mdtfpfm.org.npmdtfpfm.org.np/uploads/files/projects/other_document/... · Web viewThe team was led by Manoj Jain (Lead Financial Management Specialist and Task Team Leader) and comprised

Strengthening Public Financial Management (SPFM) I (TF010452) & II (TF0A1065) Implementation Review and Support Mission

April 4-8, 2016

Aide MemoireI. Introduction

1. A World Bank (WB) team1 led by Mr. Manoj Jain (Lead Financial Management Specialist) carried out the Implementation Review and Support Mission of the "Strengthening Public Financial Management I & II Projects during the period of April 4-8, 2016. The team met with the Financial Comptroller General, senior officials of the Financial Comptroller General Office (FCGO) and officials of the Public Expenditure and Financial Accountability (PEFA) Secretariat. A list of the persons met is included in Annex 1. The team expresses its appreciation for valuable inputs, courtesies and cooperation extended by officials of the Government of Nepal. The findings of the mission was shared at a wrap-up meeting chaired by Financial Comptroller General (FCG) 2 on April 8, 2016. Development Partners supporting the PFM MDTF were also present in this meeting. This Aide Memoire (AM) summarizes the main points discussed during the meeting and agreements reached.

2. Franck Bessette, MDTF Program Manager is taking over as the Task Team Leader of this project from Manoj Jain, Lead Financial Management Specialist with immediate effect. As agreed during the wrap-up meeting, this AM will be classified as a public document as per the World Bank’s Access to Information Policy.

II. Key Project Data

Project Data Projects Performance RatingsApproval Date : October 31, 2011 Summary Ratings

Achievement of PDOImplementation ProgressMonitoring & EvaluationProject ManagementProcurementFinancial ManagementCounterpart Funding

Last NowS SS SS SS SS SS SS S

Effectiveness Date: October 31, 2011Revised Closing Date: June 30, 2016 (*)Grant Amount : USD 4,300,000Amount Disbursed(As of April 8, 2016)

USD 4,281,528 (99.6%)

Ratings: HS=Highly Satisfactory; S=Satisfactory; MS = Moderately Satisfactory; MU = Moderately Unsatisfactory; U=Unsatisfactory; HU=Highly Unsatisfactory

SPFM I

SPFM IIProject Data Projects Performance Ratings

Approval Date : July 29, 2015 Summary Ratings Achievement of PDOImplementation ProgressMonitoring & EvaluationProject ManagementProcurementFinancial ManagementCounterpart Funding

Last Now S S S MS S S S S S MS S S NA S

Effectiveness Date: October 16, 2015Closing Date: July 31, 2017Grant Amount : USD 3,680,000 Amount Disbursed(As of September 30, 2015)

USD 1,906,310 (*) (51.8%) as advance

Ratings: HS=Highly Satisfactory; S=Satisfactory; MS = Moderately Satisfactory; MU = Moderately Unsatisfactory; U=Unsatisfactory; HU=Highly Unsatisfactory

1 The team was led by Manoj Jain (Lead Financial Management Specialist and Task Team Leader) and comprised of Franck Bessette (Program Manager, PFM MDTF), Anand Pardhy (IT consultant), Shambhu Uprety (Sr. Procurement Specialist), Yogesh Malla (Financial Management Specialist), Timila Shrestha (Financial Management Specialist), Shraddha Shah (Operations Analyst) and Nagendra Nakarmi (Sr. Program Assistant).

2 The Joint Secretary (Budget, MOF), the Joint Secretary (IECD, MOF) and senior officials of FCGO and PEFA Secretariat were present at the wrapup meeting..

1

III. Achievement of Project Development Objective

3. The Project Development Objective (PDO) of both projects is – “to improve expenditure control and enhance government accountability and transparency by strengthening the treasury system, improving financial reporting and building PFM capacity”. The team assessed the relevance of the PDO and confirmed that it still remains relevant for both projects. The achievements of PDO level results for SPFM I & II (as at April 8, 2016) are shown below :

Indicators Unit of Measurement

Baseline Year 4 Target Status as of April 2016/Comments

Percentage of overall budget executed through the DTCOs where the TSA system has been implemented

% 7 98 Nearly 100%. Target achieved a year in advance

Budget Execution Reports and Financial Statements produced by the TSA system on a real time basis

No of districts Nil 75 For all 75 districts.

Preparation of consolidated financial statements for PILOT Ministries in accordance with Part 1, Cash IPSAS ;

No Nil 2 for SPFM 1 and 7 for SPFM

2

15 central economic entities have prepared consolidated financial statements based on NPSAS cash part 1

Numbers of research studies into high priority PFM areas completed and disseminated

No Nil 5 for SPFM 1 and 8 for SPFM

2

Seven reports Completed (2 earlier and 5 in the current year).

Improved sustainability of TSA system

Enhanced network and infrastructure

Nil Under Impl. Procurement delayed under SPFM2 as per agreed targets; needs to be expedited

Improved quality of in-year and end of the year financial statements

Financial reports

- Implementation intitated

Commitment module needs enhancement both for reporting and control purposes. RMIS has been rolled out to 15 districts

The detailed component wise targets and current status (for both SPFM 1 and SPFM 2) as of April 2016 are set out in Annex 2.

Achievements and Challenges

4. Key areas of progress since last mission include (a) almost near completion of activities in SPFM 1 (b) Finalization of the PEFA report and approval of GoN’s Public Financial Management reform Strategy/program by national PFM Steering Committee (c) sustained roll out of the Revenue Management Information System (RMIS) in 15 districts (District Treasury Controller Offices (DTCOs) and Banks collecting revenue amount) with 90% coverage of the revenue (d) preparation of NPSAS based financial statements in 15 line ministries/economic entities and rendering them to audit, (e ) provision of TSA/FMIS access to both line ministries/agencies and OAG office (f)posting of the IT director and (g) initiation of the PFM advanced diploma course in association with ACCA and NASC for 30 students.

5. The TSA system continues to be sustained well in spite of issues in respect of poor infrastructure, frequent power cuts, staff transfers and connectivity issues. Real time budgetary control continues to be exercised for all expenditures across Nepal. Successful implementation of TSA and its results are evident in the entire PFM cycle which contributed to upgrade in several of PEFA II ratings (19 indicators). Monthly budget executions reports (Ministry wise, Spending District wise, Economic Classification wise) continue to be made available but these could be further improved. Under Component 2(b), Nepal Public Sector Accounting Standards (NPSAS) has made good progress in the last few months.

6. Efforts continue to be made under the third component in reaching out to various stakeholders across the country to more remote districts, demand side stakeholders, line ministries, departments, financial sector, media and general public in increasing PFM awareness and building a solid

foundation for ensuing PFM reform processes. Research work has been completed for “off – budget items” and report finalized.

7. The IT procurement under SPFM II (which forms the bulk part of the project) is delayed as per the agreed milestones from last mission. Some of the procurements have been started but yet to be completed and while several are yet to be initiated. While some of this can be attributed to the post-earthquake and the fuel blockade that affected whole of Nepal, there has been a general slippage in terms of planning and coordination at FCGO. While some activity in this respect is visible in last couple of months, there is a need now to expedite so as to complete the upgrade of IT infrastructure for TSA/FMIS at the earliest.

