Information Systems Consultants would include: a) Preparation of the detailed functional design for the specified svstems: This would include: i) analysis of the functional processes including administrative procedures, transaction documents. forms and information flows, data flow statistics, related to the accounting and reporting, payroll. pension and cash management areas currently in use and/or recommended by the project consultancies; ii) developing and defining a new set of functional processes, informnation flows, procedures. transaction types and associated documents and torms. and related structures required to set up the new sy stemis: aLnd iii) developing, a full ftrncLiotial design for the computer svstems required. including tlle specitication ot the outputs reports. the input formats. transaction Llocurnents. processini ancd controls for the systems required at various nodes of the intormatioii tlow network. the interfaces Lnd data flows between these nodes and with external svstems. 45 ANNEX' Page 2 of 2 b) Specification of the technologzy architecture required for the implementation of these systems: Thlis activity would include the development of specifications for the H/W and S/W to be installed at the various nodes and the mode of interconnection of this l-lardware and Software. c) lnvestigation of altematives for application software: This would entail investigating and ascertaining whether one or more off the shelf software packages are available which can meet the functional requirements of one or more of the systems, as defined above. d) Procurement of H/W and S/W: Project consultants will incorporate the Hardware and Software specifications into an RFP for procurement, develop criteria for the evaluation of vendor proposals; assist the govemment in the tendering process, in evaluating vendor proposals, in the acquisition of the hardware and software, monitoring the installation and carrying out qualitv assurance during the testing of the hardware and software procured for the project. In the event of a suitable package being identified, project consultants would develop terms of reference for a turn key project for acquisition and installation of the package (including any customization required) and acquisition and installation of suitable hardware and software using International Competitive Bidding (ICB). In the event of no suitable package being identified, the hardware and svstems software would be acquired through intemational competitive bidding and the development of the software and related documentation would be contracted out to a local software house. In both cases the supervision of the software customization/ development and implementation of the systems at the first few (4-5) sites would be the responsibility of the consultants selected for preparing the systems design. e) Svstems implementation: The Core information systems defined above will be implemented in a phased manner. In the first phase the systems will be implemented at the AGPR Head Office, at an Accountant General's (AG) Office at a provincial headquarters, and at two District Accounts offices (DAOs) reporting to this AG. This is referred to as the Pilot implementation. In the second phase the systems will be replicated over the course of this project to a total of 21 sites including all Provincial AG offices in Sindh. Punjab, NWFP and Baluchistan, and selected DAOs within each province. Systems implementation wvill involve: (i) preparation of an implementation schedule, (ii) installation and testing of the hardware and systems software. DBMS, and Application Development tools etc.; (iii) installation and testing of the application systems and training end users; and (iv) preparation of related technical and end user documentation. Replication of the system would involve preparation of a replication plan and schedule for the system for all designated sites. including a check list detailing tasks that need to be unldertaken for replication of the system at , tepical provincial or district sitc. %%orkiin closelv with the H.-W. S/W venidor to ensure that the replications aire operauional and training of sufficiellt :ocal staff capable of carrying out subsequent replicatiolls. 46 ANNEX 4 Page I of 5 PAKISTAN IMPROVEMENT TO FINANCIAL REPORTING AND AUDITING PROJECT STAFF APPRAISAL REPORT INFORMATION SYSTEMS ARCHITECTURE FOR GOVERNMENT FISCAL MANAGEMENT A. Information Systems Architecture 1. Figure I shows the overall Inforrnation Systems Architecture for Government Fiscal Management in Pakistan. This architecture showvs the major functional processes required to be carried out as part of government fiscal management. the agencies associated with these processes, the complete suite of information systems required by these agencies to perform these functions and the major data flows between the systems. The high priority information systems. identified by the diagnostic consultancv as being critical for the governments financial information needs are indicated by the shaded boxes in this diagram. A brief description of these application systems which have been selected for implementation under this project is given below. a) Core Accounting and Reporting System: The Core Accounting and Reporting System will provide an integrated government wide accounting function and will encompass the functional requirements for the budget execution and accounting processes and would cover the appropriation, commitment, funds allocation, and payment processes for both the investment and current budgets. This system would be the core financial management inforrnation svstem of the Government of Pakistan. It will be used by: i) the Pakistan Audit Department (including its subordinate units) to perform the basic accounting functions: ii) the Federal Ministry of Finance and the Provincial Finance Departments to perform the processes associated with budget execution, monitoring and control: iii) the Ministry of Finance to provide the information it requires for cash management and to implement cash limits, as may be required; and iv) the Federal Planning Division and the Provincial Planning Departments to obtain the status of actual expenditures on ongoing programs and projects. The information contained in the system data bases would provide the MOF and other core financial agencies a foundation for a comprehensive management information related to the country's financial resources. The information contained in the data bases would be available to other governmnent agencies on an as required/approved basis. In addition, the system would provide useful financial information to the ministries, spending units (in their respective areas) to enable them to better manage their work programs. It will give these departments the facilities to down load relevant and authorized data and perform required analy ses. 1he system x \il[ be desiunied in accordance with internationally accepted accountings principles and standards it will be based on a double entrv accounting model. Such a svstem would need to be comprehensive in terms of coverage and be a source of reliable and timelv data to become a credible source ot inforrnation for users. The Core Accounting 47 ANNEX4 Page 2 of 3 System will therefore be a ftillly automated system. with data captured only once as an accounting transaction progresses throughl tile system. This system, introduced along with a modem budget classification system and aln appropriate chart of accounts, would enable expenditures and revenues to be recorded at a detailed level and related to specific programs