The effective of world bank project/financial management reporting in reducing risks

Abstract

The study seeks to clarify why donors such as the World Bank still insist on the use of their financial management system rather than the recipient country??s financial management system, despite the intention under the Paris Declaration 2005 to use the respective government??s systems. The study then explores the reasons why the financial management system such as the Project/Financial Management Reporting (PMR/FRM) used by the World Bank is more effective in managing risks related to public financial management and aid as compared to the Government of Malaysia approach. The quality of reporting is based on the criteria by a study by Drebin, Chan & Ferguson (1981) on “Objectives of Accounting and Financial Reporting for Government Unit”. Findings are based on evidence from its documentation and direct observations. The study demonstrates the significant roles in reducing risks played in the World Bank approach by the better financial management and procurement procedures using the PMR/FMR. The implication is that more effective risk management in financial management were needed by all implementers not in Malaysia but also will benefits other countries in managing risk such as fraud and corruption.