2003年-世界发展银行全球_Moldova___Country_Financial_Accountability_Assessment_54页_5mb

Moldova Country Financial Accountability Assessment (CFAA) Summary

Core Content

The Country Financial Accountability Assessment (CFAA) for Moldova, conducted by the World Bank in 2003, evaluates the country's financial management systems in both the public and private sectors. The report concludes that while some progress has been made in improving public financial management, the overall financial accountability framework remains weak and requires substantial strengthening. The assessment highlights key areas of concern and outlines a Development Action Plan (DAP) to address them, with a focus on enhancing transparency, accountability, and institutional capacity.

Main Recommendations and Key Findings

Public Sector Financial Management

• Budget Formulation:

  • The budget process is fragmented and lacks integration of all financial resources.
  • The Law on Budget System and Budget Process (1996) requires parliamentary approval only of the state budget, not the national framework.
  • Donor-funded investments and extra-budgetary resources are approved separately, not integrated into the state budget.
  • A Medium Term Expenditure Framework (MTEF) is being introduced to address these shortcomings, but budget formulation still follows an incremental and input-oriented approach.
  • Recommendation: Each ministry's Collegium Board should formally and regularly review its budget and execution reports.

• Budget Execution and Cash Management:

  • Weaknesses in cash management lead to unpredictable cash releases and penalty payments.
  • The Ministry of Finance established a Cash Management Unit in 2001, but its methodological skills need improvement.
  • Better coordination between departments (e.g., Budget Synthesis and Debt Departments) and tax authorities is needed.
  • Recommendation: Develop regulations on state budget cash allocations to increase transparency, and upgrade local treasury systems to manage commitments and arrears.

• Accounting and Financial Reporting:

  • Detailed accounting instructions were enacted in 1995, but consolidated financial statements for the entire public sector are not prepared.
  • The current accounting and treasury laws are complex and need simplification.
  • Recommendation: Simplify the legal framework to a principles-based regime and prepare consolidated financial statements.

• Internal Control and Auditing:

  • Internal audit in the public sector is underdeveloped and focused on post-event controls.
  • A framework for internal audit should be established with input from line ministries and the public sector.
  • Recommendation: MoF should develop a strategy for a public sector internal audit function.

• External Auditing:

  • The Court of Accounts (CoA) has extensive legal powers but faces capacity constraints.
  • The CoA should focus on systems improvements and risk mitigation rather than fault-finding.
  • Recommendation: Twin the CoA with a more developed Supreme Audit Institution (SAI), revise its law to limit control and enforcement activities, and improve staffing, training, and auditing methodology.

• Parliamentary Oversight:

  • Parliament is active in promoting financial accountability but needs to enhance oversight of public expenditures.
  • The Committee on Economy, Industry, Budget and Finance should regularly review the financial performance of ministries.
  • Recommendation: Parliament should pay more attention to reports from the CoA and the Ombudsman.

• Local Government Institutions:

  • Local governments face similar financial management challenges as the central government.
  • They are affected by frequent administrative-territorial changes and unclear fiscal decentralization reforms.
  • About 30% of public funds are allocated to local budgets.
  • Recommendation: Simplify accounting laws, prepare annual performance reports, and develop a financial management training program for local staff.

Private Sector Financial Management

• Accounting and Auditing:

  • Reforms in private sector accounting and auditing began in 1995, supported by the MoF and international partners.
  • The Law of Accounting (1995) needs revision to align with EU Directives and IAS.
  • Recommendation: Enact a revised Law of Accounting consistent with EU legislation and IAS.

• Financial Reporting:

  • Financial institutions, listed companies, and entities of public interest should prepare consolidated financial statements under IAS and EU legislation.
  • SMEs should have simplified financial reporting aligned with EU standards.
  • Recommendation: Require consolidated financial statements for specified entities and simplify reporting for SMEs.

• Auditing:

  • The Law on Auditing is outdated and needs alignment with EU Directives and best international practices.
  • The audit requirements should be extended to non-banking financial institutions, listed companies, and entities of public interest.
  • Recommendation: Revise and enact the Law of Auditing and the Law of Joint Stock Companies, and extend statutory audit requirements.

• Accounting and Auditing Institutions:

  • There is a need for sustainable, adequately resourced standard-setting institutions.
  • The Association of Audit Firms in Moldova (AAFM) and the Association of Professional Accountants and Auditors (ACAP) are underdeveloped.
  • Recommendation: Establish and strengthen AAFM and ACAP, and develop a common institutional framework for auditor education and certification.

• Accounting Education:

  • Initial efforts have been made to improve education and training for accountants and auditors.
  • However, more work is needed to improve the training, education, and certification process.
  • Recommendation: Develop programs that serve as prerequisites for auditor certification in Moldova.

• Banking Sector:

  • Banks are licensed and regulated by the National Bank of Moldova (NBM).
  • Some IAS elements are not incorporated into NAS, leading to discrepancies.
  • Recommendation: Enact a Law requiring IAS for financial reporting in the banking sector, and harmonize auditor education and certification with NBM and MoF.

Fiduciary Considerations for Bank-Financed Projects

• The CFAA concludes that the Bank cannot rely on the existing financial accountability framework to ensure the proper use of funds.
• Each Bank-financed project must be assessed individually for its financial management arrangements.
• Recommendation: Establish a forum to oversee project financial management systems, review the quality of project auditors, and provide training to CoA on Bank-financed projects.

Development Action Plan (DAP)

The DAP outlines actions to be taken in three time frames: short-term (less than 1 year), medium-term (1 to 3 years), and long-term (over 3 years). Key actions include:

• Consolidating the budget process to include all financial resources.
• Revising the Law of Accounting and Law of Auditing.
• Strengthening the Court of Accounts through twinning with a more developed SAI and peer review.
• Developing a training program for local government financial staff.
• Improving auditor education, training, and certification.
• Harmonizing the institutional framework for financial management across sectors.

Conclusion

The CFAA underscores the need for comprehensive reforms to strengthen Moldova's financial accountability framework. These reforms are essential to improve public sector financial management, enhance transparency and efficiency, and ensure the effective use of both domestic and international funds. The DAP provides a structured approach to implementing these reforms, with clear responsibilities and timelines. The Bank emphasizes that it will continue to assess financial management risks independently, given the current limitations of the national framework.