UNITED NATIONS DEVELOPMENT PROGRAMME

PROJECT DOCUMENTPapua New Guinea

Project Title: Provincial Capacity Building (PCaB) Programme, Phase II- Bridging PhaseProject Number:Implementing Partner: Department of FinanceStart Date: 01/01/2017 End Date: 31/12/2017 PAC Meeting date:

Brief DescriptionThe Provincial Capacity Building (PCaB) Programme, Phase II-Bridging phase (PCaB II-B) builds on the achievements of Provincial Capacity Building project launched in 2008 which focused on overall financial management improvement programme of the Government of Papua New Guinea (PNG) through enhancing sub-national treasury functions.

The areas of work under PCaB II-B responds to the outcomes of the evaluation of PCaB-II as well as the major directions of the ongoing policy and institutional reforms of the Government of PNG (GoPNG) on Public Financial Management. PCaB, Phase II-B aims to improve the equitable delivery of public services through enhancing public finance management systems and capacities at the national and sub-national levels. PCaB II-B is also in line with UNDPs Regional Local Governance Initiative ‘Strengthening Local Governance Systems for the SDGs in Asia-Pacific’.

The major focus of PCaB II-B will be on the work at the district level, targeting District Development Authorities (DDAs) for more effective delivery of their finance management functions. The PCaB II-B project is a bridging phase of the project, transitioning from PCaB II to its final phase (PCaB III) envisaged to begin by end of 2017. It is also in line with the ongoing reforms in the Public Finance Management sector of the Government of PNG and contributes to the implementation of the PFM Roadmap adopted by the Go PNG in September 2015. PCaB II-B also complements other initiatives supported by the Government of Australia, including the Provincial and Local Level Government Programme which aimed at supporting effective decentralised service delivery in PNG.

Total resources required (USD):

3,250,000

Total resources allocated (USD):

3,250,000

UNDP TRAC: 50,000Australian

Gov: 1,200,000

Donor:Government

In-Kind (*): 2,000,000

Unfunded: (*) This contribution is not recorded in Atlas

Agreed by (signatures):UNDP Implementing Partner

Print Name: Hemansu-Roy TrivedyResident Representative

Print Name: Dr. Ken NganganSecretary Department of Finance

Date: Date:

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Contributing Outcome (UNDAF/CPD, RPD or GPD):Elected representatives and key GoPNG bodies implement good governance practices grounded in accountability, transparency, inclusive participation and equityIndicative Output(s):National and sub-national levels of GoPNG have increased financial management capacity to manage the equitable delivery of public services.

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Contents

I. Development Challenge...........................................................................................................41.1. Country context.................................................................................................................41.2. Background.......................................................................................................................51.3. Past interventions.............................................................................................................6

II. Strategy...................................................................................................................................102.1. Alignment with GoPNG priorities..................................................................................112.2. Scope...............................................................................................................................112.3. PEFA Assessment..........................................................................................................122.4. Programme objectives....................................................................................................172.5. Approach.........................................................................................................................172.6. PCaB II-B components...................................................................................................18

III. Results and Partnerships......................................................................................................193.1. Project beneficiaries.......................................................................................................23

IV. Project Management...............................................................................................................27V. Results Framework.................................................................................................................29

TARGETS (by frequency of data collection)...........................................................................29DATA COLLECTION METHODS & RISKS................................................................................29

VI. Monitoring And Evaluation....................................................................................................30VII. Work Plan ...............................................................................................................................32VIII. Governance and Management Arrangements.....................................................................34IX. Legal Context and Risk Management...................................................................................36X. ANNEXES................................................................................................................................37

ANNEX 2. RISK ANALYSIS...........................................................................................................37ANNEX 4. TERMS OF REFERENCES OF THE CHIEF TECHNICAL SPECIALIST.....................................38

ANNEX 5. LIST OF CURRENT PROVINCES AND DISTRICTS UNDER PCAB SUPPORT......41

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List of abbreviations

ASFD Accounting Standards Framework DivisionAWP Annual Work PlanBSP Bank of South PacificDDA District Development AuthorityDIRD Department of Implementation and Rural DevelopmentDoF Department of FinanceDNPM Department of National Planning and MonitoringDPLLG Department of Provincial Local Level GovernmentDT District TreasurerDSP Development Strategy PlanDSIP District Service Improvement ProgrammeDTO District Treasury OfficeFMIP Financial Management Improvement ProgrammeFTB Financial Training BranchHACT Harmonized Approach to Cash Transfer ICDL International Computers Driver’s LicenseICT Information Communication TechnologyICTD Information Communication Technology DivisionIFMS Integrated Financial Management ServiceLLG Local Level GovernmentM&E Monitoring and EvaluationMTDP Medium Term Development PlanNEFC National Economic and Fiscal CommissionPEFA Public Expenditure and Financial AccountabilityPLGP Provincial and Local-Level Governments ProgrammePCaB Provincial Capacity BuildingPDFMD Provincial Districts Financial Management DivisionPGAS PNG Government Accounting SystemPFM Public Financial ManagementPFMA Public Financial Management ActPSA Provincial Support AdvisorPDSA Provincial and District Support Adviser PSMA Public Service Management ActTCSA Training Coordination Support Advisor

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I. DEVELOPMENT CHALLENGE I.1. Country contextPapua New Guinea (PNG) is the largest country in the Pacific region, with a total population of 7.5 million and more than 80% of people living in rural areas. During the last decade (2004–2014), the country demonstrated continued economic growth. In 2014, the GDP grew by 6%, while the per capita-income increased to USD 2,010.1 During the same period, the country’s Human Development Index (HDI), including the three main dimensions that make up the HDI – namely a long and healthy life, access to knowledge and a decent standard of living – was steadily rising. However, PNG’s HDI remains among the lowest in the world (ranked 157th out of 187 countries).2 The 2015 Final MDG Progress report outlined that despite good progress, PNG did not meet any of the made in achieving the targets and indicators. The major contributing factors are the gaps in effectiveness of governance systems resulting in a ‘disconnect between national and sub-national service delivery systems’ and ‘negligence and misappropriation of public funds and resources’3

which contribute to the deterioration of services.

Review of the relevant Worldwide Governance Indicators (WGI) during the last decade (2004-2014) show unstable progress until 2009, and a slight increase for ‘government effectiveness’ and ‘voice and accountability’, as well as for ‘control of corruption’. The latter scores lower compared to other indicators. Likewise, PNG’s Corruption Perception Index (25 out of 100; 145th out of 175 countries) is below the world average of 43, which is believed to be due to ‘the lack of enforcement of the law...and little or no accountability for those who fail to follow the rule of law in dealing with state assets and decisions’.4

Graph 1: Worldwide Governance Indicators, 2014

The above is backed up by the findings of the recent Country Assessment on Public Expenditure and Financial Accountability (PEFA) whereas the Government is underperforming on (a) external scrutiny and audit, (b) asset and liability management as and (c) accounting, recording and reporting. This highlights existing policy and institutional gaps, which could partly be caused by the weak demand for the good governance, resulting from poor awareness and capacities to influence policy level planning and decision making processes. For example, the 2012 Open Budget Index (OBI) of PNG suggests that the country is generally an average performer with moderate strength of its legislation and Supreme Audit Institution (between 34 and 66), but is weak in public engagement (below 34).5

1 2014 Annual Progress Report, United Nations in Papua New Guinea2 2014 Human Development Report: http://hdr.undp.org/sites/all/themes/hdr_theme/country-notes/PNG.pdf 3 MDG Summary Report for Papua New Guinea, 2015 (unpublished)4 Transparency International PNG: http://www.transparencypng.org.pg/newsroom/view/2014-corruption-perceptions-index-offers-a-reminder-and-a-warning-that-abus 5 http://internationalbudget.org/wp-content/uploads/OBI2012-PapuaNewGuineaCS-English.pdf

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In 2014, the Government of Papua New Guinea (GoPNG) passed the largest annual budget (USD5.4 billion) in PNG’s history, demonstrating its commitment to improving service delivery to its citizens through increased budget allocations (a) to the provincial, district and local level governments and (b) to the health, education, infrastructure and law and justice sectors, which are regarded as ‘key development enablers’.6 In 2014 the GoPNG allocated PGK 3. 5 billion to the sub-national level governments, and this trend is likely to continue given GoPNG’s commitment to further increasing resource allocations at the sub-national level.7

At the same time, according to the 2014 Annual Progress Report of the UN in Papua New Guinea, the major challenge for the Government is ‘to ensure public agencies have the capacity for managing and implementing priority programmes and demonstrating that these resources are used effectively’. For instance, the 2011 Auditor General Office (AGO) Report, submitted to the National Parliament, indicated that only 40% or 34 of 85 government central agencies were audited. The others did not possess the necessary financial reports to initiate the audit. An equally concerning situation is highlighted in the 2012 AGO report, identifying that government agencies on average delayed the submission of their financial reports by four to five years.

The situation is even more concerning at sub-national levels. The provinces, district and Local Level Governments (LLG) have to provide the Annual Financial Statement (AFS) and Monthly Bank reconciliations of their trust and operational accounts. Delays in submitting mandatory reports to the national level are common, with most of the provinces having three to four years of delay in the submission of their AFS, and 25 to 40 months in the provision of monthly bank reconciliations. These delays impede the release of subsequent budgetary tranches, and are thus affecting service delivery at the provincial, district and LLGs levels.

It is clear that, without adequate capacities to manage public funds in a transparent and accountable manner, increased resource allocation will not improve the access of citizens to public services. As the PEFA Country Assessment Report suggests, there is a need for a robust system of PFM to ensure ‘effective implementation of policies and strategic allocation of resources and efficient service delivery’. This means that continued external support is critical to sustain achieved development outcomes and timely and effectively implement the envisaged Public Finance Management reforms.

I.2. BackgroundThe Provincial Capacity Building (PCaB) programme, implemented by UNDP in cooperation with the Department of Finance and funded by the Australian Government, directly contributes to the Financial Management Improvement Programme (FMIP) of the Department of Finance (DoF), and focuses on capacity building for enhancing treasury functions at the sub-national level.

The programme builds on the achievements of PCaB II and takes into account the recent policy and strategic developments of the Government of PNG, with regards to effective decentralisation and improved service delivery. This includes working more closely with the District Development Authorities (DDAs) established to support institutional reforms within the Department of Finance. The programme design is also guided by the outcomes of the Independent Review of the PCaB project, initiated by the Australian Government in 2014.

