1. FM Good Practice
Ahmad Abdo, Financial Management Specialist
World Bank
Joint FM & Procurement Workshop
June 19-20, 2014
Palestine, Ramallah

2. 2
 Reliable accounting system.
 Sound Internal controls/ Internal audit
 Adequate Planning procedures
 Budgeting
 Periodic Financial Reporting
 External Audit
 Qualified Personnel (staff)
Elements of Good Financial Management
arrangements:

3. 3
Financial Management Assessment
 Fiduciary Risk: Is the risk that Bank funds will
not be used for the intended purposes or that
they will be used without attention to
economy and efficiency.
 Follows risk based approach: ranks fiduciary
risks as High, Substantial, Moderate, Low.

4. 4
Financial Management Arrangements
Budgeting:
 Risk of inadequate appropriation
 Risk of delays in approving the annual budget
 Risk of appropriation being diverted to other
activities/projects during the year
 Risk of budget being unable to monitor project
expenditures

5. 5
Financial Management Arrangements
Flow of Funds:
 Central Treasury System
 Designated Account
 Monthly reconciliation

6. 6
Financial Management Arrangements
Internal Control/ Internal Audit:
 Internal control is able to prevent or detect
material irregularities and errors
 Internal audit is able to provide as assurance
on the robustness and compliance with
internal control

7. 7
Financial Management Arrangements
External audit
 Audit contract
 Financial statements and management letter
 Terms of reference must be comprehensive
and covers all donors
 Audit team is capable and experienced

8. 8
Financial Management Arrangements
Accounting
 Automated accounting system capable to
record financial transactions in separate cost
centers and for all donors
 Asset control
 Control over bank and cash accounts
 Access to supporting documents

9. 9
Financial Management arrangement
Reporting: Interim Financial Reports (IFRs)
Purpose:
Brings together project financial management,
disbursement, contract monitoring and
physical progress made by the project with a
view to managing project resources properly.

10. 10
Financial Management Arrangements
Interim Financial Reports must be:
 Relevant to decision makers
 Timely submitted
 Accurate and reliable
 Should link physical progress to financial
progress
 Includes explanation of significant variances

11. 11
Financial Management Arrangements
Interim Financial Reports includes:
 Statement of cash receipts and disbursement
by (component, Activity, category) for the
period/ and cumulative from inception
 Actual Vs Budget
 Designated Account Reconciliation
 Fixed Asset list
 Contract listing
 Physical Vs Financial progress report

12. 12
Practical Case