Fiscal year 2010/11 - Poverty Alleviation Fund, Nepal

Chapter 6:
Financial
Management
This chapter discuss the the outcome of some of the major
studies relating to PAF results on the ground.
6.1. Financial Planning and
Management
PAF Financial Management System consists of three pillars namely-
Financial Planning, Financial Management and Financial Reporting.
Financial management is directed by Applicable Accounting Standards
which is accepted both by Government of Nepal and World Bank. It also
fulfills the requirements of partner organizations. Financial Management
System of PAF is governed by Financial Management Manual.
PAF accounting system is based on Cash basis. It maintains all books of
accounts relating to receipts and expenditures. PAF maintains its books
of account on computerized accounting software-Fin App.
For effective implementation of PAF activities and monitoring of
documents, regular auditing is done by internal and external auditors.
M/S P.P. Pradhan & Company is assigned as internal auditor for the
FY 2066/67 and FY 2067/68. Similarly, external audit is carried out by
Office of Auditor General.
For effective planning and monitoring of funds, PAF has signed separate
MoU with Rastriya Banijya Bank (RBB) and Nepal Bank Limited
(NBL). PAF has opened Main account and along with main account,
separate bank accounts are opened for PAF operating expenses and for
Programme expenses. Also, RBB and NBL have opened Operating bank
account for each community organization in their concerned districts.
PAF prepares Implementation Progress Report (IPR) on a trimester basis
for the purpose of review by internal management and reporting to the
World Bank., The report is comprised of different sections including brief
description of project progress. The IPR is the comprehensive report
that includes various reporting formats, which cover financial, physical
progress, contract expenditure and procurement information. The report
2A discloses the information on sources and uses of funds. Likewise,
2B provides information on uses of funds by project activity and 2C
is the section that gives information on IDA eligible expenditure and
the disbursement status. Section 2D is for reconciliation statement of
special account and the projection for the forthcoming trimester.
Review of physical progress section provides all information on the
achievement against planned with regards to major physical indicators
set by PAF. Contract expenditure report has two parts- goods and
The funds flow modality of PAF with community organization is as follows:
Figure : PAF Funds Flow Modality
PAF
Level
(Centre)
CO Level
(District)
PAF
Program
A/C
Community
Operating A/C
consultants. Furthermore, goods and consultancy are categorized on the
basis of prior or post review threshold. Similarly, procurement section
has two parts -goods and consultancy. Furthermore, procurement of
consultant has been categorized as individual consultant and firm
consultant. Whether procurement is prior or post review depends upon
the threshold for procurement of goods and consultants.
6.2. Procurement
PAF
Main A/C
Community
Contribution
PAF
Operating
A/C
Partner Organization
(PO) Provide
Technical Assistance
to Community
Organization (CO)
Annual procurement plan (PP) for the FY 2010/11 has been prepared
and implemented. The PP covers procurement of services, goods
and non-commodity services. Based on the Public Procurement
Act 2063 Public Procurement Regulation 2064 and the World Bank
Procurement Guideline, PAF has prepared a procurement guideline and
all the procurement of goods and services are procured by following the
guideline.
6.3. Budget and Expenditure
The total expenditure in FY 060/61 (2003-04), FY 2061/62 (2004-05),
FY 2062/63 (2005-06), FY 2063/64 (2006-07), FY 2064/65 (2007-08),
FY 2065/66 (2008-09), FY 2066/67 (2009-10) and FY 2067/68 (2010-
ANNUAL PROGRESS REPORT (2010/2011) 35