United Nations Country Team
TERMS OF REFERENCE FOR MACRO ASSESSMENT CONSULTANT
BACKGROUND
Pursuant to the UN General Assembly Resolution 56/201 on the triennial policy review of operational activities for development of the United Nations system, UNDP, UNICEF, UNFPA and WFP (UNDG ExCom Agencies) adopted a common operational framework for transferring cash called “Harmonized Approach to Cash Transfers (HACT)” to government and non-government Implementing Partners. Its implementation will significantly reduce transaction costs and lessen the burden that the multiplicity of UN procedures and rules creates for its partners.
Implementing Partners will use common forms and procedures for requesting cash and reporting on its utilization. Agencies will adopt a risk management approach and will select specific procedures for transferring cash on the basis of the joint assessment of the financial management capacity of Implementing Partners. They will also agree on and coordinate activities to maintain assurance over the utilization of the provided cash. Such jointly conducted assessments and assurance activities will further contribute to the reduction of costs.
The adoption of the new harmonized approach is a further step in implementing the Rome Declaration on Harmonization and Paris Declaration on Aid Effectiveness, which call for a closer alignment of development aid with national priorities and needs. The approach allows efforts to focus more on strengthening national capacities for management and accountability, with a view to gradually shift to utilizing national systems. It will also help Agencies shape their capacity development interventions and provide support to new aid modalities.
The Agencies will need to assess the risks associated with transactions to an Implementing Partner before initiating cash transfers under the harmonized procedures. Two types of assessments are required: a Macro Assessment in order to ensure adequate awareness of the Public Financial Management (PFM) environment which Agencies will provide case transfers to Implementing Partners; and a Micro Assessment in order to assess the risks related to cash transfers to the partner.
Within this context, the ExCom Agencies in the Maldives (i.e. UNICEF, UNFPA and UNDP) plan to undertake a macro assessment of the countries financial management system, in order to enable them to take appropriate decisions on Harmonized Approach to Cash Transfer (HACT) modalities, procedures and assurance activities for their programmes/projects during the rest of their five-year Country Programmes 2008-2010. The cash transfer modalities are planned to be effective from January, 2008.
Preparatory activities for the HACT roll-out in 2008 are being undertaken. An inter-agency group called the Operations Management Team (OMT) was tasked by the UN Country Team, to manage this preparatory process, with support from the Office of the UN Resident Coordinator.
This TOR is for the conduct of the Macro Assessment. The World Bank had recently conducted an assessment of accounting and auditing standards and practices in the public sector of the Maldives. It contains a lot of information which could extensively guide the Agencies in the macro assessment. In view of this recent study, the Agencies agreed that a desk review of existing relevant studies would suffice to develop a UN Macro Assessment.
PURPOSE OF THE MACRO ASSESSMENT:
· Capacity development objective: The macro assessment will support the ExCom Agencies and the Government to identify strengths and weaknesses in the country’s public financial management system (PFM) and areas for capacity building by the Government and other partners.
· Financial management objective: The macro assessment (in combination with the micro assessments of Implementing Partners) will assist in the establishment of appropriate cash transfer modalities, procedures, and assurance activities to be applied by the ExCom Agencies. The review establishes the capacity of the Supreme Audit Institution (SAI) to undertake audits of cash transfers provided to “low risk” Implementing Parners
SCOPE
· The macro assessment will be a desk review of any of the following assessments recently completed, based entirely on PFM-related work conducted by development partners. Examples of such reports include:
Assessments by the World Bank
· Country Financial Accountability Assessment. CFAAs vary in format and presentation.
· Public Expenditure Review. This analyzes a country’s fiscal position, expenditure policies, and public expenditure management systems.
· Country Procurement Assessment Review. This reviews public procurement institutions and practices.
· Institutional and Governance Review. This reviews the quality of accountability, policy-making, and service delivery institutions.
· Capacity Assessments of Heavily Indebted Poor Country PFM. Done jointly with the IMF, this assessment covers some of the same issues as a CFAA.
It should be highlighted that the World Bank recently released a report, entitled: “Maldives Public Sector Accounting and Auditing: A Comparison to International Standards,” which provides very relevant information on the country’s public financial management system.
Assessments by Other Institutions
· Fiscal Transparency Review. IMF. This uses the code of good practices on fiscal transparency adopted by the IMF in 1998.
· Diagnostic Study of Accounting and Auditing. Asian Development Bank.
· Ex-ante audits of PFM systems undertaken by the EC.
· Assessments by CIDA, DFID, EU, ADB and other Agencies.
· In order to ensure that the review is of maximum usefulness and relevance, the above assessment reports should be as recent as possible, but not more than five years old.’
· The review will cover areas of the national budget development and execution process; the functioning of the public sector accounting and internal control mechanisms; audit and oversight; and financial recording systems and staff qualifications.
· Should further clarification or verification be required to substantiate the review, responsible officials of relevant government agencies will be contacted. The Ministry of Finance, Auditor-General’s Office, Ministry of Planning and National Development will be among those government authorities for this clarification/verification exercise, but will not be restricted to only these Authorities.
METHODOLOGY
· The consulting entity (hereinafter called as “the consultant”) will begin with the collection of existing PFM review reports and will also consider the ExCom Agencies’ own experience and knowledge of the PFM. The consultant will review the existing documentation and ExCom Agencies’ experience to address the issues raised.
· The consultant will give special attention to PFM aspects and issues that relate to the management and utilization of official development assistance in general and technical assistance in particular.
· The consultant will prepare a draft report on the results of the macro assessment, based on the HACT Framework. The UN Resident Coordinator’s office will share the draft report with all HACT working group members on cash transfer modality and relevant development partners. The UN Resident Coordinator’s office will thereafter organize a meeting for the consultant to introduce the draft report to representatives of the Government and ExCom Agencies and validate its results with the latter.
· Progress in consultant’s work will be closely monitored by the UN Resident Coordinator’s Office and the OMT.
· The consultant will present and submit the final macro assessment report to the UN Resident Coordinator and the heads of UNDP, UNICEF and UNFPA in the Maldives, through the UN Resident Coordinator’s Office.
DELIVERABLE
· The consultant report will be about 4 pages (excluding annexes) and conclude with a completed table of the risk areas (Annex 1) . The report should include the following main elements:
- Objective of the review and statement of process and participating institutions
- Summary of findings-- to address each of the issues identified in the checklist
- Any key risks the PFM poses to the functioning of the cash transfer framework
- Assessment of Supreme Audit Institution’s capacity to undertake required audits
- Suggested opportunities for capacity building (if any)
- Bibliography of information sources used in the assessment
- Annex - the completed checklist
DURATION
The macro assessment is estimated to take maximum 1 month. A timetable will be developed by the consultant and approved by the OMT.
QUALIFICATIONS
- The assessment will be conducted by a consultant, familiar with the country and the working languages of the Maldives. The consultant is expected to have the following major qualifications and competencies:
- Independent of the Government of Maldives and should have prior experience advising on the PFM. Preference will be given to consultants who have undertaken such assessments.
- Experience and expertise in reviewing public financial management systems.
- Familiarity with international organizations, particularly UN Agencies, their financial management policies/practices and assistance projects, will be an advantage
- Broad understanding governance and accountability issues
- Ability to identify and collect reports on the PFM
- Excellent written and oral communication skills in English, knowledge on Divehi language will be an advantage
