Emergency Fire Prevention And Control Project in the Amazon: Annex 5

Annex 5

Brazil: Emergency Fire Prevention And Control Project in the Amazon
Financial Summary


The financial management system to be implemented before project effectiveness at IBAMA will be adapted from the systems currently being used by other Bank-financed projects within MMA. This system is structured to provide planning, monitoring and expenditure control. This system has demonstrated its capacity to maintain adequate accounting, financial reporting, and auditing systems to ensure the provision of accurate and timely information regarding project resources and expenditures to project management, auditors and the Bank. Similar systems have been operating in other Bank projects for at least 2 years.

Organizational Chart

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Financial Management Unit Function

The PCU at IBAMA would include a financial management unit headed by a financial manager. The unit would be responsible for instructing and supporting other executing agencies on financial management budget and expenditure control. An operational manual is being prepared by the project management unit, setting out operational procedures, auditing requirements, the responsibility of the executing agencies and all other financial aspects of project implementation. The executing agencies would report to the Project Coordinator and would be supervised by the Technical Management Unit. They would work based on the Annual Operating Plan (POA), which would describe the main elements of the project executing process. The financial management unit would produce accounting and monitoring reports monthly so that adjustments can be made promptly, if needed.

Financial Management Unit – Staffing

  • A Financial Manager would report directly to the project manager. He would coordinate the unit and support the executing agencies on the implementation of monitoring mechanisms and financial procedures. He would ensure that the Project Coordinator is provided with timely accounting and monitoring reports to facilitate project implementation and monitoring.
  • The Financial Assistant would assist the financial manager in all financial aspects of the project. He/She would be responsible for disbursements, would prepare Statements of Expenditures – SOE, and would generate accounting reports in accordance with international accounting standards, ensuring that they are accurate and timely.
  • The Physical/Financial Monitoring Assistant would assist the financial manager and would be responsible for controlling and monitoring the physical/financial tasks described in the Annual Operating Plan (POA) for each of the executing agencies of PROARCO.

It was agreed with the PCU that all financial staff would be college-educated accountants and they would be trained by a financial manager who has substantial experience with the Bank projects. It was also agreed with the PCU that the financial assistant and the physical financial assistant would be in place prior to loan effectiveness. The implementing units of each project executing agency would also include a qualified financial assistant who would be responsible for providing all project financial information to the management unit.

Accounting System and Procedures

The accounting system would be based on a specific chart of accounts for this project in accordance with the categories described in the Project Appraisal Document (PAD). This system would produce accounting reports reflecting project components defined in the PAD. The system would basically consist of two parts. Part one would be the planning of expenditures; and part two would be the monitoring and control of expenditures. The data would be inputted by the financial management unit as they receive the physical/financial data from the executing agencies. The executing agencies would primarily work with the Annual Operating Plan (POA) and would report the expenditures to the Financial Management Unit so that they can monitor the physical/financial progress of the project. The accounting records would be maintained on a cash basis. The system would provide accurate and timely accounting reports.

Planning and Budgeting

An Annual Operating Plan (POA) would be prepared by each of the executing agencies and would be submitted to the Project Management Unit. Each POA would be revised and inputted into the system under specific codes which would identify the executing agency, the category, the component, and the element of expenditure as described in the PAD. Please refer to Flow of Funds for more details on disbursements aspects.

Project Financial Management Reporting

The format of the accounting reports agreed with IBAMA would show the sources and uses of the funds, variances between actual and planned expenditures, and the uses of funds by project category and executing agency. It would allow the Financial Management Unit to monitor the physical and financial progress of the project. The accounting reports would be produced monthly. An existing accounting system in use for other Bank-financed projects is being adapted to prepare the financial management reports as agreed.

Auditing Requirements

The terms of reference for the audit of this project satisfactory to the Bank would be included in the project operational manual and would be reviewed by the FMS of the Brazil CMU. The Bank’s other projects with MMA (NEP, GEF/FUNBIO/PROBIO) have been audited by the Secretaria Federal de Controle (SFC) and no major issues have been reported. This project would be audited either by SFC or by an independent private auditor, in accordance with the proposal of SFC made to the Bank in the context of the Protocol of Understanding.

Flow of Funds

The Executing Agencies would pay themselves for their acquisitions and would submit financial requests to the Financial Management Unit at IBAMA on their expenditures according to the Annual Operating Plan (POA). IBAMA would advance the funds to the executing agencies from its account through Secretaria do Tesouro Nacional (STN). The Executing Agencies would provide to IBAMA an actual expenditures report and IBAMA would prepare the Statement of Expenditure (SOE) and would send it to STN. STN would then send to the Bank (LOAEL) the application form for withdrawals in order to reimburse themselves from the special account.

 

Financial Summary

Years Ending December 31 (in US$’000 equivalent)

  Implementation Period Total

1998

1999

Project Costs       Investment Costs

7,100

453

7,553

Recurrent Costs

11,500

947

12,447

Total

18,600

1,400

20,000

Financing Sources (% of total project costs) IBRD 14,000

1,000

15,000 Government 4,600 400 5,000 Total 18,600 1,400 20,000


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