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Streamlining Anti-Corruption in FM Support to Bank Operations

Streamlining Anti-Corruption in FM Support to Bank Operations. By Nestor Coffi Cluster Leader AFTFM. Overview. Background Assessment of Corruption Risks Mitigating Measures: conventional approaches Mitigating Measures: Non-conventional approaches Dealing w/Corruption Allegations &Cases

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Streamlining Anti-Corruption in FM Support to Bank Operations

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  1. Streamlining Anti-Corruption in FM Support to Bank Operations By Nestor Coffi Cluster Leader AFTFM

  2. Overview • Background • Assessment of Corruption Risks • Mitigating Measures: conventional approaches • Mitigating Measures: Non-conventional approaches • Dealing w/Corruption Allegations &Cases • Documentation: IRIS/PRIMA • Collaboration w/Procurement & INT

  3. Background • Corruption defined • Clarified technical definition but • Controversy about the roles of actors and endemic causes • Engaging Government w/WB & Donors • GAC Implementation A/P: • key FM roles? • How to discharge them? • Country level: Strategy & diagnostic => ACT (CAS, Programs) • DPL triggers as leverage… • Project level: infrastructure projects Vs soft/TA projects

  4. Assessment of Corruption Risks • New Requirement • COT Approach • Materials: Indicative Questionnaires • Recommendation: guidance notes needed, systematic Vs Ad-hoc,

  5. Mitigating Corruption Risks: Bureaucratic or Documentation-Based Approach • Reinforce Internal Controls • But ineffective when there is collusion! • Ensure timely review of IFR • To detect fraudulent financial reports • Increase Transactions Reviews / In-depth SOE Reviews (frequency, scope) • To detect fictitious/inflated invoices • Physical verifications • to corroborate with financial reports (apply 20/80 principle) • Require High Quality Audits

  6. Mitigating Corruption Risks: Non-conventional Approach • Involve Audit Committee, Anti-Corruption Commissions • Complement Financial Audit w/ Performance/Technical Audit (TOR expended…) • Require Parallel Auditing (deterrent force) / “Agreed-Upon-Procedures” Audits/ ISA240 • Require Social Accountability Arrangements for CDD and HIV/MAP type projects • Involve Independent Media / Disclose Project Audit Reports • Increase Sensitization: Corruption Awareness Workshops / Campaigns

  7. Dilemmas in Dealing with Corruptions Allegations or Cases • Fiduciary role Vs Advisory role • Development Drive Vs Investigation Drive • Zero-Tolerance Corruption Vs Selectivity • Avoiding throwing away the Baby with the Washing Water • Professional judgment, • Seriousness of allegations or facts/evidences • Good understanding of the context

  8. Corruption and Use Country Systems : challenges • Reasonable Fiduciary Assurance easily Questionable? • Reputational Risks Vs Risk Appetite • L/M Corrupt Country Risk • H/S Corrupt Country Risk • Fongibility Vs Earmark • Dilution into Macro Issues Vs Transactional Mode • Risk of Diversion w/Multiple PFM Actors • Political sensitivity: manipulation, pressures, threats, bargaining, …etc.

  9. Documentations • FMA – specific section summarizing corruption risks with detailed discussions in the questionnaires & ratings • FM SPN – H/S Risk Corruption Project => QA FMS review • PRIMA Module on Anti-Corruption (under development)

  10. Collaboration with INT and Procurement Teams • Collaborative work & exchange of information w/Procurement team • Speak out, Involve TTL & RMFM • Request TTL to Report to INT • Ask when in Doubt b/c It’s a Learning Process for all of us…

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