and projects. Data recorded at this level will then be directly available for use bv arencies/spending units for program and project management. This data will also be easily amenable to cross classification for financial and economic analyses. The introduction of an automated accounting system would ensure completeness of data capture (that is no transaction would be processed outside the svstem) and rigorous application of all relevant financial controls to all transactions processed by the system. The System would have interfaces with external data sources on a periodic basis. Establishing such an interface will ensure that financial data in the system data bases has the coverage necessary to provide a comprehensive financial picture for the Government of Pakistan. , b) Pavroll and Pension Svstems: The payroll of government employees constitutes a large portion of the government expenditures. The need for an automated Payroll and Pension System is evident in view of the increasing volume of transactions. The proposed payroll and pension system will perform the full range of both the payroll and pension functions as an integrated system and the payments processed will automatically update the accounting data in the Core Accounting and Reporting System. The system will be designed to incorporate government rules and regulations related to the payroll and pension functions. c) Cash Flow Forecasting and Financial Analysis System: One of the MOF's main inforrnation needs is to establish a cash forecasting system for forecasting likely flows of expenditure and receipts and the consequent impact on cash balances and issue of debt instruments. The Cash flow and Financial analysis system will be designed to provide accurate cash balances for the MOF to perform its cash forecasting functions. B. Technology Architecture for PAD's Core Information Systems 2. The technology architecture for the project specifies the nature size and distribution of the computer processing facilities and associated work stations; the nature of the communications connections between the nodes of the network; and the nature and type of application development. svstems software and Data Base Management Systems (DBMS), that should be employed for the project. This architecture is determined by the characteristics of the application systems for government accounting which may be summarized as follows: a) the application systems for government accounting wiil consist of several modules that need t) exchanue data wx-ith each ollher: b) some mnodules xx ill need tv be implemente' at multiple levels e.g. the AGPR in Islamabad. the l'rovincial AG offices and the District Accounts Ot'fices. Data will be generated. stored and processed at each level and will need to be transferred between Lhe various levels: and 48 ANNEX4 Page 3 of 5 c) the data and transaction volumes will vary by province and district. For the Central AGPR site and for some AG offices and District .Accounts Offices they could be quite high. 3. Hardware Characteristics: These application characteristics require that a distributed architecture be used and computer processing power be located at the various nodes of the network (the AGPR office, AG offices, and District Accounts Offices). Where facilities allow and data volumes justify it, these nodes should be coinected via telecommunications facilities. In the absence of telecommunication facilities data transfer would be via computer compatible media (diskettes). The transaction processing and database management required at each node should be carried out by the computers installed at these nodes. Summary or detailed data, as required, would be transmitted via telecommunications facilities/diskettes to the central computers located at the AGPR offices in Islamabad. 4. The adxantage of such an architecture is that it distributes computing power, commensurate with needs, to different nodes of the network, thereby optimizing usage and making it more reliable and less vulnerable to malfunctions at a single central site. In addition, end users at Provincial AG and District Accounts Offices would have better control over their technological and data resources and this inculcates a sense of ownership for the systems they use. The size and distribution of computing power across the various nodes of the network is deternined by the volumes of data and transactions that are generated and stored at the various nodes and the volumes and frequencies of data that are transmitted betwveen the nodes. Information zathered from discussions with PAD has been used to estimate the size and location of computers. This information will be progressively refined by the consultants during the preparation phase of the project, by undertaking actual surveys to gather data for each site. 5. Software Characteristics: The nature of the application systems requires that the same core functionality be available at all nodes of the network. Thus, for example, the core finctionality requirements will be similar at all District Accounts Offices. Therefore the sarne application software package would need to be replicated at multiple sites. This characteristic requires that the application software be scaleable and be able to run on small or large computers without major changes. Scaleability can be achieved by choosing a line of computers of varying capacities which are fully compatible from the software perspective. However. such a choice would restrict further additions to the network to a particular vendor and line of computers. Altematively, to avoid these restrictions, the application systems should be developed using application development tools and DBMS software that can operate on machines of different sizes offered by several vendors. This feature is called software portability. Several application development and DBMS packages are available in the market which are both vertically and horizontally portable. 6. Ideallv. the %%a\ to ensure vertical and horizontal portability and scaIeabilitv at the various n(odes of the network is to choose hard%varc and software that subscribes to the OPEN systemns conicepts. Ill practice. the environment that comes closest to this concepr is the UTNIX environment. ApplicaLtions developed under this en ironment would be able to run. \ith minimum changes. on any computer that has a UNIX based operating svstem. Most hardware vendors now offer a version of UNIX as an operating systems alternative. The project therefore proposes to use 49 ANNE 4 Page 4 of 5 UNIX as the operating system environment across the nodes of the network. In addition the application development environment chosen will use Fourth Generation Languages (4GLs) and Relational Data Base Management Systems (DBM[Ss) and associated development tools, Graphical User Interfaces (GUls) to increase application development productivity and offer a user friendly environment for data access and usage. This approach strikes a balance between large main frame systems which would be cumbersome and expensive and other options which could be under powered and not scaleable to sites with a large number of transactions. ANNEX I'age 5 of 5 Figurel: Pakistan - Information Systems Architecture for Government Fiscal Management I Function State Economic Ptanning Div A MOF & PAD AGIDAO Agencies Agencies with Central Board of Rev. Nap. SBP, PAD _______________ Bank Affairs Div. Prov. nlan spis Prow. Fin Depts AGPR Omffies Coveted by PAD oepaubmntaiized Accounts Taxation Customs Treasuries Audit Legend t Anwows show miormati dbon Some lows Wtm be PapW based.sone electroni ntomaan Systems Plawnnd Undr this Plojc Macro Economic Syslens for Macro-Economic Forecasting : Forecasting ._. Macro-Economic Fraework Limn Agency Oelencemallways Tax Cusioav 4 i'wes l eid Bud. Prep. ludet Prep. Planning I Pl n Acl.ads _Boom _ ye Byaarra j ystem systa m Feed back Budget Preparation Budget Gutn x |ul Guatbas I- I I born System for Budgetl eu4r1wethe Preparadon 4 Iddierttr A 4_ _ wCx | C...,t Benuv Esi_s areas iktorc Łbd * .