under way or being considered; the third for CPARs. Differences in perspectives have made it difficult to ensure good coordination of PER, CFAA, and CPAR processes. Planning and budgeting for these instruments are largely based on parallel exercises with separate teams, peer reviews, and the like, and teams usually do not include experts from the other areas-let alone are they integrated.

But there is encouraging evidence of a trend toward integration, or at least harmonization, of recommendations as the basis for a single dialogue with recipient governments (PEFA 2002). A recent Bank directive states that country teams can choose to prepare an integrated fiduciary assessment combining the CPAR, CFAA, and PER.5 To qualify as an integrated assessment, the final product must comply with the guidelines for each instrument, and the sector boards responsible for each must agree on the content and on how the product will be presented to the client. Combined PERs, CFAAs, and CPARS are most common in the Banks East Asia and Pacific Region, where they have become almost standard-partly in response to pressure from the regions governments. But separation and occasional dissonance between PERs, CFAAs, and CPARs remain common.

Some argue that a clearer division of labor is needed between PERs and CFAAs. In that view PERs should focus on upstream public expenditure management issues-expenditure programming, policy-budget links, sectoral resource allocations, and budget preparation-and CFAAs should focus on downstream issues-budget execution, accounting, audit and control, and executive accountability to the legislative branch. The current division of labor is far less clear. CFAA guidelines include budget preparation in the scope of work, but this process has long been covered by PERs due to its direct link to expenditure policy, medium-term programming, and the overall macroeconomic framework. The executives accountability to the legislature is also part of CFAA guidelines, yet it should be analyzed from an overall governance perspective, not just from a narrow budget and public accounting perspective.

To some extent such difficulties arise from the absence of published guidelines for PERs. As noted, the broader the scope of an exercise, the harder it is to define its scope and coverage. This makes it difficult to clearly define the terms of reference for an exercise like a PER, which necessarily has a wide scope but needs to be tailored to the problems of the recipient country. But while the breadth of the issues to be covered (such as institutional and governance concerns) can justify more indicative guidelines for PERs than for, say, CPARs, it cannot justify the continued absence of any

guidelines. The time has come to formulate PER guidelines, reach Bank consensus on them, receive feedback from other development agencies and sample recipient governments, and formally promulgate the guidelines. Thus the recent decision by the Banks Public Sector Governance Board to prepare such guidelines is encouraging.

But the challenges of coordination go beyond the need for separate guidelines, particularly since individual assessments of public expenditure management should be seen as parts of an integrated whole. The World Bank would never advise a recipient government to set rigid organizational boundaries between budget preparation and budget execution. In every country the ministry of finance is responsible for both preparing a realistic budget that reflects government policy priorities and for facilitating and monitoring its execution. In addition, institutional and governance issues, including corruption, emerge at every stage of public expenditure management-not just in upstream or downstream phases.

Different elements and phases of the budget cycle have multiple inter-dependencies, and integrated approaches can create important synergies that improve assessment work (box 4). Thus the Banks assessment instruments should strive for increased integration and cooperation, not further separation. Yet some respondents believe that the organizational boundaries between CFAAs and PERs have become more rigid in recent years.

Short of creating a single office in the Bank to advise on all phases of the public expenditure management cycle and financial accountability-which is not a realistic possibility at this point-ways should be found to bring the PER, CFAA, and CPAR processes closer together. At the same time, efforts should ensure that the guidelines for these instruments are consistent, facilitate integrated approaches, and provide stronger guidance for institutional and governance work. The recent PEFA paper on integrating these instruments concludes that the potential benefits of integration can outweigh the costs, if the process of integration is managed effectively, and is adapted to the country circumstances. A review of the Banks internal rules and procedures may be necessary to support the development of integrative and collaborative work (PEFA 2002, p. ii). The paper also identifies good practices to guide country teams in adopting integrated approaches and sharpen the Banks operational procedures. These good practices include:

Recognizing the key role of country directors and country economists, working with sector managers, in designing and implementing diagnostic and reform work-which should be closely linked to Country Assis-

Box 4

How an integrated approach can strengthen assessments

By focusing on the complete cycle of public expenditure management and bringing together multidisciplinary teams-including economists, accountants, auditors, procurement experts, and public management specialists- integrated approaches can generate important synergies:

A comprehensive picture of public expenditure management, without gaps or overlaps.

A consistent analysis of public expenditure management performance.

Recommendations that are consistent, prioritized, and reflect government capacity.

Greater force to arguments for systemic reform of public expenditure management, by broadening the range of government agencies and other stakeholders involved in the dialogue.

Integrated approaches can also identify interdependencies between upstream and downstream phases of the budget cycle and provide better understanding of problems such as:

Unrealistic budgets, which can lead to unpredictable cash flows, divergences between budgeted and actual expenditures, and procurement delays caused by funding shortages.

Problems in procurement contracting, which can lead to low completion rates and inadequate returns for investment projects.

Inefficient information systems for public expenditure management, which can fail to link the different stages of the budget cycle in a comprehensive, unified accounting and reporting framework.

Incomplete audit trails, which can fail to take into account all relevant financial records on cash releases, procurement tenders and contracts, payroll management, and the like.

tance Strategies, Poverty Reduction Strategy Papers, and related lending and technical assistance operations.

Being aware that this work may cover several years and a series of interrelated missions and reports.

Establishing a core team with appropriate skills and experience to manage and conduct the work, with additional teams created as required to carry out specific analytical tasks.