feed into the overall country support strategies. Diagnostic studies should be regarded as part of a process, not as a single product, and sequenced over time.

Diagnostic reviews should be conducted according to open and transparent processes-There should be full consultation with all stakeholders before completion. There should be no surprises when the final report is published.

Understanding the institutional and governance context-Reviews of public financial management systems are not simply technical exercises. They require a full understanding of the underlying governance arrangements in a country, the informal rules and incentive structures, and the factors that can undermine efficient and effective delivery of public services through waste, mismanagement and corruption.

Performance measurement

The following principles guide the elaboration of good practice in performance measurement:

The measurement framework needs to encompass the critical aspects of public financial management-covering budget formulation, execution, reporting, and review-and be fully integrated with diagnostic reviews and processes.

The measurement framework should encompass internationally agreed codes and standards-which represent the target for public financial management systems-where appropriate. This leads to two specific requirements:

- Codes and standards need to be developed to fill existing gaps in coverage.

- Developing countries should fully participate in the development and formulation of codes and standards.

Performance measures should be comprehensive with respect to the critical areas to be covered without being excessively numerous. They should be readily understandable, cost effective, and capable of being calibrated to cover different stages of development and monitored on a regular basis. They should be acceptable to both partner countries and donor agencies and, where appropriate, consistent with current and proposed relevant international codes and standards.

While there can be no single overall measure of public financial management performance, it is necessary to avoid having too many indicators. In addition to indi-

cators of the overall effectiveness of the system, it can be useful to have more detailed indicators of specific aspects or areas of public financial management, e.g., public procurement, internal control and external audit.

GOOD PRACTICES IN DIAGNOSTIC WORK

Planning the review

As far as possible donors should seek to satisfy their requirements by relying on the diagnostic reviews that are already available, or that will be made available within a reasonable period of time.

Where individual donors requirements are not satisfied by available diagnostic reviews, they should seek to limit unnecessary duplication of work by collaborating with other donors and stakeholders and sharing the results of their reviews.

All donors should promptly share information on plans for carrying out diagnostic work in a particular country.

The reasons for conducting the review and its relationship with the overall country development strategy and the strategies of participating donors should be clear to, and accepted by, all participants at the beginning of the review.

Collaboration between partner country and donors is as important as collaboration between donors. Collaboration may take a number of forms:

Joint undertaking of a diagnostic review-With work being undertaken by staff or consultants of any number of development partners, including the partner country.

One or some partners undertaking the study-This may include the partner country undertaking a self-assessment, with appropriate review by donors, or one or more donors carrying out work on behalf of a wider group, with others providing funding or specific technical resources or indicating their intention to use the results of the study.

Conducting the review

The nature and extent of collaboration should be agreed and documented at the start of the planning process. This should include:

The role of the partner country in the work.

Whether there is to be a joint or separate reports for different donors. Whether there is to be a joint report, and the preparation of a joint initiating memorandum.

Which donors may be lead-participants, and which may take a more secondary role. Where there are many donors interested in a diagnostic study it may be necessary to limit the direct participation of some so as to keep the process cost-effective. This would be achieved through mutual agreement.

The staffing contribution and division of labour and costs between the participants.

Processes for communicating conclusions with other stakeholders.

Obtaining objective information on the quality of the public financial management system requires consultation with all stakeholders in the partner country. Apart from central ministries such as Ministry of Finance, these include spending ministries, parliaments, the business community and civil society.

Progress and emerging conclusions should be shared with all participants during the course of the review through regular meetings. The partner country should be encouraged to share draft conclusions with other country stakeholders before finalisation.

Quality assurance

All participants have a shared interest in achieving a quality diagnostic review. Where joint reviews are carried out, quality assurance arrangements should be agreed at the planning stage and recorded in a jointly owned paper. These arrangements will normally provide for a regular review of work done by each participating organisation, and for clearance by others before the report is issued.

Sharing the review report

All review reports will be shared to the fullest extent, observing individual participating donors disclosure policy and the prior agreement reached with the partner country.2

Follow-up activity

Donors will work to develop an understanding with the partner country that the review is intended to bring about improvements in the public