monthly narrative report on cumulative implementation ... report... · monthly narrative report on...

Monthly narrative report on cumulative

implementation progress

UNDP STAR project management and the

Amalgamation Team

1st PROGRESS REPORT

Chartered Accountants Member firm of Grant Thornton International Ltd

Grant Thornton Sh.p.k Rr: Sami Frasheri Kompleksi T.I.D, Shk. B, Floor 1 10 000 Tirana Albania T +355 422 74832 F +355 422 56560 [email protected] www.granthornton.al

Dear Sirs,

In accordance with the Contact for Professional Services No. #07/2015 signed between Grant Thornton sh.p.k. and UNDP Albania "Provision of technical assistance services for replication of Due Diligence Developed Model for LGUs in Albania in the framework of Territorial and Administrative Reform Implementation" (‘the Project’) and the activities predefined within the scope of the project, herewith we provide you with the first Progress Report for the Project. The Report comprises the accomplished activities under the project for the month of September 2015, a list of the main issues identified, the results achieved under the project, the plan of the activities for the next month and an assessment of whether the deliverables will be issued in accordance with the project deadlines.

With respect,

Kledi Kodra, FCCA

Managing Partner

To: United Nations Development Programme Rr.Skenderbej, Gurten building, Kati I II Tirana, Albania

11 October 2015

mailto:[email protected]

Chartered Accountants

Member firm of Grant Thornton International Ltd

Important Notice

The Progress Report (‘‘the report’’) on the realization of the Project "Provision of technical

assistance services for replication of Due Diligence Developed Model for LGUs in Albania in the

framework of Territorial and Administrative Reform Implementation" (‘‘the Project’’), is prepared

by Grant Thornton Sh.p.k on behalf of the Consortium of firms, including the Grant Thornton

offices of Macedonia and Kosovo as well as Inter BBK Audit. (“Grant Thornton” or “The

Company”) according to the Contact for Professional Services No. #07/2015 signed between

Grant Thornton sh.p.k, and UNDP Albania. Grant Thornton Sh.p.k on behalf of the Consortium

of firm is not accepting any kind of responsibility or obligation to any other party, but UNDP

Albania (“the Client” or “UNDP Albania”) or the concerned parties whom are entitled to the

content of the Report, as specified in the Agreement. Anyone relying on this document, with

exception of the Client or the concerned parties who are entitled to the content of this Report,

entirely or partially, undertakes the risk completely regarding the results shown in this document or

its content on any grounds whatsoever.

In the execution of this services and the preparation of this document, Grant Thornton does not

undertake any kind of responsibility for the decisions of the Client, regarding the undertaking or

not of any strategy or direction of activities. The Report and the expressed opinions are based on

information obtained by the Local government units working groups. Not limited to the above,

Grant Thornton will not have any responsibility or obligation regarding the submitted information

or explications on which this Report is based upon, if these are incorrect, incomplete or untrue.

The Report is submitted only to UNDP Albania and should not be used, reproduced or

distributed, directly or indirectly, to any other party, for any kind of purpose, without prior written

consent from Grant Thornton.

The results expressed in this Report can be completely understood only after reading the Report

and the other documents, data, assumptions and limitations.

Monthly narrative report on cumulative implementation progress to UNDP STAR project management and the Amalgamation Team

11 October 2015

Chartered Accountants

Member firm of Grant Thornton International Ltd

Content

1. Accomplished activities under the project for the month of September 2015 1

2. Main issues identified 3

3. Results achieved under the project during the first month of activities 5

4. Assessment of whether the deliverables will be issued in accordance with the project

deadlines 8

Monthly narrative report on cumulative implementation progress UNDP and STAR project management and the Amalgamation Team 11 October 2015

1

Accomplished activities under the project for the month of September 2015

In accordance with the signed Contract and with the agreed timeframe, Grant Thornton has

realized the activities under the Project as described below.