In line with PFM Roadmap adopted by the Government of PNG in September 2015, the programme aims to improve service delivery and enhance effectiveness of public service programmes through addressing critical capacity gaps related to management of public finance at the provincial and district levels. PCaB is implemented by the DoF, and complements other sub-national capacity building efforts coordinated by the Department of Provincial and Local Level Government Affairs (DPLGA) and the Department of Implementation and Rural Development (DIRD).

6 2014 Annual Progress Report, United Nations in Papua New Guinea 7 Starting 2014 GoPNG is implementing multi-years (5 years) budgeting process, figures in 2014 is similar from 2015 to 2018.

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The project implementation is guided by the Steering Committee, chaired by the Secretary of the DoF. Other members include representatives from UNDP and other donors, as well as representatives from the Department of Provincial and Local Level Government, the Department of Implementation and Rural Development and the Department of National Planning and Monitoring.

The present PCaB II-B Bridging Phase project document is a transitional set of activities aimed to link between the end of PCaB II and the final phase of the project (PCaB III) which is envisaged for a three years’ period time when the project is handed over to the implementing partner (Department of Finance).

I.3. Past interventions

1.3.1 PCaB Phase IThe Provincial Capacity Building (PCaB) programme builds on the outcomes of the previous initiatives of development partners focused on building the capacity of sub-national governments.

PCaB commenced in 2004 as part of the Financial Management Improvement Programme (FMIP) of the Government supported by the Asian Development Bank (ADB), AusAID and UNDP. In early 2000 UNDP launched its “Support to Provincial Financial Management Training” programme (SPFMT) to deliver financial management training for the provincial governments.

Under the SPFMT Programme, the United Nations Volunteers (UNVs) and national professionals were deployed to target provinces to provide required support and services to the Local Level Governments (LLG). The terminal evaluation of SFPMT programme (July 2003) concluded that the programme achieved its main objectives providing space for scaling up. This gave the basis for the design and launch of the PCaB- I focusing on capacity building for enhancing the treasury functions at the sub-national level.

PCaB-I covered 6 provinces, including Morobe, Central, Western, East New Britain, Milne Bay and later Eastern Highlands provinces. Under PCaB-I, training programmes for provincial and LLG staff were delivered. PCaB-I also created internship opportunities for PNG university students in provincial governments.

1.3.2 PCaB Phase IISince its launch in 2008, PCaB has been co-funded by the Australian Government and UNDP. Funds are channelled through the United Nations One Fund, and disbursed on a quarterly basis using the Harmonized Approach to Cash Transfer (HACT) to the PCaB’s account within the Department of Finance.

PCaB was initially piloted in six provinces, namely in Morobe, Western Province, Eastern Highlands, East New Britain, Milne Bay and Central Province. The efforts in pilot provinces were focused on improving treasury functions at the sub-nation level through a comprehensive capacity building package including:

Training on improving quality and timeliness of mandatory financial reports;

Transition to electronic process management through ICT training;

‘Problem solving’ workshops and seminars focused on specific issues faced by the beneficiaries as part of their daily work; and

Improving communication and information exchange on ongoing PFM reforms.

Training on improving quality and timeliness of mandatory financial reports:This training focused on enhancing quality and reducing the time for processing and submission of the mandatory financial reports (Monthly bank reconciliation and Annual

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Financial Statement). This was considered an essential response measure given the fact that prior to PCaB interventions, the abovementioned financial reports were submitted with delays ranging from six to 18 months, according to the Department of Finance. The delayed submission of financial reports on expenditures had further delayed subsequent budget allocations, negatively affecting timeliness and quality of public service delivery.

PCaB’s intensive capacity building efforts in six target provinces have achieved significant progress. All provinces have reached the international PEFA standard of providing bank reconciliations within one month.

Graph 2 (below) shows significant improvements in timeliness and accuracy of submission of financial reports in six pilot provinces. That progress becomes even more evident when compared to provinces not covered by PCaB (see Graph 3), whereas delays in submission of mandatory financial reports by the Treasury Offices average 14.5 months.

2008 2009 2010 2011 2012 20130

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East New BritainEastern HighlandsCentralMorobeWesternMilne Bay

Performance of PCaB Six Pilot provinces

Graph 2: Average delay time in the submission of Monthly Bank Reconciliation, 2014

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1015202530354045

PCaB Pilot Prov-inces

Non PCaB Provinces

Comparation between PCaB Provinces and some other non-supported provinces

(As of October 2011)

Months

Graph 3: Average delay time in the submission of Monthly Bank Reconciliation, PCaB Provinces vs Non-PCaB Provinces 2011

Graph 3 highlights the importance of capacity building of Treasury Offices and the need to replicate the PCaB experience in other provinces. The need to roll out and build the capacity of District Treasury Offices has also been confirmed by the outcomes of the PCaB review conducted in 2014.

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To sustain and maintain the development outcomes in the six pilot provinces, the focus was directed to building the capacity of local staff working in Treasury Offices as well as in administration at provincial, district and LLG levels. Approximately 500 staff were trained and coached on regular basis. A total of 74 staff (40.5% female) are now capable to (a) produce financial reports in an accurate and timely manner and (b) train newly employed staff, which forms a solid basis for sustained of results over time.

Table No. 1: Summary of staff capable of producing Financial Reports and providing training in Six Pilot Provinces

Gender Total

No. Province Female Male (Skilled)1 Eastern Highlands 5 14 192 East New Britain 5 10 153 Western 9 4 134 Central 1 3 45 Milne Bay 4 6 106 Morobe 6 7 13

  Total: 30 44 74  % 40.5% 59.5% 100%

Transition to electronic process management through ICT training: PCaB has facilitated the creation of six computer labs in the pilot provinces for the development and delivery of intensive ICT training. To complement the ICT training, PCaB has also worked with the Bank of South Pacific (BSP) to set up EFPOST machines in each provincial treasury to facilitate the collection of revenues. These machines allow users to make payments electronically, which in turn reduces the risks involved in handling cash. As a result, DoF extended this approach to all provincial treasuries as part of the Department’s Cashless Policy.

‘Problem solving’ workshops and seminars: PCaB also delivered regular “problem-solving workshops (PSW)” in all provinces, to (a) address daily problems faced by provincial and district treasuries/administrations, and (b) identify and provide targeted training on the theme of the workshop such as procurement, claims examinations, asset management etc. The workshops involved other relevant stakeholders such as specialized staff from government departments or institutions.

Improving communication and information exchange on ongoing PFM reforms: The project also improved communication between provincial treasuries and administration through the preparation of executive reports, providing a comprehensive overview of the province’s overall financial situation that offers more information than the cash balance usually provided by commercial banks. In addition, in 2013, due to the high demand to produce specific financial reports, PCaB was able to produce a special report template for the Service Improvement Programmes (PSIP, DSIP, LLGSIP). This report template is currently being coordinated with the departments of Implementation and Rural Development, Provincial and Local Government Affairs, Treasury and Finance. PCaB also established a webpage (www.pcabii.org ) to provide updated information on PFM issues, regulations, resources/templates and news. The programme also produces a bi-weekly newsletter.

Overall, the mid-term review of PCaB conducted in 2010 indicated good improvements in the capacity of provincial treasury staff, which was reflected to a lesser extent at the district

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and LLG levels. There was qualitative evidence to suggest that the observed progress in capacities led to improved compliance with financial management and reporting requirements.

1.3.3 PCaB Phase II PCaB Phase II was implemented during 2010-2012 and to large extent its design was guided by the outcomes of the mid-term review.

In December 2012 an Exit Strategy document was developed and submitted to the PCaB Steering Committee (SC). As a result, SC decision was taken to continue the programme. The committee members recommended extending the project through a short transition phase to allow sufficient time for planning and designing a new project proposal and mobilising resources for implementation. SC members agreed that the transition phase (2013) would focus on:

Gradual extension of PCaB to new priority provinces; and Incorporating new components aiming to:

o Enhance transparency and accountability of public funds; o Minimize the risk of corruption; and, o Establish PEFA standards.

During 2013 the PCaB programme covered four new provinces: Gulf, Western Highlands, Autonomous Region of Bougainville and West Sepik. The new components were also implemented and positive progress was documented in the PCaB Annual Assessment Report for 2013.

Likewise, during 2013, the PCaB Programme Extension 2014-2018 document (a GoPNG Project investment document) was approved by the SC and is being implemented. Thus, the new programme document (related to current phase of PCaB) contains four strategic components:

Capacity building for Provincial and District Treasuries and Administrations;

Enhance Accountability and Transparency, minimizing the risk of corruption within PNG Public Finances at sub national levels;

Monitoring national and sub-national PEFA indicators; and

ICT Training to support IFMS roll-out to the provinces.

The project continues its gradual expansion and by the end of 2016 covers 13 provinces and three new provinces (Oro, Southern Highlands and East Sepik provinces) . Thus, the project at the end of this year will be working with 16 provinces and 68 districts. See detailed list in annex No.5

In 2016 the Project developed an electronic Monitoring and Evaluation (M&E) system tool in order to monitor and control approximately 600 government accounts from the provinces and districts. GoPNG are mandated to produce annually approximately 7,000 financial reports (Monthly Bank Reconciliation reports and Annual Financial Statements-AFS) for these accounts.

The M&E system tool had positive impact on the performance of the Department of Finance, as it helps to monitor the progress in the timely submission of mandatory financial reports. Updated reports are shown “live” in big TV screens located in strategic places within the DOF building.

With the introduction of this tool all provinces with the exception of Oro province are now submitting their mandatory reports on time – a significant improvement from provinces and districts.

The next step is to ensure the quality of the information provided in these financial reports (compliance issues). In addition, at present, there are no proper channels for

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communication and feedback from the Department of Finance HQ in Waigani to respective provinces and districts on this reports. PCaB-II B will also support building these channels.

Graph 4. Screenshot report from the M&E tool about the status of Monthly Bank Reconciliations by Provinces (Red=critical, Yellow=moderate, Green= on time) November 25th 2016.

II. STRATEGY In 2014, an independent review of PCaB was commissioned by the Australian Government through the Australian High Commissioner in PNG. Overall, the outcomes were positive about the project’s relevance, effectiveness, impact, efficiency and sustainability, and the review recommended including some specific findings in the design of the next phase, specifically:

Greater focus on service delivery, especially at the district level;

Gradual expansion to all provinces based on minimal criteria for selecting new provinces;

Graduation from the provinces supported as part of past PCaB interventions; and

Focus on activities of strategic nature directly contributing to ongoing reforms.

The outcomes of the review also show that PCaB has a strong support from DoF and it was able to meet the expectations of the Department and its stakeholders at the provincial level. The DoF considers PCaB a priority programme and is seeking additional support from donor partners for the implementation of its activities for the last phase of the project (PCaB III) envisaged to be from 2018-2019.

