Government of the United Republic of Tanzania

Ministry of FinancePublic Financial Management Reform

Programme

Operations Manual – BASKET ARRANGEMENT

Xxx xxxx

TABLE OF CONTENTS

ABBREVIATIONS USED 3 - 4 SECTION 1 - INTRODUCTION TO THE MANUAL 5 - 8 SECTION 2 - INSTITUTIONAL ARRANGEMENTS 9 - 13 SECTION 3 - UPDATING AND PREPARING ACTION PLANS AND BUDGETS 14 - 18 SECTION 4 - FINANCIAL MANAGEMENT ARRANGEMENTS 19 - 30SECTION 5 - MONITORING AND EVALUATION FRAMEWORK 31 - 37ANNEX A - FORMS

ANNEX B - REPORTING FORMATS

ANNEX C - DIRECT PAYMENT GUIDELINES

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Abbreviations used

BGP Budget Guidelines PaperBoT Bank of TanzaniaCAG Controller and Auditor GeneralCFAA Country Financial Accountability AssessmentCPO Central Payment OfficeEIN Exchequer Issue NotificationGFS Government Financial StatisticsGoT Government of the United Republic of TanzaniaICB International Competitive BiddingICT Information, Communication and TechnologyIFMS Integrated Financial Management SystemIMTC Inter Ministerial Technical CommitteeIMWG Inter Ministerial Working GroupJSC Joint Steering CommitteeLGAs Local Government AuthoritiesLGRP Local Government Reform ProgrammeLPO Local Purchase OrderM&E Monitoring and EvaluationMDAs Ministries, Departments and AgenciesMoF Ministry of FinanceMTEF Medium Term Expenditure FrameworkNAO National Audit OfficePAD Policy Analysis DepartmentPER Public Expenditure ReviewPFMRP Public Financial Management Reform Programme

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Abbreviations used

PIR Programme Implementation ReviewPO - PSM President’s Office – Public Service ManagementWP Work PlanPP Procurement PlanPRS Poverty Reduction StrategyPRSP Poverty Reduction Strategy PaperPS Permanent SecretaryPSMWG Public Sector Management Working GroupPSRP Public Service Reform ProgrammePV Payment VoucherRA Regulatory AuthorityROSC Report on the Observance of Standards and CodesTAS Tanzania Assistance StrategyToR Terms of ReferenceTRA Tanzania Revenue Authority

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Section 1 - Introduction to the manual______________________________________________________________________________

Introduction to the manual

Background

Phase IV of the Public Financial Management Reform Programme (PFMRP) started on the 1st July 2012 for a period of five years. Its main objective is to support National Strategy for Growth and Poverty Reduction - MKUKUTA/MKUZA II and the five Year National Development Plan to attain the Vision 2025.

The Government (GoT) has requested support to implement the strategy from Development Partners (DPs) and an MoU govern this partnership.

This Operations Manual will guide the management of PFMRP IV’s basket fund, which has been set up to support implementation of PFMRP IV.

About this manual

This manual builds on the principles and high level procedures for co-operation contained in the PFMRP IV Memorandum of Understanding (MOU). PFMRP implementation shall comply with GoT legislation and circulars in force. The manual does not substitute for these statutory requirements and should therefore be used in conjunction with them.

The manual, which is effective from July 1, 2012, is for use by all Government, non-Government and Development Partners participating in PFMRP IV.

Its primary aims are to: • Support PFMRP IV’s implementation to achieve the intended results;• Ensure transparency and full accountability by GoT to the Tanzanian Public, DPs

financing PFMRP and other stakeholders.

In this regard, the manual specifies institutional arrangement, processes and/or procedures for planning and budgeting, accounting, internal control, monitoring and evaluation.

Amendments to the manual

This operations manual is intended to be a “living document”. In this regard, it will be reviewed during the Annual Supervision Mission and updated as necessary. Any revisions to the manual will be approved by the JSC.

Outline of the manual

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The remainder of this manual is presented in four sections, each structured according to its own unique content.

Section 2 covers PFMRP IV’s institutional and administrative arrangements.

Section 3 describes the processes and procedures for programme planning and budgeting.

Section 4 provides guidance on financial management procedures used for PFMRP IV.

Section 5 sets out a broad framework for monitoring and evaluating the programme’s performance.

In addition, this manual offers: • A definition or explanation of frequently used abbreviations and terminology at the start

(see pages 3 and 4) and in the body of the manual respectively • A range of sample and standard formats to support each of the key processes. A

reference to these formats is provided in the relevant sections of the manual• Cross-references to processes to ensure that users do not overlook important linkages.

Section 2 - Institutional arrangements

IntroductionThis section describes PFMRP IV’s institutional arrangements. In particular, it specifies roles and responsibilities with respect to:• Formulating, approving, coordinating and implementing the PFMRP IV’s strategy and plan of work.

Further, these arrangements allocate responsibility to various institutions to ensure effective linkages between PFMRP IV and other core reforms.

• Financial management of resources and reporting programme activities and results• Tracking and analysing implementation progress and thereafter developing and/or recommending

measures for correcting under performance.