- BItsuin Dala bAinm d eIon.n x oiqs CapiJ. Cu.rent Fiaumncu kawion Ar-ncYrograms;widI rojs epproved L Line agency Departonuinlaized Toa Cusioms t - _ _- _ _ _ _ _kb _ _ _ _ _ Itudgel Execution Accounting Syslens ACirri"s= Adunm"=a O Budget Executmo"s , SystemNs to Budget lk.d AYrioi tEore Govt. M-_ system..s RailwaysUdelsnce. sic. Monitoring, Couiol @ Execution, Aonitoring Ł Tiaxnse Accounting A * amni Etoaa Cou.irni Fiscal Reporting [xpen(iiUrs L System sur ran Pep4 naiizeti A c4rats R Rver cap t1COding) Fiscl Reporting oaIioi-us t 77 eDeU i y m il S for fjrsaBanknPmgrsss il i I C t P D tar Bert Remnncaion| Paying |! P ftoin9 X n r d rq1 1 1r xXPgWt|IW oank Cash nCa. -nt bommingR r [-... i,r I Cash i i - - - -|n - - [Mbi | a! -FdFo | ftm mnagwwt I De CO Sewvic Pav.entsA.omn roe"el D- slc F oG xrsnm Iwo A I I fbbt nf Sy l IbA SPx?_oon E|. gBonetic~~~~~~~~~~~~~~~~~Pt Admne Petmoimme am I'ir VlS n Sif IPe..rilonl| _ _agmna hduordE.mirW.a L. . .. . ..t | .~j Amr v v _ .y j y x-7xb_| q lio Aug Syatems ker Vati Aron Auditing ANNEX5 Page l of4 PAKISTAN IMPROVEME NT TO FINANCIAI, RFPORTING AND AUDITING PROJECT STAFF APPRAISAL REPORT TRAINING PLAN S Iescipltis.il, of Target Group Criteria for Trainiing esponsibiity Expeclted Resuilts Airangenieits for No. 'Ir;aining Selectioll of Motde for. Designinig etc. ratinces to Rle-cuter - T._, ruincecs j ________________ _______________r_ _e W orkplace TI S- I (A): RCvised I. PAD officers & All slaff in B5 I . Slaff: lField I. Respective Efficient amd effective I IRM %s ing to issue standaids anid procedtires staff. above Office Accountanits implementation of revised policy directive includinig comnputeriied Training General standards & procedures accounting procedures 2. Staffand officers of Centers through trained staff and the Treasuries and officers. the DAOs 2. °llicers: AA1'l 2. A A'I'l 3. Managerial slikiTol' thi l'rovihcial Govts. based in Secrelarials (Secits) 2 TSI-B: Retaininig Staff of the Accounts All redundant staff Field Office Respective Redundant staff trained in redundant stalf oni Offices of the PAD. Training Centers Accountants new skills -do- CompLuterization of General accouLntillU prceS _ _ __ures 3 TSIA&B: Ttinainig of Ofricers selected as FOTC Trainers, Training to be AAT'I A core of 18 trainers shall Trainers for Field Offices trainers for FOTCs B-17/18 arranged by become available to Training Centers "course impart training of l'OTCs -do- (FOTCs) developers" in withi help of course revised developers procediires and staliidar ds 4 TSIA&13: Twrininu Selected trainers of the Trainers wilh at Training by AATI to coordinate Trainiers with skills in abroad ol'ljaiiici-s in AATI least 3 years selected foreign course development -do- Training service in tihe Training inethodology/techiiiques MethodologyfFechniquies AATI Institutions ANNEX 5 I'age 2 of 4 _ . 1 SeIto of Mo. Io )gig1Tane oR-ne S I)escription of rr.aining Target Groulp Criteria for Training Responsibility Expected ltesults Arrangements ror No. 5;clection of Motde ror l)csigning Trainees to Rc-ecnler Trainiees etc. Workiplace 5 TS-2: Expanding anid PAD officers and staff PAD staff and Accountanits 1. Computer Fulfillnent of IIRM Wing to issue strengtlheniing computer officer (B-5 to General/AATI Advisor requirements of policy directive trainiing to meet B- 19) trainiing in recluirenlunits o 2.raiini!5 2 AATI "Comptiter Basics" flowinig from l)iagnostic and "Office Consullancy Automiiation" identified by Diagnostic Consultanicy 6. TS-5A: Trainina of Officer in B-19/18 Officers without Selected I. Director Preparation of a O)fficers abroad lo1r Ivo posied in thc AATll any previous loreigni GcneCral fIM core of 1 2 trainers years t0ir NlIt tll' and ihose likely to he long terIn universilies or to Irain in curricula etluin Alelal lU)'l I;madualme so posted training abroad insliltules 2. AAI'l ol' ile Revise(d 2 -do- tdegrees in Accounting, wilh specified years 'Irainiing Auditing, Managemlenl, i minimum Program for Financial Management, period of Probationers Coimputer Science/MIS teaching and EDP Auditinig experience 7. TS-5A: Traininlg of Probationary Officers Probationary AATI AATI Professional Probatioiners in Revised of the Accounts Officers of the development of Program Group Accounts Group newly inducted who have officers -do- exhausted Ilteir chances for reappearing in the F-PSC exams S. TS-Ii: Seminiiars, B- 17 officers and Fixed yearly Short courses tIRM Continued Conferelices. Short above louirs of at AATI Professional -do- Courses training lor ClPE I lducalion ANNEXS Page 3 of 4 S. D)escr-iption of Targct Group Criteria for Training Responsibility ror Expected Results Arrangements for Nio Tr aininig Selection of Mode D)esigning etc. Trainees to Re-enter Trainees ___ _|_Workpbace 9. TS-3: Trraining Of B-I8 officers of the B-I8 officers of AATI AATI and Prepare officers for B- 18 officers in Accotuts Group PAD due for PAD/HRM Wing professional HRM Wing to issue preparation for and tilose who promotionl within. responsibilities in B-19 policy directive promotion to A- 19 frulfill conditions one year for promotion 10 TS-14: Professional Ofiicers likely to be Local AATI in Mid. Manageniienit No specific policy Training lor 13PS- 18 to promoted to BPS- Consultation with Professional required on posting 19 Promolion Zone 19 in six months IIRM Wing Development Course Officers It. I RN I sti alegy Seniority-cum- Appropriale PAD/I IKM Wing Enable PAD/I ItM to I IRM Winlg to issue Nklalnpk)%Cl- 4Ilai;IIIIIi. filness and aptilude local andi lauliCil MIS policy (lirective Job Aiialyl is I )Diabase for I IRM (I0 loreign developiient, and Managemelit etc. officers) institution undertake preparation of Job Descriptions etc. 12. Audit Strategy Officers giving Study tours PAD/Audit Wing Acquaint officers with IiRM Wing to issue Traininig - IForeign options to serve in abroad to modem audit practices policy directive Training Audit Offices (40 offices of in other SAls. officers) cooperating SAis 13. Audlit Siraiegy Officers considered Competitioni MBA program PAD/Audit Wing Acquaint officers with I IRM Wing to issue I raiiiinig - F:oreigna lo liave senior modlerin finaincial policy direclive 'Iraining management mnilagement practices. polenlial 14. Audit Strategy Officers giving 4-6 monthis PAD/Audit Wing Acquaint officers witi Trainitiii - I ocal oplions to service witli private altestalionl audil Altacluinnis wilih in Auidit Ollices or sector audit practices in the privale -do- Private :\udifiuig F:irmiIs otherwise selected firms in sector I (100 ollicers) Pakistan_ ANNEXS Plage 4 of 4 S.; ] l)escriplion iif Target Croul) Criteria for Training Responisibility for| Expected Rtesults Arrangeymcnts for No T rainllng Selection ofi Motic Dcsigining ctc. ITrainees to Rle-enter I ______ ________ ______ _ ________ _______ T rainces j _ ___________ ________rainces W ork p)lace 1I. Orienl.tlioll Programl Senior to middle All Local PAD/MIS Wing raamiliarize the IT IT professional staff (1316-20) level IT professionals of the will be inducted in professional MIS Wing %viltl ille the MIS Wing for induicted in the MIS objectives and specific jobs and they Wing (BPS 