The activities the Agency undertakes within its competencies are largely funded from the World Bank and other donors’ donations and credits. All such projects are implemented and the donor funds used in line with clearly defined procedures as a strict adherence thereto is a condition for their use.
A special Project Management Unit (PMU) within the Agency is responsible for technical and financial administration of projects financed from donations and proceeds of credits granted by international financial institutions. PMU activities include implementation of procedures for selection of consultants and procurement of goods, fund management, use of funds, record-keeping and reporting on the use of funds.
The Agency’s partners from 2001 onwards include:
Owing to its considerable experience with projects financed by the World Bank and other donors, and to its exceptional performance so far, the PMU also provides services of technical and financial administration of projects funded by the WB and other donors to other institutions, including:
PMU has successfully administered over 30 projects amounting in total to approx. EUR 25 million, financed by various donors.
Financial Audit of the Agency to Assess Fiduciary Risk
Since the Agency is the fund manager in a number of DFIDprojects, in December 2009, the DFIDoffice in Serbia conducted a financial audit of the Agency to assess fiduciary risks.
Fiduciary risk is a potential risk that donated funds may not be used for the targeted purpose, that the investments may fail to achieve the optimum value, and/or that the use of funds may not be fully justified. The most common reasons for conducting a fiduciary risk assessment in a country are the lack of capacities, insufficient expertise and knowledge, inefficiency of bureaucracy and/or high level of corruption.
Fiduciary Audit was carried out in line with PEFA1 indicators and included a thorough scrutiny of the Agency’s trustee system and procedures related to DFID(and other donors’) fund management as well as the review of audit reports for DFID projects. The audit also included information on the Agency’s operations in the context of public finance management in the country and fiduciary risks identified in the last PEFA report on Serbia from 2007. The audit report findings were as follows:
- Fiduciary risk of using the Agency’s services for the implementation of DFID-funded projects is low.
- There is no need to take any risk mitigation measures.
- The engagement of the Agency to help implement DFID projects is suitable considering the general fiduciary risk assessment of broader state systems. While these systems have weaknesses, the Agency’s system and procedures are robust and reliable.
- With the reporting system outlined in the Memorandum of Understanding being implemented, DFID may be confident that fiduciary risks related to advance payments for the projects are low.
- Engagement of the Agency for the implementation of similar projects in the future is suitable.
1 - The Public Expenditure and Financial Accountability Program was launched in December 2001, co-financed by the World Bank (Development Grant Facilities - DGF), European Commission, Department for International Development of the Government the United Kingdom of Great Britain and Northern Ireland (DFID), Swiss State Secretariat of Economic Affairs (SECO), Royal Norwegian Ministry of Foreign Affairs, French Ministry of Foreign Affairs and International Monetary Fund (IMF). PEFA Program aims to improve the borrowers’ abilities and capacities to: (i) assess the country’s public expenditure, procurement and financial accountability, and (ii) develop a set of practical activities aimed at capacity reform and development. PEFA reports provide a snapshot of the situation with regard to public finance management in each country. The assessment is conducted by applying the methodology developed by PEFA.