Para 3.17.16 — MSO (Audit)
Original Rule Text
3.17.16 The responsibility of identification, determination of feasibility of project, its execution and administration rests with the borrower. However, an appraisal is carried out by the Bank with the assistance of the borrower to examine the economic, financial and technical requirement of the project which provides a basis for decision to support with a loan. The Staff Appraisal Report (SAR) includes a detailed explanation and assessment of the financial management system and any additional requirements for the particular project. It addresses the design of the project accounts, procedures required for consolidating reporting from various sub-projects, the use of SOEs, and any other activities required to assure accountability. This will be especially important when the project involves several agencies and the methodology for consolidating total project expenses is not clear. The SAR also outlines the format for project reporting, including the audited and unaudited financial statements required, and their frequency. An agreement is drawn between borrower and Bank defining project, specifying programme to be followed to achieve its objective and schedule of items to be financed by Bank; the arrangement for disbursement of the proceeds of the loans are made after its approval by the Board of Directors.
What This Means
The borrower (Government of India or its agency) is responsible for identifying projects, assessing their feasibility, and implementing them. The World Bank conducts its own appraisal of the project's economic, financial, and technical aspects. The Staff Appraisal Report (SAR) produced from this process defines the financial management framework, project accounting design, SOE procedures, reporting formats, and consolidation methodology. A formal loan agreement between the borrower and the Bank spells out the project objectives, implementation programme, eligible items for financing, and disbursement arrangements.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Project identification, feasibility, execution, and administration are the borrower's responsibility
- 2World Bank conducts independent appraisal covering economic, financial, and technical aspects
- 3The Staff Appraisal Report (SAR) defines financial management and reporting requirements
- 4SAR addresses project accounts design, SOE procedures, and sub-project consolidation methodology
- 5A formal agreement defines project objectives, eligible items, and disbursement arrangements
Practical Example
The Government of India proposes a $500 million rural livelihoods project spanning 10 states. A World Bank appraisal team visits India, examines project feasibility, and prepares a Staff Appraisal Report specifying that each state must maintain separate project accounts, submit quarterly unaudited financial statements, and use SOEs for withdrawals under $200,000. The formal loan agreement is signed after the Bank's Board approves the SAR.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What is the role of the Staff Appraisal Report in audit?▼
Why is the SAR important for multi-agency projects?▼
Can the borrower modify the project design after the agreement is signed?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.