This CFAA concentrates, by design, onfederal-level public sector financial management in theRussian Federation. Its results feed into the fiduciarydiscussion presented in the new Russian Federation CountryAssistance Strategy (CAS), and into the Core IntegrativeFiduciary Assessment (CIFA). In budget management the CFAArecommends 1) strengthening the strategy phase of budgetpreparation to link macroeconomic resource constraints andsectoral and program targets; 2) adopting a uniform,simplified budget coding structure; 3) adopting a moreparticipatory approach to budget planning and formulation;4) introducing accounting principles by entities withextra-budgetary funds and preparing reports that arecompatible with Treasury accounts and fiscal reporting; 5)preparing a program of institutional development for the MOFand applyingmodem information technology; and 6)amendingthe chart of accounts (COA) to fully reflect the budgetclassification. The development and implementation ofafull-function Treasury system will take several years and isnot expected to become fully operational before 2004/05. Inthe interim, the CFAA recommends immediate implementation ofan improved system ofexpenditure monitoring, extension ofTreasury control ofexpenditure commitments to all items ofthe economic expenditure classification, and replacement ofweekly cash finding limits by monthly funding ofestablished expenditure commitments. In accounting andfinancial reporting, some recommendations are to 0 review ofexisting budget classifications and coding structures anddesign of a revised structure and COA that conform with theIMF GFS classification; and to integrate the two existingcoding systems. To improve internal controls and internalauditing, the report recommends regarding the internal auditas an important management tool, shifting to a new model,based on service orientation and performance/riskassessment, internal audit functions becoming independentfrom other organizational and functional departments, staffreporting directly to the head of the organization,regulating the entity by an audit charter, and auditfunctions be carried out by multi-disciplinary teams. As forexternal audits, the CFAA strongly supports theChambers' program of institutional and methodologicalimprovements, in particular its preparation of a long- termplan to assess public institutions' performance (valuefor money) in the use of public funds. Finally, the CFAAfinds that the World Bank is adequately discharging itsfinancial management fiduciary responsibilities with respectto its lending operations. The CFAA risk assessmentconcludes that the current ring-fencing approach to projectimplementation arrangements should be maintained,recognizing that--based on the effective operationalizationof the reforms being introduced in public financialaccountability--the present arrangements could in due coursebe subject to revision.
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