8. The commitment roll-out has also been going slower than anticipated. Although design level changes recommended in the last mission have been initiated in terms of structure of the reports, there has been problem in initiating budget/cash control, as the commitments are being recorded ex-post in a stand-alone mode – and therefore are not available to be used as a control measure on an on-line basis. Even if there is a sense that government is not so far facing cash constraints (except year end rush), it is committed to achieving these objectives which is further elaborated in the later section. The finalization of accounting manual has moved forward albeit, at a slow pace and needs to be expedited. It has been agreed during the mission that the government will expedite implementation of these actions.

In view of the above, the DO (Development Objectives)/IP (Implementation Progress) ratings of SPFM I is retained as “Satisfactory”. However for SPFM II the IP is rated at “Moderately Satisfactory” due to delay in procurement. The PDO for SPFM II still remains fully achievable and therefore “Achievement of PDO” is also retained as “Satisfactory”. The ICR for SPFM I will be conducted either separately or jointly together with the SPFM II project, which closes 30 July 2017 and provides supplemental funding to the same activities.

IV. PFM Reform Strategy Phase 2

9. The mission was happy to note that government has finalized the PFM reform strategy phase 2 on the basis of PEFA assessment (completed in May 2015). The reform strategy was endorsed by National PFM Steering Committee in February, 2016. The process was extensive and included several internal/external consultations. A long term design or strategy is important to help plan and commit funding from various sources (Tentative Costed at USD 68 million?) for the next phase. The MDTF team, as agreed in the last Program Coordination Committee (PCC) meeting, has developed a draft MDTF strategy based on this document which is expected to be finalized shortly.

V. Summary of Implementation Progress

Component 1: Implementation of Treasury Single Account (TSA) System.

10. Rollout of TSA: No further bank accounts have been closed since last mission. The government has succeeded in closing a total of over 14,300 bank accounts since start, by centralization of payments through the TSA system. Some special provisioned bank accounts of the government still remain operational at the time of this review, which include accounts for non-budgetary expenditure, revenue, retention money, special purpose and miscellaneous accounts (Kha 1 to 11). Several rules and requirements restrict closing of these accounts. The team recommends the FCGO to undertake further rationalization in this area by analyzing these bank accounts and undertake necessary measures.

11. Commitment Recording: Although the process of Commitment module/recording has been rolled out in all the 75 DTCOs and revised reports have been developed for aggregating the commitment information, this process has only been partially successful as (a) reports still need to be upgraded to be useful for line managers(b) ex-ante entry into commitment module is not taking place

and (c) budget control is not exercised through commitment module (i.e. budget is not blocked for commitments entered in the system for that line item).

12. As per current guidelines, recording of procurement contracts/POs above the threshold of NPR 500,000 takes place which needs to be made real time. Currently, spending unit sends the commitment form for the issued contract/PO above the threshold of NPR 500,000/ to the treasury offices for commitment recording usually along with payment request, after the goods receipt/service completion and invoice approval. Budget is also not blocked for commitment issued as a result control cannot be exercised. As per plans, in the year (FY2015/16), the commitment related reports and process enhancement in the system was expected to be developed which has been partially done. There was also an intention to expand commitment recording to non-procurement related expenditures, including salaries, pensions, social security which has not yet been done. Due to these business procedures, the objectives of commitment control - to avoid overspending if cash is not available – is not being achieved. It is noted, though, that these objectives currently are not seen as critical by GON as overspending is not a major issue now. However, this issue is critical from three perspectives; (i) orderliness in budget implementation (ii) cash/budgetary control and (iii) arrears control. This will also become significant when cash constraints start to appear especially in last few months of every year (like last few months of FY 2014/15). Therefore, it is important to fix the process weaknesses now. The box below highlights how the process can be ideally enhanced going forward:

13. The ex-ante recording at spending units is currently not possible due to no online access to FMIS/TSA. But in the meanwhile this could be done at the level of DTCOs by asking spending units to send commitment information as soon the event take place rather than wait for cash/first payment to the contractor. The commitment recording against the released budget could also not be developed due to programming/software development issues – the module has not been developed as per agree design (developed by international expert), which envisaged commitment recording against the released budget. FCGO is currently considering shifting the commitment module to spending units which will require a huge effort with connectivity required for over 4000 spending units. In contrast it may be better in medium term for the ex-ante recording to shift as part of the CGAS implementation. FCGO has been considering rolling out the Computerized Government Accounting System (CGAS) to the spending units (but not much success has been achieved). An interface of this system with the TSA system could be an option but will need to be developed in a concerted manner as part of overall development of the IFMIS in Nepal. Some enhancements in reporting have been done but are yet to be completed. The Team also advises the FCGO to review its strategy for including Salary, pension, and social security payments (which are largely predictable obligations), in the cash plans for better cash management, without the necessity of introducing commitment control over these obligations. Emphasis, therefore, should be on further strengthening the cash planning process in the current year in terms of system enhancements. In preparation for that phase, institutional arrangements for cash management committee and cash release process should be strengthened in the next few months to be able to make them effective by November 2016.

14. There is a need to review the implementation so far, revisit the business process as implemented, remove gaps/inconsistencies and enhance the capacity for implementing commitment module by setting up an Implementation Team headed by JFCG/DFCG including both functional and software experts. It was also explained that for blocking commitment against budget there is a need to bring several stakeholders on board. Therefore there is a need for this team (at FCGO) to upscale the dialogue to Finance Ministry and line ministries/departments and garner their ownership. It was agreed that this will be done in the next few months with workshops/consultations to help with the implementation. FCGO should also consider revising the threshold to NPR 200,000/300,000 (to

At the time of commitment recording:- Available Funds ()- Commitment ()

At the time of payment:- Commitment()- Expenditure()

Available Funds= budget release +/- virements – expenditure –commitments

be in line with current rules for a contract agreement) to enlarge the coverage and make commitment more effective.

15. The Team recommends that the FCGO complete the above process in next few months to start the new FY (FY 2016/17) with full implementation of the commitment module as per envisaged design. For this necessary consultations within Ministry of Finance and with line ministries/departments would need to be conducted in next few months. The Budget authorization letter for next years should include the commitment format of reporting to enable implementation. The budget division should also include this in their budget discussions with line ministries/departments

16. Revenue management information system (RMIS): The mission was informed that RMIS after initial teething issues has stabilized in all 15 districts with more than 90% aggregate revenue. However during the rush period for deposit of taxes the server load has been peaking and system has to be rebooted. This depicts the need for optimization of the servers, which does not seem to have been correctly done. With new IT consultants in place in FCGO, this should be a priority now. Banks are entering revenue vouchers in the system on a real-time basis and remitting collections into the revenue TSA account on a daily basis (at the time of Day Closing). Per previous mission recommendation, RMIS has been made a primary system of data entry at the collecting banks to ensure better control and no revenue remaining unaccounted. The mission was informed about the improvement in recording revenue information and bank reconciliation process as a result of RMIS rollout. The DTCOs, where the system has been rolled out, are able to approve revenue reports online through the RMIS on a daily basis, a process that used to take a month before this roll out. The paying offices carry out bank reconciliation with the respective banks on an on-line basis, a process which used to take between six to eight months earlier. FCGO has shared a plan to rollout RMIS in balance districts over the next two years with an intention to fully cover all districts by July, 2017. They have also shared RMIS implementation plan for diplomatic missions abroad which is under review.

