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p. 5 of 5 BACK | NEXT Board of Directors' Report: 2001 Year in Review Strengthening the framework Broadening partnerships General operations Board committees

Annual Report 2001

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Board committees

The Board of Directors had four standing committees and one working committee in 2001. For membership, see Appendix 4.

Audit Committee

The responsibility for evaluating operations was transferred from the Board’s Audit Committee to its newly created Development Effectiveness Committee in 2001. This shift allowed the Audit Committee to focus on internal controls, and internal and external audits. In its 2000–2001 report, the Audit Committee concentrated on the impact of the new financial accounting standards (FAS 133) on ADB’s financial statements. It stressed the importance of closely following the evaluation of current thinking among the multilateral development banks regarding figures to be adopted for financial decisions and the use of three parallel accounting frameworks. The Committee oversaw the bidding process for selecting external auditors for 2001–2004 and concurred with the reappointment of PricewaterhouseCoopers LLP; reviewed and endorsed the 2001 work program of the Office of the General Auditor, including the activities of the Anticorruption Unit; recommended that the new Regional and Sustainable Development Department be the focal point in ADB for good governance activities; and monitored the implementation of and internal operational controls in the development of INTEGRA, the integrated computer system being implemented in ADB.

Budget Review Committee

The Budget Review Committee met in June 2001 to review the implementation status of the Information Systems and Technology Strategy (ISTS), future information technology directions for ADB, and capital expenditures for 1998–2002. In November, it reviewed Management’s 2002 budget proposal, 2001 work accomplishments, and 2002 work plans of ADB departments and offices.

At the June meeting, the Committee noted the generally satisfactory progress of most ISTS subprojects. While noting delays in implementing the INTEGRA system, it asked that the interface between the INTEGRA and other planned systems be properly established and coordinated promptly to ensure seamless data generation and information flows to optimize the system’s integration.

In November, the Committee noted the expected benefits in the new regional department structure, especially in terms of services to DMCs, and focus on long-term approaches. It noted that the success of the reorganization would hinge on the effectiveness of the Regional and Sustainable Development Department. It emphasized the critical role of the Knowledge Management Committee in effectively coordinating departments and offices in the knowledge group, and stressed the importance of the new business processes in improving efficiency and effectiveness, and reducing transaction costs.

The Committee noted that the number of new policies and mandates approved over the last 5 years had placed increased pressure on ADB resources, and that ADB’s policy mandates needed to be adequately funded and staffed.

The Committee welcomed the introduction of environmental and social guidelines in private sector operations and suggested that the Private Sector Operations Department explore more ways to address poverty reduction. It noted that ADB’s portfolio management was as important as project processing and stressed the importance of exploring innovative ways to assess the leverage effects of ADB’s assistance.

The Committee noted that the transition to London interbank offered rate (LIBOR)-based lending (LBL) would require a radical change in accounting systems and a strong team to ensure that ADB and its DMCs get the full benefit of LBL.

On the budget process, the Committee urged ADB to explore translating into budgetary terms the cost of implementing policies and other key initiatives, and also, to the extent feasible, the benefit expected in terms of the leverage effects of ADB assistance. It sought clarification of the rationale for cost demarcation between technical assistance and internal administrative expense (IAE), stressing the need for ADB to remain rigorous in distinguishing between technical assistance and IAE-financed activities.

The Committee noted several key training programs aimed at building mission leaders’ capabilities. It also urged more effort in the recruitment and career development of women professional staff. It urged that security, financial, personal, and professional issues be considered to facilitate recruitment and retention of these staff.

The Committee recommended approval of the budget for 2002.

Development Effectiveness Committee

The Development Effectiveness Committee, established in December 2000, became active in 2001. The Committee’s mandate is to help the Board ensure that ADB’s programs and activities achieve the desired development objectives and use ADB resources efficiently.

The Committee focused on ADB’s operations evaluation program and results. It reviewed the annual work program of the Operations Evaluation Department (OED); reviewed the annual programs for project and technical assistance completion reports coordinated by the Central Operations Services Office (COSO); discussed with staff OED’s Annual Review of Evaluation Activities in 2000 and COSO’s Semiannual Report on Loan and Technical Assistance Portfolio Performance for the period ending 31 December 2000, and prepared Committee reports on these; and reviewed selected OED evaluation reports.

The Committee concluded that the evaluation of ADB’s development effectiveness was carried out adequately and efficiently in 2001.

In its reports to the Board, the Committee emphasized the need to assess realistically the achievements and sustainability of completed projects, and specify and implement follow-up measures to support sustainability; incorporate adequate provisions for operation and maintenance in project design; ensure government ownership and local participation in projects; whenever possible, specifically target the poor to ensure that they benefit from projects; focus on long-term rather than short-term reforms; continue efforts in capacity building for project implementation in the DMCs; and use ADB’s resident missions effectively.

Inspection Committee

In 2001, the Inspection Committee assisted in evaluating candidates for the new roster of independent experts, who were subsequently appointed by the Board in July 2001, with 5-year terms expiring on 30 June 2006.

The roster now comprises 35 names from 20 countries. For details, see http://www.adb.org/inspection.

In April 2001, the Inspection Committee received a request for an inspection of the Samut Prakarn Wastewater Management Project in Thailand and, in July, the Board approved the Committee’s recommendation for an inspection.

The Committee noted and subsequently expressed concern that some policies had been approved by the Board but had not yet been incorporated into the Operations Manual, thereby excluding them from the scope of the Inspection Policy. Management is reviewing the issue.

The Committee selected three panel members (the Panel), who inspected the Project in September 2001. The Panel’s final report was forwarded to ADB Management in December 2001.

Also in December, the Committee received a request for inspection of the Southern Transport Development Project in Sri Lanka.

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