Proper oversight and management of financial resources are key to IFAD’s ability to reach its objectives and demonstrate to its stakeholders that adequate governance arrangements are in place. Project Financial Management is a key contributor to IFAD's governance structure through risk based fiduciary assurance (compliance) and the performance of value-added inputs. Financial management also contributes to IFAD’s development effectiveness through supporting improved delivery and achieving higher disbursements.
IFAD adheres to its development commitments as a maturing IFI and reliable development partner, enhancing its business model and strategic operational development through harmonized financial management best practices, development of modernized operational policies and knowledge management.
Good Financial Management
The Agreement Establishing IFAD requires that the proceeds of loan and grant financing are used solely for the purpose/s intended under the related agreement and in accordance with the activities described in the annual workplan and budget.
Financial Management refers to the budgeting, accounting, internal control, funds flow, financial reporting and auditing arrangements by which borrowers and recipients receive funds, allocate them, and record and report on their use.
Good Financial Management is important to a country’s development because it provides assurance to citizens that their taxes are being used appropriately, to donors and lenders that the funds they provide are being used as intended, and to the private sector that there is an appropriate environment for investment and growth.
Risk Based Assurance Framework
IFAD follows a risk based assurance methodology to systematically assess and mitigate fiduciary risks. A fiduciary risk rating is initially assigned following assessment during the project design stage. The fiduciary risk rating is subject to ongoing review and may be either validated or refined based primarily on findings made during annual supervision and implementation support field missions.
Through application of the risk based assurance framework, supervision requirements and disbursement processing arrangements are determined and modified, so as to ensure that the fiduciary risks are effectively mitigated throughout the project lifecycle.
Use of Country Public Financial Management Systems (PFM)
IFAD is committed, along with other donor partners, to operationalize the aims of the Paris Declaration, the Accra Agenda for Action, and the Busan Partnership to further align IFAD procedures and practices with country PFM systems.
Public disclosure of project financial data
Publicly disclosed project audit reports can be accessed through the corporate document repository and, where available, on the project pages. The earliest available project audits cover the financial year 2017-18. As of 2019, public disclosure is mandatory for all IFAD-financed projects.
See also IFAD’s e-learning tool: A guided overview of IFAD financial management practices and procedures