17. Funding of treasury infrastructure of districts affected by the earthquake: SPFM II provides a sub-component under component 1 to finance furniture, computer equipment, power backup system, house rents and repairs & maintenance. Solar power equipment is being procured under this activity for an amount of USD1300,00.00 and the balance amount is proposed to be used for office/computer equipment.

18. Accounting Manual: After last mission’s feedback, FCGO team had provided numerous comments on draft Accounting Manual and requested for a re-write. Consultant’s contract was extended with no extra cost and a re-write has been submitted in Nepali which is currently under review of FCGO. The WB team will also review this draft and submit comments to FCGO for finalization. It was agreed that accounting manual should be finalized at the earliest. After that a cabinet approval will be required to make it effective and will take at least a few months. It was agreed that the agreed and approved accounting manual will be put in full implementation across by November 16, 2016 (beginning of second trimester).

19. TSA Access to Line ministries/agencies and OAG: Per recommendation of last mission, two users from each of the 39 economic entities (including OAG) have now been provided access to TSA/FMIS. FCGO has created login IDs and provide read-only access to these officials. A two days’ orientation program was organized for the assigned staff of these entities. Currently the existing report for their respective line ministries have been made available. Moving ahead, a facility to export to excel will be provided to allow customization of reports at each line ministries level. It may also be possible to develop further reports in consultation with these ministries and/or give an option of generating their reports through dynamic query/report features. It was agreed that these actions will be completed by July 31, 2016. Pilot audits were conducted under Strengthening Office of the Auditor General (SOAG) Project where CAAT (IDEA) was used to develop a risk profile of the TSA transactions through on-line access and develop an audit plan. However, this has been operated by the consultants so far and there is a need to develop capacity within OAG’s office for its staff.

20. System Audit: Given the growth of IT in FCGO’s functioning and landscape over the years in an unplanned manner, the mission had noted need for comprehensive functional and IT security audit of the system is necessary to address any control or security risks. It was suggested in the last

mission that a quick IT security Audit be conducted to address any vulnerabilities. FCGO had submitted a draft TOR to which bank provided comments and requested procurement at the earliest. However this action has been delayed. This was discussed again during this mission and given the timing, FCGO is of the opinion to carry out this security audit towards the implementation of new IT security equipment at DC and DTCOs which would help cross check the efficacy of the new equipment. The TOR will be accordingly revised by FCGO and submitted to bank for NoL by April 30, 2016. The Bid document of new equipment/networking etc. will also need a clause which will cross refer to a third party audit of equipment before making the final payment.

21. IT equipment costing, technical specifications and procurement Plan under SPFM II: This action is severely delayed as compared to agreed actions from the last mission. A revised Costing sheet along with Procurement Plan (PP) for SPFM I and SPFM II, submitted by FCGO on March 31 was discussed. FCGO has made some changes (in costs, grouping and specs) without adequately consulting with bank on technical issues. Moreover it is not clear if they have exceeded the overall budget for this component. These include realignment of goods, changes in technical specs and decentralization of network cabling. Mission has requested FCGO to resubmit updated costing sheet (and revised PP) along with breakdown costing of each line item/component by April 15, 2016. Team has also requested FCGO to prepare a document giving detail status of all procurements.

22. Network cabling, accessories and its commissioning: FCGO wants to decentralize this activity to all DTCOs for ease of administration and build-up capacity of DTCOs. The mission agreed for this decentralization (without any extra budget) but suggested FCGO to agree on common product specifications to be procured and issue guidelines for execution of cabling work by the local vendor. It is also suggested to monitor and do quality control checks (certified) by FCGO’s network person/team by visiting at least 50% of DTCOs. It is also suggested by the mission not to do permanent structured cabling in DTCOs which are in rented places and will be moved to another location. This is to avoid recurring cost and wastage of material.

23. Firewall at DTCOs: FCGO requested additional firewall for security at DTCOs (27 Nos) which access FMIS/TSA over Internet. Additional Firewall will not only add to the cost but also the administration of these firewall would pose a challenge. Therefore it was agreed that there will no need for this extra firewall (since there is no data at any of DTCOs) but suggested to explore an option where routers at these DTCOs could have equivalent (firewall) features. FCGO would come up with UTM (Unified Threat Management) devices along with costs which would offset routers. FCGO is also requested to expedite dialogue with their existing service providers to bring these 27 DTCOs under FCGO Intranet to enhance security and safety of network. FCGO will submit UTM tech specs and its costing for bank’s approval by April 15, 2016.

24. FCGO sites SSL certification: It was revealed during discussions that the URLs of FCGO’s various web based systems running on web are on HTTP and not with HTTPs, SSL (Secure Socket Layers). Earlier they had SSL certification which has expired. Mission team strongly suggested to get all these system sites with SSL on highest priority.

25. Development of Software Systems - Protocols and documentation: All applications are developed in-house by IT consultants. There is a need to strengthen the software development processes followed by the team as it had organically grown over the years. Given the TSA/FMIS success, several subsequent demands have been placed which has led to proliferation of software development/revision/refinement without adequate documentation protocols in this regard. This can pose as a major challenge incase if consultants were to leave FCGO. WB Team requested FCGO to get System Requirement Study (SRSs), Systems Technical and User manuals for all applications (by June 30, 2016). It is also suggested that FCGO monitor and rationalize usage of servers and licenses with respect to the server configurations and DC architecture. Mission has requested FCGO to prepare a DC server/network diagram along with configurations of each server and applications hosted on these various servers and will be shared by April 30, 2016.

26. Hiring of IT staff and Consultants: Mission was informed that the new IT Director will be on board from April 18. In addition an IT engineer is also under processing and is expected to join by May 31, 2016. Out of 6 consultant agreed positions, 5 have been hired and started their duties. The sixth position of IT Technician will be filled out shortly. FCGO is also additionally requesting to hire 3 technicians for better support to DTCOs particularly remote locations. The mission noted

proliferation and dependence on IT consultants in FCGO over the years and there is need to balance this with regular staff to ensure continuity and security. It was agreed that FCGO will explore if regular staffing positions could be created in place for this additional request. In line with this recommendation, IT organization chart along with job responsibilities will be reviewed with the new IT Director and will be shared with bank by April 30, 2016. FCGO has hired one consultant to support Services for Oracle & Fusion Middle Ware and has started showing good improvements in Oracle database management, optimizing, tweaking and its performance.

27. Asset Register: The Asset register is still not ready at desired matured level. There are still some important fields missing in the register. The discussions with IT team came to a conclusion and it has been decided to use a freeware application for Asset Management. The IT Asset Register will be prepared using the freeware software by April 30, 2016.

28. Network Bandwidth: FCGO had shared bandwidth utilization statistics after the last mission and it was suggested to upgrade the bandwidth. FCGO informed mission hat the bandwidth is being upgraded to 15 Mbps by April 30, 2016.

29. Status of IT infrastructure procurement: The current status of the various IT infrastructure planned under component 1 is provided in Annex 4. Going forward this will need a continuous monitoring to ensure that the activities are not further delayed.

Component 2: Strengthening accounting and reporting practices in public and private sector

30. Component 2(a): Private sector accounting and reporting: Under SPFM 1, Nepal Financial Reporting Standards (NFRS) are in place, which are aligned with International Financial Reporting Standards. In addition, guidance notes have been completed which aim at improving the financial report preparation in the corporate sector. Project Completion Report for this sub-component has been submitted by ASB and no further activities are planned. This results is a saving of USD 75,000 which can now be reallocated. This sub-component is not planned under SPFM II.

