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HUGAP TRAINING

PRESENTATION OUTLINE
THE PHILIPPINES ODA and the WORLD BANK
FINANCING AGREEMENT REQUIREMENT FOR AUDIT
COA AUDIT POLICIES ON PROCUREMENT
PROCUREMENT AUDIT NOT PART OF AUDIT PROGRAM/ SHOULD IT BE
INCLUDED?
FAPS PROCUREMENT REQUIREMENTS
COMPARISON OF WB GUIDELINES AND RA 9184
NCB ANNEX
SUGGESTED AUDIT WORKING PAPER FOR PROCUREMENT AUDIT OF FAPS
THE PHILIPPINES AND THE WORLD BANK
PH is one of the founding members of the World Bank
WB
5 institutions

comprise 187 countries with over $60 Billion worth of projects


annually
Goals are to alleviate poverty and boost shared prosperity

PHILIPPINES Portfolio Status


Financing agreement (fa) binds PH and WB
LOAN AND GRANT AGREEMENTS BETWEEN THE PH AND WB IS AN EXECUTIVE
AGREEMENT GOVERNED BY INTERNATIONAL LAW
FA PREVAILS OVER NATIONAL LAW
RA 9184 EXEMPTS FA ON MATTERS OF PROCUREMENT (Section 4)
FINANCING AGREEMENT REQUIREMENT FOR AUDIT
Financial Management.
(a) The Recipient shall ensure that a financial management system is maintained
in accordance with the provisions of Section 2.07 of the Standard Conditions.
(b) The Recipient shall ensure that interim unaudited financial reports for the
Project are prepared and furnished to the World Bank not later than forty-five
(45) after the end of each calendar semester, covering the semester, in form
and substance satisfactory to the World Bank.
(c) The Recipient shall have its Financial Statements audited in accordance with
the provisions of Section 2.07 (b) of the Standard Conditions. Each such audit
of the Financial Statements shall cover the period of one fiscal year of the
Recipient. The audited Financial Statements for each such period shall be
furnished to the World Bank not later than six (6) months after the end of
such period.
Annual work and financial plan
The Recipient shall: (i) prepare and furnish to the World Bank for its approval, not
later than November 30 of each year during the implementation of the Project, an
annual work and financial plan containing all eligible Project activities and
expenditures planned for the following fiscal year of the Borrower, including the
expenditures to be financed by the Recipient; (ii) ensure that the Project is
implemented in accordance with the approved annual work and financial plans;
provided, however, that in case of any conflict between the annual work and
financial plans and the provisions of this Agreement, the provisions of this
Agreement shall prevail; and (iii) not make or allow to be made any change to the
approved annual work and financial plan without prior approval in writing by the
World Bank.
CoaS AUDIT policies on PROCUREMENT
GUIDE IN THE AUDIT OF PROCUREMENT (GAP)
RA 9184 with section on FAPs
HANDY GUIDE IN THE AUDIT OF PROCUREMENT
RA 9184 with section on FAPs
GUIDE IN THE AUDIT OF FOREIGN FUNDED PROJECTS
General guide on financial audit including audit of
procedures for procurement
Issue: Procurement Audit not regularly done as part of annual audit
2008 Country Procurement Assessment Report COA lacks knowledge on
procurement rules and procedures prescribed in RA 9184
Remedial Measure GAP and HUGAP

In GAA funded projects, has procurement audit become


part of Annual Audit Report?
For FAPs, auditors do not include procurement audit in their Annual
Audit Report
It is not part of audit program

Why? Lack of knowledge on procurement rules and


procedures of FAPS
Should procurement audit be included as part of audit program for faps AUDIT?
CONSIDERATIONS FOR INCLUDING PROCUREMENT AUDIT:
PROCUREMENT IS MATERIAL ITEM IN PROJECTS
KEY ASPECT IN THE SUCCESS OR FAILURE OF PROJECTS
A SOURCE OF GRAFT AND CORRUPTION
Faps PROCUREMENT REQUIREMENTS
ALL PROCUREMENT SHOULD FOLLOW THE WB GUIDELINES FOR GOODS,
WORKS AND NON-CONSULTING SERVICES
ALL CONSULTING SERVICES SHOULD FOLLOW THE WB GUIDELINES ON
CONSULTANTS SERVICES

WB Guidelines RA 9184 equivalent Explanation

A. Goods, Works and Non-consulting Services

1. International No Equivalent Use the Bank Guidelines


Competitive
Bidding

2. National Public Bidding Same, except for


Competitive Bidding unacceptable rules
Goods <$3million
Works <$15million

3. Shopping Shopping Same


<$100,000

4. Direct Contracting Direct Contracting Same, except adjacent or


contiguous location

5. Limited Bidding Limited Source Bidding Same


6. Community Community Participation
participation as part of negotiated
method

7. UN agencies UN agencies Same

B. Consulting Services, no equivalent. Use the Banks Consultants


Services Guidelines
Differences between ra 9184 and wb guidelines

Unacceptable rules for NCB


. Eligibility screening shall not be applied, provided however that bids that do
not contain any of the following documents shall not pass the documentary
compliance check: (i) evidence of the required financial, technical or production
capability; (ii) audited financial statements; (iii) credit line or cash deposit
certificate; (iv) bid security; and (v) authority of the bid signatory;
2. Domestic or regional preferences shall not be applied in the evaluation of
bids, and other preference in effect in the Philippines shall not be used except with
prior concurrence of the Bank;
3. Foreign suppliers and contractors shall be allowed to participate, if
interested, without first being required to associate with, or enter into joint venture,
with local firms, and foreign bidders shall be allowed to bid, even without
registration, licensing, and other government authorizations, leaving these
requirements for after award and before signing of contract;

UNACCEPTABLES RULES..
For works contract, the experience qualification requirement shall be: (i)
at least one previous contract at 80% of the estimated cost of the contract
being procured, and (ii) an annual turnover from all works averaged over the last
three years equal to 100% of the estimated cost of the contract being procured.
5. Alternative procurement methods defined in the Revised Implementing Rules
and Regulations (2009) such as Limited Source Bidding, Direct Contracting and
Shopping are acceptable. The use of the other alternative methods will require prior
Bank concurrence.
6. Prequalification of bidders shall be required for large or complex works
or highly specialized procurements. The invitation to prequalify shall be
advertised concurrently on the Banks external website.
FAPS Procurement Audit Suggested Working Paper