Proposed grant from the global environment facility trust fund
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Country issuesThe Country Financial Accountability Assessment (CFAA) prepared by the Bank in 2003-2004 state that at the central level, the Government of Argentina has a fully integrated budget, accounting, treasury, and public debt financial management system. These systems control the funds received by the central government from any source and provide sufficient information to determine if the funds were utilized as planned. An issue raised in the Country Assistance Strategy (CAS), document issued in January 2004, was the chronic untimely submission of audit reports to the Bank. However, since 2003 there has been some improvement on country audit report compliance. The audit compliance issue is being addressed by the Bank at portfolio level and through an IDF-funded assistance to strengthen the institutional capacity of the Auditoria General de la Nacion (AGN), the Borrower’s Auditor General Office. The 2006-2008 CAS currently under preparation refers to a fiduciary action plan for improving the timeliness and effectiveness of the external audit function in the country. The International Monetary Fund issued an experimental Report on the Observance of Standards and Codes (ROSC) for Argentina in April 1999. It commented that based upon the description of practices provided by the authorities and summarized in the report, Argentina has achieved a high degree of fiscal transparency. This is a reflection of the significant progress that has been made since the implementation of landmark legislation on financial administration and control in 1992. Implementing EntityThe established administrative unit within the Secretariat will be responsible for project budgeting, accounting, internal controls, funds flow, reporting and external auditing. Budgeting and AccountingCash transfers to the administrative unit s in Argentina are recorded in the Federal Government integrated budget and accounting system (SIDIF, Sistema Integrado de Informacion Financiera) and subject to control over the budgetary execution process while accounted for in the Project Unit information and accounting system. The process for the preparation of the annual budget must ensure consistency with the Annual Operative Plan, Plan Operativo Anual (POA) of the project. The unit has skilled experienced FM staff capable of fulfilling the project needs. It is required that a separate budgetary line in the Secretariat’s annual budget be set to allocate budgetary resources and keep truck of the project execution specifying the sources of funds. To maintain the project accounting records the Unit will use the UEPEX system, an in-house information tool developed by the Federal Government which use is mandatory for multilateral financed operations at federal level and is considered adequate for accounting purposes. The project chart of accounts will reflect disbursement categories, project components and sources of financing. The cash basis of accounting will be used for recording the project transactions.
Internal Control and Internal AuditingSAGPyA is subject to internal audit of the General Syndicate of the Nation (SIGEN) which is the Federal Government’s internal audit agency under the jurisdiction of the executive branch. SIGEN supervises and coordinates the actions of Internal Audit Units (IAUs) in all federal agencies, approves their audit plans, conducts research and independent audits, systematizes the information from its own reports and those produced by the IAUs. Funds Flow and Disbursement ArrangementsTo facilitate project implementation the Unit will operate a Special Account (SA) in US dollars. The same as in previous project, SAGPyA will open the SA in Banco de la Nacion Argentina (BNA). The administrative unit will manage the Special Account and will be also responsible for preparing the bank account reconciliation on a monthly basis. Funds deposited into the Special Account as advances will follow the Bank’s disbursement operating policies and procedures described in the Legal Agreement or in the Disbursement Letter. Withdrawals from the Special Account will be solely made for payments of eligible expenditures As eligible expenditures arise, funds will be converted to local currency and deposited into a dedicated payment account open in BNA in pesos from which payments will be made as incurred. The project Operational Manual will incorporate specific arrangements to ensure the adequacy of the administrative unit control over uses of funds for the Grant program under Component 3 and other project activities involving advances to other Government institutions or non-governmental organizations (NGO). These procedures will be prepared by the PIU, reviewed and agreed with the Bank FMS and will e included in the Operational Manual as well. The flow chart below presents the funds flow arrangements from the GEF account to the project Special Account and operative account. Grant Funds 
World Bank 
 SAGPyA-Admis. Unit
Local Funds   Admin. Unit
The Project incorporates the Bank’s new policy on eligibility for Bank financing.11 This policy was approved by the Bank’s Board of Directors on April 13, 2004. The New Policy Framework on Eligibility of Expenditures in World Bank Lending applies to this project since the country’s financing parameters for Argentina have been approved. The proceeds of the Grant would be disbursed against the following disbursement categories:
Traditional method for disbursements will be used. An Authorized Allocation (AA) for advances into the Special Account will be established. The recommended maximum authorized allocation for this operation is $ 500,000 which is considered adequate to cover up to six months of the project transactions. All Withdrawal Applications (WAs) will be fully supported by proper supporting documentation for all expenditures made under contracts requiring prior review by the Bank, and contracts whose value will be raised above the prior review limits as a result of amendments to the Grant Agreement. All consolidated SOEs documentation should be maintained by the PIU for post-review by the Bank and audit purposes for up to one year after the final withdrawal from the grant. Requests for replenishments to the Special Account would be sent to the Bank on a monthly basis or whenever the account needs to be replenished by at least 50 percent. Replenishments, up to the Authorized Allocation will be made on the basis of Applications for Withdrawals (Form 1903) accompanied by the supporting and other documentation detailed in the Disbursement Handbook. The project will continue to access Bank’s Client Connection web page to get the 1903 Form from the web and to perform on a periodic basis the reconciliation between its bank account and resources received from the different sources. The Operational Manual will include a specific funds flow procedure for the Grant program under Component 3 and other project activities involving funds transfers to other Government institutions or non-governmental organizations (NGO). These procedures will be prepared by the administrative unit, reviewed and agreed with the Bank FMS |