The period of the present PCaB II-B project is for only one year -2017. During this bridging period the project will continue its operations with gradual support to other new provinces,

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and supporting the DOF staff in ICT matters in line with the imminent implementation of the IFMS to all provinces in early 2017.

The focus in this bridging period will be to enhance the quality aspects of the financial reports, as the issue with the timeliness has been resolved due to M&E tool mentioned above. The project support to DDAs is also planned to be developed in this period, starting with some districts that can be selected using DOF and the Project agreed criteria.

II.II.1. Alignment with GoPNG priorities The PCaB II-B is fully aligned with GoPNG policies and national strategic development priorities and plans such as:

Papua New Guinea Vision 2050 (Institutional development and Service Delivery section);

Development Strategic Plan 2010-2030 (Public Sector Management component)

Medium-Term Development Plan (Governance and Public Sector Management section)

The Alotau Accord that prioritizes the needs of provinces and districts through resource allocation for (a) Service Improvement Programmes (SIPs), (b) The Public Sector Reform programme, and (c) in combating corruption.

PEFA country self-assessment and external assessment 2014-15; and

PFM Road Map (2015-2020).

II.2. Scope PCaB II-B builds on the past achievements and is also guided by the outcomes of the independent review of PCaB carried out in 2014-15. PCaB II-B is in line with the recent decentralisation and fiscal policy reforms at sub-national level, including institutional changes such as establishment of DDAs as a way to improve service delivery at the district and local level governments. PCaB II-B is also in line with the 2015 PEFA Country Assessment Report and the Road Map for PFM Reform.

PCaB II-B also contributes to UNDPs Regional Local Governance Initiative ‘Strengthening Local Governance Systems for the SDGs in Asia-Pacific’ and also complements other ongoing donor funded initiatives, including those funded by the Government of Australia.

More specifically, PCaB II-B complements Outcomes 1 and 2 of the Provincial and Local Level Governments Programme (2012-2017) focusing on strengthening provincial capacities to deliver services according to functional assignments and on enhancing demand for and use of performance information to manage service delivery8.

PCaB II-B will target the district level. The main counterpart for undertaking PCaB II-B interventions will be the District Development Authorities.

.Excerpt from the District Development Authority Act 2014

District Development Authority (DDA)The functions of the DDAs include:

- to perform service delivery functions and carry out service delivery responsibilities;

- to develop, build, repair, improve and maintain roads and other infrastructure;

- to approve the disbursement of district support grants and other grants;

- to oversee, co-ordinate and make recommendations as to the overall district planning,

8 https://dfat.gov.au/about-us/publications/Documents/plgp-design.pdf

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including budget priorities, for consideration by the Provincial Government and the National Government

- to determine and control the budget allocation priorities for the Local-level Governments in the district;

- to approve the Local-level Government budgets for presentation to the Local-level Government and to make recommendations concerning them

- to draw up a rolling five-year development plan and annual estimates for the district;

- to conduct annual reviews of the rolling five-year development plan;

- perform other functions as prescribed by the regulation;

According to the Government of PNG, the DDAs were established to serve three main purposes:

- Greater decentralisation;

- Locate more decision making with local people, and

- Provide greater coordination of development activities at the local level9.

Although these efforts of the Government to decentralise the fund allocation and provide direct allocation to the districts are commendable, implementation of the policy, according to Intellecap, faced challenges due to (a) weak capacity of DDAs ‘to effectively utilise the available funds’ and (b) duplication of functions and lack of clarity on the roles and distribution of responsibilities at the provincial and district levels10

In view of the above, the District Development Authorities (DDAs) will serve as the major entry point for project interventions, while PFM will be the main focus of capacity building efforts to improve accountability within the public financial management system and processes. To ensure targeted support, a comprehensive institutional analysis of DDAs with special emphasis on service delivery functions will be made. The findings will then be used to provide targeted support to the selected DDAs.

The new provinces and districts will be chosen based on the basic criteria to be developed and approved by the Project Steering Committee meeting. Selection of the districts will also be guided by the extent to which PCaB II-B will complement other donor/government funded initiatives focused on enhancing service delivery at the sub-national level.

II.3. PEFA AssessmentIn 2014-2015, the GoPNG undertook and reported on a Public Expenditure and Financial Accountability (PEFA) self-assessment. The simultaneous external assessment carried out by the International Monetary Fund (IMF) has been recently finalized and published. According to the PEFA external assessment report, several PFM issues are raised, including the need to strengthen accounting and reporting, as well as the audit and internal control functions, including procurement and assets policy and management functions (See Table 1 for PEFA overall and priority results).

Throughout 2014-15, under the leadership of the Department of Finance, PNG officials from ten (10) Government central agencies conducted a self-Assessment using the PEFA Framework, and identified both the strengths and weaknesses in PNG’s PFM systems. Subsequently, in March 2015, the Self-Assessment was used to inform an independent assessment conducted by the International Monetary Fund. The results of both assessments were quite similar showing overall consensus on the current situation with regards to PFM.

Table 2 below shows average performance under the main PFM pillars.

9 http://www.pngperspective.com/news/district-development-authorities-to-replace-jdbpc-/ 10 ‘Seeding Social Enterprises in Papua New Guinea’ Report, UNDP/Intellecap, 2015

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Table 2 Average Performance by Pillars, PEFA PNG 2015

Credibility of fiscal strategy and budget (PI1-3)

Policy-based planning and budgeting (PI14-18)

Comprehensiveness and transparency (PI4-9)

Predictability and control in budget execution (PI19-25)

External scrutiny and audit (PI29-30)

Asset and liability management (PI10-13)

Accounting, recording and reporting (PI26-28)

0.0 0.5 1.0 1.5 2.0 2.5 3.0

According to the PEFA assessment report, the budgetary functions, credibility and fiscal strategy – including the policy-based planning and budgeting and its comprehensiveness and transparency – remain problematic, however the major gaps are seen under the following pillars:

1. External scrutiny and audit:The PEFA assessment emphasizes that there is limited evidence about the Audit findings and recommendations from the Office of the Auditor General (AGO) and/or the Public Accounts Committee (PAC) reports are followed up systematically. This finding reflects the absence of effective accountability mechanisms in the Government, and the absence of legal recourses to impose penalties on non-complying officials for breaches of the law and financial misconduct.

2. Asset and liability management:This is one of the weakest areas of PNGs PFM system and refers to the state-owned enterprises and statutory bodies, many of which are several years behind in submitting their annual financial statements. Many of them have received audit disclaimers or adverse opinions. The preparation of capital budgets is fragmented and needs to be further integrated with recurrent budgets. Few departments undertake rigorous economic analysis of proposed public investment projects or provide systematic reports on the physical and financial progress of these projects.

3. Accounting, recording and reporting: There are many concerns regarding the persistent lack of reliability of accounting records. Many bank reconciliations are not carried out in a timely manner, and backlogs arise in the clearance of closed accounts and advances. Even if the reconciliations are completed, there are many significant unresolved items. Likewise, the report mentions that no recognized accounting standards are used to prepare central government financial statements. The financial statements are only submitted for audit 15-16 months after year-end, which lags good practice by a considerable margin.

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In response to the outcomes of the PEFA country assessment, the GoPNG has developed a Roadmap for PFM Reforms which: Summarizes the major findings of the PEFA Assessment; and Lists and prioritizes important actions that must be undertaken during the next four

years to address major weaknesses identified by the PEFA assessment.

Table 3 below summarizes the priority PFM reforms outlined in the PFM Roadmap:

Table No. 3 Summary of priority PFM reforms and their timelines

Short-term priorities (2015-2016)

Medium-term priorities (2017-2019)

Medium-term priorities (2020 and later)

o Completion of the roll-out of IFMS and retirement of PGAS within national government agencies

o Catching up on the 18-month reconciliation back-log and putting in place a process and staffing for timely completion of reconciliations for spending and revenue receipts

o Stricter discipline on the use of trust accounts and their replacement wherever possible by end-year carryover provisions within the WPA.

o Revisions of the legal framework for PFM – particularly the finance manual and Finance Instructions in order to align business processes with the IFMS

o Strengthen compliance with rules and procedures.

o Full integration of recurrent and capital budgets.

o Preparation by Treasury of a comprehensive database on government loans, guarantees and PPPs

o Strengthened internal controls of spending, including for payroll

o Improving national accounts data

o Roll-out of IFMS and retirement of PGAS for provinces and districts

o Adoption of a top-down budgeting process and an MTBF at national level.

o Implementation of robust frameworks for managing and monitoring the financial position and fiscal risks of SOEs, statutory bodies, and provinces.

o Improved coverage of the budget to include all revenues received by public bodies, authorities, and SNGs.

o Improved systems of cash forecasting and cash management, including a cash management unit, expanded coverage of the WPA

o Strengthened debt management practices to minimize funding costs and risks

o Strengthened management of arrears

o Improved and timely in-year and annual budget execution and financial statements

o Introduction of a treasury single account

o Development of performance-related budgeting and programme budgets

o Reorganization of the Departments of Finance and Treasury

o A rudimentary balance sheet for general government

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The findings of PEFA Assessment and priorities outlined in the PFM Roadmap, coupled with the mentioned PCaB independent review, form a solid base for the new phase of PCaB.

Timeliness and quality of financial reportsInitially, the project’s focus was to ensure timeliness in the submission of mandatory reports in line with PEFA standards. In the course of project implementation, it was observed that provinces were mostly spending the funds for administrative rather than social priority sectors such as education, health, infrastructure and agriculture. For example, according to the National Economic and Fiscal Commission’s (NEFC) Provincial Expenditure Report,11 in 2013 the spending average of provinces under ‘Administration’ reached almost 300% of the budgeted amount. Some provinces like Morobe and Western spent 500% and 700% respectively of the budgeted amount, while expenditure in education, health and infrastructure were around 50% (see Graph 4 below). Provinces need to control their spending on Administration, which will result in the release of funds for the delivery of public services.

At the time of writing this document, the PCaB project had achieved the timeliness in the submission of mandatory financial reports for all provinces and districts, this was thanks to the Monitoring and Evaluation tool developed by the project at the beginning of this year. This is an unprecedented and huge achievement of the project so far and it will allow the project’s focus in the quality aspects of these mandatory financial reports by next year and onwards.

In view of the above, the present phase will continue to focus on timeliness of submission of mandatory financial reports and will also prioritize the work towards improving the quality of expenditures at the provincial and district level. This combination of time and quality in submission of mandatory financial reports is expected to result in the improvement of service delivery at the provincial and district levels.

