UNITED NATIONS DEVELOPMENT PROGRAMME

RBEC/MDGD

PROJECT DOCUMENT

Title:	Regional Strategy for Financial Accountability in Governance

No.:		INT/96/001/A/8G/31

Project Sites:	New York and Bratislava

Duration:	12 months

ACC/UNDP Sector &

Sub-Sector:	0240-Public Administration

		and Management

Implementing Agency:		UNDP-RBEC

Executing Agency:		UNOPS

Estimated Starting Date:	August 1997

Government Inputs:		In Kind

______________________________________________________________________________

BRIEF DESCRIPTION:

This project links up the issues of democratic governance and accountability. These are of pivotal importance to the countries of Central and Eastern Europe and the Commonwealth of Independent States. The project will establish a regional strategy by conducting a regional workshop and carrying out follow-up activities at the national level in six selected countries and two sub-regional training activities. The project targets each country’s supreme audit institution dealing with accountability in regards to the financial governance of all national assets. The ultimate responsibility for acting on findings and recommendations of this independent state organ rests with the duly elected legislatures of the newly-democratized countries of the RBEC region. The project, financed by the UNDP/MDGD Programme for Accountability and Transparency and RBEC thus encompasses the UNDP focus area of governance, accountability, democratization, transparency and participation in these countries. This project is linked to the DGP/RBEC Umbrella Project (RER 96/009/A/01/99) and its activities are meant to complement the objectives of the larger regional approach.

______________________________________________________________________________

Cleared by:							Date:

1.	G. Shabbir Cheema _______________________		____________________

	Director, UNDP/MDGD

2.	_______________________________________		____________________

 

Approved by:

3.	Anders Wijkman _________________________		____________________

	Asst. Administrator & Director, BPPS

4.	_______________________________________		____________________

	Executing Agency, UNOPS

 

 

CONTENTS

										Page

I.	CONTEXT								 3

1. Democratization and Accountability					3
1. Prior Assistance							4

II.	PROJECT JUSTIFICATION						5

1. Needs to be addressed						5
1. Expected project results						5
1. Target beneficiaries							6
1. Project strategy and implementation arrangements			6
1. Coordination arrangements						6
1. Counterpart support capacity					7
1. Special considerations						7

III.	DEVELOPMENT OBJECTIVE					8

IV.	IMMEDIATE OBJECTIVES, OUTPUTS AND ACTIVITIES	8

1. Objective 1								8

1.1	Output 1							8

1.2	Activity							8

 

2.	Objective 2								9

 

	2.1	Output								9

	2.2	Activities							9

	2.3	Output 2							9

	2.4	Activities							9

 

V.	INPUTS								9

VI.	RISKS									10

VII.	PROJECT REVIEW, REPORTING AND EVALUATION		10

VIII.	BUDGET								10

IX.	ANNEXES

1. Workshop Plan							12
1. National Consultancies - TOR					15
1. Project Coordinator - TOR						16
1. Focal Points							17

I.	CONTEXT

 

1.	Democracy and Accountability

 

	There is a growing international consensus concerning the centrality of sound governance to the attainment of sustainable human development. This has been demonstrated at each of the recent UN Conferences which have examined issues of the environment, social development, population, women, and human settlements:

 

• 1992: UN Conference on Environment and Development, Rio de Janeiro;
• 1994: UN International Conference on Population and Development, Cairo;
• 1995: World Summit for Social Development, Copenhagen;
• 1995: Fourth World Conference on Women, Beijing;
• 1996: Second UN Conference on Human Settlements, Istanbul.

Governance can be defined as the exercise of political, economic and administrative authority to manage a nation’s affairs. This is a broad concept and involves a large list of key issues such as legitimacy, accountability, transparency, human and institutional capacities, participation of civil society, rule of law, devolution of authority and resources, leadership and management, and civil service reform. A programme to address the priority governance needs requires a national capacity assessment with full involvement of the respective country.

