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Establishment of An Inspection Function

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Rationale

The rationale for establishing an inspection function independent of Management includes the following:

• Establishment of an inspection function and related inspection procedures would be consistent with the Bank's policy of encouraging transparency and accountability in its operations

• Establishment of such a function would complement the Bank's policy of allowing greater public access to Bank documents and publications, as well as the Bank's increased emphasis on beneficiary participation in the formulation and implementation of projects

• Independent investigation of the facts underlying the grievance of a group arguably affected by the Bank's failure to follow its operational policies and procedures would permit a fair hearing of the views of the affected group

• The activities and recommendations of an inspection body would help to educate the public at large about the variety and complexity of issues involved in development programs in the region

• The existence of an inspection body would foster greater confidence in and support for the Bank and its operations

6. At the same time, it should be recognized that the Bank already has in place a number of well-developed supervision, audit and evaluation systems. The Bank's Office of the General Auditor (OGA) regularly audits the Bank's financial, accounting, administrative, project-related and other activities; OGA reports directly to the President, and its activities are reviewed extensively by the Audit Committee of the Board as well as the Bank's independent outside auditors. The Post-Evaluation Office (PEO), which also reports directly to the President, conducts selective audits of completed Bank projects, as well as impact evaluations and other special studies of post-evaluated projects. In addition, Management Review Meetings. Staff Review Committee Meetings and Loan and Technical Assistance Coordination Committee Meetings provide mechanisms for relevant Departments, Divisions and Offices to review and comment on proposed projects. with respect to both the project's merit and its conformity with Bank policies and procedures. In particular, the Bank's Office of the Environment and Social Development, which reports directly to the President, considers the environmental and social issues raised by proposed projects. Finally, the Board of Directors itself reviews each proposed project on the basis of a Report and Recommendation of the President (RRP); this review often involves intensive scrutiny by member country governments.

7. It would be unnecessary and undesirable to duplicate the activities of these offices and mechanisms in a newly established inspection body. However, such a body could augment the Bank's existing system of controls by providing a mechanism for external parties to raise concerns about the Bank's compliance with its own policies and procedures in the formulation or implementation of projects. Such a mechanism would, in turn, complement and strengthen the Bank's existing quality control systems.

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