2005 2007 2009 2011 20130

50

100

150

200

250

300

Average of Provincial Expenditure by sector 2005-2013

Education Health Infraestructure Agriculture Fisheries Administration%

Graph 4 – 2005-2013 Provincial Expenditure Review by sectors as a percentage of the cost of services. NEFC Raising the Bar, PER 2013

Enhancing internal controls11 The NEFC produces, as mandated by the constitution, annual reports on the fiscal performance of provinces.

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A properly functioning PFM system is essential to effective service delivery. Graph 5 below shows the PFM cycle which includes planning, budgeting, accounting and reporting, as well as internal and external oversight of the main stages.

Graph 5 - PFM Cycle and PCaB Intervention attached to service delivery phase

During the previous phases of PCaB, emphasis was placed on accounting and reporting functions which complemented the capacity building interventions of other Australian Government-funded initiatives12 focusing on planning and budgeting at sub-national levels. The missing link in these complementary efforts is the audit function (internal controls) which ensures smooth functioning of the PFM system, from the planning to the execution phase or service delivery.

PCaB II-B will therefore also aim to improve internal oversight (audit function) which is an essential cross-cutting element for all the other stages of the PFM cycle. Without this, the current PFM cycle in PNG, especially at the sub-national level, will be incomplete and thus insufficient to ensure transparent and accountable flow and use of public funds at different levels of decision making. Subsequently, the access of most vulnerable population segments to public services would remain limited.

To improve the audit function, the PCaB II-B will ensure that the Provincial Audit Committees (PAC) established with the support of PCaB in all target provinces are duly equipped to effectively perform the internal audit function. In addition, it will build on the initiated efforts in promoting SMS messaging to report on suspected cases of corruption through the Phones Against Corruption initiative, which is being trialled within the DoF under the Internal Audit and Compliance division. A scaling up of this initiative will be done through a separate project document.

12 Currently is the Provincial and Local Government Programme –PLGP and previous to this was the Provincial Performance Initiative -PPII

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II.4. Programme objectives

The overall objective of the PCaB is to support ongoing PFM reforms through enhancing financial management capacity of national and sub-national levels of Government for transparent, accountable and equitable delivery of public services.

The specific objectives of the programme include:

Enhance institutional capacities of the District Development Authorities to effectively perform the core/mandated service delivery functions;

Improve the timeliness and quality of financial expenditures through better accounting and reporting at the national and sub-national levels;

Enhance transparency and accountability in management of public funds at national and sub-national levels through strengthening internal audit functions and improvement of financial controls; and

Support implementation and monitoring of PFM Roadmap through technical and advisory support to the Department of Finance.

II.5. ApproachApproach of PCaB II-B is two-fold. First, the project will support implementation of PFM reforms (2.5.1) through enhancing treasury functions at the sub-national level (continuing from Phase II as recommended by the Independent Review). Second, the project will support implementation of institutional reforms (2.5.2) to enhance service delivery at the district level. This will be achieved through capacity building of DDAs to perform their core/mandated service delivery functions which will be undertaken in coordination with other relevant stakeholders including Department of Implementation and Rural Development (DIRD), Department of Provincial and Local Level Government Affairs (DPLLGA), Department of National Planning and Monitoring (DNPM). The proposed approach will ensure complementarities between the ‘resource planning / allocation’ and ‘expenditure and reporting’ sides of service delivery.

2.5.1 PFM ReformsIn order to contribute to the implementation of ongoing PFM reforms, and to sharpen the focus on service delivery at the district level, the PCaB will build on the approaches applied in previous phases including:

a) Site-based local advisors in each province: Through the placement of permanent local advisors in the provinces, the PCaB programme will continue to deepen its activities at the district level. At present, PCaB has 1 advisor in each of the 12 provinces covered by PCaB. A gradual increase in the number of advisors is expected as the project expands to new provinces. In larger provinces like Morobe or Enga (9 and 5 districts each respectively) one additional advisor will be placed to ensure each adviser is responsible for no more than four districts.

b) Mentoring, Coaching and On-the-Job Training: This is the key approach to build capacity within the supported provinces. This approach proved to be effective and practical with tailor-made capacity building activities for small groups. Although this approach is time and resource intensive, it led to significant improvements in local capacities.

c) Focus on Accounting & Financial Reports: This will be the main focus of the work of PCaB advisors, which is in line with the DoF mandate to implement the national budget. The PCaB advisors will also be dealing with other components of the programme such

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as accountability and transparency, and in monitoring how critical capacity gaps are addressed at sub-national levels.

d) Computer Labs & extensive ICT training: The PCaB will continue to support computer labs in all provinces to ensure continuous ICT training courses for provincial administration and treasury staff. Training of Trainers (ToT) for provincial-based ICT trainers will continue. Seven computer labs are currently operating and an additional six are being established. The support of Volunteers Services Overseas will continue to be engaged in the provision of ICT specialists to be based at the provincial level, in order to provide hands-on ICT technical support to the districts. At present there are six VSO ICT specialists, and in early 2016 a total of 16 will arrive to join the PCaB project.

e) Ad-hoc Problem-Solving Workshops: This will also continue in all provinces and will be provided according to demand. Topics of high demand during the previous phases of PCaB included procurement, claims examination and asset management.

f) Innovation and creativity: The project was able to produce innovative proposals such as electronic payments using EFPOST machines which evolved to cashless policy; implementation of PEFA standards initiated by PCaB project; implementation of Phones Against Corruption, etc. The programme will continue providing innovative solutions to improve the efficiency and effectiveness of DoF’s main functions.

2.5.2 Support to DDAsReview of health, education and other social indicators at the provincial level show that there is a considerable variation of development within the provinces of PNG. Respectively, experience of PCaB I and II shows that the capacities of sub-national governments are also uneven.

To choose target districts basic criteria will be developed and submitted for review of the Steering Committee. Once approved, it will be applied for selecting target districts. After selection, capacity mapping in each target district will be done to ensure that PCaB II-B does not duplicate, but complements the ongoing efforts. If the target DDAs are already being supported by other development partners (PLGP funded by the Government of Australia) extensive consultations will be carried out to identify and employ synergies for greater impact.

To have a clear picture on the capacity of DDAs, it is proposed to conduct a comprehensive legal and institutional analysis to identify potential duplications and other challenges faced by DDA in performing core service delivery functions. The outcomes of the analysis will then guide development of different scenarios for strengthening the DDAs. UNDP will also conduct regular comprehensive analysis to review if and how the work under Section 2.5.1 contributes to/improves the quality of service delivery in target districts.

In addition to the Department of Finance, UNDP will also work closely with the Department of National Planning and Monitoring to review the outcomes of the analysis and ensure that the analytical work carried out under PCaB II-B feeds policy level planning and decision making, especially in resource allocation/budget processes.

II.6. PCaB II-B components

The PCaB II-B will build on past achievements, and its design is guided by the outcomes of the Independent Review of PCaB undertaken in 2014. As well, PCaB II-B is in line with ongoing PFM reforms. As a bridging project, the aim is to continue the past experience of PCaB II but preparing the key activities for the final phase of the project (PCaB III) planned to begins in 2018.

The PCaB Independent Review has closely assessed each component of PCaB-II and recommended the following revisions:

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Discontinue (a) roll out of District Treasury Offices, (b) capacity building to implement Public Finance Management Act, (c) research, (d) Objective 6 which focuses on establishment of PEFA standards; and

Continue (a) capacity building of District Treasury Offices, (b) Objectives 2, 4 and 5 which focus on enhancing accountability and transparency of managing public funds.

In view of the above, the following two interlinked components are proposed:

1. Improve service delivery at the sub-national level to transparently and accountably manage public funds;

a. Training for the timely and accurate provision of financial reports;

b. Enhance accountability and transparency, minimizing the risk of corruption within PNG Public Finances; and

c. ICT Training as a support to IFMS roll-out to the provinces and districts.

The 2nd component is proposed based on consultations with DoF:

2. Relocating ‘unattached’ staff of DoF for filling critical capacity gaps at sub-national level.

III. RESULTS AND PARTNERSHIPS Expected Results

Component 1: Improve service delivery at the sub-national level by ensuring public funds are managed transparently and are accountable Component 1 is focused on addressing capacity gaps at the sub-national level to ensure efficient and timely use of public funds for provision of basic services. The component 1 is composed of 4 sub-components (Activity Results):

Activity Result 1.1: Capacity building of DDAs to perform core/mandated service delivery functions

Activity Result 1.2: Capacity building of sub-national governments in timely and accurate provision of financial reports

Activity Result 1.3: Enhance Accountability and Transparency, minimizing the risk of corruption within PNG Public Finances

Activity Result 1.4: ICT Training to support IFMS roll-out to the provinces

Activity Result 1.1: Improve service delivery through capacity building of DDAs to perform core/mandated service delivery functions Customised capacity building packages to the DDA will require comprehensive analysis to identify potential duplications and major challenges faced in performing core functions. As part of this analysis, capacity mapping of DDAs will be carried out for the project to plan and deliver targeted capacity development packages.

The analysis will also include the review of the implementation of local development plans, sources of funding and potential linkages with budgeting/resource allocation processes. This will require close cooperation with other relevant stakeholders including Department of Implementation and Rural Development (DIRD), Department of Provincial and Local Level Government Affairs (DPLLGA), Department of National Planning and Monitoring (DNPM) and also with the PLGP. The findings will guide the project and DDA to ensure greater linkages between planning, budgeting and implementation processes. When and if

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required, policy recommendations will be made and awareness among development partners will be created to take informed policy decisions.

In addition, UNDP, not exclusively through PCaB, will work closely with DIRD to ensure that DDAs have greater consultations with and engagement of communities in management of local development processes. Feedback mechanisms such as citizen scorecards will be introduced and piloted in pilot districts to measure/review changes in the quality of service provision in the pilot communities over time. The outcomes of this exercise will complement the regular provincial expenditure reviews of the National Economic and Fiscal Commission to analyse the impact of the improvements of PFM capacities on service delivery at the district level. UNDP will provide support to DIRD and DDAs for greater use of evidence in planning and decision making.

Based on the outcomes of the work with DDAs, including communities, UNDP will develop knowledge products to guide design of future programmes and interventions.

Activity Result 1.2: Improve service delivery through capacity building for the timely and accurate provision of financial reports Activity Result 1.1 will include On-The-Job Training, Mentoring and Coaching to provincial and district treasury offices not covered under the previous phases, using the templates, methodologies and tools developed during previous phases of PCaB. The support to the provinces covered under the previous phases will be limited to monitoring and evaluation, since they are able to work independently as indicated in the PCaB Exit Strategy document and independent review report.

