The World Bank's analysis of a country’s public financial management system is an important component of fiduciary diagnostics. It is typically undertaken both to help the client country strengthen its system and to safeguard funds that the Bank provides against misuse. The resulting diagnostics have fostered reform agendas in client countries. Â
World Bank Instruments for Assessing Different Elements of Fiduciary RiskÂ
The Bank has a variety of instruments that assess different aspects of risks at the country level. These are undertaken by different units:Â
The Financial Management Unit  The Country Financial Accountability Assessment (CFAA) assesses fiduciary risks posed by weakness in FM systems
The Procurement Unit  The Country Procurement Assessment Report (CPAR) measures fiduciary risks posed by weakness in the procurement systems that may result in uneconomic or inefficient procurement of goods, works, and services with public resources.Â
The Poverty Reduction and Economic Management (PREM) Network  The Public Expenditure Review (PER) focuses, among other things, on the equitable use of public resources. It sometimes includes measurement of fiduciary risks posed by weaknesses in financial management systems.
 The Integrated Assessment (the final report may be called by various names, such as Country Integrated Fiduciary Assessment; Public Expenditure Management, Financial Management, and Procurement Review; and Country Fiduciary Assessment, to name a few) reviews areas typically covered by the CFAA, CPAR, and PER.
 The Institutional and Governance Review measures, among other things, risks posed by corruption.
 The Highly Indebted Poor Countries Assessment and Action Plan was developed jointly with the International Monetary Fund and tracks poverty-related spending risks in selected countries.
 The PFM Performance Report developed in partnership with other donors, was introduced by the Bank in 2005 to monitor and track progress in PFM and results in the application of the PFM PM framework.
 The Public Expenditure Tracking & Survey (PETS) tool tracks the level of a country’s resources available to deliver services by helping minimize risks, losses, or diversion of public funds.Â
The Institutional Integrity Department  Fiduciary Assessment is used to assess the effectiveness of fiduciary controls at different stages of the project cycle and to propose specific measures to improve them.
Between July 1999 and December 2004, the Bank prepared 189 CFAAs and CPARs for about 100 countries. IEG's evaluation of these diagnostic instruments for public financial management assesses how effective they have been in furthering the Bank's development and fiduciary goals.Â
The Bank does not define the term "fiduciary risk." The CFAA Guidelines (2003) state that the fiduciary risk, as covered in a CAS, consists of three elements:
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Financial management risk, drawn from the CFAAÂ Â
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Procurement risk, drawn from the CPARÂ Â
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Risk of misuse of Bank funds through official corruption, drawn from World Bank anticorruption diagnostics and elsewhere. Â
CFAAs and CPARs are diagnostic tools that help identify risks to the use of Bank loan proceeds posed by weaknesses in borrower financial management and procurement systems; thus they help the Bank fulfill its fiduciary obligations. The instruments are not expected to examine "developmental risk"—the risk that Bank funds, as part of the budget flowing through the country’s PFM system, will not be well spent on poverty reduction or are not adequately poverty-focused. Other instruments, such as Public Expenditure Reviews and their variants, focus on such issues. Some donors such as the U.K. Department for International Development (DfID) have defined the term "fiduciary risk" to include the risk that public expenditures are not poverty focused.  Â
CFAAs contributed substantially, and CPARs modestly, to development outcomes in a sample of 10 countries examined. Client consultation and donor collaboration in the preparation of CFAAs and CPARs have been increasing, but internal Bank coordination among the three sets of units dealing with PFM has lagged, resulting in fragmented action plans for clients.Â
The various related diagnostics should support the client in preparing a single, integrated action plan.Â
To be more effective in helping achieve the Bank’s fiduciary goal, CFAAs and CPARs should incorporate an integrated fiduciary risk assessment framework.Â
A strengthened role for the country and greater collaboration with relevant donors in the preparation of CFAAs and CPARs would enhance their impact. The diagnostics should help the client track and measure the costs and results of PFM reform. Â
The efficiency and effectiveness of CFAAs and CPARs would increase with better internal coordination among the various units responsible for PFM. Â
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The CFAAs and CPARs evaluated are of central relevance to development effectiveness.
The overall quality of the diagnostic exercises evaluated is satisfactory.
Satisfactory client participation ensured that the analysis in CFAAs and CPARs was country specific and realistic, but client leadership in the diagnoses was low.
Donor collaboration on CFAAs and CPARs increased over the evaluation period.
Better internal coordination among Bank units preparing CFAAs, CPARs, and other PFM-related diagnostics such as Public Expenditure Reviews, would have resulted in greater efficiency.
CFAAs, and to a lesser extent CPARs, have significantly furthered the Bank’s development objectives.
CFAAs and CPARs have only contributed in a limited fashion to the achievement of the Bank’s fiduciary objectives.
Both instruments have had a more limited effect on managing risks to Bank assistance, because of the lack of a sound analytical framework for assessing fiduciary risks and of associated guidance on how identified risks should be reflected in the design of CASs. The evaluation recommends:
Ensuring that fiduciary instruments use an integrated risk analytical framework that includes a common approach to defining "fiduciary risk"
Issuing revised guidelines and implementing an integrated training program for relevant staff
Supporting the client in preparing a single integrated, prioritized, costed, and monitorable set of actions within an agreed framework for PFM reform.
 
 
 The Country Financial Accountability Assessment (CFAA) assesses fiduciary risks posed by weakness in FM systems
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