The IHP+ Financial Management Technical Working Group met for the...
Financial Management Assessment
Sound Financial Management (FM) is critical to ensure the best use is made of scarce resources and that funds for health services reach the communities that need them. Two key messages have emerged from recent reviews of IHP+ and commitments by development agencies to increase use of country financial management systems:
- More needs to be done to enhance and increase the use of country financial management systems.
- More needs to be done to reduce transaction costs, partly heightened due to duplicated Financial Management assessments and processes and parallel FM systems.
As part of work by Health Systems Funding Platform partners, a team from the World Bank, GAVI, and Global Fund carried out a review of agency fiduciary assessment procedures in 2010. As a result of this review, partners agreed that carrying out individual Financial Management Assessments (FMAs) was a significant duplication of effort and cost. They developed a report with reasonable recommendations for FM harmonization.
Some potential benefits of the proposed joint FMA approach include:
- Stronger risk assessment and management of the sector for all operations financed by participating donors
- Reduced burden due to one single FM framework and processes
- Common accounting systems improve integrated planning across all funding sources (i.e. government and development partners)
- One single set of periodic reports with:
- better transparency, reduced risk of duplication/double counting
- reduced burden of reporting
- Reduced number of auditors and streamlined audits.
The approach is based on three main principles:
- Align with partner country systems whenever they meet the minimum acceptable level.
- Harmonize among development partners, when all or part of the national Procurement and Financial Management (PFM) system is not acceptable. Do this in a way that the burden on the country and the development partners is minimized.
- Agree and support implementation of a joint action plan that strengthens the national system so as to bring about the necessary changes to make the alignment with the country system feasible.
IHP+ has begun exploring opportunities for advancing ‘One FM’ agenda and will test the proposed joint FMAs in a few countries. This work is led by the World Bank. Based on the experience, guidance for implementing Joint Financial Management Assessments and Joint Financing Agreements will be revised.