CFAAs are increasingly being carried out as combined or parallel products with related Bank diagnostic instruments-for example, with PERs (as in Mozambique, the Philippines, and Turkey) and Institutional and Governance Reviews (as in Bolivia and Peru). There is also increasing collaboration and coordination with Country Procurement Assessment Reviews (CPARs).

In addition, a growing number of CFAAs are carried out in collaboration with other development partners, which reflects the international harmonization agenda being promoted by the Task Force on the Harmonization of Donor Practices (sponsored by the OECDs Development Assistance Committee) and the Harmonization Group (sponsored by multilateral development banks). This collaboration should reduce the transaction costs for client countries of multiple donor assessments.

For example, CFAAs in the Banks Latin America and Caribbean Region are generally carried out jointly with the Inter-American Development Bank. Other development partners that collaborate on CFAAs include the United Nations Development Programme, the African Development Bank, the Asian Development Bank, the European Community, and the Strategic Partnership with Africa, as well as bilateral donors such as the U.K. Department for International Development, the Norwegian Agency for International Development, and the Swedish International Development Authority. It is expected that the Banks development partners will increasingly use CFAAs as a basis for their decisions on budget support. CFAAs can also increase the depth of work on public expenditure management-for example, by using EC audits and compliance tests as complementary sources of information (see below).

The guidelines review other Bank and International Monetary Fund (IMF) instruments relevant to CFAAs and emphasize that the level of analysis in CFAAs will vary, reflecting country circumstances and the timing, scope, and coverage of other planned or recently completed analytical work. They also stress that the Bank is moving toward integrated fiduciary assessments and that this will increasingly affect the sequencing and timing of products.

At present CFAAs are not public documents and are not released except with the agreement of the government concerned. However, governments are encouraged to disseminate CFAA reports.

The guidelines stress that staff preparing a CFAA should strive to obtain empirical evidence of what is happening on the ground-as opposed to what is contained in formal rules and regulations-and that conducting this reality check is difficult. Discussions with the national audit agency and the use of questionnaires are recommended. The anchor of the Financial Management Network is developing a standard questionnaire for CFAAs.

A CFAA typically reviews the following issues in the public sector:

Budget preparation procedures-particularly comprehensiveness, realism, and classification.

Budget execution and monitoring (including cash management and internal control).

External fiscal reporting and transparency.

External auditing and legislative follow-up.

Financial management staffing capacity.

Past CFAAs have also reviewed corporate governance and financial reporting in the private sector, including the accounting profession. In the future it is expected that these issues will instead be addressed through IMF Reviews of Standards and Codes (ROSCs) for private sector accounting and auditing. But issues related to the accounting profession may be covered in CFAAs if they are relevant to the public sectors need for accounting professionals and to the reporting and accountability of state enterprises.

The Bank considers follow-up an integral part of the CFAA process. The updated guidelines stipulate that from the outset the Bank and the government should agree that the CFAA is targeted at remedial action. The document should include an action plan of sequenced activities, and should define the resources and technical assistance required. Specific benchmarks or indicators should be developed to assess performance. The action plan should be agreed by the government and its key elements reflected in the CAS.

CFAA guidelines suggest that other Bank instruments, especially PERs and Institutional and Governance Reviews (IGRs), should be the primary source of information for institutional and governance aspects of public expenditure management. But the guidelines also recommend that CFAAs include a section on the legal and institutional framework for public expenditure management (annex A, p. 17) and identify aspects of the public expenditure management system that might facilitate corruption or in which improvements might reduce it (annex C, p. 30).

WORLD BANK COUNTRY PROCUREMENT ASSESSMENT REPORTS

Country Procurement Assessment Reports (CPARs) were introduced in the late 1980s. In 1998 their focus and objectives were redefined when the assess-

ment process was redesigned to reduce the focus on procurement in development projects and increase the emphasis on diagnosing national procurement systems and generating dialogue with governments about needed reforms. The main purpose of CPARs is to determine the need for and develop action plans to improve procurement systems. Specific elements include:

Providing a comprehensive analysis of public sector procurement systems-including the legal framework, organizational responsibilities, and control and oversight capabilities.

Conducting a general assessment of the institutional, organizational, and other risks associated with procurement-including identifying procurement practices that are unacceptable in Bank-financed projects.

Developing a prioritized action plan to bring about improvements.

Assessing local private industrys participation in public procurement and the adequacy of commercial practices related to it.

To ensure country ownership, CPARs are launched with the agreement of the government concerned and often involve its active participation. The guidelines for CPARs suggest techniques for demonstrating the benefits that can arise from the procurement review and thereby foster government support. In addition, assessment teams should strive to involve the business community and other nongovernmental partners.

The timing and scope of other diagnostic instruments help determine the content of individual CPARs. The World Bank plans to increasingly integrate its economic and sector work on accountability, risk assessment, and public expenditure and to better coordinate these analyses with those of other donors to avoid duplication, overlap, and high transaction costs. Joint efforts have already been undertaken, for example, in Bosnia and Herzegovina, the Philippines, and Turkey. Because sound procurement systems are a priority interest for all donors, the Bank encourages its staff to collaborate with other agencies, and the CPAR guidelines spell out the various forms that such partnerships may take.

A countrys CPAR, like its PER and CFAA, is closely linked to its CAS. Bank policies indicate that CASs should include thorough discussions of fiduciary issues.2 The CPAR is the Banks primary product for procurement issues. The Procurement Board is responsible for the overall development of CPARs, and the anchor of the Procurement Network reviews initiating concept memorandums and may provide other assistance. Country directors