Download - FIDUCIARY FORUM 2008
FIDUCIARY FORUMFIDUCIARY FORUM20082008
Disbursement
What’s NewWhat’s New iLAP – new systems (February 2008) E signature pilot (November 2007) Reorganization of LOA (July 2007) New Disbursement forms (2007) Updated Disbursement Policy OP/BP 12.00
(March 2007) Disbursement Guidelines (2006) New Legal Agreements (July 2005) Eligibility OP/BP 6.00 (April 2004) Decentralization (2003)
Session outlineSession outline
LOA organization - who does whatEligibility - Disbursement
categories Advances – flexibilitySupporting documentation - SOEElectronic WA – electronic
signatures
The Loan divisions
Part of CSR VPDisburses USD 20 to 22 billion
each year28,000 disbursement transactions123 staff7 regional centers
Controllers, Strategy, Resource Management (CSR)
CSRVP
CSRSI CTRDR CSRRM
CTRDRDeputy
Controller
LOADMDisbursement Management
LOAFCFiduciary
and Controls
ACTCFLoan Services
Group
Fiduciary and Controls Fiduciary and Controls Division Division (LOAFC)(LOAFC)
Clearance function during project identification through Board
Monitor ongoing adequacy of fiduciary arrangements during implementation
Participate in joint CSR/FM quality reviews
Disbursement Disbursement Management Management (LOADM)(LOADM)
Processing withdrawal applicationsPortfolio management Records management
Eligibility Reforms (2004)
Removes old definitions of eligible and ineligible expenditures from OP 12.00 (now covered in OP 6.00)
Shifts determination of eligibility to what is needed for the project, in accordance with country financing parameters and the loan agreement
New flexibility in setting up withdrawal categories in loan agreement (no longer tied to procurement methods)
Guiding Principles
Bank loan proceeds finance the expenditures necessary to meet the development objectives of operations supported by the loan.
Guiding Principles
acceptable oversight arrangements, including fiduciary oversight arrangements, are in place to ensure that such loan proceeds are used only for the purposes for which the loan is granted, with due attention to considerations of economy and efficiency.
Eligibility
What are the Eligible Expenditures ?
When are they incurred ?
How are they valued ?
When are they recorded by the Bank ?
Guidance“….Bank staff typically ….” !!!Review the cost estimate that the
borrower prepares for the each project.
This estimate is normally broken down by expenditure line items that facilitate management of the project and oversight of its implementation, and by time profile (at least annually).
Guidance
On the basis of this review, Bank staff form a judgment as to whether all costs are necessary to meet the objectives of the operation.
All necessary costs for which Bank staff are satisfied that acceptable arrangements are in place to manage associated risks are eligible for Bank financing
DISBURSEMENT DISBURSEMENT CATEGORIESCATEGORIES
It used to be so easy
Schedule IGoods WorksServices
Schedule II – Project description
Disbursement Categories
Can match the needs of the projectType of expenditureProject componentSingle categoryFlexible
Disbursement Disbursement PercentagesPercentages
Country Financing Parameters for most countries
Mainly “up to” 100%
EligibleEligible
Taxes and dutiesRecurrent costsLocal costsSpecial authorization (land etc)
What to expectWhat to expect
More emphasis on making sure that Disbursement Categories match project needs
AdvancesAdvances
The BasicsWhat we used to do What are the changes
DESIGNATED ACOUNTS DESIGNATED ACOUNTS DECEMBER 31, 2007DECEMBER 31, 2007
Funds in Designated Accounts $ 6.2 billion (2003 $4.1 billion)
DA inactive 6 months $ 807 million (2003 - $52 million)
DA inactive 12 months $128 million (2003 - $ 8 million)
DAs INACTIVE 6 MONTHS
0
100
200
300
400
500
600
700
800
900
98 99 00 01 02 03 04 05 06 07
It used to be so easyIt used to be so easy
Special Accounts up to 10%
Initial Allocation up to 5%
OP 12.00 pp 5OP 12.00 pp 5
The Bank determines the amount that may be advanced into the designated account in accordance with the operation’s periodic financing requirements.