17-20) activities of PAD, its woould remaini posted organizationi and the on these jobs long terni computerization plan of the Department 16 Tecchinology Relieshier Systems Analysts, All Local MIS Wing and llpdate the knowledge programi (I I17- I ')) Programmers and Pakislan Comiiputier about tlhe latest trenids OA Stall ol MIS 13Burcaui (ICII) in thc lechinlology and As above Wilng Upgrade and reiniforce skills in some areas relevant to this project 17. Skills l)evlopmecnmt Operators and Data All Local Separate MIS Wing, PCB [)evelop skills required PAD staff would be Prograii (1B 16-17) Control staff of AG Modules by Hardware vendors for DP operations and trained unider this Offices and DAOs Job-type and consultants management at each programil and PAD and Computer Site (Implementation site would have to make Managers of these Assistance) arrangement to retain offices t I I Iinte MIS Winig 55 ANNEX6 Page I of 8 PAKISTAN IMPROVEMENT TO FINANCIAL REPORTING AND AUDITING PROJECT STAFF APPRAISAL REPORT IMPLEMFNTATION PLAN 1. The attached Project Implementation Plan represents a summary of an operational project monitoring system developed by PAD to track key activities and for monitoring project progress. The implementation plan contains: (a) the list of all key activities and milestones associated with each project sub- component, including technical assistance and training, the dates of their start and completion, and linkages with preceding and following activities; (b) a schedule of procurement actions. including target dates for each step; and (c) specified actions required to achieve the project's development initiatives. 2. The operational monitoring system also includes: (a) schedules for disbursements for each project component, detailing expected fmancing by financier, maintained by PAD as part of the project's COSTAB files; (b) project accounting and auditing arrangements (para. 4.28); and (c) arrangements for monitoring and review, including a Steering Committee and an external Panel of International Experts (paras. 3.7 and 4.29). 3. PAD would keep the implementation plan up to date, and it would form the basis for periodic reporting to senior management, the Steering Committee and IDA. 4. Key development impact indicators and progress indicators for monitoring delivery of project inputs are further described in Annex 8. Implemnentation Plan PAKISTAN: Improvement to Financial Reporling and Auditing (PIFRA) Project 1996 1997 1998 J 1999 2000 2001 ID Task Naie 92103IQ4Q1 042 0304101 Q2 03 0401 02 Q3 04 01 0Q2103104 01 IQ2103T4 1 IDA Credit Effectiveness 2 Governmnent Accounting & Financial Reporting 3 Financial Administration 4 Review of Rules & Regulations ro 10 Study of depaitmeptalization 11 Review of the impact of departrmentalization 12 Consultancy; Accounting Standads & System Develop /Irnpl, 13 Systems Consultants Appointed * i 14 Study for impovemenr of accdnft pgicis & fncial repoping. 16 Complete accounting standards and reporling frarmework 16 Adopt accounting standards 17 Complete revised chart of accounts 1B Appoint consultants to assist implement revised accounting polkie 19 Imnpleientation of accounting poicies & standards study 20 Implement revised chart of accounts 21 Systerm developmnent & implementation_.______ 29 Finalze hlirctional design & software specifications -- 30 Functional Specifications Completed 31 Search software package (off the shelfl 32 Software Development & Customnization V 33 HIW/SW for Systems Developnent lnstaled (see MIS Center) 34 Award SW/Devebprment Procuremnent Contract o 35 Develop Core Accounting & Reporting System . 3B Develop Payroll System.| 37 Develop Pension System.I 38 Develop Cash-Flow Forecasting & Financial Analysis 39 Pilot Instalation 40 Core Accounting & Repoting Systemn 41 Payroll System I 42 Pension Syslem 43 Cash-Flow Forecasting & Financial Analysis 44 Pilot Implementtion Conpleted (using TAC ll HW)I 45 Hardware, Software, and Facilities I-j 46 Finalize design & specification 47 BSi ing |_i__ _ _ _| 1 Annex B Implementation Plan PAKISTAN Imnprovemenl to Finandal Reporting and Auditing (PIFRA) Pr*oect 1996 | 1997 199 | 19S | 2000 2001 ID Task Name a210314 GQF021030Q4101 2 304 Ql 0Q21030Q4101TQ2T033 401102 10304 56 Evaluation & Award r 64 Delivery. 71 Faciites and Sile Preparation . r n so Systems Rephcation I1 Core Accounting & Report Sysen' 22 Payrd Sytr Is Phase I Systm s Repicain o 6P.nio System 3 Cash-Fl Foreasing & Fnial Analysm * ComlSeteSystems Replaion 87 Cosuiancy: Imoptmmdlon Asabtan U Local consulants - swurvor i _ n9 Local consuitants - team 90 Govemment AUd_I 91 Systems Improvement Coehu_any 92 Procurement of consuants 93 _ __Prepare terms d rference (TOR) cA 94 i_ Bdmg ________ 102 Evaluation & Award 110 Audig Syste _epr uent 111 Review o sys_e 112 Agie e_ _oW 113 Prep manulsi 114 is dItnn irnp_o mn 116 Evaluation 4 116 Inremal audik - systm under development 117 MBA Program for Auditors/AccountantailS . : = 113 SAI Attachrnenis 119 Private sector cooperation - 120 Study for potential areas for greater private sector involwement 121 Piot introduction of audits 122 Review performance, cost. & quality assurance 123 Extension of trial partnerships in governrment auditing = 124 Gradual expansion of the program 125 Audit System (IIW/SWlFacililies) 2 Annex 6 Inipleenlntion Plan PAKISTAN: Improvement to Financial Reporting and Auditing (PIFRA) Ptf* 1996 1997 1998 1999 2000 2001 ID Taslk Name 203 4 011021 03 Q4 Q 0Q20Q30Q4 Q1 02 Q3 Q4 010Q2 03 04 10QlQ2|03Q4 126 Finalize design & spedficationu 127 Bidding _ 136 Evaluation & Award 143 Delivery 144 Site preparations i 145 Physical facilities = 146 Implefmentation 147 Review and evaluation : _ 143 Humnan Resource Management 149 Organizational Development 150 Procurernent of Consultants 151 Finalize spedfications/TOR 162 Bidding I 160 Evaluation & Award 166 Consultants appointed 167 Consulants services 168 Job analysis - foreign consultants *--__ IA 169 Clangie Mallagelment 173 HRM Policy Changes - 174 Depanrtental Cadre 175 Eliminate unqualifed promotion for new entrants 176 Revive Dired entry at B-16 177 SubstUute SAS by AAT exam 173 Inter Deparnmental Cadre 179 Start CPE program 180 Star 2 year probationers training 181 Explore professional competence scheme 182 Career Development - 183 Assign staff or 3 year period 1B4 Develop structured career path for specialist staff 185 Rotate staff on structured career path 188 Rationalize incentives for professional qualifications 189 Provide salary supplements for specialists 190 Employee Accountability 191 Define job descriptions 3 Annex 6 Implenentation Plan PAKISTAN: tmprovenent to Financial Repotting and Auditing (PIFRA) Project 1996 1997 1998 1999 2000 2001 ID Task Name Q20304Q102030412Q304 QiQ203|041010Q21030Q410Q213Q4 192 [)evelop performance standards 193 Performance evaluation against standards 194 Complete job analysis, job description, and manpower plan t 195 Training - HRM specialists 196 Syslems Development 197 Consultancy - MIS 198 Application Software 199 Install IIRM MIS 200 Establish MIS for Audit wing 201 Establish MIS tor Accounting wing 202 PAD Secretariat Information System 203 Finalize design & specification 204 Bidding 213 Evaluation & Award 220 Delivery 221 Site preparations 222 P8ysical facilities __ _ flu 223 lImpleileiilalion . - 224 Install PAD Secretariate MIS 225 Training 226 Procurement of Consultants 227 Finalize specifications/TOR 228 Bidding 235 Evaluation & Award 241 Consultants Services r 242 Professional Training 243 Training Packages 244 Training need analysis (TNA) o 245 Training material development 246 2 year Probationers Program 247 TNA - prooationers program 248 Course design 249 Training mnaterial development 250 Introduce training course I 251 Training evaluation anrd corrective actions 4 Amu 6 Implementation Plan PAKISTAN: Improvement to Financial Reporting and Auditing (PIFRA) Project 1996 1997 1996 1999 2000 2001 ID TaskName 0 2 3 Q4 QI 0Q2030Q4 Q 0203 Q4 01TQ2103TQ4 QlQ2 Q3 04 Ql 020304 252 BPS 18-19 Training 253 TNA - BBPS 18-19 254 Course design o3 255 Training material development 256 Introduce training course 257 Training evaluation and corrective actions |. 