Audit of the Burkina Faso Country Program

March 2014

Acronyms and Initialisms

Executive Summary

In accordance with its approved Risk-Based Three-Year Audit Plan (2012-2013 to 2014-2015), the Office of the Chief Audit Executive (OCAE) for the former Canadian International Development Agency (CIDA)^{Footnote 1} conducted an internal audit of the Country Program for Burkina Faso. The audit objective was to provide reasonable assurance to CIDA managers and senior management that there are key internal processes and controls for the administration of the Burkina Faso program, and that these are effective in supporting the achievement of program objectives.

Burkina Faso is one of the countries where CIDA maintains a modest presence. The annual aid budget for this country program is $17 million. Of this amount, current programming provides annual commitments of approximately $14.5 million.

The country program planning process consists of two cycles with clear timelines. The first cycle is the planning process for the country strategy and the Country Programming Framework (CPF) which covers a five-year period and includes a significant amount of analysis. The second cycle is the ongoing operational planning, monitoring and reporting process that the programs follow throughout the year.

The audit found that the Burkina Faso country strategy and CPF, which were approved in 2009, are compliant with instructions. The Burkina Faso context has evolved since its country strategy was adopted. The triggering factors for the review of a country strategy exist in Burkina Faso’s case. However, the country strategy review process could not be applied because it was awaiting approval for new templates and guidelines. The program representatives told us that approval was considered imminent.

The Burkina Faso program has an integrated business plan that complies with CIDA directives, under which efforts were made to implement projects to address Burkina Faso’s emerging context. However, these projects were not aligned with the 2009 country strategy's priority themes (children and youth) and were never approved. There is no clear process and no official guidelines for dealing with special situations like this, i.e. requiring approval for new projects that are not aligned with the existing country plan. This lack of a process may well slow down or prevent the approval of certain projects and have a negative impact on the achievement of program objectives.

The program administers the projects in compliance with contractual agreements, and more specifically with the requirements described in the terms of reference and conditions section. The reports prepared by recipients are reviewed and analyzed by CIDA field development officers and by headquarters.

The Management Accountability Framework (MAF) states that clear lines of communication promote effective coordination among all parts of the organization. We observed that the processes and controls with respect to the documentation, recording and official communication of key decisions that have an impact on program management are inadequate. The absence of documented and recorded decisions leaves room for interpretation on what measures to take and increases the risk of losing institutional memory. There is also the risk of failing to make optimal use of resources whose purpose is to support the program priorities.

Conclusion

The key internal processes and controls for managing the Burkina Faso program are in place and are effective in supporting the achievement of its objectives. However, the lack of documentation and communication of key decisions is detrimental to the sound management of the program. The audit also reveals a systemic gap in policy and guidelines for approving projects which respond to evolving country conditions but deviate from the existing country plan. Corrective action in all these areas would allow both the program and the policy framework to be more efficient and effective.

Statement of Conformance

In my professional judgment as the Chief Audit Executive, this audit was conducted in conformance with the Institute of Internal Auditors' International Standards for the Professional Practice of Internal Auditing and with the Internal Auditing Standards for the Government of Canada, as supported by the results of the quality assurance and improvement program. Sufficient and appropriate audit procedures were conducted, and evidence gathered, to support the accuracy of the findings and conclusion in this report, and to provide an audit level of assurance. The findings and conclusion are based on a comparison of the conditions, as they existed at the time, against pre-established audit criteria that were agreed upon with management and are only applicable to the entity examined and for the scope and time period covered by the audit.

Chief Audit Executive

1. Background

The Office of the Chief Audit Executive conducted an internal audit of the Burkina Faso program, implemented by the West and Central Africa Division within the Geographic Programs Branch (GPB). This audit was recommended by the Audit Committee and approved by the Chair, within the framework of the Three-Year Risk-Based Audit Plan (2012-2013 to 2014-2015).

Burkina Faso is one of the poorest countries in the world. In 2012, it was ranked 183rd out of 186 countries on the Human Development Index. The main export product is cotton, although gold exports are growing steadily. Several Canadian companies have investments in Burkina Faso, where they operate gold mines.

CIDA works in two categories of countries: countries of focus and countries of modest presence. Burkina Faso is in the latter group.

In support of the Burkina Faso Government Strategic Framework to Combat Poverty, the 2009 Burkina Faso country strategy focused on CIDA's priority themes for children and youth, while maintaining support for sustainable economic growth through already approved operational projects.

