World Bank Financial Management (FM) staff actively engage with colleagues from other development partner organizations, including multilateral development banks (MDBs), the International Organization of Supreme Audit Institutions (INTOSAI), the International Federation of Accountants (IFAC), and the United Nations (UN) family when working on FM policy and institutional and operational issues. The aim of these partnerships is to have a coordinated approach on FM policies, procedures, and practices as part of the global harmonization initiative.
FM actively supports the development of standards and codes through engagement with international standards setting and regulatory bodies. These bodies include the International Auditing and Assurance Standards Board (IAASB), the International Public Sector Accounting Standards Board (IPSASB), and INTOSAI’s Professional Standards Committee (PSC) to promote responsiveness of their pronouncements and processes to developing country needs.
Multilateral Development Banks
The Financial Management Harmonization Working Group (FMHWG) consists of representatives from five multilateral development banks (MDBs): World Bank (current chair), African Development Bank, Asian Development Bank, Inter-American Development Bank, Islamic Development Bank, International Fund for Agricultural Development (IFAD), New Development Bank (NDB), and European Investment Bank (EIB). The Group meets quarterly to promote the harmonization of their policies and practices in financial management, and to operationalize the development effectiveness agenda. The Group also focuses on fostering collaboration in FM diagnostic work, financial reporting and auditing, fiduciary risk assessments, FM capacity building in client countries, and use of country public financial management systems.
International Organization of Supreme Audit Institutions (INTOSAI)
Cooperation between the World Bank and INTOSAI is primarily governed by the INTOSAI-Donor Cooperation Memorandum of Understanding (MoU). The MoU strives to augment and strengthen support to the supreme audit institution (SAI) community, and recognizes the value of SAIs in strengthening governance, accountability, and poverty reduction.
Strategic guidance and implementation of the MoU is governed by a steering committee, which comprises all donor signatories to the MoU and SAIs appointed by INTOSAI. The Steering Committee is jointly chaired by one INTOSAI and one donor representative. Currently, the SAI of Saudi Arabia and the World Bank hold the position of joint chairs, while the United States Government Accountability Office (GAO) and the UK Department for International Development (DFID) hold the positions of vice-chairs.
Operational Partnerships with UN Agencies
Historically, under the World Bank country-based model, Bank Borrowers have engaged UN Agencies to support achievement of their development objectives. As the World Bank has seen significant expansion of demand for its operations to support rapid response in fragile, crisis-affected situations, as well as in response to global emergencies, including pandemics, UN Agencies have increasingly come to serve as critical implementation partners, where the benefits of operational partnership have included, scaling-up impact in delivering famine relief, tackling COVID, pandemic/epidemic outbreaks and malnutrition, reinforcing social safety nets and, building the resilience of communities affected by conflict and epidemics, as well as natural and climate-related disasters.
The principal modality for engagement of UN Agencies under World Bank-financed operations is through Indirect Financing, also referred to as Borrower contracting. UN Agency-specific Standard Forms of Agreement (SFA) have been developed in accordance with the World Bank 2016 Procurement Framework to facilitate Borrower contracting and are available on the World Bank Procurement webpage. Under the Indirect Financing modality, financial management arrangements with UN Agencies are governed by World Bank standard FM requirements, with requirements spelled out in the SFA General Conditions.
The World Bank may also engage UN Agencies to implement specific projects, or project components, on behalf of client countries, particularly in high-risk environments. In such cases the World Bank enters into a grant agreement directly with the Bank. Such Direct Financing may be used for Trust Fund grants and, in exceptional circumstances, for IDA grants.
The terms for Direct Financing are governed by authorizing frameworks negotiated with the UN, which allow the World Bank to recognize the UN single audit principle, through which audit requirements are met through the normal audit function of UN Agencies own external auditors. The World Bank reviews the UN Agencies’ annual external audit reports and can discuss auditors’ recommendations with the management of the relevant UN Agency. These also allow UN Agencies to implement a World Bank grant in accordance with their own financial management procedures and internal governance (oversight and accountability) systems, based on alternate assurance arrangements agreed with the World Bank.