Financial Management and Analysis of Projects - User Instructions

Table of Contents

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Foreword

1. Introduction to the Guidelines

2. User Instructions

2.1. Overview

2.2. ADB Lending and Technical Assistance

2.3. Applying these Guidelines

2.4. Project Types and General Treatments

2.5. Overview of Project Processing Steps

2.6. Step 1: Identification and Early Preparation

2.7. Step 2: Loan Preparation

2.8. Step 3: Project Examination

2.9. Step 4: Loan Negotiations

2.10. Step 5: Project Implementation

2.11. Step 6: Project Completion

3. Preparing and Appraising Investment Project

4. Financial Management of Executing Agencies

5. Reporting and Auditing

6. Financial Institutions

7. Knowledge Management

Financial Management and Analysis of Projects : 2. User Instructions

2.4. Project Types and General Treatments

2.4.1. These Guidelines effectively classify projects, executing agencies, and implementing agencies into two distinct groups: (i) nonrevenue-earning; and (ii) revenue-earning (including public sector, private sector, and financial institutions). ADB, together with other international financial institutions (IFIs), including the other MDBs, is actively encouraging borrowers and EAs to adopt uniform standards of accounting and financial reporting. However, some time will be required to achieve a high level of uniformity.

2.4.2. In the case of nonrevenue-earning EAs in the public sector, ADB expects sound financial policies, adequate accounting records, proper internal control systems, timely reporting to management, and sound and timely auditing.

Accounting Standards, Auditing Standards
and Reporting Arrangements

2.4.3. Accounting Standards. Examples of accounting standards acceptable to ADB are the International Accounting Standards (IAS) published by the IASB, which are normally used for commercial entities, and the International Public Sector Accounting Standards (IPSAS) published by the Public Sector Committee of the International Federation of Accountants (IFAC-PSC). Financial reports may be prepared in accordance with national accounting standards that are judged to be acceptable by ADB. ADB, together with the other members of the MDB Technical Working Group on Financial Management Harmonization and the OECD-DAC, undertake to support the work of IFAC-PSC in developing an accounting standard for development assistance, was published in 2004.

2.4.3. (a) Auditing Standards. Examples of auditing standards acceptable to participating MDBs are those published by the International Organization of Supreme Audit Institutions (INTOSAI), and the International Standards on Auditing (ISA) issued by the International Audit and Assurance Standards Board (IAASB). ADB may also accept national audit standards that they consider to be consistent in all material respects with international standards, or where any material inconsistency with international standards is identified and disclosed.

2.4.4. The following table illustrates these categorizations and associated treatments:

Sector:	State-Owned (Public Sector)		Private Sector
Type of Project, Executing Agency or Implementing Agency:	Non-Revenue-Earning	Revenue-Earning	Private Sector
		Financial Institutions
Broad Guidelines Approach and Requirements:	Sound financial policies Adequate accounting records Proper internal control systems Timely reporting to management Sound and timely auditing Gradual improvements in financial reporting as capacity allows	Move towards best practice private sector management, internal control, and governance arrangements Ensure that ongoing operations are sustainable Compliance with National Accounting Standards Move towards reporting in accordance with IAS

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2.3. Applying these Guidelines

2.5. Overview of Project Processing Steps

Catalog

2.4. Project Types and General Treatments