Management arrangementsThe division of institutional mandates, roles and responsibilities for the management of the programme is summarised in Figure 2.1 opposite. In addition, management arrangements are described in greater detail in the sub-sections that follow.

Joint Steering Committee (JSC)PFMRP IV will be governed by a JSC, composed of representatives from GoT and DPs. It will be co-chaired by Ministry of Finance’s Permanent Secretary (PS), who is the Accounting Officer for the Ministry, and the designated representatives from the PFM DP Group.

The participants will include MoF’s DPS-PFM Reforms, DPS-PMO-RALG, MoF’s Programme Manager, the Reforms Coordination Unit and the GoT and DPG PFMRP Secretariats. The JSC will invite representatives to attend from the Programme’s components and other DPs as required.

The main mandate of the JSC is to provide strategic oversight and direction to PFMRP IV by:

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Review and endorse the Programme Management Committee’s (PMC) recommendations on programme reports (as set out in xxxx), and fund releases;

Review and endorse the PMC’s recommendations, and where necessary issue additional strategic directions to ensure that the results in the M&E framework are achieved;

Decide on management response to audits related to PFMRP IV Basket management. Endorse official communications on PFMRP IV

Minutes signed by the co-chairs shall be distributed to all JSC members in scanned format by the PFMRP IV secretariat within a week of meeting concluded.

The JSC meeting shall be held each quarter. The call for the meeting, initiated by the GoT must be agreed with the co-chairs of the JSC and give participants at least 10 workdays notice. All documents, including draft decisions will have to be distributed with 5 work days before the said meeting and should have been discussed at the PMC level prior to the JSC. Any co-chair has the right to postpone a meeting if the call and/or document are not sent within the given timeframe.

If needed – and for practical purposes – after agreement between the co-chairs of the JSC – an individual decision of the JSC can take the format of an ‘exchange of letters’ between the co-chairs.

PFMRP IV Programme Management Committee (PMC)The PMC will be co-chaired by Ministry of Finance’s Deputy Permanent Secretary in charge of PFM Reforms (DPS-PFMR), and the designated representatives from the PFM DP Group.

The participants will include designated senior representatives from the PFMRP Component managers, representatives from the DPs who are signatories to the MoU, MoF’s Programme Manager and the GoT and DPG PFMRP Secretariats.

The main mandate of the PMC is to: Review and approve programme reports (as set out in xxxx), and fund releases for endorsement

by JSC; Discuss progress against the M&E framework, identify challenges and formulate

recommendations for the JSC decision; Co-ordinate and ensure flow of information across the PFMRP and to all stakeholders of PFM

reforms; Co-ordinate with other core reform programmes; Take operational decisions with financial implications within a components approved budget; Take operational decisions without financial implications across the Programme; Discuss and make recommendations concerning the Budget Support Performance Assessment

Framework for endorsement by the JSC

PFMRP PMC meeting shall be held each quarter and prior to the JSC meetings. The call for the meeting must give participants at least 7 workdays notice and all documents needed for the meeting will have to be distributed with 5 workdays before the meeting.

A PFM PMC meeting can be adjourned and reconvened to another time if required.

PFMRP KRA Technical Working Groups (TWGs)

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The PFMRP strategy has been organized around 5 Key Result Areas – as indicated in the table below. The GoT have appointed a lead for each KRA. The KRA leads are expected to stay informed on progress and challenges within their respective KRA. In order to facilitate this arrangement, the DPs has similarly appointed KRA leads that will be the direct counterparts to the GoT KRA leads.

TWGs will be formed within the KRAs to link the component managers with their DP counterparts. This will be the primary forum for detailed technical discussions in order to build consensus on critical issues prior to the formal meetings of the PMC and JSC, with support from the GoT and DP Secretariats as required. The DP representatives for each KRA and component will be formally communicated to the GoT and updated as necessary.

The main mandate of the TWGs is to: Discuss progress against the relevant component in the M&E framework, identify challenges and

formulate recommendations for consideration by the PMC; Discuss the programme reports (as per annex x) for purposes of submitting recommendations to

the PMC.

TWG meetings will be held at least monthly and prior to the PMC. Such meetings may be informal and called by either party with support from the PFM RP and DPG secretariat where necessary.

Table...Key Result Areas (KRAs) and Components Overview:

KRA Component, Department and KRATW

1. KRA 1: Revenue Management, Leader: CPAD

Treasury Registrar - MoF Prime Minister’s Office – Regional Administration and

Local Government (PMO_RALG) Commissioner for Policy Analysis Department (CPAD) -

MoF2. KRA 2: Planning and Budgeting, Leader: BC

Commissioner for Budget (CB) - MoF PMO-RALG

3. KRA 3: Budget Execution, Transparency and Accountability, Leader: AccGen

Accountant General (ACCGEN) - MoF CPAD - MoF Public Procurement Regulatory Authority (PPRA)

4. KRA 4: Budget Control and Oversight,Leader: IAG

Internal Auditor Department - MoF National Audit Office PPRA? TR? - MoF Parliament

5. KRA 5: Cross-Cutting Issues (Change Management and Programme Management), Leader: DPD

Department for Financial Management Information System (DFMIS) - MoF

Department for Planning Division - MoF

A contact list for the components is maintained by the GoT Secretariat.

