PAD - LGED

accounting systems. LGED will complete the recruitment process for the FMS well ahead so that
the person is in place right from the start of the project. The FMS will report to the Project
Director and be assisted by adequate number of Accounts Officer(s), Accountant(s) and other
support staff in carrying out the FM functions of the project. The TORs for all the FM positions
have been agreed with the Bank. LGED has made appropriate provisions in the Development
Project Proposal (DPP) for the FMS and other FM staff.
13. FM Risk. The overall FM risk is assessed as Substantial. The FM risk as part of
Fiduciary Management Risk in the ORAF has been identified as Substantial. The FM capacity
risk as part of Institutional Capacity risk is also assessed as Substantial. The Bank has identified
the necessary measures on FM staffing and systems to mitigate the fiduciary risks arising from
the weaknesses of the internal control environment and FM capacities through Project Financial
Management Arrangement as stated below.
14. FM Responsibilities. The duties of the PMU’s FM section will include but not be limited
to operation of the Designated Account and e-submission of withdrawal requests to the Bank;
processing the bills for procurement of works, good, services and operating expenditures;
disbursements of the Bank’s share of all bills passed for payment from the PMU and all District
Offices of the project; preparation of an annual budget, revised budget and six monthly
disbursement forecasts; obtaining quarterly fund release for GoB allocated fund and submission
of GoB share of the bills to the CAO, LGD for payment and coordinating with district offices for
submission of bills to the District Accounts Officers (DAO); maintenance of books and records
at PMU; preparation of Bank Reconciliation Statements; fixed assets management in all project
locations tracking assets procurement; custody, use, disposal and physical verification;
submission of quarterly IFRs to the Bank and preparation of annual financial statements and
other periodic reports for the Project Director, Chief Engineer, the line ministry and other GoB
agencies and the auditors; and interfacing with auditors during annual financial audit and any
other audit under the project.
15. Fund Flow and Disbursement Arrangements. The Bank’s fund will flow to a
Designated Account (DA) in the form of Convertible Taka Special Account (CONTASA), to be
opened in a branch of a commercial bank acceptable to the Bank. The bank will have adequate
experience, manpower, network and authority to process transactions on a fast track basis. The
bank holding the DA should be capable of transferring funds to the beneficiaries across the
country through bank advice and completing a foreign currency transaction independently within
a short period (not more than three business days). It is agreed that the project would start with
transaction-based disbursement, and may convert to disbursement based on quarterly Interim Unaudited
Financial Reports (IFRs), when the project demonstrates capacity to prepare reliable and
timely IFRs during implementation. Replenishment to Designated Account (DA) and
documentation of expenditures made from the DA will be done on a monthly basis upon
submission of claims along with Statement of Expenditures (SOE)/ full documentation following
thresholds to be indicated in the Disbursement Letter. The ceiling on the advance to DA will be
set at 4.5 months of estimated average project expenditures. Besides, Direct Payment from the
Bank to the providers of goods, works and services shall be admissible for larger payments.
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