BP 12.00 pp 7BP 12.00 pp 7
When disbursement arrangements include the use of advances, the task team leader reviews the reasonableness of the borrower’s forecasts from time to time to ensure that these amounts are in line with the operation’s periodic financing requirements. The task team leader alerts the finance officer when forecasts are considered to be unreasonable, and recommends appropriate action
OP 12.00 pp 5OP 12.00 pp 5
The designated account is an account that is maintained exclusively for the project. It may be an account which is segregated for Bank proceeds, or an account which pools Bank proceeds with funds of the borrower, development partners, or both.
The Bank may advance loan The Bank may advance loan proceeds into..OP12.00 pp5proceeds into..OP12.00 pp5
an account of the borrower that is .. held in a financial institution acceptable
to the Bank and operated on terms and conditions acceptable to the Bank (the “designated account”)
to finance eligible expenditures as they are incurred and for which supporting documentation will be provided at a later date
MARCH 2007 CHANGESMARCH 2007 CHANGES
NO MORESecond Generation Special
Accounts90 day advances30 day advancesSub accounts
Transfers from DA to Other Transfers from DA to Other Accounts of the BorrowerAccounts of the Borrower
Loan proceeds on deposit in designated accounts may be transferred to another account of the borrower or the project if the need exists and if appropriate arrangements are in place to ensure that loan proceeds so advanced will only be used for the purposes intended.
Disbursement Handbook para 119
WITHHOLDING ADVANCESWITHHOLDING ADVANCES
The Bank is not satisfied that the borrower’s planned project expenditures justify the deposit. The Bank may, by notice to the borrower, adjust the amount it deposits or withhold further deposits into the Designated Account until it is satisfied that the financial needs of the project warrant further deposits;
What to expectWhat to expect
No new advances where previous advances have not been accounted for by the disbursement deadline date (plus two months)
Greater focus on the making sure that advances match project needs
Documentation thresholdsDocumentation thresholds
The BasicsWhat we used to do What are the changesWhat we are doing now
The BasicsThe Basics
Supporting documentation – records
Procurement prior review thresholds
Not the same thing
The BasicsThe Basics
Op 12.00 pp 6 Supporting Documentation“The Bank may require records (e.g., receipts, invoices) for certain specific expenditures, and/or accept summary reports of expenditure (i.e., interim financial reports or statements of expenditure) from the borrower to support the application for withdrawal.”
What we used to doWhat we used to do
OP/BP 12.30 Statements of ExpenditureODP 5.02 Statements of Expenditure
Up to, but not exceeding, procurement prior review thresholds
Normally should not be less than $50,000
Normally should not exceed $250,000
What are the changesWhat are the changes
LACI - PMR/FMR/IFRNew Procurement Guidelines 2004
• Procurement Plans• Prior review first two contracts
Updated Disbursement Policies OP/BP 12.00 March 2007
What to expectWhat to expect
Having “normal” documentation/SOE thresholds for each country
Moving to higher documentation/SOE thresholds in lower risk MICs
eDisbursementeDisbursement Phase I: electronic withdrawal applications
– eForms
Previously, “PDF” form that could be filled out online, printed, signed and sent to Bank
Now, eForm allows preparation online (in Client Connection) and provides “smart help” according to application type (e.g., advance, documentation of advance, direct payment)
““Smart help”?Smart help”? eForms pre-fills borrower information,
designated account details, etc.
Provides look-up tables for commercial banks, currencies, etc.
Runs edits and checks to ensure form is complete, sufficient funds available
Still requires printing, signing, sending
Phase II: eSignaturePhase II: eSignature Phase II: eSignature (pilot) under way
Client prepares application online, attaches supporting documents, “signs” electronically (RSA SecurID), and eForm is automatically emailed to LOA service account
No printing, no physical signing, no mailing
Rollout to all eligible clients post-pilot
Phase III: Full eDisbursementPhase III: Full eDisbursement Phase III: eDisbursement means straight-
through processing
Client enters application request online and automatically updates loan disbursement records in iLAP
Eliminates duplicative data entry by LOA, but builds in additional checks and balances to flag unusual / risky payments
Manual/paper forms continue for clients without access to good IT infrastructure