The individual TWGs referred to earlier are composed of representatives from a component and from the DP side.

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Programme ManagerThe Director of Planning Division within MoF is tasked as PFMRP IV’s Programme Manager and is responsible xxxxxxxxxxxxxxx. (Warrant holder, signs off on reports.. ) .

ComponentsThe Component Managers is the most senior officer within a division, department, agency or office responsible for implementation.

Component Managers are responsible for: Implementing the agreed activities to attain the milestones and the results in their sections of the

M&E Framework; Reporting, in a timely manner, on implementation progress and challenges encountered in order

to support the formulation (when necessary) of recommendations for the JSC and PMC to consider;

Reporting, in a timely and accurate manner, information required for PFMRP IV Programme Documents;

Supporting the development of communications and ensuring that if another component within PFMRP IV is likely to be substantially impacted by their activities, that they are informed.

Effectively manage their responsibilities as warrant holders.

GoT’s PFMRP Coordination SecretariatA Coordination Secretariat has been established within MoF and reports to the Director for Planning Division who, for PFMRP IV, reports to the Deputy Permanent Secretary –PFM Reforms. The Secretariat’s role is to “support the MoF in the coordination of PFMRP implementation, including but not limited to: providing technical support and quality assurance; ensuring linkages between PFMRP and other reform programmes; liaising and sharing information with various stakeholders; supporting monitoring and evaluation activities.

The core positions of the Secretariat include a Programme Coordinator, an M&E Specialist, a Procurement Specialist, a Financial Expert/Administrator, a PFM Advisor and a Communications Specialist. Other resources can be recruited to meet specific needs. The need to mainstream the Secretariat’s functions has been recognized. Its role and function will be reviewed at the Programme’s mid-term with a view to mainstreaming its core functions by the end of the Programme.

Each of the core and other positions will be guided by Terms of Reference approved by the PMC.

The Reform Coordination Unit (RCU) The RCU is mandated to advise and assist the Chief Secretary on the coordination and leadership of core reforms for the better achievement of results. It also serves as the Secretariat to the Inter-Ministerial Technical Committee and chairs the Technical Committee of reform coordinators. The RCU is therefore strongly placed to guide PFMRP IV in relation to other core reform programmes and to support this role, the RCU is a permanent member of the JSC.

PFM Reform Programme Communication The responsibility for communications on PFM issues on behalf of the government will remain with the Communications Department within the Ministry of Finance. (fiscal information produced by the MoF).

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Communication regarding the PFM Reform Progamme will be coordinated by the PFM Secretariat in collaboration with the component managers. The intent of this communication will be to inform stakeholders on key developments within the individual components and the programme as a whole. It is also expected that PFM RP communication will support the coordination of effort and collaboration with other core reform programmes and engage in dialogue with non state actors. Information sharing should also be done proactively to facilitate planning, sequencing and effective use of resources. To this end, the PFM secretariat will develop a multi-year communication strategy / plan within the first 6 months of Phase IV. This strategy will be used to guide the development of annual communication planning for the program.

The guiding principle for the communication strategy should be to keep all relevant stakeholders informed on the progress challenges and emerging developments within the reform programme and to seek input for management decisions.

The strategic intent of the communication strategy should be build communication networks that will create and sustain focus on Government’s PFM reform agenda and the results that are being achieved. All PFM communications should be closely coordinated between the Secretariat and the Communications Department within the Ministry of Finance.

Insert figure on institutional setup.

Section 3 – Planning and budgeting

Planning and budgeting

IntroductionPFMRP IV’s Strategy, M&E Framework and Annual Work Plans and Budgets (AWPBs) guide the Programme’s implementation and resource allocation. It is expected that during the course of implementation, the M&E Frameworks and AWPB will be updated as necessary to ensure that it remains current. The following section offers guidance on updating and rolling forward AWPB.

Key roles and responsibilities during planning and budgeting PFMRP Component Managers and their teams use the WP and budget to guide their activities and as a basis for gauging and reporting implementation progress to the Program Manager. They are responsible for updating and revising plans and budgets to reflect changed circumstances or issues arising during implementation. Discussions on the AWPB at the component level will take place in the TWGs.

Planning and budgeting

The M and E framework sets out the primary objectives for the program and the 5 year workplan provides the general structure and schedule of activities that are required to achieved the program objectives. The M and E framework and the 5 year work plan will guide the development of annual work plans and budgets. The planning process will be ongoing and revisions will be required from time to time to reflect actual achievements. The annual work plan allocates roles and responsibilities for implementation and defines what activities that must be completed.

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The consolidated annual program budget1 consisting of work plan, procurement plans and cash flow forecast will be completed by April 30th of each year and submitted to the PMC for approval.

DP and GoT indicative financial commitments for the next financial year will be communicated by January 31st with confirmed commitments based on the approved annual program budget by May 31st.