The team of consultants has dedicated support and admin resources at the Central

Coordination Team level and Qark Team level. The project support and administration staff

at both levels has and will be continuously liaising with field experts and projects

management, thus facilitating the due diligence model execution in the field and timely

reporting. We have commenced the review of the existing legal framework and are

contemplating recommending necessary amendments that allow the undertaking of measures

for consolidating the systems, practices and different resources of local governments. Grant

Thornton also established an immediate operation of a central Help Desk to assist local

working groups in their carrying out of the due diligence with respect to financial and legal

operations. Furthermore, the team of consultants has been gathering information and all the

necessary documentation to execute the activities mentioned in the table below.

Activities realized in 1st

month of the Project 1 Mobilized a team which meets better the purposes of the project.. The team is made up

of two main layers:

The Central Coordination level;

The Region/Qark Level Both layer teams are made up of a blend of the finest experts in the field

2 Commenced the Review of the existing legal framework and assessing necessary amendments that allow the undertaking of measures for consolidating the systems, practices and different resources of local governments.

3 Established an immediate operation of a central Help Desk to assist local working groups in their carrying out of the due diligence with respect to financial and legal operations including materials, report templates and pilot project work. This was also reported under deliverable on 1 which was completed within 15

th September 2015.

4 Established a dedicated support team of experts at the central level to assist, provide oversight and progress monitoring on the region experts.

5 Established communication lines to provide assistance to field experts on a promptly manner via help desk tool, phone calls, emails and direct meetings.

6 Provided field experts with operational, financial models, and with relevant laws and legislation to adhere and refer to during the fieldwork.

7 Availed answers to frequently asked questions on help desk separately with respect to financial and operational issues in order to ensure the use of a consistent approach on the deliverables.

8 Monitored progress status with respect to gathering of financial statements of each LGU and deliverable notes vis-a-vis deadlines.

9 Monitored progress status with respect to gathering of existing human resources of each LGU and their organizational structure vis-a-vis deadlines.

10 Obtained summarized identified issues and problematics with respect to the existing human resources, IT inventory and financial information provided in the individual regions

11 Review of the financial and operational information prepared by the working groups in each of 384 Units.


2

The review process during September has been carried out on the financial aspects by

focusing on the financial statements of the LGUs and on the operational aspects by focusing

on the annexes of the identification of the description of responsibilities, availability of

public services, availability of administrative functions, executive roles and organizational

structure.

The team of consultants engaged with financial reporting has gathered financial statements

from each LGU and financial information regarding financial notes and is in the process of

finalizing reports on the notes of financial statements, Adjustments and Controls, Financial

Model for individual LGU and Report on Financial Control.

The team of consultants engaged with operational reporting has gathered information with respect to the existing organizational structure and business processes books and is in the process of finalizing reports on the Business Process Books and Operational Control Report.


3

Main issues identified During the first month of the project, the team of consultants identified many issues varying

from organizational issues to incompetence in completing the required annexes, uncovered

position, disorganized information and documentation, etc. A listing of the main issues

identified is summarized in the table below:

Main issued identified by the consultants 1 Lack of availability of complete information 2 Trained people in each LGU have left the Units. 3 Proper handover of documentation and information has not been done 4 Documentation is not organized and cannot be traced promptly 5 Resistance of employees to collaborate with experts 6 Inability of people to use technology 7 Old Inventory of hardware 8 Missing data on IT hardware inventory 9 Uncovered position 10 Lack of segregation of duties

The above issues identified in the first month of the project might affect the ongoing activities

planned for the next months as summarized in the table below:

Impact on the LGUs activities as well as in the amalgamation process 1 Lack of availability of complete information can create problems in stocktaking of

assets, issues in evidencing the business process and functions of the units and delays in processing of investments according to the identified need. It might also result in delays in availing complete information for the amalgamation process.

2 Trained people in each LGU have left the Units. New hires need training which can provide to be costly in terms of time and monetary terms. It might also results in delays in processing the business process and functions of the units. It may also affect the amalgamation process.

3 Proper handover of documentation and information has not been done. This has created issues and delays not in the processing of the activities of the LGUs but also in processing the information for the stocktaking process.

4 Documentation is not organized and cannot be traced promptly. This has created delays availability of information needed for amalgamation process.

5 Resistance of employees to collaborate with experts. Unclear job description creates problems in gathering information with the respect to stocktaking of assets and identification of clear responsibilities of each position. In many situations people are reluctant to provide information and collaborate mainly due to lack of understanding of the stocktaking process.