258 Sub-professional Training 259 Accounting Technicians 260 TNA hr revised standards 261 Course design 262 Training material development 263 Introduce training course 264 Training evaluation and corrective actions 265 FOTC Training in Revised Procedures 266 TNA for revised standards 267 Course design 268 Training malerial development 269 liitioxuce training course i. . o 270 Training impact evaluation and corrective actions 271 Seminar, conferences, other training etc. 272 MBA Program for Faculty 273 Links wih institutions 274 National seminar-1 275 National seminar-2 276 International seminar-I I 277 International seminar-2 278 Visit to/from other SAis . __ 234 Training abroad for faculty 289 Facilities 290 Lease lor SAS/AT Hostel 291 Furniture etc. for SAS Hostel __r 292 AATI 293 Set-up/renovation of AATI Lahore 294 HW/SW for library 295 lvW/SW for MTI 5 Annex 6 Implementation Plan PAKISTAN: Improvement to Financial Reporting and Auditing (PIFRA) Project 1996 1997 | 1998 | 1999 2000 2001 ID Task Name Q2 3Q401020304 1 2Q3 Q4 Q1 Q2 Q30Q40Q1Q20Q30Q40Q1 Q2 Q30Q4 296 UPS and copier for library ! 297 Completion of set-up & re-equipping of AATI Lahore 298 FOTCs 299 Set-up/renovation of FOTCs 300 Furniture etc. for FOTCs 301 HW/SW for FOTCs 302 Completion of set-up & re-equipping of FOTCs 303 Others 304 Subscribe journals & books __,_, 309 Administration 310 MIS - Software Development Center 311 Civil Works .-r 312 Finalize design & specification 313 Bidding 321 Evaluation & Award 328 Construction/Delivery 329 Contract posts and staffing (MIS) 330 Computer HW/SW 331 Finalize design & specification 332 Bidding . 340 Evaluation & AwardX 348 Delivery. , 349 Facilities and Sitel 350 Site preparationsI 351 Physical facilities 352 HW/SW for Systems Development Installed 353 Project Management 354 Contract posts and staffing (PMU) 355 Office furniture & equipment 356 IlHardware/software i 358 Consultancy: Future project preparation 359 Advisory panel of experts a a a a 365 Macro-Economic Management 366 MOF A 6 6 Annex 6 Implementation Plan PAKISTAN: Improvement to Financial Reporting and Auditing (PIFRA) Project _ ~~~~~~~~~~~~~ ~~1996 T: 1997 1 1998 1999 2000 1 2001 l ID Task Name 02 03 04 | Q1 I Q2 I Q3 I Q4 | 1 02 | 1 Q4 I Q1 I Q2 I Q3 I Q4 | 1 02 03 04 | Ql I Q2 03 | Q4 367 PC - Establishment of Nuclei and training of staff 368 PC - Construction of Models & Simulation and poverty analysis/monitor 369 PC - Strengthening of PPMI 370 Separation of Auditing and Accounting Functions 371 Bifurcation 372 Placement of HQ officers 381 Provide Separate Organizations Order 382 Formalize division of assets between Audit and Accounts Offices . 386 Review quality assurance arrangements 387 Complete bifurcation & separate 1996/97 budget | 388 Prepare for Separation ! 389 Draft terms of reference (TOR) for Separation Task Force (TF) 390 Review and agree TOR for TF 391 Set up TF i*: 392 Prepare Separation Strategy 393 Amend regulations, setup new structure, transfer staff etc. 394 Arrangements for Separation of Audit and Accounts Complete 395 Project Finish 7 Annex 6 ANNEX 7 Page 1 of 1 PAKISTAN IMPROVEMENT TO FINANCIAL REPORTING AND AUDITING PROJECT STAFF APPRAISAL REPORT IDA Disbursements by Semesters (USS Million) IDA Cumulative Fiscal Year Semester Disbursement Disbursement Percent Ending (US $ million) (US $ million) % FY97 Jun-97 1.6 1.6 6 FY98 Dec-97 2.1 3.7 13 Jun-98 2.3 6.0 21 FY99 Dec-98 2.9 8.9 31 Jun-99 2.9 11.8 41 FY00 Dec-99 3.8 15.6 54 Jun-00 4.0 19.6 68 FY01 Dec-00 3.2 22.8 79 Jun-01 3.2 26.0 90 FY02 Dec-01 1.4 27.4 95 Jun-02 1.4 28.8 100 June 1997 figures include PPF refinancing Annex 8 Page I of 7 PA K I STAN IMPROVEMEN-T TO FINANCIAL REPORTING AND AUDITING PROJECT STAFF APPRAISAI. REPORTI PROJECT MILESTONES ANI) PERFORMANCE MONITORING INDICATORS Component Government Accounting and Financial Reporting Objectives Develop and introduce accountinig standards, reporting systems and financial administration procedures conforming as far as possible to internationally accepted principles. Input Indicaturs P rocess Indicators Output/lImpact Indicators Performance Indicators ioeCIInIIentI i c\ Io S.tting UI) 6overnineil study teamIIIs - January 1997 Repolts onl reviews ol 'i nanncial rules and regulationls - Availability ol improved linancial reports tinl.1.iiial Ik Li u 1lit ongoing mieasured by deinostrAItilliOll alt pilot stage and regulations and tlhe imip)act iipleinenialion at completion ol replication - ol departilicnlli/alioll. Appoint consultants to review dcpartmentalizationl - Report on the review of ilic impact of for the selected province and for x% of January 1997 departmentalization -January 1998 federal transactions I A provided tom Appointimient of Accountinig Standards and Systems Improved accounting standards and reporting Implementationi of systems measured by; mlevclopment and Consultants- September 1996 frainework completed and adopted - May 1997 Numbcr of districts systems automated and implementation of % of automated transactions by value shown accounting siandanrd, f)cvelopment, agreement and adoption of improved Revised budget structure and chart of accounts in a schedule staning from zero and showing financial reporting accouinting standards and reporting framework - April conforming with GFS classification methodology a target % by year framework anid inforiiiation 1997 adopted and budget for FY 1999 prepared according systems. to revised structure - July 1998 Cash flow forecasting and efficiency of D)evelopment and implementation of revised chart of borrowing mcasured by thc initroduictioni of accounts - July 1998 cash ilow forecasts, their accuracy and the extent to which a rationalized borrowing Ilardware, systems D)evelopment of functional design of systems, Full functional design of systems, processes and strategy is adopted b) Governrent softwarc and application processes and procedures and application softwarc procedures for Core Accounting, Payroll, Pensions software required for tilC specifications - November 1997 and Cash Forecasting completed - September 1997 implementation of core Annex 8 Page 2 of 7 PROJECT MILESTONES AND PERFORMANCE MONITORING INDICATORS Component CovernmentAccounling and Financial Reporting (continiedl) Input Indicators Process Indicators Outputl/mpact Indicators Performance Indicators 0overnmient accotiliting. Acquisitioni and Installation of I lardwvare and Improvement in timeliness of expenditure paN roll and pension and Sofltware for Software Development Cenitcr - management information measured by reduction in ca.sh loreca&stimig sctccn> al I )cciber 1997 timc for comilpilation 01'accoUnts at sites wilere a total oi' 21 sItIC itelLdig systenis have been installed and iOii the Government thc AGPR office in t?ompiction of Systems Development/Customization/ Il/W, Systems S/W delivered, installed and tested; Islamabad, all provincial I esling/ ior the Core Accounting/Playroll/Plensioni and Application S/W tested lor esscntial liimmctioniality AG oilices, and sclccted (ash Forecasting Systems - March 1999 DAts within each Pilot systems installattion completed - December 1999 province. New systemiis implemented at 21 sites December 2001 Iiiplementation of Pilot Systems at AGPR Islamabad, Impact AG Peshawar; and two DADs reporting to this AG New management processes for budget execution, - D)ecember 1999 (cash allocation, commitinctl, payment processing and receipts) palyroll and pensions; and cash oloccasling in place and Ilulmclionllng P'octmil cinenlol of I 1/W aid '- S/W lor Systemmis Rcpihcation - D)ecemiber 1998 Ability lo produce liscal accounts data consistent wilh international standards; improved financial reports Replication of Phase I Systems - Core Accounting and including budget variance and project costs Payroll - January 2001 Functional and economic analyses of budget and Completion of Systems Replication - Cash expendittires available from the new system Forecasting and Pensions - December 2001 Improved expenditure management information and improved controls of expenditures Improved payroll and pensions processing and associated management information available for civil servants Improved cash maimagement Ior the Government as a whole Annex 8 Page 3 of 7 PROJECT MILESTONES AND PERFORMANCE MONITORING INDICATORS (omitpontent Government Auditing Objectives Develop and introduce improved auditing standards and techniqtues, automated tools for auditing, improved auditing capacity and increased use of privale sector lirms Input Indicators Process Indicators Outputl/mpact Indicators Performance Indicators Output IA ftianiced b) the project Appointment of Auditing Consultants - April 1997 Report on review of auditilng procedures Proportion of PAD's audits using amended liur review ol 'PA) audit, proccdures. xwork load, Review of auditing systems, proce(lures - to bc Improved auditing guidelines, policies, procedurcs communications withl completed by March 1998 and standards completed and adopted - August 1997 I'roportion of PAD's audits using improved stakeholders; preparation onwards reporting formats of guidelines, policies, and Development and agreement on revised guidelines, process for the introductioni policies, procedures and standards and preparation of Operating manuals prepared and completed - Proportion of PAD's audits subject to quality of intemational auditing related operating manuals - to be completed by December 1997 to December 1998 assurance procedures. standards; efficiency December 1998 itproveteints. qua lit l Revised procedures impleiimieited - Scptember 1998 Improved timeliness of auditing rcports; ON Issuratcc assi.tantcc in ihc Itplemenitiiation of rcvised proccdilrcs and tlic onwards timittg of'Auditor Gcneral's suhittission ol' use of autonmated tools aid evaliuiationi - to comtinerce by October 1998 rcports to lPresident and PAC; improvements stl;dard audit progranis: Evaltiation completed of new systetns and procedures to be assessed from current base period of 9 development of revised - July 2000 inonths I IRM procedures and training programs and lo Internal audit of systems under development Internal audit of systems under development Numbers of staff trained and in place explore avenues for priva:e lo commence - May 1997 completed - December 2000 measured according to target schedule. sector cooperation Development of training programs and Training programs implemented and completed; implementation: a) MBA program for a) MBA program for auditors/accountants and MIS auditors/accountants and MIS professionals - Start professionals - completed July 2000; b) Attachments October 1996; b) attachments with other SAis - start with other SAls- completed July 2000 October 1996 Sludy on avenues for private sector cooperation; Avcnucs for private sector cooperation identiiied - I'ilot recommendalions -start July 1998; review of' December 1997; Increased use of'private sector lirns measuired performancc/ costs - start January 1999; by umiber of audits conducted jointly by extension of trail partnerships and expansion of Pilot exercise completed - December 1998; PAD with private sector iirms; current base is program- start July 1999 zero. Review of Pilot completed - July 1999; 'Trial partnerships extended and program expanded - December 2000; Annex 8 Page 4 of 7 PROJECT MILESTONES AND PERFORMANCE MONITORING INDICATORS Component Government Auditing (continued) Input Indicators Process Indicators Output/lmpact Indicators Performance Indicators I lards%are, systemi Development of functional design of automated Functional design of automated auditing systems. Implementation of audit systems measured by: softlxare and applicatioui auditing systems, processes and procedures and processes and procedures and software specifications, number ol audit o'fices automalted according software for audit software specifications- July 1998 completed - July 1998 to target schedule planning, sampling and documentation and tor Acquisition and Installation of Hardware and Hardware and Software installed - Sept. 1999 audit of automatcd Software by September 1999 Auditing Systems implemented- April 2000 systems. Completion of Systems implementation - April 2000 Review of auditing systems completed - December 2000 Review and evaluation of new systems - December 2000 Impact PADs Auditing capacity improvcd, better quality staff traintcd and in place -4 New auditing guidelines, processes, procedures and standards in place and functioning Improved and timely auditing information and improved controls of expenditures throughout Govemment; timely reports to PACs Enhanced scope and independence of audit Strengthened performance monitoring and evaluation capacity through new procedures and automated tools Increased public accountability and improved Governance in place for the Government as a whole Annex 8 Page 5 of 7 PROJECT MILESTONES AND PERFORMANCE MONITORING INDICATORS Comiponent Separation of the Audit and Accounts Functions Objectives Achieving better independenec of the auditing function by initiating a gradual transfer of responsibility for accounting to the executive arm of Government. Input Indicators Process Indicators Output/impact Indicators Performance Indicators Output Governmm:nl ' ask lorccs Iifurcation: Bilurcatioll: and studies for hifurcation Arrangemnenis for bifurcation of administralion of Progress accordinig tt) agreed scheduile for of administration ol the Developmenit ot arranigemenis for bifurcation of audit and accounts functions completed development and approval of proposals tor audit an account UingS, adminiistration of audit and accounts lunctions, - I IQ ollicers placed - t)eccimber 31, 1996 lunctlionlall separialioni of accountingi an auidit development ot proposals - Placement of IIQ officers- Dec. 1996 - Separate organizations created - March 31, 1 997 and implementation of arrangements fbr for a separate structure of - provision of separate organizations- March 1997 - Division of assets between audit and accountis Bifurcation by July 1997 the accounting function - fomialization of division of assets between audit offices fomialized - June 30, 1997 with the executive arn ol and accounts offices - July 1997 - Quality assurance arrangements reviewed - Progress according lo agrced schedule for governmente - review of quality assurance arrangements - starting June 30, 1997 development and approval of proposals and rcorganization the AAI lis January 1997 - Bifurcation completed and 1997/98 budget separated implementation of arrangemenis for lunctional o to cater to the Iraining - completion of bilurcationi and a separate 1996/97 separation by July 2000 reLlt