These documents and decisions are informed by the annual review as set out in the M and E section.

The table below inform the planning process on expenses that are not eligible for donor financing. This is consistent with Government regulations and to the extent possible with the broader DP position.

Table

The budget narrative should clearly identify how the activities relate to the M and E framework and the major milestones. In the case of multi-year activities the total indicative cost of should be presented alongside the annual estimate.

Section 4 – Financial management arrangements

Financial management arrangements

IntroductionThis section describes the financial management procedures for the PFMRP basket fund. In particular it: describes key roles and responsibilities for financial management; specifies the accounting bases and systems; outlines the chart of accounts used. It also covers the following processes: management of deposits; cash flow management; procurement; accounting; reporting; external auditing; and records management. Annex C sets out financial management arrangements with respect to direct payments.

Key roles and responsibilities for financial managementThe PSF is the Accounting Officer for ministry. In this role, he/she is responsible for managing all programme financing in accordance with Treasury Circular No. 3 (Reference No. EB/260/3/02) of 2001.

The MoF Chief Accountant assists the Programme Manager The PFMRP secretariat assists the program manager in : consolidating PFMRP’s budget and cashflow forecasts; coordinating the drawing up of agreements and contracts; procurement and issue of warrant funds to PFMRP Component Managers; accounting; preparing reports on financial performance; and disbursements.

PFMRP Component Managers are Warrant Holders. PFMRP Warrant Holders are responsible for forecasting cash flows, authorising payments and explaining any variances between actual and budgeted expenditure.

The Accountant General is responsible for PFMRP’s holding account where development partners’ contributions to the basket are deposited. He/she discharges this responsibility by: After the approval of the JSC, authorising all transfers from the holding account to the Exchequer; and maintaining full records for the holding account (including a cash book, bank statements and bank reconciliation statements). In addition, the Central Payments Office (CPO) which falls under the Accountant General, processes approved payment vouchers through TISS/EFT.

Bases of accounting

1 Format found in annex...

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PFMRP’s financial management arrangements comply with government laws and regulations and in accordance with Regulation 53 Sub-Section (1) of the Public Finance Regulations, PFMRP’s accounts are maintained on a cash basis. Also, accounts are prepared on a historical basis. Chart of AccountsPFMRP uses GoT’s chart of account structure and codes to record transactions and generate reports. This structure which comprises four segments with a total of 28 digits, is illustrated in Figure 4.1 below. The Commissioner for Budgets publishes and circulates the full list of account codes to all MDAs.

Figure 4.1 - Chart of Accounts Structure

It is noteworthy that segment 1 of the chart of accounts enables users to distinguish between GoT and development partner funded contributions and associated expenditure. To allow the Programme Manager to generate financial reports for the PFMRP on a component basis, the IFMS budget and general ledger modules have been customised. In particular: Reference codes have been incorporated into two modules - budget and general ledger. Codes enable

reports to be generated which facilitate comparisons to be made between actual and budgeted expenditure

IFMS has been customised to facilitate commitment control at a component and sub-component level.

Management of deposits The development partners are committed to working in partnership with the GoT and facilitating implementation of the PFMRP through financing governed by the programme’s MOU. Specifically, development partners’ who are signatories to the MOU, commit to deposit their financial contributions to the PFMRP in a basket fund account maintained by the Accountant-General at the Bank of Tanzania (BoT). Deposits are made within the GoT’s financial year, and where possible, front-loaded within the first quarter. On making a deposit, development partners pledge to comply with the 2001 Treasury Circular “Channelling Project Funds Through the Exchequer System”.

This includes informing the Accountant General and PSF in writing of any deposits made into the basket fund account. BoT notifies the Accountant General of any deposits to the basket fund account by sending a bank credit advice. On receipt of this advice, the Accountant General’s personnel update the cash book and thereafter file it.

Forecasting cash flow requirements

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The cash flow requirements should be done in the wp/budget proposal and should be made on yearly basis.

The process for forecasting cash flow requirements is illustrated in Figure 4.2 opposite and described below. One month before the commencement of the next quarter, each Component Manager is required to prepare a six monthly cash flow in the format provided in Annex A7. When undertaking this activity, Component Managers must refer to the WP and budget (see section 3), and the previous period’s cash flow to establish which incomplete activities need to be carried forward.

The PFMRP secretariat is responsible for collating cash flow forecasts for review and approval at JSC meetings. Approvals are subject to satisfactory progress made (i.e. technical and financial performance) in the preceding quarter.

