2003年-世界发展银行全球_Azerbaijan___Country_Financial_Accountability_Assessment_66页_4mb

Azerbaijan Country Financial Accountability Assessment Summary

Core Content

This report, Report No. 26995-AZ, is a Country Financial Accountability Assessment (CFAA) conducted by the World Bank in 2003, following missions to Azerbaijan in 2002 and 2003. It was prepared by a task team led by Roberto Tarallo, with support from Ranjan Ganguli, and in collaboration with a government counterpart team. The report outlines the state of Azerbaijan's financial accountability and procurement frameworks, and provides recommendations to improve governance and financial management in both the public and private sectors.

Main Objectives of the CFAA

• To diagnose the public and private sector financial accountability framework of Azerbaijan.
• To support the development of plans and capacity-building programs to address identified issues.
• To assist the World Bank in fulfilling its fiduciary responsibilities by assessing risks and weaknesses in financial management systems.
• To align with the Country Assistance Strategy (CAS), Interim Poverty Reduction Strategy Paper (I-PRSP), and Poverty Reduction and Growth Facility (PRGF).

Key Areas of Focus

1. Country and Economic Background

• Azerbaijan is an independent nation for only ten years, undergoing political and economic transition.
• The country has significant energy resources, which provide long-term economic prospects.
• The Constitution of 1995 includes a Western-style system of checks and balances.
• The non-oil sector faces challenges in financial discipline and management, leading to a quasi-fiscal deficit.
• Approximately 50% of the population lives below the poverty line.

2. Public Sector Budgeting

• The government has adopted a bottom-up approach to budget formulation, which has several weaknesses such as poor economies of scale and inflated budget demands.
• Key reforms include:
  • Publication of the Medium-Term Public Expenditure Strategy (MTES).
  • Enactment of the Budget Systems Law (BSL).
  • Development of a Medium-Term Expenditure Framework (MTEF) for 2003–2005.
  • Establishment of a Public Investment Program (PIP).
• These reforms are supported by the SAC-II and IBTA2 operations.

3. Public Sector Accounting, Internal Controls and Reporting

• The government has made progress in fiscal and monetary reform, including:
  • Closure of numerous bank accounts.
  • Establishment of a Treasury Single Account (TSA).
  • Centralization of cash management functions.
• The Government Financial Management Information Systems (GFMIS) are based on Government Finance Statistics (GFS).
• A Treasury Information Management System (TIMS) is being implemented to improve the systems and procedures.
• The Oil Fund is under a governance and management framework with professional oversight, prudential investment rules, and annual audits.

4. Public Sector External Auditing

• The Chamber of Accounts (COA) serves as the Supreme Audit Institution (SAI).
• The COA was established in 1999, and the Chairman was appointed in 2001.
• There is a need for capacity-building in the auditing profession, particularly in the areas of International Standards on Auditing (ISA) and legislative framework improvements.

5. Public Sector Internal Auditing

• A decree in 1999 abolished most internal audit functions in the public sector, except for:
  • The Main Department of Public Finance Control (MDPFC) in the Ministry of Finance (MOF).
  • The Ministry of Taxes.
  • The National Bank of Azerbaijan (NBA).
• There are currently no internal audit functions in other ministries or central executive bodies.
• No plans to reintroduce internal audit, despite concerns about inefficiencies and corruption.

6. Legislative Scrutiny of Public Sector Financial Management

• A Parliamentary Commission was formed to scrutinize public finances.
• The information provided to Parliament is highly aggregated, limiting meaningful debate.
• The government has initiated reforms, including the BSL and improved MOF accounting and reporting systems.

7. Private Sector Accounting and Auditing

• The enterprise sector's accounting framework is similar to the Soviet era, with fixed accounting standards and methods.
• There is a lack of clarity and consistency in accounting standards, leading to confusion among foreign investors.
• A new Budget Classification system has been approved in line with GFSM.
• The Accounting Methodology Department within the MOF has developed a reform program for Azeri accounting standards, which could benefit from external support.

8. Fiduciary Considerations for Bank-Financed Projects

• The CFAA highlights the need for improvements in budgeting, treasury management, financial reporting, internal and external auditing.
• The government has made progress, but the public sector financial management framework is still not fully reliable.
• The World Bank is encouraged to explore reliance on parts of the framework for its financial management requirements, rather than a blanket approach.
• The recent appointment of a Financial Management Analyst in Baku is expected to help coordinate this effort.

Key Recommendations

Next Steps

• The Cabinet of Azerbaijan approved the CFAA recommendations in May 2003.
• A summary matrix of ongoing initiatives and CFAA recommendations is included, highlighting the progress made and the areas needing further attention.
• The CFAA is intended to serve as a unifying tool for the government, the World Bank, and donors to design a medium-term reform program.

Conclusion

The CFAA highlights the significant progress made by Azerbaijan in financial management and governance, particularly in the areas of public sector budgeting, accounting reforms, and Oil Fund governance. However, it also identifies gaps and challenges, especially in internal auditing, external auditing, and private sector accounting standards, which require further capacity-building and policy reform. The report underscores the importance of cooperation between the government and development partners to ensure the effective implementation of these reforms.