iririeeilts: au.iiociiiicnts budget for auititi and accotiints - July 1997 required in tlie Icgal lini. Scparation: work and approval ol Separation: TORs for Separalion Task force completed government to revised -TORs for TF agreed and reviewed policies - Draft TORs for Separation Task force - -Separation TF set up January 1998 -Separation Strategy completed - Review and agreement on TORs for TF - -Regulations anended, new stricttures set up and slaff March 1998 transferred - Selting up TF - March 1998 -Arrangements for separation of Audit and Accounts - Development of Separation Strategy - March 1999 functions completed - Amendment to regulations setting up new structures and transferring staff- July 2000 Impact - Completion of arrangements for separation of Audit and Accounts functions - July 2000 Improved independence of the auditing function Increased public accountability and improved governance in place for the Goverinent as a whole Annex 8 Page 6 of 7 PROJECT MILESTONES AND PERFORMANCE MONITORING INDICATORS Component Institutional Development (Human Resource Management) Objectives Developing PAD's institutional capacity to sustain improvements to financial management systems by introduction of revised lIRM policies and the strengthening of financial management training. Input Indicators Process Indicators Output/lmpact Indicators Performance Indicators Output I'A tor managing process Appointment of Job analysis and change managemcint a) Departmcntal Cadre- less promotioni ofunqualificd stafif: Itertoriinaoece meastiied by progress on of change, preparation of consultants - July 1997 direct entry at B316; and improved understanding ofi the key milestones in the developmelit Job descriptions anid principles of accounting and(I auditing. amid implemilentation of revised performance standards and Implementation of HRM policy changes as follows: policies as shown in ilte designing and installing a b) Inter- Departmental Cadre-CPE program; 2 year implementation plan MIS for llRM planning a) Departmental Cadre- eliminate unqualified probationers training; professional certification schemiie and monitoring proportion quota- December 1996; revive direct entry Percentage of stalT rotated within 3 at llt6 grade- Decemiiber 1997; substitute SAS by c) IIRM policies for: staff assignment for 3 years; career path years AA'I' examination - September 1996 for specialist staff; stall' rotation policies liniked to career dlvclopmnit: iicenfives b)r prollssiomnail qodihications: sal;iry Number ol' stalli nicilde in rcvis.cd l) Intcl-I)epaltilicnital C'adre- Start CI' plogilail - sutpplenmenits lor specialists I IKl sysictm July 1997; start 2 year probationers training - Deceimiber 1998; explore proflcssional ceritiication d) Employee Accountability- Job dcscriplions; lIercentage of staff covered by new scheme - December 1998 performance standards; manpower plan; trained IIRM job descriptions specialists c) Career policies- assign staff for 3 years - July 1996; develop career path for spccialist staff- Dec. 1997; e) IIRM MIS Installed rotate staff on structured path- Nov. 1998; rationalize incentives for professional qualifications - Dec. 1998; Impact salary supplements for specialists - July 1999 Staff training more in line with requirements of modern financial procedures and a system of continuous professional d) Employee Accountability- Define Job descriptions education to keep staff skills up to date, leading to enhanced - Dec. 1997; develop performance standards -July staff competence. 1998; develop manpower plan - December 1997; evaluate staff according to standards- December Promotion and rewards policy based on open and quantified 2000; train fIRM specialists - December 1997 perfoniance standards and a recognized merit system e) Implementation of I IRM MIS - April 2000 Improved related management information systems resulting in monitoring of compliance with new HRM policies Annex 8 Page 7 of 7 PROJECT MILESTONES AND PERFORMANCE MONITORING INDICATORS Component Inslitutional Development (Training) Objectives Developing PAD's Institutional Capacity to sustain improvements to financial management systems by strengthening of financial manaigement training. Input Indicators Process Indicators Output/impact Indicators Performance Indicators Output i ulids lor reluibhislijuicit Appointmenit of'l'raining consultants - December Trainiing needs analysis completed and cxteision ol existing 1996 training iacilitics; Training materials developcd Peiformance miaesured b)y ipimemcienationi of equipment; computer I l/W Completion of'l'raining needs analysis- February changes according to impleiiientation schedule and S/W; 1997 2 years probationers program implemented Number of trainee hours for PAD and I'A to assist in training Development of training materials- April 1997 B 18-19 training program implemented provincial staff needs assessment, course design; materials D)esign and implementation of 2 years probationers Accounting ''echnicians training program Number trainec hours lor AAT Probationers developmenit and( training program - May 1999 implemented and U 1 8 staff ol trainers IDcsigil and impleitentatio ol' BIIS 18-19 training - 1F01( training Prograin Implemented Inlernat iona:l scholarshipisp commencing ()cloher 1997 o lor lacult) tiainicis and Foreign training and MBIA priograms iinplcmnented lunds for semiinars Design and implementation of Accounting T'echnicians [raining - June 1998 Links with other institutions and SAls established Design and Implementation of FOTC training - July National and International seminars and conferences 1998 held Implementation of MBA foreign training program for Training facilities renovated- SAS hostel, AATIs and faculty - Commencing October 1996 FOTCs Development of Links with other institutions and Impact SAIs - January 1997 Improved training programs and facilities National and International scminars and conferences - A system of continuiouis professional education Commence - February 1997 Improved professional competence of staff Renovation of training facilities SAS hostel, AATIs Department wide and FOTCs - Compleled - July 1998 71 ANNEX9 Page 1 of 2 PAKISTAN IMPROVEMENT TO FINANCIAL REPORTING AND AUDITING PROJECT STAFF APPRAISAL REPORT SUPERVISION PLAN Approx. Date Activity Participation Staff Weeks September 1996 Project launch Task Manager 10 Accounting Specialist Audit Specialist Informatics Specialist HR & Training Specialist Macro Economist March 1997 Supervision Mission (coordinated Task Manager 10 with panel of experts meeting) Accounting Specialist Audit Specialist Informatics Specialist HR and Training Specialist Macro Economist September 1997 Supervision Mission Task Manager 10 Accounting Specialist Audit Specialist Informatics Specialist HR and Training Specialist March 1998 Supervision Mission (coordinated Task Manager 10 with panel of experts meeting) Accounting Specialist Audit Specialist Informatics Specialist HR and Training Specialist September 1998 Supervision Mission Task Manager 10 Accounting Specialist Audit Specialist Informatics Specialist HR and Training Specialist Macro Economist 72 ANNEX 9 Page 2 of 2 Approx. Date Activity Participation Staff Weeks March 1999 Supervision Mission (coordinated Task Manager 10 with panel of experts meeting) Accounting Specialist Audit Specialist Informatics Specialist HR and Training Specialist June 1999 Mid-Term Review Mission Task Manager 10 Accounting Specialist Audit Specialist Informatics Specialist HR and Training Specialist Macro Economist March 2000 Supervision Mission (coordinated Task Manager 10 with panel