Once the program manager have approved the cash flow forecast and this is minuted, the next steps are as follows:

Financial management arrangements

The Programme Manager has delegated authority to instruct the MoF using the “Estimates Form TFN 358” to draw down finances from the basket fund account into MoF’s Exchequer account maintained in Tanzania Shillings (see Annex A8). TFN 358 disaggregates funding requirements by financier (i.e. GoT (internal) and development partners (external))

The Budget Officers at MoF review the form and if satisfied give the Accountant General the go ahead to make the transfer via the “Release Warrant TFN 357 A” (see see Annex A9)

The Accountant General submits transfer instructions to the BoT. To confirm that this instruction has been carried out, the BoT issues a debit advice. The CPO at MoF credits MoF’s cash book on the EPICOR. Thereafter, the Accountant General sends an “Exchequer Issue Notification (EIN) TFN. 766” to PS PO-PSM notifying him/her of the transfer (see see Annex A10). When the Accountant General transfers both GoT and development partners funds, he/she must issue separate EINs

The Programme Manager informs Component Managers that resources are available by issuing “Warrants/Sub-Warrants of Funds TFN. 143” (see see Annex A11).

At the end of the month the Accountant General or officers delegated by him/her collect the previous month’s bank statements from the BoT. These statements are reconciled to the basket account’s cash book and recorded on TFN. 135 (see see Annex A12). Bank reconciliation statements must always be supported by the following supporting schedules: Deposits recorded on the bank statement but not entered in the cash book Cheques recorded in the cash book but not credited on the bank statement Charges recorded on the bank statement but not entered in the cash book (e.g. ledger fees,

commissions, interest and other bank charges) Transfers reflected on the bank statement which have not been posted to the cash book.

The Accountant General also provides the Programme Manager with an account of the transactions that have taken place with respect to the basket on a quarterly basis. This information is provided on the standard “Foreign Currency Receipts and Payments Summary” (see see Annex A13). The Accountant General also furnishes the Programme Manager with copies of bank statements and TFN. 135 schedules.

ProcurementGoods and services eligible for financing from the basket include: consultancy services and training, equipment and vehicles and civil works. Civil servants salaries and retrenchment benefits will not be

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funded from the basket. All inputs procured using the basket fund financing are exempt from taxes and duties. Expenditures that are not eligible for DP funding are listed in table xxxx below:

Type of expenditure Assessment Comments1 Salaries to Civil Servants Not allowed Civil Servants are on Government

payroll and should not be paid by Baskets for sustainability reasons

2 Salary Top-Ups to Civil Servants for program coordination and/or management

Not allowed Government should have an incentive program for the whole civil service sector which is performance based.

3 Sitting Allowances Not allowed Civil servants are paid to work for the government. Common Basket projects and programs are owned by Government and part of day-to-day work. In the case of Consultants, they are contracted and paid reasonable fees to render services to the project.

4 Honorarium to civil servants (payment for services performed in committees, meetings, workshops, tasks forces)

Not allowed. Participation is part of day-to-day work

6 Internal consulting by public and civil servants currently on government payroll

Not allowed Government has hired civil servants for certain expertise. Work done by the civil servant for Government is paid with normal monthly salary.

7 Extra duty allowances Not allowed If civil servants need to work beyond normal working hours and weekends to accomplish pre-agreed tasks, extra duty allowances are part of payment obligations Government has as an employer.

8 Acting allowances Not allowed This is part of employer duty and has to be covered by Government

9 Per diems Allowed as per Government rates

Government rates apply i. e. reduction of rates if free meals and/or accommodation are provided. (see Circular No. 1 of 2005, President’s Office)

10 Transport costs Allowed as per Government regulations

Mode of transport will normally be by programme/project vehicle. Where circumstances necessitate it, transport can also be by public transport (e.g. bus, train or airplane). In such cases, cost of transport will be reimbursed according to actual costs of a ticket and upon presentation of receipt. At the end of travel, the used tickets must be attached to the travel report.

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11 Consumables such as paper, fuel, ink, telephone costs, internet charges, handbags for workshops, pens

allowed Value for money principles strictly apply. Consumables can only be funded as needed to implement reform related activities

12 Workshops, Training, Conferences allowed (a) General rule: use conference facility of concerned institution. (b) Outside workshops require explicit specification in the workplan or budget. (c) Workshops for writing reports will not be funded

13 International travel and training allowed Value for money principles strictly apply

For any funding, Government or DPs, the Government Regulations on DSA (see below) is expected to be strictly adhered to:

PFMRP procures goods and services in accordance with standing Public Procurement Act and its supporting regulations as amended from time to time.

To ensure value for money, programme procurement is guided by the Programmes Procurement Plan, PP. This plan draws on PFMRP’s budget and GoT regulations to specify: goods and services to be procured; cost estimates; and methods of procurement.

MoF may outsource the procurement of goods and services for the programme.

The Public Procurement Regulatory Authority (PPRA) is responsible for monitoring all procurement activities with a view to ensuring compliance with regulations.

Each year, the JSC and or any basket partner may appoint an independent firm to undertake periodic post supervision assessments of procurement based on an agreed plan. To this end, the PFMRP secretariat, the Chief Accountant and Procurement Agents are required to maintain copies of documentation.

The standing arrangement for audits including audits on procurement is set out in ...

Disbursements from the Exchequer accountPrior to commencing the procurement process, the Procurement Regulations require the Programme Manager to commit funds totalling the estimated value of goods and service on the IFMS/EPICOR Vote

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Control Register (see Figure 4.3). Once funds have been committed on the system, Component Managers must generate a Local Purchase Order (LPO) (See Annex A14).