As the project gradually moves to other provinces, the number of local advisors will need to be gradually increased to maintain the relevant support at provincial, district and LLG levels.

Through the provincial and district administrations as well as through the central level, PCaB advisors can extend their support both vertically (through Treasury departments) and horizontally (through high priority sectors). The arrangements for support to other sectors will be in the form of Training of Trainers (ToT). These efforts have already been initiated in 2015, with training in monthly bank reconciliation reports (to approximately 110 staff from 18 Central Government agencies). A planned ToT to Police Staff (Police Administration Office and Provincial Police Commanders) will be organized by the end of 2015.

Activity Result 1.3: Enhance Accountability and Transparency, minimizing the risk of corruption within PNG Public Finances

Activity Result 1.2 involves three inter-linked elements of anti-corruption which are transparency, accountability and minimizing corruption risks.

a) Transparency

The aim is to deal with the right people in accessing public finance information in the Provincial and District Treasury administrations, to let the citizens know about the source and allocation of public funds in their respective province. The Programme will also help the Provincial and District Treasury and Administration in the preparation of Service Improvement Programme (PSIP/DSIP/LLGSIP) reports. This will be done in close coordination with key stakeholders such as DIRD, DPLGA, DNPM and Treasury. At present report templates have been prepared and it is in a testing phase with real data from PGAS in 10 provinces. District Development Authorities (DDAs) will manage important funds including DSIP funds, special grants for health, education and infrastructure sectors. As well, DDAs will collect non-tax revenues and make investments in public projects within the district and transparency in the management and use of these funds is most needed.

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b) Accountability

The aim is to provide management training for senior provincial administration and Treasury staff to address the concerns from the provinces and districts about the lack of commitment and managerial responsibility of some provincial administrations and Treasury staff in the delivering of services.

The management training will be outsourced to a company, NGO or the University of PNG in order to design and develop a special training package focused on management skills in the PFM area. Additional training courses will be provided in key PFM regulations such as the Public Financial Management Act, Financial Instructions and General Orders, as well as Strategic planning, Balanced Scorecard, Monitoring and Evaluation techniques.

c) Minimizing the risk of corruption

The aim is to complement recent initiatives in combating corruption in the use of public funds. DoF is establishing a series of new regulations and policies to deal with mismanagement and corruption.

The PCaB project complements the implementation of these regulations and policies within the assisted provinces. PCaB advisors will implement these regulations with practical On-The-Job training, supported by mentoring and coaching. PCaB advisors are especially suitable for this role as they are seen as neutral within the Department of Finance, and their impartial role has been well recognised.

Another important part of this component is PCaB’s support to the establishment, operation and functioning of Provincial Audit Committees (PACs), which was initiated in 2012 in coordination with the DoF Internal Audit Division and the Auditor-General’s Office. Only 14 Provincial Audit Committees have been established but efforts are being made to set up PACs in all provinces. PCaB advisors will provide support for the regular functioning of these Audit Committees. They will participate as observers in the audit committee sessions and provide advice and technical support where needed on the status of public financial management practices. This will maintain the neutral and impartial role of PCaB advisors in audit and PFM compliance and regulatory requirements.

As part of this component, the programme has developed an innovative initiative to expose and combat corruption through mobile phone text messages (SMS). The Phones Against Corruption initiative offers a safe method for reporting suspected corrupt practices. The initiative is being tested with 1,200 DoF staff. It is easily accessible, anonymous and free of charge to the general public. This approach is expected to be made available to the general public in a year’s time.

This initiative was tested and prototyped successfully within the DoF, getting important awards13 and just recently was globally awarded and recognized by the GovInsider14 and the Government of Singapore as Best Innovative project for citizen engagement. This initiative is planned to be a separated project by next year, as its impact and demand of this activity require a separated intervention.

Activity Result 1.4: ICT Training to support IFMS roll-out to the provinces

Activity Result 1.3 will include provision of ICT training for the staff of the Department of Finance and Provincial Administration at different levels, with the aim of preparing staff for

13 In 2014 and 2015 The Phones Against Corruption project won the UNDP RBAP Innovation Awards as best innovative approach in Asia-Pacific Region giving a seed funds of 25,000 USD each year for its prototyping and scaling up respectively. 14 http://www.pg.undp.org/content/papua_new_guinea/en/home/presscenter/pressreleases/2016/10/03/png-s-phones-against-corruption-initiative-recognized-globally/

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the roll-out of an IFMS system in the provinces. The programme will use the expertise of local ICT trainers (already identified in PCaB II phase) to provide regular ICT training courses for staff from Provincial treasuries and administrations.

The PCaB programme will continue establishing Computer Labs in each province, with an average of 10-16 computer labs plus a small server, networked printer and Internet connectivity. Provincial Administration will provide the adequate space/room for these computer labs.

The programme will continue developing ICT training courses in MSOffice programmes (Word, Excel, Power Point), Internet and e-mail at the basic, intermediate and advanced levels. Short training courses on IFMS modules will also be developed in selected provinces.

As part of this component, basic technical support in ICT has been largely requested by Provincial Treasurers to the ICT Division, but the lack of capacity of this division had direct consequences in the provision of technical support, affecting the operations and smooth communications between provinces and districts. The programme partially covered these gap with the programme ICT advisor, however needs exceed programme capacity. An alternative, agreed by DoF, is to incorporate VSO volunteers into the programme. This was agreed by the Steering Committee in October 2014, with a recommendation to immediately recruit four proposed VSO volunteers which would be posted in strategic locations within the regions, with a gradual expansion to provide an advisor in every province by 2019.

See Annex 6 for detailed TOR of the VSO ICT technical support specialist.

Component 2: Relocating ‘unattached’ staff of DoF for filling critical capacity gaps at sub-national levels

Activity Result 2.1: Relocating ‘unattached’ staff of DoF for filling critical capacity gaps at sub-national levels This is a new component of the Programme. The proposal is to fill key and critical positions, especially at the district levels, through utilising existing unattached15 DoF staff.The experience of PCaB in capacity building of the provincial and district staff indicates that there are some districts that have problems in terms of capacity and staff. These capacity gaps have been observed due to the lack of a basic educational background to perform these critical and important functions at the district levels. These are district treasurers and accountants who, in most of cases, have reached Year 10 but have no related or alternative experience in the position or functions. To address these gaps, the following response is proposed:

i) DoF Unattached staff The DOF under the PCaB support programme intends to create more opportunities for professional development and better use of the capacity of its unattached staff. They may be unattached due to reasons, such as: going for a long specific training; replaced temporarily for health or personal reasons; separated temporarily for administrative issues; etc.

Aim of the proposal: To improve the capacity of DoF staff at the district level, through a specific programme to post unattached staff as PCaB special advisors in provinces and districts with critical shortage of qualified staff.

15 Permanent staff from the Department without any specific functions

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Target group: Approximately 180 unattached staff that have no specific function to perform. They receive their monthly salary from the DoF. The programme will focus in approximately 30 staff which will be selected through a process involving the DoF’s Human Resource Unit and the PCaB programme.

Nature of the support: Advisory services in the provision of financial reports from the districts, including other topics such as asset management or claims examination.

Duration: 12 to 24 months Places: Selected districts in PNG. Districts will be selected on the basis of considerable/constant capacity gaps, lack of staff and/or underperforming staff in their main functions of accounting and reporting. On exceptional basis, some of these unattached staff will support strategic divisions within the DOF.

Benefits for unattached staff: The PCaB programme will nominate them as special advisors and working under the

programme; The Programme will support their move to the selected district; Accommodation will be arranged by the DoF, under the District Treasury Roll Out

(DTROP) programme; Work Certificate and/or diploma issued by the PCaB programme and the Department of

Finance; Offer of re-incorporation in the Department of Finance in a suitable position, after

satisfactory performance received by the respective Provincial Treasurer and the PCaB programme.

Administrative arrangements:A special contract arrangement will be prepared for the advisory services of these unattached staff under the PCaB programme. They will report to the PCaB programme and the DoF Corporate Service Division.

III.III.1. Project beneficiaries

As per the results in the PCaB previous phases, the programme will benefit the provincial and district populations who will receive, through the local authorities, improved delivery of public services in a timely manner as budget allocations are authorised and grants received without delays. It means that the PCaB programme will contribute to an increased delivery of basic social services to the population, through a prudent, accountable and transparent public financial management at sub-national levels, ensuring that budgeted funds are spent accordingly.

The Department of Finance and all provincial and district treasuries, including the provincial and district administrations, will also benefit from new knowledge and skills for the staff attached to them. They will be provided an average of 10 competent staff in each province capable of producing financial reports, resulting in some 220 provincial staff16 with the capacity to produce satisfactory financial reports. They will guarantee the sustainability of the project in the provision of mandatory financial reports from the provinces and districts. However, the total number of direct beneficiaries is estimated at 1,650 staff, incorporating ICT training, other PFM trainees and mentoring. From this number, there will be approximately 1,000 staff of the Department of Finance, 450 staff form the Department of

16 Additionally, to this number a total of 1300 provincial and treasury staff will be benefited with ICT Training courses in its different levels (beginners, intermediate and advanced)

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Provincial and Local Level Government Affairs (DPLGA) and 200 staff from other GoPNG Departments and Agencies. See Table 4 below.

The selection of provinces and districts to be attended in a gradual basis by PCaB programme is under the discretion and priorities of the Department of Finance, who will define the relevant criteria for submission to the Steering Committee of the PCaB Programme. In this selection process priority will be given to those provinces with high levels of poverty and inefficient delivery of public services.

Regarding the PFM training to other sectors, this will be in form of Training of Trainers (ToT) and the selection of these sectors will be demand-driven, putting priority to key sectors that manage important part of the PNG national budget.

The table below shows a tentative plan to attend the provinces by the programme in 2017.

Table No. 4 - Proposed number of Provinces, Districts and direct beneficiaries by the PCaB-II B Programme

Year 2017

Number of provinces to attend 19

Number of districts to attend 78

Total Direct Beneficiaries DoF DPLGA Other sectors

1,6501,000 450 200

Another group of beneficiaries are the staff at the DoF Provincial and District Financial Management Division (PDFMD) which manages the Provincial and District Treasuries. The programme wants to provide capacity building activities to key staff of this division, especially to the Assistant Secretaries and Regional Coordinators and Managers. They oversee performance of almost 70% of the total DoF staff (approx. 1,300 persons).