The annual funds allocated to the Burkina Faso program were $10 million in 2009, increasing to $17 million per year as of the 2010 2011 fiscal year. However, program spending never exceeded $14.5 million.

More than 70% of Canadian financial aid to Burkina Faso goes to projects that follow a program-based approach, which consists of direct funding and a sharing of funds in the fields of basic education and microfinancing. These projects provide significant support to capacity building and coordination with Technical and Financial Partners (TFP).

At CIDA headquarters, the program director has a team consisting of a program manager, a senior analyst and development officers. A team in the field is mainly responsible for administering project implementation and monitoring, as well as dialoguing with the Burkina Faso government and other funders. The team consists of the Head of Aid, development officers and Program Support Unit specialists. It is currently the lead program in microfinance and basic education.

2. Audit Objective, Scope, Approach and Criteria

2.1 Objective

The audit objective was to provide reasonable assurance that key internal controls and processes are in place with regard to management of the Burkina Faso Country Program, and that they are effective to help achieve the program objectives.

2.2 Scope

The audit focused on the Burkina Faso program activities related to the aid budget, including strategic planning for the program, as well as development, management and monitoring activities for the aid projects between April 1, 2010 and August 31, 2012. The audit scope did not include management of the program operating budget or the Program Support Unit.

2.3 Approach and Methodology

The audit of the Burkina Faso Country Program at the GPB was conducted in accordance with Treasury Board policy, and directives and standards on internal audit, and conforms to the International Standards for the Professional Practice of Internal Auditing of the Institute of Internal Auditors. The evidence gathered was sufficient to provide senior management with proof of the conclusion derived from the internal audit.

We used the following audit methods to draw conclusions about the audit criteria:

• Identifying and assessing risks;
• Identifying internal controls and assessing their effectiveness;
• Sampling projects to be reviewed;
• Reviewing and analyzing financial and non-financial information;
• Reviewing and analyzing documentation;
• Conducting interviews with the program officials; and
• Validating findings.

Throughout the audit, the auditors informed those responsible for the program about the progress of work and the findings.

2.4 Audit Criteria

The audit criteria were based on the policies of the Treasury Board Secretariat (TBS), the statutes and regulations applicable to CIDA, CIDA directives and the CIDA and TBS Management Accountability Framework.

• Criterion 1.The Burkina Faso country strategy and the Country Programming Framework (CPF) support CIDA’s priorities and objectives in compliance with CIDA policies and directives.
• Criterion 2.The program’s processes and practices allow for the development of projects that meet the country's needs and contribute to the achievement of the its and CIDA’s objectives.
• Criterion 3.The program has processes and practices in place to manage projects with due diligence in compliance with CIDA policies and directives.

3. Main Audit Findings and Recommendations

3.1 Strategic Planning

The GPB is responsible for CIDA's bilateral development assistance programs. This assistance is provided through country programs. To plan its program, the Burkina Faso team conducted a strategic analysis of the data and consulted the stakeholders, in addition to preparing a set of documents, including a country strategy and a Country Programming Framework (CPF), approved for a five-year period in accordance with guidelines established in 2010. The country strategy describes the program’s strategic directions for a specified period and is used as a basis to prepare the CPF.

According to the guidelines established in 2010 for the preparation of a CPF, a program for a country of modest presence, like Burkina Faso, must complete a series of appendices, including a logic model, a Performance Measurement Framework (PMF), a risk record and analyses of crosscutting themes. The CPF supports the overall program objective, which is to help reduce poverty by developing Burkina Faso's human resources and its productive potential. It lays the foundation for results-based program management.

The guidelines state that the country strategy and the CPF must be reviewed each year by program management to determine whether there have been any significant changes in the country’s development context and program performance. The GPB established a list of triggering factors that could justify an update to the country strategy. These factors include:

• Changes to, or the renewal of, the country’s poverty reduction strategy or its national development plan;
• Incorporation of the program evaluation results into the country strategy, and significant changes, including political crises like coups or civil wars, and natural disasters.

In 2009, the Burkina Faso program developed a country strategy. At the time, no official guidance or guidelines were available. The instructions, factors and templates to be used were communicated to the program in emails from various sources and were amended several times. One of the instructions received by the program indicated that the strategies for countries of modest presence should focus on a single priority theme. The Burkina Faso program was at the time addressing two priority themes. It therefore focused on the children and youth priority, while continuing to support the sustainable economic growth theme through existing microfinance and agri-food projects.