After a contract has been awarded, all payments are made only when an invoice and supporting documents (e.g. LPO, Goods Received Note) are submitted by PFMRP Component Managers and/or MDAs to the Programme Manager. The Officer sending the invoice is required to authorise payment by signing it. Thereafter for payments in Tanzania Shillings: Component Managers confirm that the details per the invoice match those contained in the contract,

raise a journal voucher, post details of the transactions on the IFMS and generate a “TFN 4 - Payment Voucher (PV)” (See Annex A15). The IFMS/EPICOR only generates a PV if funds have been committed and an LPO raised

The Chief Internal Auditor (CIA) verifies the PV and supporting documentation and if satisfied that the information contained is accurate, approves the PV on the IFMS/EPICOR and signs the hardcopy at hand. The Programme Manager must also sign-off the PV once he/she has confirmed that it has been posted on the IFMS/EPICOR

Figure 4.3 - Procurement and disbursement process

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Thereafter, he/she generates an approved but unposted list of PVs for submission to the CPO As the IFMS is online and networked, CPO personnel are able to access authorised payment requests

on the system. Prior to cheque printing, personnel reconcile entries on the system to hard copies of the unposted list of PVs submitted by the Programme Manager. If there are no anomalies, CPO personnel print cheques which are forwarded for signature by authorised officers in the Accountant General’s Department

The Accountant General’s Department sends copy of the cheque list to the BoT. The MoF’s Chief Accountant also gets a copy of the same list when collecting cheques from the CPO which is used for verification purposes

All suppliers of goods and services collect their payment from the MoF’s Cashier, where they are required to sign a register confirming receipt of cheques. Officers issuing cheques must stamp the PV and all supporting documentation with a “PAID” stamp indicating the cheque number on the relevant panels. Officers must also file documents in order of PV serial number

Financial management arrangements

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The MoF’s Chief Accountant, with the authority of warrant holders, can reissue cheques which become stale at the request of a supplier by: obtaining the stale cheque or an indemnity cover if lost; posting a journal to the IFMS cash book and general ledger reversing the initial entry; repeating the steps described above.

Where payments are in foreign currency, the IFMS is customised to enable PVs to be generated which are payable to the BoT. However, the PV must contain a supplier reference. The processing of payment is as described above, except that cheques generated by the CPO are in favour of the BoT. Further, the MoF Chief Accountant must present the cheque, a copy of the PV and written instructions to the BoT requesting a bankers draft or transfer to be effected in favour of the supplier.

At the end of the financial year (30 June), and before xxx, the Accountant General transfers any unspent balances remaining in the Exchequer account back to the basket fund account. The Accountant General attributes funds retained in the basket fund account to each development partner on the basis of contributions made over the lifespan of the basket.

As the basket is set up to support the implementation of the PFMRP IV the basket is closed once all commitments under each workplan for the PFMRP IV are met. Should there be a positive balance transfers should be done in line with the yearly arrangement – see above.

Management of imprests GoT Officers can apply for temporary imprests to meet travel, accommodation and workshop/seminar expenses by completing an “Application For Issue of Imprest” form (see Annex A16). Warrant Holders must authorise all such applications. Once authority has been given, Component Managers are responsible for: Committing the amount of the imprest needed on IFMS/EPICOR Generating PVs together with supporting schedules using procedures described above Issuing imprests by cheque or in cash. Where the imprest is obtained in cash, Component Managers

must ensure that it is stored in the safe Keeping a subsidiary ledger to record the amount owed by each Imprest Holder. This amount is

reversed from the books only when the imprest has been fully retired.

On completion of their activities, or 14 days after obtaining imprests (whichever is earlier), Imprest Holders are required to immediately account for amounts advanced in full by completing an “Imprest Retirement Form” and furnishing relevant supporting documentation (see Annex A17). Officers who fail to retire imprests are subject to the actions contained in the Public Finance Regulations. Specifically, Regulation 103 Sub-Section (2) states that “the amount outstanding may forthwith be recovered from any salary or other emoluments or from any other amounts due to the Officer”.

The Public Finance Regulations require that all imprests are retired at the financial year end. This requirement is irrespective of whether an Officer has completed his/her activities. If need be, a fresh imprest can be issued in the next financial year.

Management of fixed assetsAlthough GoT applies a cash basis of accounting, all furniture, equipment, vehicles and other tools procured by the programme must be reflected in the stores inventory when received from the supplier and issued to various officers. In addition, it is the responsibility of Supplies Officer to ensure that: vehicle log books are handed over to the Accountant for storage in the safe; and furniture and equipment are clearly labelled to facilitate their identification.

Reporting on receipts and expenditure

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The GoT and development partners have agreed to adopt a ring-fenced accountability arrangement. This means that reports generated for submission to the JSC and for audit purposes, relate exclusively to the PFMRP. In other words, the reporting entity is PFMRP. However, it is worth drawing attention to the point that PFMRP’s financial reports reflect all sources and uses of funds (i.e. both government and development partners).