The idea is to provide strategic management courses and M&E tools to improve the supervisory and management skill roles of this key staff, as well as monitoring and control of PDFMD activities in the provinces. The programme activities will use a recent agreement between the University of PNG and the Department of Finance. The following courses are planned:

Strategic Management Balanced Scorecard How to read and interpret Financial Reports Leadership/Supervisory skills training

Partnerships and stakeholders’ engagement

The Project has already identified, coordinated and worked with key partners to provide synergies improving the financial management capacity at sub-national levels. These stakeholders are described in the table below.

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Table No. 5.- Project main partners and their strategic intervention\collaboration

Type Institution/agency/donor Main area of strategic support and collaboration

Government Central agencies and/or institutions

Department of Finance-Financial Management and Improvement Programme (FMIP)

Project Implementing agency

Department of Finance-Financial Training Branch (FTB)

FTB Provides financial management classroom type trainings, PCaB complement these efforts.

Department of Finance-Integrated Financial Management System (IFMS)

PCaB provides ICT trainings (basic, intermediate and advance levels) in order to prepare for IFMS system.

Department of Finance-Provincial and District Financial Management Division (PDFMD)

Collaboration at the Provincial and District Treasury levels

Department of Local Level Government Affairs

Collaboration at the Provincial and District Administration levels

National Economic and Fiscal Commission-NEFC

Coordination in the reporting of expenditures at sub-national levels.

Department of Health Coordination for improving the submission of financial reports (planned).

Department of Education Coordination for improving the submission of financial reports (ongoing).

Department of Finance-Financial Reports and Control Division (FRCD)

Coordination for the implementation of PEFA standards and implementation of the PFM Reform in the country.

Auditor General Office-AGO Coordination for the implementation of PEFA standards in the country and to work with Provincial Audit Committees.

Department of Treasury Coordination for the implementation of PEFA standards in the country.

Department of National Planning and Monitoring-DNPM

Coordination for the implementation of PEFA standards in the country.

Department of Implementation and Rural Development

Coordination for the reporting on the Service Improvement Programmes.

Donors project/programmes

Provincial and Local Level Government Programme-PLGP (former PPII)-AusAID

Collaboration on capacity building activities in financial management (they provide support in planning & budgeting, PCaB focus on accounting and reporting)

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Anticorruption project- UNDP Collaboration and coordination joint activities at subnational levels through Provincial Audit Committees.

HR Capacity building in Education Sector-EU

Coordination to improve accounting and provision of financial reports at secondary schools.

BOOST programme-WB Coordination to improve accounting at Education and Health sectors.

IMF and World Bank Training programmes & technical assistance for PEFA and Anticorruption components.

Private sector Bank of South Pacific-BSP Provision of EFPOST machines in all provincial treasuries. Delivery of Bank statements by email for all accounts at provincial, district and LLG levels.

Digicel Provision of USB modems and mobile phones to PTs & DTs to access internet at sub-national levels.

Moore & Star Printing Printing of Project documents, reports and publication as part of the Project’s transparency and accountability component.

Media Haus ltd. Production of media and advertisement materials for the project.

Risks and AssumptionsOn a quarterly basis, a quality assessment shall record progress towards the completion of key results, based on quality criteria and methods captured in the Quality Management and risks assessment.

An Issue Log shall be activated in Atlas and updated by the Project Manager to facilitate tracking and resolution of potential problems or requests for change. Based on the initial risk analysis submitted (see annex 2), a risk log shall be activated in Atlas and regularly updated by reviewing the external environment that may affect the project implementation.

Based on the above information recorded in Atlas, a Project Progress Reports (PPR) shall be submitted by the Project Manager to the Project Board through Project Assurance, using the standard report format available in the Executive Snapshot.

South-South and Triangular Cooperation (SSC/TrC)The Project will also attend, in a demand-drive approach, other countries’ request to replicate the programme capacity building activities at sub-national levels. This will be through South-South or Triangular Cooperation, with support of the UNDP PNG CO and/or the UNDP Regional Bureau for Asia Pacific (RBAP).

As the PCaB Project has rich experience building financial management capacity at sub-national levels, this will be particularly important for the UNDP PNG CO to foster and promote this initiative.

KnowledgeA project Lesson-learned log shall be activated in Atlas and regularly updated to ensure on-going learning and adaptation within the organization, and to facilitate the preparation of the Lessons-learned Report at the end of the project.

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A Monitoring Schedule Plan shall be activated in Atlas and updated to track key management actions/events on specific knowledge products, besides evaluations, that will be produced by the project (e.g., publications, databases, media products, etc.).

The project will print and publicity all documentation, manuals, videos, etc. in order to create visibility for knowledge and lessons learned generated by the project so others can benefit.

Sustainability and Scaling Up

The PCaB II-B project in its bridging phase, will continue supporting the Department of Finance activities in the provinces and districts, using the national systems and processes. It is envisaged that during this phase the project will strongly support the implementation of the new Integrated Financial Management System (IFMS) in the provinces and districts. The Local Advisers together with the VSO ICT advisers in the provinces will help and facilitate the implementation of the new system (which will replace the current and old PGAS system) together with the IFMS17 team. PCaB local advisers will provide training on the new system as part of the overall IFMS implementation plan.

There is a strong ownership from the GoPNG over this project as mentioned in the project independent evaluation developed in 2015. Since phase I and through phase II, government ownership of the project has been emphasized, and it is clearly identified through its government parallel funding contribution to the project. Thus, in 2008 the GoPNG funding contribution to the project only represented 8% of the total funds of the project, while in 2015 it represents approximately 50% of the total funds managed by the project.GoPNG contribution is already set up in the National Budget, which is programmed for a five years’ period, meaning that these 50% of parallel contribution is secured and it will support the sustainability of the Project. By mid-2017, the project will elaborate a new project document for its final phase detailing all the procedures and arrangements to hand it over to the Department of Finance.

In this vein, by 2019, the Project will cover its support to all 22 provinces and it is expected to hand over it to the implementing partner without any complications as the staff, materials and activities are fully integrated within the national authorities.

IV. PROJECT MANAGEMENT Cost Efficiency and Effectiveness

As a new phase of the Project (PCaB II-B), it will consider all the experiences and lessons learnt from the past phases, using a cost efficient method to maximize results and impact with efficiency and effectiveness.In this vein, as indicated in the background of this document, the project will not intent to recruit additional local advisers to cover all provinces. The project will use and mobilize the current local advisers and rotate to a new province after the supported province keeps some level of autonomy or capacity in the production of mandatory financial reports.

The project will also move the assigned project vehicle from one province to another, making sure that it is in good condition and thus eliminate the need to purchase new vehicles when moving to a new province.

Annual planning workshops will also be organized in a centralized province to minimize dislocations and travel costs. These type of workshops will help the project to plan its activities in each specific and supported provinces, and will help the Project also to provide

17 The IFMS is a separate GoPNG project that has plans to implement the new system in the provinces and districts from 2017 to 2018.

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standardized templates, share tools and methodologies applied with success by the local advisers in their respective provinces.

Training materials, bulletins, pamphlets, banners and other publicity materials will be designed and produced at the central level in Port Moresby, and then distributed to the provinces and districts accordingly.

The Project will not provide office materials neither ICT computer equipment for the implementing partner offices in the provinces and districts, with exception to the project Computer Labs, which will be financially and technically supported by the Project until it is handover to the Department of Finance.

Project Management

The Project will be located within the Department of Finance (DOF) offices in Port Moresby, and will have sub-offices in each of the supported provinces at sub-national level. The DOF will provide these required offices for the project’s advisers, which will include office space, desk, parking area for the project vehicle, etc. As the project is expecting to cover its support to all provinces by 2019, approximately 21 project offices will be set up within the Department of Finance structures at sub-national levels.

As practiced in the previous phases, the Project will continue signing Memorandum of Understandings (MOUs) with respective Provincial Administrations (PAs) prior support of the project is provided. This will help for the PAs to ensure ownership at the local level and contribute with a permanent accommodation for the Project adviser and an office space for the ICT Computer Lab.

The project’s main office will be centralized in Port Moresby where most of the administrative and finance support personnel will be set up. In the provinces and districts, the project will have direct interaction and coordination with the Provincial and District Administrations. However, as the focus of the new PCaB II-B phase is to support the districts under the District Development Authorities (DDAs), the Project Advisers will also have facilities to work within the districts.

During this bridging period, the elaboration of the Project document for the new and final phase of the project (PCaB III) is planned.

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V. RESULTS FRAMEWORK18 EXPECTED OUTPUTS

OUTPUT INDICATORS19 DATA SOURCE

BASELINE TARGETS (by frequency of data collection)

Value Year Year1

FINAL DATA COLLECTION METHODS & RISKS

Output 1Improve service delivery at the sub-national level through capacity building of provincial administration and District Treasury Officers to transparently and accountably manage public funds

1.1 Performance of targeted DDAs as measured by the citizen scorecards;

NEFC20 survey data

0 2016 10% DDAs performance to improve in pilot districts at least by 10% annually

NEFC annual report not produced on time.

1.2 Compliance of Annual Financial Statements and monthly bank reconciliation reports with PEFA standards;

DOFM&E system

reports

6 provinces.

2016 12 At least 12 provinces submit Annual Financial Statements and monthly bank reconciliation reports compliant with PEFA standards;

PEFA assessment of these two indicators may not be easily available despite M&E tool.

1.3 Number of Provincial Audit Committees/Units operating in provinces;

DOF- IACD21 reports

13 2016 16 At least 16 Provincial Audit Committees or Units established

IACD reports not updated.

1.4 Number of unattached DoF staff mobilized to cover staffing gaps at the sub-national level

DOF Office of the Secretary

report

0 2016 10 At least 10 recent graduates and unattached staff mobilized to cover critical human resource gaps at the sub-national level.

DOF report not available

1.5 Project financial delivery status (annually);

UNDP Atlas system

92% 2015 85% Annual project budget is delivered at least 85% annually.

Atlas System

18 UNDP publishes its project information (indicators, baselines, targets and results) to meet the International Aid Transparency Initiative (IATI) standards. Make sure that indicators are S.M.A.R.T. (Specific, Measurable, Attainable, Relevant and Time-bound), provide accurate baselines and targets underpinned by reliable evidence and data, and avoid acronyms so that external audience clearly understand the results of the project.19 It is recommended that projects use output indicators from the Strategic Plan IRRF, as relevant, in addition to project-specific results indicators. Indicators should be disaggregated by sex or for other targeted groups where relevant.20 NEFC= National Economic and Fiscal Commission. They do publish annually a Provincial expenditure and performance report that will include districts & DDAs. 21 IACD= Internal Audit and Compliance Division, it is in charge to implement and monitor the establishment of internal and Audit committees within the PNG Government.

