International Development Association(IDA) stakeholders want to be assured that IDA complies withits articles and policies, and that the funds it providesfor development purposes are used as intended and havemeasurable results. A key purpose of IDA's controlsystem is to provide such assurance. Hence, the Board ofExecutive Directors requested a full evaluation of thesystem by the Independent Evaluation Group (IEG), through anassessment by IDA management and a review by the InternalAudit Department. The evaluation is the first of its kindnot only for the Bank but also for all internationalfinancial organizations. In this sense the Bank and IDA havetaken an important lead in assessment of internal controls.The analysis includes several recommendations. First,controls over possible fraud and corruption in IDAoperations should be addressed on a broad front, startingwith risk management processes and country assistancestrategies, and including the development and deployment ofspecific additional instruments directed at fraud andcorruption issues at the level of programs and projects.Second, the implementation of remedies for the other controldeficiencies should be closely monitored. Management hasrecognized the need for such remedies, and many arecontained in the Governance and Anti-corruption (GAC)program currently being implemented (including some stillunder preparation). These remedies appear in both scope andcontent to address the key issues, and they correspond wellto those suggested by IEG in this report. However, they arenot yet sufficiently operative to be tested and, ifeffective, thereby lessen the materiality of the controlsweaknesses identified. IEG thus believes it would bepremature to conclude that fraud and corruption (F&C)risks have been successfully resolved under the current IDAcontrols framework.
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