After the country strategies were approved in 2009, official guidelines on how to prepare these strategies were drawn up in 2010. Since then, the Strategic Planning and Operations Division (SPOD) has been designing a new template and new guidelines for the preparation of country strategies. Approval for these is pending.

The Burkina Faso country strategy and CPF are consistent with the instructions that were available at the time. The Burkina Faso program developed and implemented investments appropriate to the country strategy and CPF, and in accordance with CIDA policies, directives and guidelines.

From 2010 to 2012, the program implemented the Burkina Faso country strategy review. The program determined that the following triggering factors justified such a review:

• The introduction of the Burkina Faso Accelerated Growth and Sustainable Development Strategy (2011-2015);
• The loss of financial and technical partners in the special appropriations account (CAST)^{Footnote 2} of the National Microfinance Strategy (NMS) support project;
• Disappointing results under this project.

The program managers told us that the program’s country strategy prepared in 2009 was no longer optimal because it was no longer focusing on Burkina Faso’s strategic priorities.

Since then, the review has been awaiting the approval of the new templates and guidelines. We found that a variety of templates and guidelines had been analyzed by the SPOD since 2010. However, at the time of our audit, these instruments had still not been finalized or approved.

Recommendation 1:

The Senior Vice-President of the Geographic Programs Branch should update, approve and implement the guidelines and templates needed to develop country strategies.

3.2 Program Management

The country program planning process^{Footnote 3} consists of two cycles with clear timelines. The first cycle is the planning process for the country strategy and the Country Programming Framework (CPF), which covers a five-year period and includes a significant amount of analysis, in accordance with the guidelines established in 2010. The second cycle is the ongoing operational planning, monitoring and reporting process that the programs apply throughout the year. The diagram shown in Appendix B illustrates how the two cycles are linked.

The country programs follow their CPF to prepare and implement an integrated annual activity plan, and to monitor its performance. This plan is a key management tool for implementing the strategic vision underlying the country strategy and the CPF over a five-year period.

The program developed an integrated activity plan for the period covered by the country strategy. The activity plan is used for internal purposes in compliance with the guidelines. It is not subject to a Branch review and approval process. It includes activities that relate to CIDA’s administrative requirements for program management, and for managing current and future projects.

Since 2010-2011, the annual indicative program budget has increased from $10 million to $17 million, while the predictable disbursements under the existing contractual agreements were approximately $14.5 million. Over the same period, the program suspended scheduled payments (approximately $1.8 million per year) for project support for the NMS because it was having trouble meeting the targeted results.

Following this suspension, the program nevertheless managed to disburse most of its indicative budget in 2011-2012 and 2012-2013, by accelerating the scheduled disbursements for the Ten-Year Basic Education Development Plan (TYBEDP). However, the program may well generate significant budgetary surpluses for the coming years unless new projects are approved.

At the end of 2011, the program put forward three new projects under the priority theme of sustainable economic growth. These projects had been included in the integrated program activities. Two of the three projects were ultimately submitted to the Branch investment review advisory committee, and were discussed with the regional director general.

These projects were not submitted for approval, because the Burkina Faso 2009 country strategy did not provide for any new investments for the sustainable economic growth priority theme. We were informed that in February 2013, the program had received verbal authorization to resume planning work for the two previously commenced projects focusing on sustainable economic growth ─ support projects for rice steamers and NMS technical support ─ in order to submit them for approval even though the country strategy has not yet been reviewed.

There are no clear and stable processes, or official guidelines concerning the approval of new projects, when special circumstances arise which could be harmful to the achievement of the program objectives.

Recommendation 2:

The Senior Vice-President of Geographic Programs should develop and implement an official process for the approval of new projects when special circumstances arise.

3.3 Project Management

In order to evaluate project management activities, the audit team audited three projects for which the planned cash disbursements accounted for more than 70% of the 2012-2013 programming budget: NMS support; Financial Centre for Entrepreneurs / Agricultural Financial Centre (FCE-AFC); and the Ten-Year Basic Education Development Plan (TYBEDP).

The review of the project files and the interviews conducted in the course of the audit showed that there was effective coordination between headquarters’ administration and the program team in the field. The Burkina Faso program implemented processes and practices that enabled it to devise and administer projects diligently, in compliance with CIDA policies and directives. The coordination and cooperation mechanisms between the program, the TFP and the recipients, as defined in the contractual agreements and partnership frameworks, are effective.