31. Component 2(b): NPSAS Implementation: Despite recent challenges, there has been a good progress made in NPSAS implementation. As informed to the mission team, FCGO has submitted NPSAS compliant financial statements of 15 economic entities of FY2014/15 to the Office of the Auditor General (OAG) for its review and audit opinion as against the project target of 10 economic entities for year 1 (July 2016). The mission met with OAG and was informed that they have reviewed and provided their audit opinion of 2 economic entities (Ministry of Foreign Affairs and OAG) balance 13 economic entities will be completed by end of April 2016. In our discussions with FCGO, OAG and select economic entities, critical issues have been raised in terms of (a) incongruence between NPSAS standards and financial procedures/rules/relevant Acts, (b) policy level issues and (c) others related to challenges/capacity faced during implementation. Some policy related issues relate to non-clarity on control concept (mapping of MDAs), lack of information on accounting technical assistance (lack of verification of information stored in the Aid Management Platform), no approved forms or formats, non-revision of Financial Procedure laws etc.

32. The mission suggested to consolidate these learnings and flag them at the highest level of Government to brainstorm and agree on actions for ensuring smooth implementation going forward. Further, it was suggested to have a clear protocol in Aid Management Platform between the Ministry of Finance and economic entities on resolving issues related to technical assistance. Some of the other areas of challenges faced during implementation were on capacity constraint of preparers and auditors, difficulty in valuation of inventory, minimal data on third party payments etc. It was suggested to have a national level awareness seminar on NPSAS led by key Government agency inviting all stakeholders. It was also suggested to incentivize NPSAS implementation by felicitating the participating economic entities.

33. FCGO has agreed to conduct regular intensive trainings on NPSAS to all the key stakeholders as earlier training has not been enough. Further, FCGO plans to conduct a stakeholder meeting to develop consensus on way forward. Some of the previously agreed actions have not been completed (certification of two pilot NPSAS financial statements of FY2013/14, development of implementation manual and partial completion of audit). Since the two pilot financial certification will be covered in

the audit of FY2014/15, it was agreed to replace it with a review by OAG in terms of issues that need resolution. The NPSAS implementation manual draft has been submitted and is being reviewed for finalization by fiscal year end. The consultant’s contract for assistance in preparation FY 2014/15 is undergoing a no cost extension to May, 2016. For two coming FYs (2015/16, 2016/17), similar support is envisaged for which a separate contract will be issued.

COMPONENT 2 Date AgencyHire consultants for training and assisting Economic Entities in preparation of NPSAS compliant financial statements for FY 2015/16

Aug 31, 2016 FCGO

Finalize implementation and user manual June 30, 2016 FCGONo cost extension to consultants contract for NPSAS fin statements of FY 2014.15

April 30, 2016 FCGO

Provide further training to economic entities and OAG on NPSAS Nov 15, 2016 FCGOProvide English translated NPSAS compliant financial statements of FY2014/15 of balance 15 Economic Entities to IDA

April 30, 2016 FCGO

Conduct audit and provide opinion on NPSAS compliant financial statements of FY2014/15 of 13 Economic Entities

April 30, 2016 OAG

Component 3: Supporting the capacity building of the PEFA Secretariat

34. Training and Communications: The mission discussed the continued dissemination of results achieved under this component, such as the 12 newsletters and 4 journals that have been published till date (additional one newsletter and one journal since the last mission)3. The 3 talk shows with FCGO/ PEFA teams based on Fiscal Accountability and Transparency aired on various national television channels have also been uploaded in PEFA Secretariat website4. A documentary on disseminating PFM related information is also being prepared. Various PFM/ PEFA orientation programs have also been conducted (3 Regional and around 10 District level) since the last mission. Such program at the Central level is also planned to be conducted as earlier. A National level workshop to finalize PFM Reform Strategy was also conducted. Various interaction programs with bankers on RMIS and TSA are being continued and national level trainings for Economic Journalists are also planned. The DPIUs of the concerned districts are also being provided technical and research supports. As agreed in the last mission, revised activity plan for SPFM II has been prepared to streamline the process of capacity building. 35. Research and Studies: One of the PEFA mandate is to perform research studies supporting PFM reform activities. As agreed, the reports of the five studies5 were disseminated and discussed with National PFM Steering Committee. The study on internal audit was also discussed with the Office of the Auditor General. The recommendations from the studies have been included in the second phase PFM Reform Strategy.

36. FCGO has been instructed by the Prime Minister’s Office (as part of larger GoN exercise across all ministries/agencies) to conduct a study on the required restructuring of FCGO with respect to proposed fiscal federalism. It was agreed with PEFA secretariat will consult with stakeholders across Ministry of Finance and GoN to develop a plan of action in this regard. The mission suggested to include the recommendations from these studies, as may be relevant, into this restructuring (implication of fiscal federalism) study6. This plan of action will be shared with the Bank by May 31, 2016. As this study will be conducted from FCGO’s resources, it was agreed to reallocate the assigned amount to a study on overall IFMIS strategy of GoN which will help streamline disjointed

3 13 articles were published in the last PEFA journal. Around 500 copies of newsletters and 500 copies of journals are published and disseminated to every district, PIU, DPIU, ministry and training institutes. These are also up-loaded online on the website of the PEFA Secretariat for wider circulation.

4 Mission requested PEFA Secretariat to upload the talk show videos on youtube for greater outreach. A radio program dedicated to disseminating information on PFM reform has been prepared which includes interviews with various public sector experts on PFM. This program is broadcasted on the third Saturday of each month through Radio Nepal and FM 100 Mhz. There have been 6 such radio programs since the last mission.

5 Namely, (a) Study on Internal Audit System in Nepal; (b) Feasibility study on establishing a National Institute of PFM; (c) Impact of government investment in public enterprises in terms of loan and share investment; (d) Impact of implementation of TSA in public finance; (e) Pattern and implication of off-budget items in public financial accountability

6 The results of the restructuring study should help in the design of the various sub-projects included in the PFM Reform Strategy/ Program

IT/PFM initiatives across the spectrum. Procurement process for this study will be further discussed as it is necessary to find the right skill for this purpose.

37. A study tour was conducted to Malaysia and Indonesia to gain exposure on PFM reforms 7.It was agreed with PEFA Secretariat to utilize the learnings from the study tour to further the work on relevant areas including the study on required restructuring with regard to fiscal federalism.

38. Second PEFA Assessment. The second phase PFM Reform Strategy based on second PEFA assessment has been approved and disseminated to the relevant stakeholders. The PFM Reform Strategy/ Program has been divided into 119 major actions and 13 sub-projects based on relevant cluster of the required reform areas. The Government is currently working on proceeding with the implementation of Reform Program. Given the numerous actions and sub-actions, the mission emphasized on the need to re-prioritize the various actions and sub-projects with adequate consultations with the relevant stakeholders. The mission also emphasized on the need to incorporate the recommendations of the various studies conducted by FCGO/ PEFA (as specified above) in implementation of the PFM Reform Program. The PFM Reform Program will also be the basis for future MDTF work program.