6 Inability of people to use technology. The LGU are widely spread covering remote geographical areas where people are not up to date with the technology. This has created problems and delays in data processing of activity of the LGU and in availability of information for the stocktaking process.

7 Old Inventory of hardware creates the risk that hardware and software defaults might result in losing electronic data which can facilitate the LGUs activities.

8 Missing data on IT hardware inventory, This has created problems in stocktaking of IT Hardware. Problems which have been encountered by the consultants team relate also to the fact the people using the pc cannot identify specifics of the computers in use such as; Year of production, hardware model etc.

9 Uncovered position. During the process it was identified the need for covering of various position such finance specialist, IT specialist etc. This leads to difficulties in processing the units activities as well difficulties in gathering data for the amalgamation process.

10 Lack of segregation of duties has created issues with respect to undefined responsibilities in the respective positions in the LGUs as well as lack of proactivity for collaboration of amalgamation process.


4

Recommendations 1 Increased focus of the working groups on the physical count of the assets. Their findings

should be considered and actioned upon, immediately. 2 This will have to be remediated throughout a clear defined job description for each

position and organized training of employees following a needs identification process. Field experts hired by the consortium to spend time in additions to what was planned to support the working groups.

3 Municipalities should provide for restriction in case of undelivered handover when employees leave their position.

4 Documentation should be organized in orderly manner, considering timing, purpose and sub-unit and function in each identifiable separate sections. Appropriate focus is provided by the working groups to develop and share orderly files for the Amalgamation Process.

5 LGUs must ensure that employees have understood the process and ensure that they should be very proactive in availing the information to experts in accordance to their scope of responsibilities.

6 LGUs must ensure that his people which are familiar with technology and ensure proper training those who encounter problems in using technology.

7 LGUs should ensure that proper data is kept with respect to IT inventory in order to properly project investment in the network.

8 LGus should ensure that proper data is kept with respect to IT inventory in order to properly project investment in the network.

9 In the absence of uncovered position the new LGUs should properly plan vacancies to be fulfilled by adequate and appropriate hires. LGUs must ensure that employees are hired through transparent hiring process. Working Appropriate focus is provided by the working groups to develop and share transparent hiring process

10 The LGUs should ensure proper segregation of duties.

The implementation of the recommendations for the upgrade of the management

information system will significantly depend on the managerial decisions that have to be

taken by each LGUs’s management.


5

Results achieved under the project during the 1st month

The central and field consultants have been continuously monitoring the working groups

output and has provided assistance to them by availing necessary guidelines of process on

the Help Desk and by way of creating communication lines via Help desk for frequently

asked question, conference calls and meetings.

Financial Reporting Results.

The team of consultants engaged with financial reporting has gathered financial statements

from each LGU and the notes of financial statements, Adjustments and Controls and

Financial Model for LGUs, and Report on Financial Control.

The realization rate of forms F1-F9, which have been actually submitted and are under the review process is approximately 90%. the LGUs in delay include Tirana, Berat Shkoder and Korca, which financials have not been submitted yet. This has happened due to the fact that these main municipalities understood with a certain delay the requirements of the guidelines of the amalgamation process, asking them to prepare financial forms F1-F9 individually before the amalgamation. As regarding to notes, the realization is pretty low; we have send reminders and have also reached working groups by phone to understand the reason of such delays. We were unable to conclude why municipalities have reduced the rhythm of work. We were informed that some of the employees of municipalities that through trainings were conducted by STAR are dismissed and the newcomers have their difficulties. Moreover the notes are pretty voluminous compared to the forms and mostly because a part of the employees are not prepared to work with them.

The consultants suggest that perhaps it would be appropriate once again to organize

meetings for a final call for the submission of the Financial Statements and relevant notes

and the National Coordinators are included in delivering clear messages.

Operational Reporting Results.

The central and field consultants has been continuously monitoring the working groups

outputs and has provided assistance to them by availing necessary guidelines of process on

the Help Desk and by way of creating communication lines via Help desk for frequently

asked question, conference calls and meetings

The team of consultants engaged with operational reporting has gathered information with

respect to the existing organizational structure and business processes books and is in the

process of finalizing reports on the business process books and Operational Control Report.


