SAJMMR Volume 1, Issue 1 (October, 2011) ISSN 2249-877X
South Asian Academic Research Journalshttp://www.saarj.com- 47 -
Country Financial Accountability Assesment provide for a review of the private and publicsector financial management systems of the country and the regulatory frame work . Focus onthe country helps identify those countries with specific financial management capacity buildingneeds serves as a mechanism for building appropiate technical assistance into the leadingportfolio.
CFAA’s also provide a framework in which the requirements of project financial
mangement can be better understood. It identifies major issues affecting financial managementin the country ans any departures from international standards.
CFAA’s are important because they provide the context ,without which an assesment of the
financial management system of a project lacks country ---specific underplanning. Specifically,the CFAA can provide information on topics such as the strength of the local accountingprofession ,the nature of accounting auditing standards ,the capacity of the supreme auditinstitution, and the quality and reliability of government accounting.Such detail provides a goodbasis for assessing project financial management systems.It is therefore , recommended thatthose who assest project financial management system refer to the CFAA , as well as to thecountry Assistance Strategy (CAS) which may also raise relevant issues.Assessment of the project financial management system may comprise features of both reviewand design ,the financial management system depends ,on the nature of the project and of itsimplementing entity ,which could be self-standing project implementing unit (PIU) , agovernment ministry department or agency or a commercial entity ,where a project isimplemented by a government department or agency ,its likely that the projects will use the
government’s standard financial management .A review of this system would be best carried
out as a part of a CFAA , so that the project review can be limited to those aspects which areproject specific .However, where a CFAA does not exits ,the review should cover interrelationships between the financial management systems of the project and of government.Institutional strengthning can take several years to achieve .The best way to achieve this is toaddress not only the needs of the project but also those of the wider environment in which it islocated .An exclave or ring fence approach , provides only for the financial management needsof the project while ignoring the needs of the larger environment .Treating the project and itsaccounting system.,procedures and controls as separate may help in the short-term to achieveacceptable standards for the project .But in the longer term ,ring fencing is likely to beinaffective .Therefore ,when planning ,technical assistance ,attention should also be given tofinancial management system is a priority.Before assessing the project financial management system ,the FMS ,working with the task teamleader (TL) , acquires a thorough understanding of the project concept including its objectives,components ,costs , implementing ,agencies ,cost-sharing arrangements and procurement profile.Starting with the fundamentals premise that sounds financial management is essential for projectsuccess , the FMS looks for a system that is able to provide timely and reliable information givewarning of problems in projects implementation and allow borrower and Bank staff to monitor
the project’s progress towa
rd its agreed objectives:Does the PIU have available an adequate number and mix of skilled and experiencedfinancial management staff.