 

The pursuit of democratic governance and accountability is a paradigm of pivotal importance to the countries of Central and Eastern Europe (CEE) and the Commonwealth of Independent States (CIS). Increased public awareness and control mechanisms over decisions affecting society and human well being is one of the basic prerequisites for building a solid foundation for the democratic processes in these countries.

 

In most of the countries in the region the systems of accounting, auditing and evaluation are undergoing through a stage of a serious transformation to reflect the new realities of democratic governance and market economy. These stage of transition requires the assistance from established democracies and specialized agencies to aid the still fragile principles of checks and balances introduced by the newly elected reform governments.

 

	Accountability on several levels is necessary for the effective control of government resources. An independent audit system strengthens expenditure control by exposure and sanctions against misspending and corruption. It can extend to monitoring and evaluating public expenditure programmes for effectiveness and performance. It can help to control overall spending.

 

Improved public sector management can bring many benefits: lower costs, more effective production and delivery of goods and services by public agencies, more realistic budgeting, better policy formulation and implementation, an improved environment for the private sector.

 

Critical areas are civil service reform, budgeting, accounting, and auditing.

 

Civil service reform can be achieved by helping collect and analyze base-line data on employees, ghost employees, and payrolls, assisting in sectoral reviews of ministries or parastatals, privatization, better resource planning, etc.

 

Budgeting can be improved by a better budget planning system and expenditure management, training, improving information systems, strengthening of the audit function, etc.

 

Improved accounting can be achieved by training accountants, modernize accounting procedures and upgrade of the professional bodies of accountants.

 

Sound financial management requires a modern auditing system.

 

In the public sector, the audit function is needed:

 

• to examine the accounts of national line-ministries and agencies, and

• to gather evidence on which to judge whether public funds have been spent for the purposes authorized

• in addition, auditing typically includes a review of internal controls maintained to ensure that:

• obligations, revenue and expenditure are recorded and accounted for properly to ensure reliable financial and statistical reporting;

• assets are safeguarded against waste, loss, unauthorized use, and misappropriation;

• financial management complies with the laws, rules and regulations of the country.

Accountability is both a tool and a measurement device and it means intelligently providing for, and being able to report on:

 

• financial status;
• results oriented programmes/projects;
• progress on programmes/projects;
• accurate costs; and,
• resources condition and use.

Inherent in this definition are two concepts of accountability:

 

1. financial accountability that is concerned with the use of financial resources; and
1. results accountability that is concerned with outputs or achievements.

2.	Prior and Ongoing Assistance

 

	Subsequent to the dramatic changes in the countries of CEE and the CIS with the fall of communism, UNDP responded to the new situation by developing a Democracy, Governance and Participation framework (DGP), which outlined priorities, direction, and implementation strategy to address the needs of the countries in the region and the donor community. The DGP programme conducted activities at both the regional and the national level.

 

	At the regional level DGP established a multilateral Task Force to improve international coordination and information sharing through the participation of donor and programme countries and specialized agencies, organized two Task Force meetings, and published comprehensive reports on DGP activities in CEE and CIS. At the national level, the programme had explicit focus on several types of activities, among which are assistance to the Parliaments, establishment of Ombudsman and Human Rights institutions, support to civil society participation, and strengthening supreme audit capacities.

 

	Under the regional umbrella were developed two national projects for strengthening audit and accountability: Support to the National Assembly in Accountability (Supreme Audit Institution) in Armenia, and Development of human resources in the participation of regional economic life and strengthening of overall financial management in the Murmansk oblast, Russian Federation. Other countries have also expressed interest in receiving international assistance in this area, but do not have yet developed national projects.

 

 

II.	PROJECT JUSTIFICATION

 

1.	Needs to be Addressed

 

	Many of the existing national institutions for audit do not reflect the principles of democratic check and balances. Consequently, there is a substantive need to support and direct the nation states how best to form and develop Supreme Audit Institutions. In countries where those already exist, there is a great demand for appropriate training of the personnel.