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VI. MONITORING AND EVALUATION

In accordance with UNDP’s programming policies and procedures, the project will be monitored through the following monitoring and evaluation plans:

Monitoring Plan

Monitoring Activity Purpose Frequency Expected Action Partners (if joint)

Cost (if

any)

Track results progress

Progress data against the results indicators in the RRF will be collected and analysed to assess the progress of the project in achieving the agreed outputs.

Quarterly, or in the frequency required for each indicator.

Slower than expected progress will be addressed by project management.

Monitor and Manage Risk

Identify specific risks that may threaten achievement of intended results. Identify and monitor risk management actions using a risk log. This includes monitoring measures and plans that may have been required as per UNDP’s Social and Environmental Standards. Audits will be conducted in accordance with UNDP’s audit policy to manage financial risk.

Quarterly

Risks are identified by project management and actions are taken to manage risk. The risk log is actively maintained to keep track of identified risks and actions taken.

Learn Knowledge, good practices and lessons will be captured regularly, as well as actively sourced from other projects and partners and integrated back into the project.

At least annuallyRelevant lessons are captured by the project team and used to inform management decisions.

Annual Project Quality Assurance

The quality of the project will be assessed against UNDP’s quality standards to identify project strengths and weaknesses and to inform management decision making to improve the project.

Annually

Areas of strength and weakness will be reviewed by project management and used to inform decisions to improve project performance.

Review and Make Course Corrections

Internal review of data and evidence from all monitoring actions to inform decision making. At least annually

Performance data, risks, lessons and quality will be discussed by the project board and used to make course corrections.

Project Report A progress report will be presented to the Project Board and key stakeholders, consisting of progress data showing the

Annually, and at the end of the project (final

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results achieved against pre-defined annual targets at the output level, the annual project quality rating summary, an updated risk long with mitigation measures, and any evaluation or review reports prepared over the period.

report)

Project Review (Project Board)

The project’s governance mechanism (i.e., project board) will hold regular project reviews to assess the performance of the project and review the Multi-Year Work Plan to ensure realistic budgeting over the life of the project. In the project’s final year, the Project Board shall hold an end-of project review to capture lessons learned and discuss opportunities for scaling up and to socialize project results and lessons learned with relevant audiences.

At least annually

Any quality concerns or slower than expected progress should be discussed by the project board and management actions agreed to address the issues identified.

DFATDOF

Evaluation Plan

Evaluation Title Partners (if joint)Related

Strategic Plan Output

UNDAF/CPD Outcome

Planned Completion

DateKey Evaluation Stakeholders

Cost and Source of Funding

Elaboration of the Project Document new phase

(PCaB III)DFAT, UNDP RBAP Jul. 2017 DFAT, UNDP

RBAP Cost-Sharing & TRAC

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VII. WORK PLAN 2223

EXPECTED OUTPUTS

PLANNED ACTIVITIESRESPONSIBLE

PARTY

PLANNED BUDGETFunding Source Budget Description Amount

Output 1Improve service delivery at the sub-national level through capacity building of provincial administration and District Treasury Officers to transparently and accountably manage public funds

Component 1: Improve service delivery at the sub-national level to transparently and accountably manage public funds

Improve service delivery through capacity building of DDAs to perform core/mandated service delivery functions DoF

Cost-Sharing

Contractual Services – individuals 490,000Accommodation 30,000Travel 20,000

Workshop training support 30,000

Vehicles, maintenance and fuel 30,000

Improve service delivery through capacity building for the timely and accurate provision of financial reports DoF

Communication & audio visual equip

10,000

Miscellaneous expenses 1,778

Enhance Accountability and Transparency, minimizing the risk of corruption within PNG Public Finances DoF Cost-Sharing

Contractual Services – individuals 10,000 Monitoring 10,000Travel 10,000Workshop training support 10,000 Miscellaneous expenses 0

ICT Training to support IFMS roll-out to the provinces DoF Cost-Sharing

Contractual Services – individuals 10,000 Monitoring 10,000Travel 10,000

Workshop training support 10,000

Subtotal 1 691,778Component 2: Relocating ‘unattached’ staff of DoF for filling critical capacity gaps at sub-national levels

2.1 Relocating ‘unattached’ staff of DoF for filling critical capacity gaps at sub-national levels

DoF Cost-Sharing

Contractual Services – individuals 20,000Monitoring and evaluation 10,000Travel 10,000Workshop training support 5,000Miscellaneous expenses 1,000

Subtotal 2 46,000

Programme Coordination, management and Technical Support DoF Cost-Sharing Contractual Services – individuals 250,000Monitoring 5,000

22 Cost definitions and classifications for programme and development effectiveness costs to be charged to the project are defined in the Executive Board decision DP/2010/3223 Changes to a project budget affecting the scope (outputs), completion date, or total estimated project costs require a formal budget revision that must be signed by the project board. In other cases, the UNDP programme manager alone may sign the revision provided the other signatories have no objection. This procedure may be applied for example when the purpose of the revision is only to re-phase activities among years.

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Training and Workshop 5,000Communication & audio visual equip

18,000

Vehicles, maintenance and fuel 10,000Office equipment supplies and utilities

10,000

Miscellaneous expenses 2,000Subtotal 3 300,000

Sub-Total for Output 1 1,037,778Rent and Security 20,000

Evaluation Elaboration of the Project new Phase UNDP Cost-Sharing

Contractual Services – individuals 13,000

Travel 5,000

Miscellaneous expenses 2,000Subtotal 4 40,000

Grand Total 1,077,778

General Management Support & others

GMSM&E and Communication

88,88933,333

TOTAL 1,200,000

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Project Management and CoordinationProject Manager

Project Board

Senior BeneficiaryDepartment of

Finance

ExecutiveSecretary, Department

of Finance , UNDP

Senior SupplierDonors, UNDP

Project AssuranceUNDP

Project SupportOperation/Finance/M&

E

Project Organization Structure

Component 1 Component 2

VIII. GOVERNANCE AND MANAGEMENT ARRANGEMENTS

The project will be implemented in one year only as a bridging phase for the last phase of the project. The project will be implemented in the framework of the current United Nations Development Assistance Framework (UNDAF 2012-2017) and UNDP CPD (2012-2015/2017). The programme will be implemented through the National Implementation Modality (NIM). The DoF will be the main implementing partner for the project. Active participation of a wide range of stakeholders is expected in the project.

The Project Board (Project Steering Committee) will be composed of the Executive, Senior Beneficiary and Senior Supplier. The Executive role will be chaired by the Department of Finance Secretary or his designated representative and co-chaired by UNDP Resident Representative or his designated representative. The Senior Beneficiary will be the Department of Finance. The Senior Supplier is represented by the donors, including the Government of Australia and UNDP.

Fund flow arrangements and Financial Management:

Funds will be released according to the approved Annual Work Plans (AWPs) and advances will be disbursed to the implementing partner on a quarterly basis, using the Harmonized Approach to Cash Transfer (HACT) methodology and the Funding Authorisation and Certificate of Expenditures (FACE) templates. The Project Manager will be responsible for compilation and collation of periodical financial reports. Unspent funds from the approved AWPs will be reviewed in the early part of the last quarter of the calendar year and funds reallocated accordingly. The Project Board will reserve 25% as a tolerance rate for overriding the budget of various outputs. Beyond this, the Project Manager needs to request revision of the QWP by the Project Board. Cost recovery of project implementation support services by UNDP will be charged as per UNDP rules and regulations.

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The Provincial Capacity Building (PCaB) programme team is comprised of a pool of Provincial and District Support Advisors who are full-time national resident advisors based within the Provincial Treasuries. At present, 13 resident Provincial and District Support Advisors-PDSAs are based in 13 supported provinces. There will be a progressive increase in advisor numbers according to the increase of supported provinces. The Management Team is based within the Department of Finance.

The Management Team will comprise the Chief Technical Specialist, the National Program Coordinator and the National Training Coordinator Advisor. Other Advisors include the ICT Support Advisor and the Monitoring and Evaluation Advisor.

The Finance and Administration Team is comprised of the Finance and Administrative Manager and the Finance and Administrative Associate.

Donors’ funds are channelled through UNDP and then to the implementing partner (DoF) under HACT approach used by UNDP.

The project will be subject to audit according to UNDP rules and regulations.

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IX. LEGAL CONTEXT AND RISK MANAGEMENT

This project document shall be the instrument referred to as such in Article 1 of the Standard Basic Assistance Agreement between the Government of Papua New Guinea and UNDP, signed on the 7 th April 1981.   All references in the SBAA to “Executing Agency” shall be deemed to refer to “Implementing Partner.”This project will be implemented by the PNG Department of Finance in accordance with its financial regulations, rules, practices and procedures only to the extent that they do not contravene the principles of the Financial Regulations and Rules of UNDP. Where the financial governance of an Implementing Partner does not provide the required guidance to ensure best value for money, fairness, integrity, transparency, and effective international competition, the financial governance of UNDP shall apply.

Consistent with the Article III of the SBAA, the responsibility for the safety and security of the Implementing Partner and its personnel and property, and of UNDP’s property in the Implementing Partner’s custody, rests with the Implementing Partner. To this end, the Implementing Partner shall:

a) put in place an appropriate security plan and maintain the security plan, taking into account the security situation in the country where the project is being carried;

b) assume all risks and liabilities related to the Implementing Partner’s security, and the full implementation of the security plan.

UNDP reserves the right to verify whether such a plan is in place, and to suggest modifications to the plan when necessary. Failure to maintain and implement an appropriate security plan as required hereunder shall be deemed a breach of the Implementing Partner’s obligations under this Project Document and the Project Cooperation Agreement between UNDP and the Implementing Partner.

The Implementing Partner agrees to undertake all reasonable efforts to ensure that no UNDP funds received pursuant to the Project Document are used to provide support to individuals or entities associated with terrorism and that the recipients of any amounts provided by UNDP hereunder do not appear on the list maintained by the Security Council Committee established pursuant to resolution 1267 (1999). The list can be accessed via http://www.un.org/sc/committees/1267/aq_sanctions_list.shtml. This provision must be included in all sub-contracts or sub-agreements entered into under/further to this Project Document.

Consistent with UNDP’s Programme and Operations Policies and Procedures, social and environmental sustainability will be enhanced through application of the UNDP Social and Environmental Standards (http://www.undp.org/ses) and related Accountability Mechanism (http://www.undp.org/secu-srm).   