of experts meeting) Accounting Specialist Audit Specialist Informatics Specialist HR and Training Specialist Macro Economist September 2000 Supervision Mission Task Manager 10 Accounting Specialist Audit Specialist Informatics Specialist HR and Training Specialist March 2001 Supervision Mission (coordinated Task Manager 10 with panel of experts meeting) Accounting Specialist Audit Specialist Informatics Specialist HR and Training Specialist Macro Economist September 2001 Supervision Mission Task Manager 10 Accounting Specialist Audit Specialist Informatics Specialist HR and Training Specialist March 2002 ICR Mission (coordinated with Task Manager 10 panel of experts meeting) Accounting Specialist Audit Specialist Informatics Specialist HR and Training Specialist .Macro Economist ANNEX 10 Page 1 of 3 PAKISTAN IMPROVEMENT TO FINANCIAL REPORTING AND AUDITING PROJECT STAFF APPRAISAL REPORT TECHNICAL ASSISTANCE OBJECTIVES, CLASSIFICATION. ACTIVITIES AND OUTPUT Objectives anid Classification Activities Source and Duration Output I ~~~~~~~~~~Foreign Local 1 Strengthening the auditing Review PAD audit policies processes and 70 10 i) Revised audit policies, procedures, work allocation function in Ihe PAD. procedures, output, work-load, efficiency methods; Classification Institutional ii) Improved audit efficiency Development Perform quality assurance for PAD auditing 8 Improved quality assurance procedures Advise on Methodologies to enhance PAD's communicationis with stake 6 10 Methodologies for enhanced communications with holders major stake holders Advise on identification of areas for Public/ Private sector cooperation 15 Identified areas for public/ private sector cooperation Intemal Audit of PAD's systems under development 6 10 Improved quality of information systems Membership in the advisory Panel of experts 2 Input to PAD's advisory panel Managing TA 6 36 Efficient administration of TA ANNEX 10 P'age 2 of 3 Objectives anl(d Activities Source and Duration Output Classification l l Foreign Local I Development andl Prepare detailed funictionial design; for the 110 100 Detailed functionial design for specified informiation implementation of high Core accounitinig, Payroll and pensions and systems; design of the technology architectLuiC for priority application the Cash forecasting systems; Specify the information systems; Tender documenits for H/W, S/W; systems. technology architecture required for the Management of the Pilot systems implementationi and Classitication: implementation of these systems; systems replication processes Institutional Investigate alternatives for application Developimecit Software; Assist in the procuremenit of hardware and software; Assist in Systems implementation- Pilot systems and first phase replications Classil-icationi: Assistance to IPAD in the process of systems Implemeniation assistanc Consultancy for implementation assistance 192 implementation and replication 3. Humani Resouice Job Analysis 3 5 Revised Job descriptions and performance standards Management. ClassiIicitlionl: InstitLutionial MIS constillanicy (I IRM) 6 M IS systemils tob I IRM planninig and moniitorinig Deve lopmen it Change Management consultancy 12 Consultinig assistance for managing the process of change 4. Traininig. Training needs analysis 2.5 2 i) Training needs for B- 18/19 officers Classificationi: ii) New training packages Institutional iii) Revised training standards Development iv) Training needs for probationers Course design 2 2.5 Course designs for: i) B 18-19 training; ii) two years probationers program; iii) FOTC courses Training material development/ testing 10 22 Course material for i) accounting technicianis, BS 18/19 training, training of probationiers, revised training packlages Quality control evaluation of training 1 5 i) Revised systems to assess quality of training; application of the new systems to evaluate training of probationers, accounting technicians and overall impact of training ANNE3X 10 Vage 3 of 3 Objecti%es and 1 Activities Source and Duration Output Classification Foreign Local 5. Macro economic studies. Preparation of macroeconomic, financial 40 133 Agreed action plan to implemenit recomimenidations of Classilication: Policy policy, and diagnostic studies. policy and diagnostic stidies. Support 6 Privalte secbol finanicial Provision of on-the-job specialized 6 20 Strengthnilied capacity for macroeconomliic modeling and disclosure. training in macro modeliig and short-tcrnm improved moniloring of poverty Classilication: Policy technical assistance for establishment o Support poverty monitorinig nucleus. 7 Assislallce to Plaonning EIconomic Policy Analysis Dizaginostic 13 44 Stidies and action plans to inipiove management of federal Co'mimmiissioni Study. Specialized on-the -job training and provincial developmenit expendiftirc; diagniostic study Classifhication: I olicy and action plan to streamlinie institutionial airanigemiients for Support macroeconomic policy making; increased capacity for poverty analysis and monitoring 8. Future Project Preparation of Future Project 10 30 Project feasibility report and detailed documents Preparation Classification: Implementation Assistance 76 ANNEX I I Page 1 of I PAK1ITAN IMPROVEMENT TO FINANCIAL REPORTING AND AUDITING PROJECT STAFF APPRAISAL REPORT DOCUMENTS IN PROJECT FILE 1. Report on the effectiveness of the Pakistan Audit Department's component of the Third Technical Assistance Project (Cr. 1755 - Pak). Pakistan Audit Department, December, 1994. 2. Pakistan: Improving the Fiscal Reporting System, William Allan and Michael Woolley, Fiscal Affairs Department, IMF, August 27. 1990. 3. Pakistan Audit Department, Diagnostic Consultancy Project, Price Waterhouse a) Interim Report I, Detailed Analysis. November 7, 1992 b) Interim Report II, Proposed recommendations, November 25, 1992 c) Final Report, February 3, 1993 4. Pakistan Audit Department. Training Consultancy, CIPFA, March 1993 a) Overview Report b) Technical Report 1. The Establishment of a Professional Body c) Technical Report 2, Training Needs Analysis d) Technical Report 3, A Strategy for Human Resource Management 5. Pakistan Audit Department, March 1995. Strategies for: a) Implementing an Improved Financial Reporting System b) Implementing an effective Audit Function and Public-Private Partnership c) Improving Human Resource Management d) Implementing Computer based Information Systems to Support Government Accounting, Audit, Human Resource Management and Office Automation e) Training 6. Terms of reference for consultancy services for the development of accounting principles and standards, and the development and implementation of core financial systems for the Government of Pakistan. IBRD 27293 60 65 70 /TAJIKISTAN 75; / J ' :t'CCHINA PAKISTAN ov IMPROVEMENT TO FINANCIAL REPORTING AND AUDITING PROJECT _/ * AGPR OFFICE v 3 AG OFFICES I ,.... 35 f; PILOT IMPLEMENTATION SITES AT\ Appromte 35 b Lin of Control PROVINCE WIDE SYSTEM REPLICATION ., Peshawar ®)ISLAMABAD JAM and KASHMIR f59 NATIONAL CAPITAL 19 PROVINCE CAPITALS j PROVINCE BOUNDARIES ! r ¶ _ . _ INTERNATIONAL BOUNDARIES S ) A # RIVERS Lahore® \ 30 Q .1 A Quetta 300 % _ INDIA ISLAMIC \ REPUBLIC OF I - IRAN ' 0 100 200 300 Kilometers 25 * 100 200 Miles S1NDH / 25' Karachi . -. _._ t- ~ Tbis map woo prod,ced by the Mop Design Unit of T he - J World Bonk The boundaries. colors, denominatons and any g other reformotson ho-n on this map do not imply, on the part of The World Bo1k Group, any judgment on the legol status of any territory or any endorsement or acceptance of such boundaries 60 65- 70 75' JULY 1996