An Evaluation of the World Bank's Trust Fund Portfolio

CHAPTER 4MANAGEMENT AND ACCOUNTABILITYThe Bank’sfinancialmanagement oftrust funds islargelysuccessful fromthe donors’perspective, butit presentsobstacles togood planningandmanagement forthe Bank.Although theBank’sprocurementrules are part ofits highlyappreciatedfiduciaryframework,many donorrepresentativesand recipientofficialscomplain aboutthem.4.8 While the Bank’s financial management of trust funds is largelysuccessful from the donors’ perspective, it presents obstacles to goodplanning and management for the Bank. This is because trust fundaccounting systems are separate from mainstream Bank financialsystems and largely designed to ensure and demonstrate compliancewith fiduciary rules. As a result, operational managers report thefollowing problems:There is no report that a unit can run for its work programportfolio that provides all sources of funds for each task. 11Operational units cannot readily factor trust funds into theirannual work planning cycle because they receive trust fundresources at varying and unpredictable intervals.The true costs of preparing and supervising projects areunderstated, insofar as time spent on trust-funded operationsmay not always be charged against the trust fund. 12 InRwanda, for instance, some staff did not have a budget line toaccount for the time they devoted to individual trust funds,and instead assigned these costs to the budgets of otheroperations. Because there is no accounting for these costs, thescale of the problem is unclear.Country offices must maintain parallel systems to track trustfund disbursements and to manage accounts for term andcoterminous staff. 13 For instance in Indonesia, trust fund teamshave had to set up their own spreadsheets, templates, andprocedures. Parallel systems are needed to track expendituresand to manage accounts for term and coterminous staffbecause the Bank’s business management software does notdistinguish the two types.4.9 These kinds of problems have been documented in the annualtrust fund portfolio reports of some of the VPUs, accompanied bynumerous suggestions to make trust fund financial managementmore efficient and transparent. These suggestions focus mainly onimproving data recording and the merging of systems and reports.Such systems improvements are likely to succeed only if the Bank anddonors also confront the underlying issue: that compliance-focused,parallel accountability to donors is not compatible with the Bank’sneeds for integrated financial planning and reporting.4.10 Procurement. Trust-funded activities 14 are subject to theBank’s procurement guidelines, which specify the circumstancesunder which contracts must be awarded by international competitivebidding, local competitive bidding, or other methods, which in turndetermines the need for Bank prior review. Even though theguidelines form part of the Bank’s highly appreciated fiduciaryframework, many in-country donor representatives and recipient52