The Road to the SDGs

PURPOSE X Project-level financial management due diligence is crucial during project preparation to ensure that project implementation arrangements properly reflect the capacities and capabilities of the beneficiaries. X At an operational level, project financial management underscores the need to enhance quality-at-entry in all IsDB- financed projects. X IsDB commits to ensuring that project- level teams in the projects it funds are equipped to assist beneficiaries with the development of sound project financial management systems. This includes familiarising project stakeholders with IsDB’s financial management policies and procedures through liaison with the responsible field staff. X IsDB’s Project Financial Management Policy Framework (PFMF) has four core objectives: – To ensure the quality of project financial management throughout the project’s cycle – To contribute to providing reasonable assurance on the use of IsDB’s funds – To support MCs in enhancing their financial management performance and capacity, and promote efficient project implementation – To harmonise FM practices with other MDBs and FIs. METHOD X To achieve the objectives outlined above, IsDB recently completed the development of the PFMF, which sets various principles that govern IsDB’s financial management in MCs. X The PFMF is founded on a risk-based approach and requires that key project financial management risks are adequately assessed and further identified as inherent, control and residual risks. These three types of risks must be adequately monitored during project implementation. X The PFMF is underpinned by six guiding principles that oblige IsDB’s project staff to take an active role throughout the entire project cycle as members of the project teams. It enshrines seven key principles, which are summarised as follows: – Principle 1 — IsDB requires the financing agreement to stipulate that the recipient and implementing entities of financed projects maintain financial management systems acceptable to IsDB – Principle 2 — A risk-based approach will be followed by IsDB in assessing, Project Financial Management Policy Framework F inancial management is an integral part of the public sector development process, ensuring accountability and efficiency in the management of MC resources IsDB has devised a robust set of project financial management guidelines to support its work Within IsDB’s new decentralised ecosystem, the Project Financial Management Policy Framework is facilitating more intensive engagement with MCs through the Regional Hubs [ 154 ] SDGs