The Programme Manager is responsible for generating periodic reports on PFMRP activities/ transactions which can be used to: gauge implementation progress; support policy development and planning; give a comprehensive trail of resources disbursed from the basket; report fund balances at the year end.

Table 4.1 over the page, presents a list of the reports generated from the IFMS, the information that they contain and how frequently they need to be prepared and their due dates. In addition, report templates are provided Annex B of this manual. The reporting currency is Tanzania Shillings.

Where considered beneficial to the users, the Programme Manager with inputs from PFMRP Component Managers and support of the Chief Accountant and Programme Coordinator prepares a written commentary. This commentary draws readers’ attention to the most salient points in the report. For example, the receipts and payments account produced annually should be supported by notes which: Describe significant account policies Detail movements on the basket fund account (i.e. breakdown of deposits and transfers by

development partner and date respectively) Provide a schedule of direct payments for goods and services (See Annex C) Using the chart of accounts codes, provide a breakdown and composition of expenditure by

programme component.

Table 4.1: Financial reports

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Internal audit arrangementThe Public Finance Regulations of 2001 require the Chief Internal Auditor to work closely with the PFMRP Audit Committee of MoF. The Committee which meets quarterly, reviews and approves his/her plans and reports. It also advises PSF on any actions that need to be taken. IS|THIS SECTION RELEVANT

External audit arrangementsThe National Audit Office has responsibility under law to undertake external financial and performance audits within six months of the financial year end. The Controller and Auditor General may discharge this responsibility by authorising registered private sector audit firms to undertake audits on his/her behalf. Where a private sector firm is selected to undertake the work, audit fees are paid from the basket. In this regard, the WP should provide for this activity and its associated costs.

The National Audit Office are required to audit the PFMRP’s receipts and payments statement, signed by PSF, in accordance with International Standards on Auditing and GoT’s accounting policies and standards. In addition, the audit involves: verifying the accuracy of balances reported in the holding account, giving assurance with respect to disbursements; evaluating the overall accuracy of information presented in the accounts. The auditors should:

Give an opinion on the holding account’s opening balance, transactions during the year and closing balance. To this end, auditors are required to, for example:

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Obtain confirmation from the development partners on amounts transferred during the financial year to the BoT holding account

Ensure that all transfers from the holding account via the Development Exchequer have subsequently been transferred to MoF’s PMG account

Physically verify that goods procured have been distributed to MDAs Give assurance with respect to disbursements made through the Development Exchequer; vouch the

validity and accuracy of payments; verify the effectiveness of systems and provide an opinion on whether funds disbursed were used for their intended purpose

Give an opinion on the financial statements and accuracy of the holding account. The audit report should also contain a paragraph confirming that internal and external funds have been used in accordance with the conditions of the relevant grant/financing agreements

Assess the adequacy of systems for internal control and accounting and particularly the control of fund releases and payments as well as the adequacy of the accounting and reporting systems

Comment and provide recommendations with respect to any control weaknesses identified in a management letter. The auditors discuss the management letter with the Audit Committee. They must incorporate any comments received in the management letter.

The preferred format for the auditor’s report is attached as annex X and will be submitted to the National Audit Office for their consideration.

Procurement Audits

The PFM Reform Programme will undertake a semi annual audit of procurement undertaken with Basket funds. The audits, to be undertaken by PPRA, will be conducted on a sampling basis with the size of the sample to be determined periodically by the Programme Management Committee. The procurement audits will focus on both compliance and value for money in the use of PFM funding by component managers. The cycle for the procurement audit and the submission of reports will be established with the PPRA within the first 6 months after the PFM RP start up.

Records managementPFMRP’s management must comply with all instructions issued by the Accountant General with respect to the preservation of accounting records. In addition, Reference 137 Sub-Section (2) and Reference 139 Sub-Section (2) of the Public Finance Regulations of 2001, requires: The Treasury securely bundles “all receipts and payment vouchers” lodged by Programme Manager Books and records of accounts to be retained for specified periods. For instance, original payment

vouchers and used cheques must be retained for a period of five years.

Where to add this in the Planning and Budgeting section?Attached at annex X of this document is also a check-list for appraising work-plan activities and expenditures. This is expected to be used to guide discussions at the TWG levels.

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Monitoring and evaluation framework

IntroductionEfficient and effective implementation of the PFMRP demands that there is a robust system for

Monitoring and Evaluation (M&E) of the programme’s milestones and results. In particular, an M&E system will support the successful implementation of the programme by maintaining easily retrievable records on PFMRP implementation which provide a basis for: • Establishing what is succeeding• Identifying problems and thereafter making adjustments to the programme • Providing readily available reports for decision-making• Communicating results to a range of stakeholders.

This section describes how the M&E system operates in the context of GoT’s overall M&E framework. Thereafter, it sets out the key features of PFMRP’s M&E system. In the latter context, users of this operational manual should note that this section does not specify detailed procedures for undertaking M&E. A step by step guide of how to conduct PFMRP’s M&E processes, procedures and activities is contained in a standalone manual.