39. Building In-country capacity for PFM Training Program: Based on FCGO’s training needs assessment for conducting accredited courses on PFM in Nepal, PEFA Secretariat made an agreement with ACCA (The Association of Chartered Certified Accounts, UK) to conduct one year face-to-face learning course in Kathmandu which will lead to an internationally accredited degree in Advance Diploma in PFM including a certificate on IPSAS. The course has been started from March 2016 and expected to be completed by April 2017. The total of 30 staff from FCGO, OAG and various ministries/ departments are participating in the course which is being conducted in the evening for two hours. The course is being conducted in Nepal Administrative Staff College (NASC) which is an important partner in the initiative. A resource person from NASC is also one of the participants in the course with the objective of developing NASC’s capacity on PFM to enable NASC eventually taking lead in conducting required PFM courses for the country. As the current program is a pilot, the lessons learned from this pilot will be assimilated to help design a PFM training project later as part of PFM Reform Program. To ensure success of the pilot, it was agreed with the PEFA Secretariat to explore possible ways of incentivizing the success of the participants in attaining the Diploma, as may be allowed by GoN rules.

Implementation Arrangement

40. The membership to the National level PFM Steering Committee, chaired by the Finance Secretary, has been expanded to include 14 members including a member secretary – two private sector representatives have been added to the committee. The leadership of the PEFA Secretariat has recently changed. The Joint Financial Comptroller General Mr. Kewal P Bhandari is the new Coordinator of the PEFA Secretariat following the transfer of the former Coordinator Mr. Mukunda Raj Prakash Ghimire. The working level committee is mandated to meet every two months, and the team encourages this meeting to be held more regularly as opposed to the current practice of meeting on a trimester basis. The review team suggested that the continuity of leadership in the PEFA Secretariat is crucial to drive the PFM agenda forward, and steps should be taken in this regard to ensure staff continuity. A national PFM consultant (funded by DFID) has been provided to support the PEFA Secretariat.

41. Financial Management and Disbursement: The expenditures of NPR 37.34 million (72.27% of the budget) and NPR 8.36 million (2.23% of the budget) have been incurred under SPFM I and II respectively up to the second trimester of FY 2015/16. For FY 2015/16, the approved budget is NPR 427.24 million (51.67 million and 375.57 million for SPFM I and II respectively). The Team noted that the budget for counterpart fund is considered sufficient. The team also noted that the budget authority and approved work program for both SPFM I and II for FY 2015/16 has been received as one budget head. The respective activities under SPFM I and II have been segregated in the project work plan as well as procurement plan. There are no outstanding financial monitoring reports, audit

7 Related to budgeting, accounting, IPSAS, internal controls, internal audit, external audit and IT with participation of 14 Government staff from FCGO/ PEFA, MOF, NPC, OAG, Ministry of Physical Infrastructure and Transport and Ministry of Women, Children and Social Welfare.

reports or audit issues. It has been agreed with both FCGO and PEFA Secretariat to maintain the activity-wise information in CGAS by May 31, 2016. The mission also emphasized on the need for timely update of CGAS in all DTCOs and reconciliation of CGAS and TSA data. As of April 7, 2016, the SPFM 1 has disbursed USD 4.28 million, which is about 99.57% of the allocated funds including Designated Account balance of USD 338,719.78, which will be utilized based on second and third trimester expenditures of FY 2015/16. An advance of USD 1.906 million has recently been disbursed under SPFM II. Based on its progress, the FM Performance is retained as ‘Satisfactory’. Details provided in Annex 3.

42. Procurement: SPFM-I: The Bank team reviewed the implementation status of the procurement plan (PP) of the SPFM-I. Almost all of the planned procurement activities have been completed and have been/are being implemented satisfactorily and are at completion stage. Considering the overall procurement progress achieved, procurement performance rating has been retained as “Satisfactory”. SPFM-II: Though the procurement plan was uploaded in SEPA system, as agreed in the last mission, it needs major revision in terms of clarity of the proposed procurement activities, their cost estimates, year of procurement, etc. The IT procurement, the critical and major procurement, is delayed as per the agreed milestones from last mission. None of the procurements have been completed and while several are yet to be initiated. In order to address these issues and expedite the delayed procurement, the following actions have been agreed with the project team: (i) A project period master procurement plan is prepared in the format as agreed during the discussion. This is a costed list of procurement activities under each component with year of procurement for consulting services, goods and non-consulting services; and (ii) Updating of the current procurement plan based on the master procurement plan. Manual version of these documents will be submitted for the Bank’s review by Apr 15, 2016, and the PP will be uploaded in SEPA system by April 30, 2016. Based on the delay observed in major procurement, performance rating has been downgraded to “Moderately Satisfactory”.

Agreed Actions Date AgencyCOMPONENT 1Utilization of SPFM 1 funds : FCGO will send a plan to utilize savings (about USD 200,000) under the SPFM 1 project which is closing on June 30, 2016

April 15, 2016 PEFA Sec

Commitment recording :Necessary consultations within Ministry of Finance and with line ministries/agencies would need to be conducted in next few months. The Budget authorization letter for next year should include the commitment format of reporting to enable implementation. The budget division should also include this in their budget discussions with line ministries/agenciesFCGO to enhance the Commitment Module to record/enforce commitment against the released budget for better control and reporting against budget (both for commitment and expenditures). FCGO to complete the above process in next few months to start the new FY (FY 2016/17) with full implementation of the commitment module as per envisaged design. FCGO to ensure that final enhancements in the reporting module - development of linkage of commitment with the budget, revised FMR/BER, and multi-year commitments - be completed.FCGO to further strengthen the cash planning process in terms of system enhancements. Institutional arrangements for cash management committee and cash release process should be strengthened

April - June 30, 2016

July 15, 2016

November 16, 2016 (starting of 2nd trimester)

FCGO

FCGO

FCGO

FCGO

RMIS: FCGO to roll out plan RMIS in additional 35 districts FCGO to roll out plan RMIS in additional 25 districts

July 16, 2016July 16, 2017

FCGOFCGO

Accounting Manual: FCGO to finalize the manual, get it approved from cabinet (as may be required) and start the implementation

November 16, 2016

FCGO

TSA Access: FCGO to provide further support (excel export) and adequate training.

July 31, 2016 FCGOFCGO

Cost Sheets and associated technical details: Revised cost sheet and backend calculation worksheets for IT equipment in line with PP line items to be submitted

April 15, 2016 FCGO

IT Security Audit: The TOR will be revised to accommodate installation of new equipment. The consultant hiring process and the conduct of security audit to be timed with the installation of new equipment (verification of last payment under various IT contracts as listed in Annex 4).

Apr 30, 2016 Bank

Procurement of IT equipment under SPFM II: The detail status of IT and power backup equipment procurement as of March 31, 2016 to be submitted to

April 30 2016 FCGO

Agreed Actions Date AgencyCOMPONENT 1Utilization of SPFM 1 funds : FCGO will send a plan to utilize savings (about USD 200,000) under the SPFM 1 project which is closing on June 30, 2016

April 15, 2016 PEFA Sec

the bank.Application Systems: SRS, Systems Technical and User Manuals to be prepared for all the applications developed by FCGO.

June 30, 2016 FCGO

Training of existing IT staff by IT consultants to bring them at par

Complete hiring of IT staff as per GoN approval : One Computer Engineer (GON Position)

April -June, 2016Dec 31, 2016

FCGO

GoN

IT Organization Structure: The Organization structure along with job responsibilities to be reviewed by the new IT Director with the Bank’s recommendations and submit the revised Org chart.