According to the CIDA Business Process Roadmap (the reference manual for the whole CIDA programming process), the project development must include the preparation of a conceptual document and a project approval document (including a risk assessment, a logical model and a PMF).

This should be followed by drafting an appropriate contractual agreement. The file review showed us that the development of the selected projects was consistent with the guidelines. Furthermore, the contractual agreements follow the CIDA directives and officially factor in the responsibilities and obligations of the parties, as described in the planning documents.

The program manages the audited projects in accordance with contractual requirements. The file review showed that work plans and implementation plans had been prepared, and that they included the activities, schedules and resources needed to achieve the objectives.

The logic models and PMFs comply with CIDA requirements. The audit team found that the expected results for the three audited projects were consistent with the results of the program and CIDA’s objectives. The contractual obligations are being met and the reports prepared by the recipients are revised and analyzed in the field and at headquarters.

3.4 Decision Documentation and Communication

Effective processes and controls give management a level of assurance that decisions were made by those in authority and that they are communicated clearly to the parties concerned, as stipulated in the Management Accountability Framework (MAF). Key decisions affect the approval of country strategies and CPFs, as well as the continued business management and planning for the program. These key decisions should be documented, recorded and communicated to preserve the organization’s corporate memory and to clarify operational expectations at all levels of the organization.

The approval of Burkina Faso’s country strategy in 2009 is documented and was officially communicated. However, according to the program officers, the decision not to submit a new country strategy for approval was communicated only verbally, and never documented or recorded.

In December 2010, during the CPF review of the Burkina Faso program, no evidence was ever provided to demonstrate that the CPF review and approval steps had been documented, recorded or officially communicated.

The program produced many documents reporting on the work done to establish new projects, including the document submitted to the Branch investment review advisory committee for review and feedback. Decisions pertaining to the cessation or resumption of new projects for the Burkina Faso program are not officially documented. Some decisions were communicated verbally, whereas others were transmitted by email.

We found that the processes and controls pertaining to the documentation, recording and official communication of key decisions that have an impact on program management are not applied rigorously. This lack of rigour may lead to misinterpretation of the decisions and concomitant measures. In addition, there is a risk of losing corporate memory and of not using program resources optimally.

Recommendation 3:

The Senior Vice-President of Geographic Programs should develop and implement an official mechanism for the documentation, recording and communication of key decisions.

Appendix A: List of Recommendations and Management Action Plan

Recommendation 1

The Senior Vice-President of the Geographic Programs Branch should update, approve and implement the guidelines and templates needed to develop country strategies.

Responsibility: Assistant Deputy Minister, Geographic Programs Branch

Proposed Management Measures: The GPB agrees with this recommendation and is now following up on it. The guidelines and a template for country strategies have been developed. These will be reviewed and finalized once the governance structure for the new amalgamated Department has been established.

Target Date: Completed

Recommendation 2

The Senior Vice-President of Geographic Programs should develop and implement an official process for the approval of new projects when special circumstances arise.

Responsibility: Assistant Deputy Minister, Geographic Programs Branch

Proposed Management Measures: The GPB agrees with this recommendation, which it is now addressing. A formal approval process is in place so that all programs can submit projects, even if they are not aligned with their country strategy. Approval for such projects is a matter of ministerial authority. Earlier this year, the GPB developed a new approach that would allow programs to submit, through investment plans, an overview of proposed projects and to obtain instructions with respect to the directions to follow for their programs. This will enable them to mention any special circumstances and to identify the changes required to their country strategies where applicable. This new approach has been submitted for approval.

Target Date: Completed

Recommendation 3

The Senior Vice-President of Geographic Programs should develop and implement an official mechanism for the documentation, recording and communication of key decisions.

Responsibility: Assistant Deputy Minister, Geographic Programs Branch

Proposed Management Measures: The GPB agrees with this recommendation, which it has already addressed with the establishment of formal mechanisms to communicate key decisions. The minutes of meetings of the Strategic Operations Directors (SOD) group and the Geographic Programs Branch (GPB) management group are shared by email with the members of the groups who are then responsible for sharing any relevant information with employees in their respective directorates. In addition, regular meetings are organized with employees of the GPB, and the ADM communicate on a monthly basis with employees to keep them informed of the latest developments pertaining to major GPB issues.

Target Date: Completed

Appendix B: Cycles of the Planning Process