An overview of GoT’s M&E system PFMRP constitutes only one of several core reform programmes instituted by the GoT in pursuit of economic growth, improved public service delivery and poverty reduction. Thus, the undertaking for achieving the target outcomes specified in PFMRP is crosscutting and therefore does not fall under the sphere of individual agencies or programmes. In this context, GoT has in place a national poverty monitoring system which among other things defines:• Institutional roles and responsibilities for Technical Working Groups tasked with undertaking surveys

and censuses, research and analysis and information dissemination. The activities of these Technical Working Groups is overseen by a National Poverty Monitoring Steering Committee

• A number of priority outcomes and related poverty indicators and targets (determined from baseline data)

• Common procedures for assessing progress with respect to the achievement of targets.

The global M&E system above is designed to capture information for multiple users. It is used for preparing PFMRP progress reports, research and analysis joint GoT/development partner appraisals, consultations with and dissemination of progress to various stakeholders.

This system is linked to priority sectors’ and PFMRP’s monitoring systems (see Figure 5.1).

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PFMRP’s monitoring and evaluation framework A computerised database designed by the PO-PSM for use by the public service will be installed for PFMRP. The system serves as a data repository and information system at two levels.

First the system reports on intermediate outcomes and output indicators (see Fig 5.2). The database which is maintained by the Deputy Programme Coordinator (M&E specialist) encompasses all of PFMRP’s components and relies on data collected from a variety of sources.

It can be observed from Figure 5.2 that the system supports the framework during implementation for both planning and monitoring. The programme strategy provides a foundation for monitoring objectives and targets by assigning indicators to them.

The WP is used to monitor timeliness e.g. were targets and activities started and completed when they were intended? The budget provides a basis for monitoring expenditure e.g. are actual expenditures in line with the appropriated budget?

At a second level, the M&E database can also be used to generate plans for all component outputs and activities. In particular it generates a simple Gantt Chart setting out component activities and milestones which may be used to monitor implementation progress (see Figure 5.3).

Figure 5.2: Scope of the M&E system

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Implementation progress reported by Component Managers at monthly Technical Committee meetings convened and chaired by the Programme Manager provides a basis for updating the database.

Monitoring implementationThe following performance reports are generated from reports by component managers. Failure to report in a timely manner will transpire into withholding funds to the particular component.

Quarterly Progress Report: Using information collated from the TWGs, the GoT Secretariat will devise a Quarterly Progress Report to be discussed and approved by the PMC, and reviewed and endorsed by the JSC. These Reports cover the following:

An assessment of the implementation progress against the Annual Work Plan and where necessary, the multi-year M&E Framework. This should include quantified data on measuring actual indicators (results) against targets;

An assessment of the challenges and risks to achieving the results in the Annual Work Plan and where necessary M&E Framework;

Financial information on actual expenditures for activities and milestones against budgets Procurement

Annex x provides the schedule for Quarterly Progress Reports.

Annual Report: The Annual Report will be produced using information collated from the TWGs and reflected in the Quarterly Progress Reports. It is submitted to the PMC and JSC for consideration within x months of the financial year end. The Report will cover:

An overall assessment of implementation progress against the Annual Work Plan and an assessment towards achieving the results in the M&E framework;

Information on the challenges encountered that impeded the delivery of results in the Annual Work Plan and any action taken so far;

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Risks towards the achievement of results going forward and how they will be managed Financial information on actual expenditures for activities and milestones against budgets, and to

also include the audited income and expenditure statement;

Measuring the Impact of Capacity Building InitiativesPFMRP IV contains a substantial number of training/capacity building activities. Measuring the impact of these activities is therefore critical to informing the effectiveness of the Programme. Impact will be measured through:

Tracer Studies: explain what they are, how many to be undertaken and when. Specific indicators to measure the effectiveness of training activities.

The Annual Report contains an executive summary to highlight the Programme’s key successes and challenges ahead. It is circulated to all PFMRP components and representatives from the RCU and other core reform programmes. It will also be available on the MoF’s web-page within 2 weeks of being endorsed by the JSC.

Evaluation

Information dissemination Each year, around September/October, representatives from the implementing components and DPs will conduct a Joint Supervision Mission. The aim of the Mission is to take stock and recognize achievements so far and revise, if necessary, strategic directions and supporting programme documents to ensure the delivery of results. Specifically, the review will consider the extent to which the:

Programme purpose and objectives remain appropriate Detailed design of the programme remains appropriate, logically consistent and complete Management and coordination arrangements and especially coordination with other reform

programmers are operating smoothly and effectively Programme resources are adequate Funding mechanisms support smooth implementation Programme outputs and deliverables achieve internationally accepted standards of quality Budget Support PAF changes????

To ensure that a high level of objectivity is maintained, both GoT and DPs have the option to contract independent experts to help provide an assessment of the Programme’s performance.

Other Reviews

A Public Expenditure and Financial Accountability (PEFA) update for central and local Government will start in March/April 2013 to be based on the 2011/12 FY. A fully independent mid-term review of the Programme will also be conducted in September/October 2014, and an independent full-term review in 201x.

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