May 15, 2016 FCGO

Asset Register: A freeware software for Asset Management will be explored and Assets will be maintained using this software rather than on excel sheet. To be completed by May 15, 2016.

May 15, 2016 FCGO

Link to DC: FCGO to upgrade the link to 15 Mbps based on utilization review and analysis of bandwidth. Upgradation to be done by Apr 30, 2016.

April 30, 2016 FCGO

To rationalize the use of servers as planned July 16, 2016 FCGO

Websites SSL Protection: All FCGOs websites should run using HTTPS with SSL (Secure Socket Layers) certification

April 30, 2016 FCGO

COMPONENT 2Hire consultants for training and assisting Economic Entities in preparation of NPSAS compliant financial statements for FY 2015/16

Aug 31, 2016 FCGO

Provide further training to economic entities and OAG on NPSAS Nov 15, 2016 FCGOFinalize NPSAS users’ manual June 30, 2016 FCGONo cost extension to consultants contract for NPSAS fin statements of FY 2014.15

April 30, 2016 FCGO

Provide English translated NPSAS compliant financial statements of FY2014/15 of balance 15 Economic Entities to IDA

April 30, 2016 FCGO

Conduct audit and provide opinion on NPSAS compliant financial statements of FY2014/15 of 13 Economic Entities

April 30, 2016 OAG

COMPONENT 3 A study on overall IFMIS strategy of GoN which will help streamline disjointed IT/PFM initiatives across the spectrum. Procurement process to be decided

May 31, 2016 PEFA Sec

Implementation arrangementsSubmit (i) a costed list of procurement activities for consulting services, goods and non-consulting services; (ii) An updated procurement plan (PP) based on the costed list. Manual version of these documents will be submitted for the Bank’s review

April 15, 2016 FCGO and PEFA Secretariat

The PP in SEPA (online procurement plan) will be submitted for the Bank’s review

April 30, 2016 FCGO,PEFA Sec

VI. Next mission

43. The next implementation review and support will be undertaken in July-August 2016 at a mutually convenient time.

Annex 1Page 1 of 1

Annex 1 List of Persons Consulted

Financial Comptroller General Office

1. Mr. Rajendra Prasad Nepal-Financial Comptroller General2. Mr. Jagannath Devkota- Joint Financial Comptroller General3. Mr. Surya Mani Gautam-Deputy Financial Comptroller General4. Mr. Jibnath Pokharel- Deputy Financial Comptroller General5. Mr Gajendra Bahadur Shrestha- Deputy Financial Comptroller General6. Mr Yadu Nath Bhattarai- Deputy Financial Comptroller General7. Mr Thaneshwor Gautam- Deputy Financial Comptroller General8. Mr Ramesh Prasad Siwakoti- Deputy Financial Comptroller General9. Mr.Daleswor Aryal, Accounts Officer10. Mr. Sanjaya Manandhar, IT Specialist (Consultant)11. Mr. Kishor Chapagain, IT Specialist (Consultant)12. Mr. Amir Aryal, IT Specialist (Consultant)13. Mr. Ridesh Rai, IT Specialist (Consultant)14. Mr. Raju Siwakoti, NPSAS Consultant

PEFA Secretariat15. Mr. Kewal Prasad Bhandari, PEFA Coordinator/Joint Financial Comptroller General16. Mr. Bhuban Prasad Kafle, Member Secretary17. Mr. Prithivi Raj Bhusal, Accounts Officer18. Ms. Anupama Karki, Accounts Officer 19. Mr. Padam Prasad Paudel, Accounts Officer 20. Mr. Rajendra Bahadura Bajracharya, PFM National Consultant (DFID)

DTCO Nuwakot21. Mr. Mani Bhadra Neupane- Chief Comptroller General

Ministry of Finance

22. Mr . Baikuntha Aryal-Joint Secretary 23. Mr. Ram Saran Pudasaini- Joint Secretary- Ministry of Finance

Office of the Auditor General

24. Mr. Baburam Gautam, Assistant Auditor General

Election Commission

25. Mr. Baburam Shrestha, Under Secretary (Finance)

Ministry of Women, Children and Social Welfare

26. Mr. Deviraman Gyanwali, Under Secretary (Finance

Ministry of Physical Planning and Infrastructure Development

27. Mr. Mun Kumar K.C., Under Secretary (Finance)

Annex 2Page 1 of 4

Annex 2SPFM I Results Framework as of April 30, 2016

Indicator Unit of Measure

BaselineDecember

16, 2010 (*)

Year 4 target

Status as of April 30, 2016

PDO Level Results Indicators*Percentage of overall budget executed through the DTCOs where the TSA system has been implemented

Percentage 7 98 Nearly 100%.

Budget Execution Reports and Financial Statements produced by the TSA system on a real time basis

Number of districts

Nil 75 75 districts.

Preparation of consolidated financial statements for PILOT Ministries in accordance with Part 1, Cash IPSAS ;

Number Nil 2 IPSAS based financial statements prepared. ICGFM has certified the statements on 2nd December, 2014 and report submitted to OAG. Further rollout under SPFM II

Numbers of research studies into high priority PFM areas completed and disseminated

Number Nil 5 All 5 completed and disseminated

INTERMEDIATE RESULTS (Component 1)Number of DTCOs where TSA implemented

No. 8 75 Implemented in all 75 districts.

Number of Spending Unit (SU) Bank Accounts Closed

No. 1300 14000 Over 14300 bank accounts closed.

Number of FCGO , line ministries/agencies and DTCO staff trained or oriented; and still deployed to perform the functions envisaged

No. 600 5500 7203 staffs have been trained and oriented.

Number of master trainers trained (TSA and IPSAS and working as trainers under the project

No. 0 75 65 master trainers have been trained in TSA

Software redeveloped after removing bugs as reported in current software;

- Functional Software developed and functioning

New features added in software to meet and additional feature such as commitment accounting

- - Functional Commitment recording system developed and implementation started from July16, 2014.RMIS developed and piloted (3+12 districts).RMIS will be fully rolled out by July 16, 2017

INTERMEDIATE RESULTS (Component 2)Preparation of consolidated financial statements for PILOT Ministries in accordance with Part 1, Cash IPSAS

Number - 2 Consolidated financial statements for 15 economic entities prepared for FY 2014/15 in accordance with Part 1, Cash IPSAS

Annex 2Page 2 of 4

Indicator Unit of Measure

BaselineDecember

16, 2010 (*)

Year 4 target

Status as of April 30, 2016

Listed SOEs prepare accrual financial statements in accordance with IFRS

percentage 0 100% All NFRS (based on IFRS) prepared, approved and promulgated by ASB and ICAN. Further implementation is with ICAN which is outside the purview of the project

Implementation of commitment controls in the budgetary entities of GoN (within pilot ministries)

- - 100% of budgetary entities

Commitment Control system developed and implementation started from July 16, 2014 across all 100% budgetary entities (in 75 districts) in phases. Needs enhancement which will be implemented by July 16, 2016

Number of persons trained in application of new accounting standards based on IFRS

No. - 225 20 staff + another 20 TOT

Number of GoN finance and accounts staff trained in application of Cash based IPSAS and still deployed to perform the functions envisaged

No. 0 500 140 staff trained

Preparation of Software of NPSAS

No. Done Consultant hired. Software development started

INTERMEDIATE RESULTS (Component 3)Secretariat manual and procedures prepared and implemented

- - Implemented Implemented

Number of National level PEFA Steering committee meetings supported during the project period

No. - 12

23 in total (20 during the project period)

Number of research studies completed and disseminated

No. - 12 In total 7 studies have been completed

Carried out repeat PEFA assessment

- - PEFA assessment Completed. Report is disseminated on June 2015.