The Implementing Partner shall: (a) conduct project and programme-related activities in a manner consistent with the UNDP Social and Environmental Standards, (b) implement any management or mitigation plan prepared for the project or programme to comply with such standards, and (c) engage in a constructive and timely manner to address any concerns and complaints raised through the Accountability Mechanism. UNDP will seek to ensure that communities and other project stakeholders are informed of and have access to the Accountability Mechanism.

All signatories to the Project Document shall cooperate in good faith with any exercise to evaluate any programme or project-related commitments or compliance with the UNDP Social and Environmental Standards. This includes providing access to project sites, relevant personnel, information, and documentation.

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X. ANNEXES

1. Project Quality Assurance Report

2. Risk Analysis.

ANNEX 2. RISK ANALYSIS

# Description Date Identified Type

Impact (I) &

Probability (P)Note:

scale 1-5 (5 being

the highest)

Countermeasures/ Management response

1Lack of Political or Administrative support

Dec 2013 PoliticalI: 3P: 2

The project will work closely with the Department of Finance and engage responsible staff in order for the program to achieve its intended outcomes.

2 Low capacity of key personnel Dec 2013 Organizationa

lI: 3P: 1

The recruitment processes will be carried out to ensure that right people with the appropriate qualification/experience etc are appointed to the various positions meeting the minimum capacity requirements for producing the required deliverables.

3Maintenance & recurrent costs not met

Dec 2013 OperationalI: 4P: 1

Efforts will be paid by the project to ensure that funding is sufficient to cater for these costs. Otherwise the program will not effectively and efficiently carry out all its intended activities.

4 Project assets personalised Dec 2013 Operational

I: 2P: 1

The project will ensure that all project assets are captured in the project’s Asset Management Register and are being monitored by project Admin staff regularly.

5 Remoteness of Advisors network Dec 2013

Organizational and Operational

I = 2P = 1

Purchase of ICT communication equipment and bringing team together in Port Moresby more frequently

6 Poor transportation Dec 2013 Operational

I = 3P = 1

The program has purchased vehicles for site based advisors for logistic support in order to carry out their activities effectively.

7

Poor cooperation with other parts government/lack of commitment by other parts of government

Dec 2013 Organizational

I = 1P = 1

Ongoing continuous consultations with several stakeholders (Financial Training Branch, PDFMD, PLGP, PPII, NEFC, CSTB, private sector partners, donors, etc) will minimize the risk.

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8High counterpart staff turnover and failure to retain trained officers

Dec 2013Organizational and Operational

I = 2P = 1

The program uses multi-skills approach, meaning that trainings is extended to multiple staff so, if turnover of staff happened there are available replacement to cover the tasks or position duties.

9

Lack of programme and\or operational support from the CO to the IP in key project activities

Nov 2016Organizational and Operational

I=3P=2

The UNDP management should address and correct this issue with timeliness. The Project manager needs to inform this issues in the programme staff meetings.

3. Capacity Assessment: Results of capacity assessments of Implementing Partner (including HACT Micro Assessment)

4. Project Board Terms of Reference and TORs of key management positions

ANNEX 4. TERMS OF REFERENCES OF THE CHIEF TECHNICAL SPECIALIST

Post Title: Chief Technical Specialist (Programme Manager) Post Level: P4Project Name and Number: Provincial Capacity Building Programme Duty Station: Port Moresby, Papua New Guinea Duration of Appointment: 1 year with possibility of extension subject to satisfactory

performance.Starting Date: January 2017 Bureau / Office: RBAP / UNDP PNGFocal point: UNDP Deputy Resident Representative Advertised on: Background The organise Law on Provincial and local Level Governments was passed by the parliament of Papua New Guinea in 1995 and implemented from 1997. Major financial management and planning functions were devolved to the provinces, districts and local level administrations, and this was accompanied by expanded budget allocations for sub-national governments. The program (PCaB) planned for 2013 and onwards, is expected to complement and enhance the effectiveness of past PCaB II intervention and existing Technical Assistance (TA) on sub national financial management provided by other donors. Attention will be given to sub national provincial financial management issues in the context of efforts to improve service delivery and enhance the effectiveness of public programmes. The main outcomes of the programme are envisaged to be sustained improvements in financial management capacity, the provision of timelier and more accurate financial reporting, and improvements in the effectiveness of treasury management systems and incorporate more effective use of information and communications Technology (ICT). This will be achieved through a team –based and tailor –made approach to capacity development according to national and sub-national needs and existing capacities, strengthened central coordination and management, greater focus on district treasuries and LLGs, better coordination between the Department of Finance and government administrations and sub-national levels, close alignment of assistance to the needs of individual provinces, and enhanced coordination with the work of other capacity building initiatives. At the end of 2011 a Project Exit Strategy was developed and the Steering Committee agreed to extend the project for 2013 while a new project document is elaborated for the new phase.

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The programme builds on the achievements of PCaB II and takes into account the recent policy and strategic developments of the Government of PNG, with regards to effective decentralisation and improved service delivery. This includes working more closely with the District Development Authorities (DDAs) established to support institutional reforms within the Department of Finance (DoF). The programme design is also guided by the outcomes of the Independent Review of the PCaB project, initiated by the Australian Government in 2014.In line with PFM Roadmap adopted by the Government of PNG in September 2015, the programme aims to improve service delivery and enhance effectiveness of public service programmes through addressing critical capacity gaps related to management of public finance at the provincial and district levels. PCaB is implemented by the DoF, and complements other sub-national capacity building efforts coordinated by the Department of Provincial and Local Level Government Affairs (DPLGA) and the Department of Implementation and Rural Development (DIRD).The programme is being implemented by the Department of Finance through and a component of the Financial Management Improvement Programme (FMIP).

Specific duties and responsibilities:The CTS (Programme Manager) will be responsible for the overall management and successful implementation of the programme and for strategic and financial planning. The specific duties and responsibilities during the assignment would include, but not limit to, the following: Lead and manage the programme in a manner that ensures that both national and sub-

national governments have strong ownership of the programme. Provide managerial oversight over the entire programme and supervise the programme team. Provide substantive technical support to field advisory staff by providing answers on specific

technical questions that may arise in the course of their work. Supporting the management and dissemination of knowledge develop in individual provinces,

and maintain a data base on available performance indicators (such as the timeliness and correctness of financial reporting in different provinces and districts).

Draw on international experience and expertise in the areas of financial management and capacity building to develop effective strategies to enhance the effectiveness of the programmes operations.

Prepare review, study and policy papers on various aspects of sub-national financial management on the basis of implementation experience under PCaB.

Responsible for quarterly and annual reporting to the Steering Committee. Works closely with the National Programme Coordinator (NPC) to strengthen his or her

managerial, technical and coordination capacities in order to gradually transfer more and more oversight and managerial functions of the programme to the NPC enabling the CTS to concentrate on his /her technical advisory services towards the second half of the programme. This transfer of managerial and technical capacity is a key requirement of the position.

Provide strategic advice to FMIP/PDFMD/ Steering Committee on matters relating to capacity building within the programme framework.

Oversees strategic planning of the annual national and provincial workshops and for reporting to the Programme Executive Group.

Updated the programme risk and issues log at regular basis and brings relevant matters to the attention of the FMIP Programme Manager and Steering Committee.

Competencies: Demonstrates integrity by modelling values and ethical standards; Promotes the vision, mission, and strategic goals of GoPNG initiatives. Has ability to lead strategic planning, results –based management and reporting; Has ability to leads identification, formulation, implementation and evaluation of programme

components and activities;

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Focuses on impact and result for the client and responds positively to critical feedback, consensus oriented.

Leads teams effectively and shows conflict resolution skills. Displays a high level of respect, diplomacy and tact when dealing with government officials,

elected members and other project stakeholders. Demonstrates political sensitivity and analytical judgement Approaches work consistently with energy and a positive, constructive attitude Is proactive and has the ability to discuss openly with all senior government staff; Results – orientation and efficiency in a multi-tasking environment Capacity to perform effectively under pressure and hardship conditions; Highly developed inter –personal, negotiation and teamwork skills, networking aptitude, ability

to work in the multi-cultural environment; Highly developed inter-cultural communication and skills.

Essential knowledge and experience

At least 10 years of experience and experience with similar assignments in managerial position

Held senior positions in a Government or project (preferably in the context of another developing country facing similar challenges to PNG in terms of decentralization) in the area of financial management or public administration.

Knowledge governance and capacity building issues preferably in area of financial Management or public administration.

Knowledge in providing advisory services; Solid experience in facilitating training and capacity development. Strong experience in project development, management, monitoring and evaluation in

including PRINCE2 and results –based management; Ability to manage and supervise other advisors (national & international); Ability to use computers and information technology as a tool and resource; advance

computer skills and experience in the use of web-based management systems. ATLAS experience a distinct advantage

Experience in working in a multi – cultural environment and with senior government officials is highly advantageous; representation skills

Working knowledge of sub-national initiative in PNG; Experience with international organizations, UN/UNDP desirable

Qualification Advance university degree in Public Administration, Economics, Accounting, Finance,

political science or related discipline; PhD distinct advantage.

Language: Full working knowledge of English including excellent drafting and presentation skills;

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ANNEX 5. LIST OF CURRENT PROVINCES AND DISTRICTS UNDER PCAB SUPPORT

Province District # Districts

1 Easter Highlands province 8 Daulo Goroka Hengafoni Kainanatu Obura-Wonenara Unggai-bena Luka Okapa

2 Enga 6 Kandep Laiagam Porgera Kompiam-Ambuim Wapenamanda Wabag

3 Western Highlands 4 Mt Hagen Mul-Baiyer Dei Tambul-Nebilyer

4 Morobe 9 Bulolo Finschaffen Huon Gulf Kabwum Lae Makham Nawaeb Menyamya Tewai siassi

5 Saundaun 4 Telefomin Vanimo Aitape Lumi Nuku

6 West New Britain 2 Talasea Kandrian

7 Autonomos R of Bougainville 3 Central B North B South B

8 East New Britatin 4 Pomio Rabaul

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Gazelle Kokopo

9 New Ireland 2 Namatanai Kavieng

10 Central province 4 Abau Rigo Goilala Kairuku Hiri

11 Gulf 2 Kerema Kikori

12 Milne Bay 4 Alotau Essala Kiriwina Goodenough Samarai Murua

13 Western 3 North Fly Middle Fly Soth Fly

14 Oro 2 Ijivitary Sohe

15 East Sepik 6 Ambunti dreikikir Angoram Maprik Wewak Wasera Gawi Yangoru Saussia

16 Southern Highlands 5 Kagua-Erave Nipa-Kutubu Ialibu-Pangia Imbonggu Mendi-Munihiu TOTAL PROVINCES 16 TOTAL DISTRICTS 68

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