 

	The CEE and CIS countries need to be assisted in the transformation of their accounting and auditing arrangements to a modern and effective system in unison with international standards. Effective financial management requires a modern auditing system. Accountability for public funds can be achieved through an auditing function examining the accounts of national governmental ministries and agencies in order to gather evidence on which to judge whether public funds have been spent for the purpose authorized.

 

	With regard to the ascending trends of decentralized governance, the countries in CEE and CIS have to strengthen their financial management at the local level. Decentralizing governance from the center to regions, districts, local governments and communities is fundamental for promoting participation, equitable distribution of development benefits, access to services, governments responsiveness and efficiency, and the involvement of women and civil society organizations. It is also a prerequisite for increased financial and administrative efficiency particularly at times of scarcity and financial restraint.

 

2.	Expected Project Results

 

The undertaken project activities will contribute to the enhancement of effective and efficient management of public resources and will reinforce popular support to the economic transition by enhancing transparency in public finance. Furthermore, by fostering official authorities’ accountability vis a vis their constituencies, the various transition reform processes will gain in legitimacy and support. It is expected that the project activities will contribute to sensitization and greater involvement of the countries from the region in the modern accounting and auditing standards and democratic principles. As an outcome of the project is also expected that a number of countries will have developed national strategy for accountability and transparency and would have taken a step forward towards the establishment and enhancement of independent Supreme Audit Institutions.

 

3.	Target Beneficiaries

 

The project addresses the proper initial structuring and enhancement of a country’s primary accountability institution. The foremost mandate is the independent assessment and reporting of government allocation and use of national assets. The duly elected legislative body is thus provided with the information to act upon disclosures and recommendations as to assure that financial governance is maximized in the RBEC region of transitional economies targeted by the DGP programme.

 

4.	Project Strategy

 

	The project is developed under the RBEC Regional Programme on Democracy, Governance and Participation (DGP) and represents a direct continuation of the programme activities during the past 2 and a half years. The current project will allow for a comprehensive strategy to address the distinct needs for accountability and transparency in the CEE and CIS region and will function as a flexible umbrella programme. The envisaged project activities will be conducted in close collaboration with the Programme on Accountability and Transparency (PACT) of MDGD, which will render specialized support and expert assistance.

 

	The project will be conducted at two levels: regional and national. At the regional level the project will take the form of a regional workshop which will gather together representatives of the relevant governmental sectors from the CEE and CIS countries and international experts in auditing and accounting. The main purpose of the workshop is to assess the situation in the region and to outline specific project activities to respond to the national needs.

 

	At the national level, the project is going to follow up with assessment and formulation missions to the countries which have indicated interest in developing a national programme. It will then assist with the implementation of the outlined activities and develop two sub-regional training program.

 

5.	Coordination Arrangements

 

A country’s accountability process comprises several institutions besides the foremost one targeted by the project. As other agencies, whether multilateral or bilateral might be involved in other issues such as accounting, budgeting or public reform, the project will seek to complement on-going or projected support and, when warranted, will offer to coordinate, or act as a focal point in order to avoid overlapping and duplication and thus maximize and integrate efforts in accountability.

 

6.	Counterpart Support

 

	a.	Regional Level

 

At the workshop, participants will present country papers setting forth each country’s accountability and transparency institutions and processes as well as national efforts in the area. A brief assessment of its institutional building and strengthening needs will also be presented.

 

b.	National Level

 

The countries (6) selected for follow-up missions comprising of needs assessment and activity formulation will seek to facilitate the process by enhancing and detailing their exact requirements as summarily presented at the regional workshop. Two countries will support the two regional training activities.

 

7.	Special Considerations

 

It is expected that the Workshop Secretariat, in close cooperation with the participants will prepare a strategy-paper on regional activities in accountability & transparency.

 

The strategy-paper will, more specifically, contain recommendations to build and/or improve capacity in specific areas of accountability such as budgeting, accounting, financial reporting, evaluation, and auditing. An outline of specific recommendations for support including training activities will be added.

 

Most probably, the strategy-paper and the recommendations will be prepared by cluster of countries with similar characteristics.

 

Linkages with the existing regional programme on Democracy, Governance and Participation will be established.