Number of seminars & workshops conducted for raising PFM awareness

No. - 7 65 PFM orientation programs (9 central, 17 regional and 50 district level) conducted. A high level ownership building program conducted for the Secretaries of GON in presence of Finance Minister.

PEFA journal published and disseminated

No. - 4 volume of PEFA journal published in January 2016 and 11th series of newsletters have been published and disseminated.

* - Baseline has been taken as the start of the retroactive financing i.e. December 16, 2010

Annex 2Page 3 of 4

SPFM II Results Framework as of April 30, 2016

PDO Level Results Indicators* Unit of Measure

Achievement as of June 2015 (*)

YR 1 target(June 30,

2016)

Actual achievement as on April

2016Percentage of overall budget executed through the DTCOs where the TSA system has been implemented

% of exp. 98 99 100

Budget Execution Reports and Financial Statements produced by the TSA system on a real time basis

No. of Districts

75 75 75

Preparation of consolidated financial statements for PILOT Ministries in accordance with Part 1, Cash IPSAS ;

No. 2 7 15

Numbers of research studies into high priority PFM areas completed and disseminated

No. 8 5

Number of DTCOs/districts where TSA implemented

No. 75 75 75

Number of Spending Unit (SU) Bank Accounts Closed

No. 13500 13850 14250

Number of FCGO , line department and DTCO staff trained or oriented; and still deployed to perform the functions envisaged

No. 5500 7300 7203

Number of master trainers trained (TSA and IPSAS and working as trainers under the project

No. 40 50 65

Software redeveloped after removing bugs as reported in current software;

- functional functional functional

New features added in software such as commitment recording

- Pilots Partial Implementa-

tion

Under implementa-

tionRoll out of Revenue Management Information System (RMIS) at districts and paying centres

No. of districts

Pilots initiated 5 districts 15 districts

Online access of real time budget and financial information to line departments

No of deptts

1deptt 55 department

39 deptts

System based monitoring of IT networks and devices

NA Under Impl. procurement delaqyed

IT Strategy, organization structure and detailed plan prepared and implemented

- - Under prep Not yet started

Conduct of IT/Functional Audit in FCGO Third party audits

Nio audits Functional audit done

Not yet started

Implementation of commitment controls in the budgetary entities of GoN

- - Implementa-tion initiated

Process being enhanced

Annex 2Page 4 of 4

PDO Level Results Indicators* Unit of Measure

Achievement as of June 2015 (*)

YR 1 target(June 30,

2016)

Actual achievement as on April

2016

Number of GoN finance and accounts staff trained in application of Cash based IPSAS and still deployed to perform the functions envisaged

No. 0 80 staff 140 staff

PFM accreditation courses designed and courses initiated

None Signing of MoU and initaion of

course design

Course has been stared

with 30 PFM Staff

Number of GoN Employees enrolled /completed in Diploma/Certificate Courses in local accredited PFM academic Institution

No. Nil 15 30

Number of National level PFM Steering committee meetings supported during the project period

No. 16 20 23

Carried out repeat PEFA assessment and prepared PFM reform strategy Phase II

Completed PEFA II

Prepared PFM II strategy

Approved PFM reform strategy II on

24th FebNumber of seminars & workshops conducted for raising PFM awareness

No. 59 completed 70 seminars and

workshops

65 seminars and

workshops

(*) Baseline values for SPFM II would be the values as on June 2015.

Annex 3Page 1 of 2

Annex 3Financial management

Budget and Expenditures for FY 2015/16:

The status of budget and expenditures up to the second trimester of FY 2015/16 are as follows:

SPFM I In NPR Millions

BudgetBudget Expenditure % Expenditure

GoN WBTF Total GoN WBTF Total GoN WBTF Total

Recurrent 10.56 36.84 47.40 7.67 26.47 34.14 72.65% 71.85% 72.03%

Capital 1.33 2.94 4.27 1.09 2.12 3.20 81.69% 71.95% 74.98%

Total 11.89 39.78 51.67 8.76 28.58 37.34 73.66% 71.85% 72.27%

SPFM II In NPR Millions

BudgetBudget Expenditure % Expenditure

GoN WBTF Total GoN WBTF Total GoN WBTF Total

Recurrent 21.01 73.28 94.29 0.14 0.47 0.60 0.65% 0.64% 0.64%

Capital 72.46 208.82 281.28 2.63 5.13 7.76 3.63% 2.46% 2.76%

Total 93.48 282.10 375.57 2.77 5.59 8.36 2.96% 1.98% 2.23%

Most of the planned activities in SPFM I have been completed resulting in the expenditure rate of 72.27% in FY 2015/16 up to the second trimester. Moreover, as there would be total savings of around USD 200,000 in SPFM I project from Category 2 USD 45,000 and Category 4 USD 155,000, the amounts will be reallocated to Category 1 as agreed during the mission.

The expenditure rate is only 2.23% up to the second trimester of FY 2015/16 for SPFM II as most of the activities are planned for the third trimester (the project was effective only on October 16, 2015). The expenditure rate is expected to improve in the third trimester of FY 2015/16.

Disbursement: As of April 7, 2016, the Project has disbursed USD 4.28 million, which is about 99.57% of the allocated funds. Netting off the balance available in the Designated Account of USD 338,719.78, the actual usage of funds is 91.70%. As per the Project’s record, only the reimbursable amount for expenditures incurred in the second trimester of FY 2015/16 amounting to NPR 23.24 million (around USD 232,440) remains to be transferred to Government Treasury. The remaining DA balance net of the reimbursable amount of around USD 232,440 will be transferred based on expenditures of the third trimester of FY 2015/16.

Financial Management: The Team noted that CGAS has been fully implemented in FCGO Office as well as PEFA Secretariat, however activity-wise information is not available in CGAS, which has been manually maintained. It has been agreed with both FCGO and PEFA Secretariat to maintain the activity-wise information in CGAS by May 31, 2016. CGAS has been installed in all

Annex 3Page 2 of 2

DTCOs, however due to delay in updating CGAS in DTCOs, it was noted that the IUFRs/ FMRs were being prepared based on TSA data. The mission requested FCGO/ PEFA to emphasize on the need for timely updating CGAS in all DTCOs. The mission also requested for reconciling CGAS data with TSA data on periodic basis, preferably every trimester.

Transaction review: Some of the vouchers were sampled for FY 2015/16 expenditures and there were no significant finding except that an advance of NPR 2.3 million for DTCOs Chiefs’ workshop was being charged to the Project erroneously, which FCGO has agreed to adjust to its own resources.

Internal Control: The team noted no major finding on Internal Control except for the following:

- Asset management. As agreed earlier, the excel Asset Register being maintained for the IT assets is yet to be maintained for all the other Project’s assets. It was agreed to be completed by May 31, 2016. It was also agreed that each asset will be individually coded and details of each asset will be maintained in the excel Asset Register. The Project is currently maintaining Manual Stock Books (Main and Subsidiary).

- Advance settlement. The team noted delay in settlement of some of the advances, e.g. NPR 0.1 million provided to NPC outstanding since FY 2013/14 and the advance to Sajha Pasal Sewa of total NPR 6.1 million outstanding since Shrawan 2072. The Project was advised to emphasize on timely settlement of advances.

