Overview on Fiduciary Aspects, Procurement and

Audit

IFAD India Country Office

What is IFAD?

• IFAD (International Fund for Agricultural Development) was established in 1978

• Headquarters at Rome, Italy

• One of the International Financial Institutions

• India is a Founding Member

IFAD Loan Assistance

• On Highly Concessional terms

• No interest charged for the loan

• Service charge of 0.75% on loan disbursed

• Repayment over 35 years

• Back-to-back loan

• Repayment responsibility with Govt. of Maharashtra

Important dates

• Approval of IFAD Executive Board April 2009

• Programme Effectiveness 4 December 2009

• Programme Completion date 31 December 2017

• Programme Closing date 30 June 2018

Basic documents

Programme Financing Agreement (and amendments)

Agreed Minutes of the Negotiations

Project Appraisal Report (Design document)

Co-financing Agreement

Disbursement Guidelines

IFAD Guidelines on Project Audit

IFAD Procurement Guidelines

Project Implementation Manual

Project Financing Agreement

Legally binding document for compliance

Modified/amended with mutual concurrence of Government/IFAD

Appraisal Report is only a road map for implementation; not binding

Compliance to Loan Covenants to be reported during each JRM

JRM recommendations shall be in line with the PLA

How IFAD funds are routed?

• Loan Account for each project

• Distinctive Loan Number/Grant Number

• Loan denominated in Special Drawing Rights (SDR), a notional currency

• Special Account denominated in United States Dollar or any fully convertible currency

• Programme Accounts denominated in local currency (INR)

Loan and Grant Assistrance from IFAD

• Two Special Accounts in RBI

• Loan Special Account will have an initial deposit of USD 2 million

• Grant Account withdrawal will be on the basis of estimates in AWPB

Fund Flow

CAA&A

IFAD

RBI Special Account

Govt. of Mah.

LPA/PMU

PMU submits WA

Counterpart and Parallel funds

• Department of CMT to create a budget line under EAP

• GoM to release funds as per AWPB (ideally quarterly)

• Close followup/liaison required

• PMU to maintain records for Govt. share (taxes etc)

Tracking of funds from different sources

• IFAD

• Govt. of Maharashtra counterpart funds

• SRTT Cofinanced funds

• Parallel financing from the State (convergence of existing programmes)

• Beneficiary contribution

• Formal Financial Institutions

Important Reporting

• Section 4.02 Progress Reports (6 monthly and annual – November and June)

• Section 5.01 Financial Statements (6 monthly and annual – December and June)

• Section 5.02 Audit Reports (30th September

Procurement

• IFAD Procurement Guidelines apply for the Loan and Grant funds

• Reference in Schedule 4

• Procurement methods available for Goods, Works and Services

• Prior review by IFAD

Some facts on Procurement

• Procurement is a much maligned word in implementation

• Procurement is blamed for lack of effective planning or incomplete planning

• Procurement is a disciplined process approach

Procurement – Overall Considerations

• Economy & efficiency

• Equal opportunity to all eligible bidders

• Fairness, integrity, transparency & good governance

• Competition as per procurement methods

Procurement Cycle

• Identification – needs or wants

• Planning

• Method of Procurement

• Bidding Process

• Evaluation and Award

• Contract Management

• Monitoring

• Disposal

Contract Management

• Vital when many contracts/partnership agreements crucial for implementation exist

• Site review/Progress reports

• Identification of bottlenecks – delays, slow performance

• Amendment in contracts

• Frequent consultations

Audit Report and Financial Statements

Auditors to be appointed within 90 days of effectiveness for the first year and within 30 days of start of the year subsequently

Section 5.02 (b) covers audit report and timeline

In case, no audit report the Fund shall suspend the right of the Borrower to request withdrawals from the Loan Account and Grant Account.

IFAD’s Policy on Anti-Corruption and Fraud

• IFAD follows zero tolerance on corruption and fraud

• IFAD Policy available on website www.ifad.org

• IFAD’s whistle blower policy protects the confidentiality

• Office of Investigative Audit reports directly to the EB

Auditing

• The terms of reference to be in line with the IFAD Guidelines on Project Audit

• The auditor has to provide certification of PFS, audit report, management letter, separate opinion on SoE.

• Reporting templates available

• Audit Log of Observations

• Before 30 September every year

IFAD Policy on Anti-Corruption (contd)

In case of fraud and corruption, IFAD will:

• Reject award recommendations

• Cancel relevant portion of loan if borrower fails to take action

• Sanction firms or individuals involved and declare ineligible for stated or indefinite period of time

• IFAD has the right to require a provision in the bidding documents / RFP enabling IFAD’s inspection and audit of accounts related to contract

Thank you