 

The consolidated results of the above fact-finding missions and formulation missions will be the building blocks of a national strategy in accountability and transparency;

 

Field assessment and consultation mission will be sent to the involved countries. Assessment and evaluation of the existing institutions as well as their responsibilities and capacities will be conducted and will identify the working relationship with other governmental agencies. Accountability, auditing, and control practices will also be evaluated.

 

From the mission findings will be prepared assessment and recommendation reports. During this phase will be identified characteristics, attributions and requirements of the Supreme Audit institutions for the beneficiary countries through consultation, national workshops and seminars, as relevant;

 

• constitutional framework
• legal structure
• status and independence of the institution
• human resource capacity for financial management
• audit practices in government and private sector
• creation of Supreme Audit Institutions (where needed)
• elaboration of target objectives
• inventory of resources needed and identification of procurement sources

Following will be design, formulation and approval of national strategies on accountability and transparency. Success/monitoring criteria and benchmarks will be determined for future activities.

 

The final stage will involve implementation of the national projects. During this phase, implementation and coordination mechanisms required for the project’s operations will be set up.

 

 

III.	DEVELOPMENT OBJECTIVE

 

The focus of the support activity is on the overall governance issue in the newly-democratized transitional economies of Eastern Europe and the CIS countries. UNDP through its various programs and bureaus has prioritized the issues of governance, democratization, accountability, participation and management development. The project will thereby provide a concerted and coherent approach to support the targeted countries in building and strengthening the main accountability institution in the financial governance aspect of democratization.

 

 

IV.	IMMEDIATE OBJECTIVES, OUTPUTS AND ACTIVITIES

 

1.	Objective 1

 

Creation of an information and exchange forum for heads of each participating countries main institution involved in accountability and financial governance and the development of a regional strategy.

	1.1	Output

Allow heads of each country’s supreme audit institution to initiate structural and administrative enhancements that will translate into more effective and relevant findings and recommendations for the legislatures to act upon.

	1.2	Activity

 

	Regional workshop

 

2.	Objective 2

To initiate national activities in 6 of the countries with the purpose of enhancing the contribution of the principal auditing body to the overall democratization and accountability processes.

2.1	Output 1

 

To formulate six action plans for enhancing financial governance through a comprehensive needs assessment in the selected six countries. All related resources needed to carry-out successfully the plans will be determined together with a mobilization plan.

	2.2	Activities

 

	Country missions to assess and formulate action plans concerning issues such as:

1. legal structure,
1. organizational structure,
1. existing human capacity,
1. existing physical resources,
1. training needs
1. preparation of budget,
1. identification of potential development partners.

2.3	Output 2

 

To prepare and carry-out two practical group training activities.

 

2.4	Activities

 

1. Activity for developed institutions
1. Activity for start-up institutions

V.	INPUTS

 

	1.	Government

 

Regional workshop: A host country of the region will provide the venue as well as certain basic activities to be determined.

 

National activities: The countries shall provide certain services necessary for each mission. The exact contribution in kind will be determined for each mission.

 

2.	UNDP

Regional Workshop

Travel:		25 country participants

			25 UNDP field office participants

			5 presenters from more advanced institutions

			2 facilitators and rapporteurs.

 

Per diem:	5 days for 57 traveling attendees

			5 days for 2 local staff

 

Interpretation:	3

 

Equipment:

 

Hospitality:

 

Rapporteur:	1

National Activities

Consultancies:		18 work weeks

 

Project Coordination:	12 months

 

Travel:			6 missions

 

Headquarters to Field:	3

 

Per diem:		approx.180 days

 

Group Training:	2 sub-regional workshops

 

 

VI.	RISKS

 

Except for a possible change of dates of the regional activity and therefore national follow up activities there are no special risks involved in the project.

VII.	PROJECT REVIEWS, REPORTING AND EVALUATION

 

The project will be subject to periodical joint review by representatives of UNDP/MDGD, UNDP/RBEC, and Governments. For the purpose will serve the report from the workshop and the reports on country activities from the project manager. The project will be subject to evaluation in accordance with standard UNDP policies and procedures. In addition, representatives from donor or related institutions such as INTOSAI/EUROSAI can participate.