Financial Monitoring Report. There are no outstanding progress reports. The timeliness and quality of the financial monitoring reports (FMRs/ IUFRs) are satisfactory. The review team reminded that the second trimester FMR/ IUFR will due on April 30, 2016.

Audit Report: No major finding has been reported in the internal audit report of FY 2014/15. The internal audit for FY 2015/16 has not been done yet. The Project was requested to emphasize on trimester internal audit as per the Government Policy. The external audit report for FY 2014/15 has been received with unqualified opinion. There are no major issues raised in the external audit report except for the procurement delays which the Project confirmed as settled.

Annex 4Page 1 of 3

Annex 4Details of IT Infrastructure to be Procured under Component 1 with Work Plan

Sr No Description

Estimated Amount (USD)

Bid Publish

Date

Pre-bid meeting

Contract award date

Estimated End Date

1 1. Network Monitoring Software for Short Term Solution, 2. Online Monitoring Software for day to day supports, 3. Website design 4. Grievance handling System development, and 5. Web base E-Attendance System (With Devices) All procurement will complete up to 15 July, 2016

20,000.00       15/06/16

2 Core i5 Branded Computer 12 Core i7 Laptop Computer 8 Duplex Laser Printer 4 Middle Range Photocopy Machine 2 Data Storage Devices 10

26,650.00       15/03/16

3 1 Core i5 or higher Branded Computer/Laptop 50 2 Duplex Laser Printer 5 3 Normal Laser Printer 23 4 Middle Range Photocopy Machine 11 5 Replacement of Battery /Invertor/Solar Panel 15 This Procurement plan ill implement by 79 DTCOs

130,000.00       15/06/16

4 1 Core i7 Branded Computer/ Laptop 40 2 Duplex Laser Printer 4 3 Normal Laser Printer 15 4 Middle Range Photocopy Machine 10 5 Surveillance System (CCTV) for DTCOs 3 6 Replacement of Battery /Invertor/Solar Panel 12

120,000.00       15/06/17

5 1 Procurement of Solar Power Backup System for DTCOs (Category B) 4 2 Procurement of Solar Power Backup System for DTCOs (Category C) 15 3 Procurement of Solar Power Backup System for DTCOs (Category D) 6 Total 25

395,592.00       9/4/2016

6 1 Precision AC Redundant Precision Cooling System Set 2 Rack Integrated and Contained Cabinet Including 4X42U Racks Set 4 Containment Frame Sub assembly Frame/Smart Row/Fire Fighting Cabinet Set 1 Fire Detection System Fire Detection System with Novec GAS 1230 Suppression System & Accessories Set 1 Monitoring System Rack Data Unit,Functional Modules four Serial card,Temperature & Humidity Sensor,Water Sensor,Beacon &Buzzer Sount and Flash Led,Door Status etc. Lot 1 2 Electrical Distribution Electrical Kit for DC Set 1 3 PDUs /Rack Dual Intelligent PDUs /Rack Ser 4 4 Door Controller Access Control Proximity Reader with 6 Door Controller Set 3 5 Other Installation & Commissioning,project management for DC LS 1 6 Battery Batteries for UPS set 80

185,928.87       4/4/2016

7 S.N. Descriptions Qty 1 Core Router 2 2 WAN Switch 2 3 Perimeter Firewall 2 4 DMZ Switch 2 5 Core Switch 2 6 Server Farm Firewall 2 7 Server Farm Switch 2 8 LAN Access switch 9 9 VPN Solution (SSL VPN) 2 10 Threat management System (DDos Security) 1 11 Wi-Fi (HO) with Controller and 16 nos AP 1(Lot) 12 NMS (Network Monitoring System) 1 13 WAN Bandwidth

1,343,241.00       30/09/16

Annex 4Page 2 of 3

Sr No Description

Estimated Amount (USD)

Bid Publish

Date

Pre-bid meeting

Contract award date

Estimated End Date

Optimizer 2 14 Server Load Balance with WAF (Wave Application Firewall) 2 15. Branch Router 67 16. Branch Fare Wall 27 17. Branch Switch 72

8 For HO (Head Office FCGO )LAN Cat6 UTP Patch Cords - 7 Feet Nos 175 Patch cable retrofit lock for user end cables Nos 40 2-port British Style Shuttered faceplate, WHITE Nos 140 Cat 6 UTP Jack with Strain relief and bend limiting boot Nos 175 LAN Cable: 4-pair, Cat6 UTP 23 AWG Cable, CMR, FRPVC, 600 MHz, roll of 305m, Grey Boxes 30 48 port (2 RU) network panel with CAT 6 U/UTP jacks, rear cable manager and multicolor port LEDs Nos 6 Panel controller for Network Panels, with PoE / LAN port for remote management Nos 6 Cat6 UTP Patch Cords - 4 Feet Nos 180 Fiber Cable: 6-core Outside Plant Cable - Corrugated Steel tape Armored, Loose-tube, Gel-filled, 50/125 micron OM3 MM Nos 1400 Fiber Management System, 12F, 1U, LC OM3, Loaded with Pigtails, Splice tray, Couplers and management rings. Should be supplied with all splicing accessories like splice protector sleeves, cable ties, cable tags, cleaning tissues etc. Nos 5 Fiber Management System, 48F, 1U, LC OM3, Loaded with Pigtails, Splice tray, Couplers and management rings. Should be supplied with all splicing accessories like splice protector sleeves, cable ties, cable tags, cleaning tissues etc. Nos 1 LC-LC Multimode 50/125 micron OM3 Duplex Patch Cord, LSZH, 3 Meter Nos 12 Cabling Management Software Nos 1 Three Year TAC support from OEM for Intelligent Software 2400 ports Nos 1 6U Networking Rack Nos 11 For Data Center (DC) 24-port unloaded Modular Straight Jack Panel for SL series, 1U Nos 3 24 port (1 RU) network panel with CAT 6 U/UTP jacks, rear cable manager and multicolor port LEDs Nos 5 Panel controller for Network Panels, with PoE / LAN port for remote management Nos 1 Fiber Management System, 12F, 1U, LC OM3, Loaded with Pigtails, Splice tray, Couplers and management rings. Should be supplied with all splicing accessories like splice protector sleeves, cable ties, cable tags, cleaning tissues etc. Nos 2 Patch cable retrofit lock for user end cables Nos 40 etc Installation,Commission

249,226.00       14/05/16

9 S.N. Descriptions Qty 1 Router for 20 DTCOs 16 2 Router for 59 DTCOs 50 3 Managed Switch 72 This Procurement will implicate by 79 DTCOs

400,100.00        

10 S.N Description Quantity 1 Procurement of Solar Power Backup System for DTCOs (Category C) 7 2 Procurement of Solar Power Backup System for DTCOs (Category D) 2

130,600.00       3/3/2016

Annex 4Page 3 of 3

Sr No Description

Estimated Amount (USD)

Bid Publish

Date

Pre-bid meeting

Contract award date

Estimated End Date

11 S.N Description Quantity 1 Core i5 or higher Branded Computer/Laptop 40 2 Duplex Laser Printer 5 3 Normal Laser Printer 27 4 Middle Range Photocopy Machine 13 5 Replacement of Battery /Invertor/Solar Panel 11

109,400.00       15/02/16