6

Nevertheless, operationa/legal experts have encountered difficulties in gathering of

information due to issues outline in “the main issues identified” section. Districts which have

overcome these issues and have shown notable progress are: Lezha, Tirana and Shkodra.

Meanwhile, districts with less progress are Kukesi and Gjirokastra.

Majority of these districts are in process of gathering information data and report preparation

on the next tasks, whilestill trying to complete documentation and information for the forms

expected to be filled within September.

Plan of activities for the next month

The table below presents the plan of activities for the next month following the finalization

of the Project with proposal time frame for completion of each separate activity.

Activity Proposed time frame 1 Providing continues assistance via help desk and

other established communication lines to field experts.

Throughout the month on daily basis

2 Monitoring progress status for delivering of reports

wich are due including delivering of previous month reports for those LGU who struggled to meet deadlines.

Throughout the month on daily basis

3 The book data – Business processes Mid - October 2015 4 Operational control report 20th October 2015 5 Notes of the Financial Statements (Notes 1-12) End of October 2015 6 Controls and adjustments End of October 2015 7 Financial Model for LGUs End of October 2015 8 Financial Control Report End of October 2015

Concurrently with the above activities, teams of experts have started the preparation

activities for implementing the IT/ICS components including archiving, drafting of duties

and responsibilities for the new functions, which will continue with the remaining

municipalities, as well as the valuation of assets components.


7

Plan of activities for the remaining months

The review process to be performed during the realization of the remaining months of the Project are presented in the table below. theProject Aug - Oct ’15 Provide oversight to the preparation of 384 due diligences for all LGUs

and 61 consolidated due diligences for each municipality Nov – Dec ‘15 Develop a detailed set of templates for the application of the practical

guidance for valuation of fixed assets, recommend improvements changes in the guidance, and help develop local capacities for carrying out the valuation

Jan – Mar ‘16 Support the completion of LGUs’ financial reporting for FY 2015 and the development of the first consolidated budget for 2016.

Jan ‘15–Mar ‘16 Review a sample of valuation of fixed assets, at least one of each kind, using the practical guidance and provide recommendations for legal amendments enabling the carrying out of the valuation exercise.

Aug - Nov ’15 Examine the optimization of the human resources and propose specific organizational charts for each of the 61 new LGUs along with job descriptions and objective for every position, department and directorate within the 61 LGUs as prescribed in the Albanian legislation and international best practices.

Aug ’15 – Mar ‘16

Based on the governing legal framework including international best practices develop a generic manual of internal/external policies and procedures, code of conduct, functional analysis, job descriptions and business continuity plan, to be followed by all elected and non-elected officials, other employees and contractors of the respective LGUs as per the new organization and functions of the LGUs after the amalgamation.

Aug ’15 – Mar ’16

Recommend new standards and practices for building up, safeguarding and operating the ICT systems.

Aug ’15 – Mar ‘16

Recommend the specific organization of services provision in the new LGUs.

Dec’15–Mar ’16 Assist the commencement and implementation of the amalgamation process including the Joint Stock Companies (SHA) of the LGUs.

Jan’16 –Mar ’16 Assist in the valuation of a sample of fixed assets based on the templates prepared based on the practical guidance

Monthly narrative report on cumulative implementation progress to UNDP STAR project management and the Amalgamation Team 11 October 2015

Assessment of whether the deliverables will be issued in accordance with the project

The accomplishment of the activities of the next month up to the finalization of the Project is closely related with the realization of each individual task undertaken by the Working Groups set up in the Municipalities. The speed of implementation of activities by such Working Groups will be key to the timely issuance of the main deliverables by the Consultant. The Consultant is already investing time in addition to the planned level of efforts at the beginning of the Project. We are confident that our close attention to the WG as well as the renewed efforts and emphasis by the Government, the Ministry of Local Affairs and the STAR project staff will enable us to report under the project in accordance with the initially agreed timeline. The commitment of the mentioned stakeholders is a must. We commit to notify you promptly in the event that we notice that the agreed project timeline will not be met.

*****

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