VIII.	BUDGET

	Regional Workshop

Travel:		25 Participants @ $700				$ 17500

		25 UNDP staff @ $500				$ 12500

		5 Presenters @ $700				$ 3500

		2 Facilitator & Rapporteur @ 2500		$ 5000

Per Diem:	DSA @ $81 x 5 days x 60 people		$ 24300

Interpreters & Translators: 3 x $1500				$ 4500

Equipment:	Miscellaneous					$ 1000

		Translation					$ 2000

Rapporteur:							$ 1000

Hospitality:							$ 2200

Workshop Total						$ 75000

 

	Follow-up individual country activities

Consultancies:		18 work-weeks @ $2000		$ 36000

Project Coordinator:	12 months @ $10000			$120000

Mission travel costs:	12 @ $ 2500				$ 30000

DSA:			180 days @ $200			$ 36000

Miscellaneous:							$ 3000

 

Follow-up activity Total					$225000

 

Group Training Activities *

 

A.	For established institutions:* 				$ 25000

 

1. hands-on training in auditing procedures
1. practical applications on electronic systems
1. development of internal capacity to support auditee accounting and reporting
1. development of internal capacity for accountability for donor activities
1. performance auditing concepts and procedures

B.	For start-up institutions:*					$ 25000

 

1. basic training in accounting
1. establishment of recruitment criteria
1. basic training for recruits
1. practical training on basic auditing techniques
1. basic practical initiation to EDP audit systems

Training Total							$ 50000

PROJECT TOTAL						$350000

 

*Detailed activities and venues to be determined and planned at workshop time.

 

ANNEX I

WORKSHOP PLAN

 

1.	Logistics, Sponsorship and Purpose

 

1.1	Date and venue:

 

RBEC’s Regional Workshop on Accountability and Transparency will be organized from 16 to 18 September in Bratislava and hosted by the Supreme Audit Office of the Slovak Republic.

 

1.2	Sponsorship:

 

The Workshop will be organized by RBEC in close co-operation with MDGD’s Programme for ACcountability & Transparency (PACT). PACT has offered to sponsor this event.

 

2.	Objective of the Workshop

 

Key objective # 1 of the Workshop is to develop a regional strategy on accountability and transparency, and to make the role of Supreme Audit Institutions understood with all government entities and powers.

 

Key objective # 2 of the Workshop is to initiate follow-up assessments with a goal to identify and develop national projects, including training programmes for clusters of countries.

 

2.1.	The Workshop is part of a regional strategy on accountability and transparency;

 

2.2.	Actually, the Workshop will initiate the development of such a strategy by sensitizing representatives of national governments on the essence and purpose of institutional capacity in accountability and transparency, more specifically in the areas of budgeting, accounting, reporting, evaluation and auditing.

 

2.3.	It should be understood that the Workshop is not an objective in itself. It is expected to lead to follow-up assessments by the participating countries in the form of fact-finding missions to identify the status and quality of existing capacity, followed by proposals to improve and/or build capacity in specified areas;

 

2.4.	Finally, a direct linkage will be established with the existing more comprehensive plan to support the institutional transition in the RBEC-countries: the Regional Umbrella Programme to support Democracy, Governance, and Participation in Europe and CIS. Within this Regional Umbrella Programme, the Workshop will focus specifically on those elements in para. 4.1.1. Democratic Governance and Public Sector Reform that pertain to financial accountability and transparency, e.g. improving budgeting and financial management, and adopting performance management systems that continuously improve productivity and results of government work. In addition, the Workshop will adopt the entire para. 4.1.6. Supreme Audit and Evaluation Capacity.	

 

Key objective # 3 of the Workshop will be to organize and carry-out two practical training activities on a sub-regional basis.

