Accounting and Monitoring: ADB Tightening Control Over Country’s Financial Management

The Asian Development Bank (ADB) is currently engaged in efforts to enhance the effectiveness of its projects in Uzbekistan. Ms. Ruth Farrant, Director of Public Financial Management at the ADB, has recently visited Tashkent to assess the impact of the ADB’s projects in Uzbekistan. Following discussions with participants and partners of the ADB initiatives, Ms. Farrant shared her perspectives on financial management with the Kursiv reporter.

Seeing is believing 

— Mrs. Farrant, this is your first foreign business trip in a new role. Why Uzbekistan?

— The main objective of this mission is to identify and take advantage of opportunities to improve the standards of accountancy and auditing. We aim to achieve this objective by collaborating closely with audit institutions, internal audits and integrated IT financial management solutions in cooperation with the government and other partners.

Our vision is to enhance compliance with international standards of government accounting and financial reporting, ensure the fulfillment of project financial obligations, and strengthen aspects of project asset management and resource control. These efforts will ensure that the ADB projects are effectively and transparently managed in line with global practices.

Additionally, it is crucial to maintain our focus on enhancing human capital in financial management, thereby improving the capacity of financial management and reinforcing financial sustainability.

— What issues do you focus on during this mission?

— We pay our attention to several pivotal areas. Firstly, we strengthened national systems to align with international accounting and auditing standards. Secondly, our focus was on enhancing the financial sustainability of enterprises. Thirdly, we tackled projects grappling with financial management challenges. These priority areas were fundamental for ensuring effective project and resource management.

It became apparent that face-to-face communication was considerably more influential than many emails or phone calls. Thus, convening various partners within the mission framework proved immensely beneficial. The most noteworthy outcome was the tangible support I garnered, manifest in the expressions of the individuals involved, a display of support far more remarkable in impact than any form of electronic communication.

Raising the bar

— How does ADB plan to improve Uzbekistan’s financial management systems and ramp up its potential?

— The Asian Development Bank has approved a loan to strengthen the public finance management system. We work with our colleagues on policy development and public financial management reform. The Ministry of Economy and Finance and the ADB project financial management specialists are creating a roadmap for transitioning to the country’s International Financial Reporting Standards (IFRS) and implementing International Public Sector Accounting Standards (IPSAS). This work aims to ensure that financial reporting and auditing adhere to international best practices, the ADB procedures and requirements.

During a meeting with UzAssets JSC representatives, we discussed how the bank can assist in developing policies and procedures in line with international standards and implementing IFRS. All of these efforts contribute to the government’s ambitious reform agenda.

The ADB is dedicated to this work. Like other donors and development institutions, we have engaged in extensive joint work through the Global Partners Forum, where each participant can showcase their roles and contributions. This collaborative approach allows us to bring best practices to the loan portfolio. During meetings with donors, it became evident that we were not competing or duplicating each other’s efforts, allowing us to work more effectively together.

— What challenges do you face managing finances for projects in Uzbekistan?

— The financial management challenges in Uzbekistan’s project management involves ensuring the timely completion of project audits and high-quality financial reporting. Improving project policies, procedures, and requirements must be done to align with international best practices. Moreover, giving due attention to proper accounting and asset management, enhancing the quality and compliance of financial covenants and strengthening monitoring systems are vital considerations.

The ADB is actively engaged in capacity-building initiatives to address these challenges and focuses on expanding its field presence to mitigate risks effectively.

— How does the bank handle compliance and financial management issues in high-risk projects?

— The bank has implemented measures to adjust to more stringent financial management procedures, demonstrating reduced flexibility towards non-compliance. This approach has received positive feedback from regulators as it emphasises our dedication to fiduciary discipline.

Setting clear standards as a minimum requirement has proven effective in evaluating project preparedness. Projects lacking essential components such as an accounting system, a dedicated financial manager, or a designated bank account are deemed unprepared for launch. Establishing these minimum requirements facilitates the filtering of underdeveloped projects, allowing us to allocate resources to well-prepared initiatives.

Effective collaboration with the government is vital. Open and comprehensive discussions provide a clear understanding of effective strategies, areas needing improvement, and overarching goals. The collaborative effort fosters a shared objective where all parties contribute to achieving success. Amidst all the reform efforts, the prevailing sense of unity ensures collective progress despite obstacles.

Learning to be inspired

— You have participated in several workshops organised by ADB. Will they help improve financial management systems in Uzbekistan?

— I am delighted to announce that the workshops were very successful. These workshops are crucial in providing necessary tools to both implementing agencies and project staff. I am especially pleased that our seminars have developed into an invaluable platform for exchanging perspectives on specific issues and discussing future trends. I hope the outcomes of these workshops will significantly contribute to enhancing the financial management systems in Uzbekistan.

— As far as I know, you also did a site visit.

— During our recent visit to the Drinking Water Supply and Sewerage Systems Improvement Project site in Tashkent province, we had the valuable opportunity to observe the implementation of our financial management procedures and the progress of various initiatives. We engaged in constructive dialogues with the project teams, conducted targeted consultations and introduced necessary adjustments. Witnessing the diverse international team of experts from Turkey, Iran, Russia, Tajikistan and other nations was particularly noteworthy.

Their unwavering dedication and ability to communicate in five languages while working towards a common goal made a lasting impression. Despite the challenges in construction, their enthusiasm and commitment are commendable, and I am eager to contribute to such a vibrant and collaborative environment.

— Everything you said sounds genuinely inspiring, and I sincerely hope the visit to Uzbekistan meets your expectations.

I was uncertain about what to anticipate before the trip. I had thoroughly researched the country, its people and its culture. Despite studying Russian at university years ago and visiting Russia, I had never been to Central Asia. The trip proved to be a delightful experience, and I would welcome the opportunity to visit Uzbekistan again.