3.	Organization of the Workshop

 

3.1	Agenda

 

Day One: Tuesday, September 16, 1997
Morning	Afternoon
Welcome and opening statement	Country-presentation, cluster 1
Keynote address	Plenary discussion
Agenda	Wrap-up of the day
Presentation of strategy-outline
Discussion
Agenda

Day Two: Wednesday, September 17, 1997
Morning	Afternoon
Country-presentation, cluster 2	Plenary discussion
Plenary discussion	Country-presentation, cluster 4
Country-presentation, cluster 3	Plenary discussion
	Wrap-up of the day

Day Three: Thursday, September 18, 1997
Morning	Afternoon
Break-up in Working Groups: *planning/budgeting ) challenges & *accounting/reporting ) recommen- *evaluation/auditing ) dations	Plenary on challenges and recommendations from each of the 3 Working Groups   Draft strategy-paper
Closing Speakers	Closing Statement

3.2.	Reference materials on the subject matters, in the form of hand-outs, will be provided to the participants, prior to the Workshop.	

 

4.	Participants	

 

The participants in the Workshop will consist of:

 

4.1. Staff from relevant governmental entities operational in planning, budget, accounting, reporting, evaluation and audit.

 

4.2. Representatives from global networks such as INTOSAI/IDI, IFAC, Transparency International, ICA, etc.

 

4.3. Representatives from Bretton Woods organizations such as World Bank and IMF.

 

4.4.	RBEC (two) and MDGD (two);

 

4.5.	Representatives of the donor community such as Denmark, European Union, Finland, Germany, Netherlands, Norway, Britain, Sweden, etc.

	

4.6.	A representative of one of the "Big Six" auditing/consulting firms.

 

4.7.	Two facilitators

 

	Around 70 persons are expected to participate in the Workshop.	

			

5.	Official Languages

 

Russian and English will be the official languages of the workshop. Simultaneous translation will be made available in the two languages plus Slovakian.

 

 

 

 

ANNEX 2

TERMS OF REFERENCE

National Consultancies

Activities:

1. Review of existing and proposed constitutional laws and regulations

    

1. Formulation of recommendations on legal structure

    

1. Identification of existing training programs and facilities

    

1. Description of personnel (academic & professional background)

    

1. Identification of managerial level resources

    

1. Identification of potential trainers and venues

    

1. Formulation of needed training activities

    

1. Assessment of EDP capacity 7 facilities

    

1. Description of existing systems and procedures

    

1. Recommendations on feasibility of EDP use

    

1. Description of basic needs for EDP (hardware and software)

    

1. Assessment of accounting/reporting requirements in government entities

    

1. Preparation of recommended action plan

    

1. Assist project coordinator in formulating specific country program/project

ANNEX 3

TERMS OF REFERENCE

Project Coordinator

1. Plan country missions

    

1. Prepare specific TOR

    

1. Assist in consultancy identification and selection

    

1. Participate in country missions when warranted

    

1. Formulate action plans and specific country programs/projects

    

1. Help mobilize resources to realize country programs/projects

    

1. Assist in start-up of project activities

    

1. Coordinate efforts in RBEC region between MDGD and RBEC regional umbrella programmes

    

1. Prepare necessary reports for MDGD and/or RBEC

    

1. Organize sub-regional training activities

ANNEX 4

 FOCAL POINTS FOR FURTHER INFORMATION

1.1.	Ms Gergana Zlateva, Programme Management Officer

UNDP/RBEC - Division II

304 East, 45th Street

New York, NY 10017 - USA

Tel.# 212-906-5156	

Fax# 212-906-6267/6595

Internet: gergana.zlateva@undp.org

 

1.2.	Fred Schenkelaars, Special Adviser

UNDP/BPPS/MDGD/PACT - Programme for Accountability & Transparency

One UN Plaza (1st Avenue and 44th Street) - DC-1 - Room 2008

New York, NY 10017 - USA

Tel.# 212-906-5094	

Fax# 212-906-6471

Internet: fred.schenkelaars@undp.org

 

1.3.	Daniel Pierre Blais, Consultant/Facilitator

c/o Ms. Gergana Zlateva

Tel.# 819-847-1725	

Fax# 819-847-4304