Review Report Corporate Relationship Management Unit

Reviewed by Supervised by

: :

Syed Yasir Shah Junaid Tariq

PAKISTAN POVERTY ALLEVIATION FUND INTERNAL AUDIT UNIT

Dated: October 06, 2011

Pakistan Poverty Alleviation Fund (PPAF) System Review of Corporate Relationship Management Unit

Contents Section 1. 2. 3. 4. 5. 5. Scope of Work and Methodology adopted Executive summary Observations on review of CRM Unit Conclusion Time line for agreed actions Annexure A Status of MoUs signed with CSPs Annexure B Page No 3 4 5 8 8 9

Pakistan Poverty Alleviation Fund (PPAF) System Review of Corporate Relationship Management Unit
1. Objectives and Methodology Adopted The scope of this assignment is to review CRM Unit related management policies and procedures for the period from July 2010 to June 2011and the objectives of this assignment are broadly categorized into following main areas: i) Ensure that existing practices and procedures of CRM unit are in compliance with partner agreements i.e Memorandum of Understanding (MoU) and policy and procedures laid down in draft operational manual of CRM unit. To ensure that CRM unit operations have been carried out effectively and efficiently.

ii)

The approach adopted to conduct this assignment comprise of following steps: i) ii) iii) Developing an understanding of partner agreements and draft operational manual of CRM unit; Execution of review procedures in order to draw conclusion, and Reporting findings and observation to management on the basis of our review.

Pakistan Poverty Alleviation Fund (PPAF) System Review of Corporate Relationship Management Unit
2. Executive Summary As part of annual audit plan of PPAF (approved by PPAF audit committee), Internal Audit Unit (IAU) reviewed CRM unit operations and related internal controls. Findings are briefly summarized below: 2.1 2.2 2.3 2.4 2.5 2.6 The unit is lagging behind its target of raising funds from corporate sector. The unit is lagging behind its targets defined in its LFA for the year ending July 2010 June 2011. The baseline and impact assessment study for school milk program was carried out by MER unit but it has not been issued to share the findings. CRM unit has not formulated its LFA for the financial year July 2011 - June 2012. In cases where CSP make direct disbursement to PO, PPAF is not informed of the amount of contribution that CSP has made against its share. Involvement of CRM unit at the stage of execution/implementation was found limited with respect to progress on projects.

Pakistan Poverty Alleviation Fund (PPAF) System Review of Corporate Relationship Management Unit
3. 3.1 Observations on review of CRM unit The unit is lagging behind its target of raising funds from corporate sector. CRM unit has a commitment to raise funds of Rs.252 million from Corporate Social Partners (CSPs) against a target of Rs. 500 million stipulated in LFA. Whereas, the actual contribution verified is Rs. 44 million. Nightingale foundation claims that it has contributed Rs. 43.96m directly to the school, however, this claim could not be verified from PPAF PO, MIED. Implication LFA target is not achieved, moreover, funds received from CSP when compared with commitments are relatively less which reflects that potential resources are not effectively tapped. Recommendation Projects are initiated on timely basis to ensure the committed funds of CSPs are utilized at an optimum level. Unit comments 3.2 Fundraising achievements for the subject period were revised to Rs. 500 million against the initial target of Rs. 300 million, during the first quarterly review meeting. Due to the change in the reporting line of CRM unit, the execution of the LFA FY 2010-2011 was hold to devise new strategy for CRM unit.

The unit is lagging behind its targets defined in its LFA for the year ending July 2010 June 2011. A detailed analysis of targets that are not accomplished is as follows: Target
5 Partnerships 3 organizations USD 5 million 2 events January, 2011 45 events 4 visits per project per annum 2

Activity
1. Consolidation of existing partnerships 2. MoU / Agreements with international trusts and foundations 3. Raise funds from international trusts and foundations 4. Organize CSR events involving the corporate sector 5. Finalization of CRM manual / BoD approval on amendments 6. Local trainings/ seminars/ conferences 7. Quarterly visits with BTRs. 8. Induction of 1 manager & 1 SME

Achievement
2 partnerships Nil Nil Nil Nil 3 2 visits per project 1 SME hired

Pakistan Poverty Alleviation Fund (PPAF) System Review of Corporate Relationship Management Unit
Implication The approved targets of the unit are not achieved. Recommendation The under achieved targets may be incorporated in 2011-12 LFA so that continuity of important activities could be ensured. Unit comments CRM draft manual is not yet reviewed and approved. The new strategy framework is under discussion with the senior management. MoUs with Pakistan Petroleum Limited, Fauji Fetilizer and Lucky Cement are still under considerations.

3.3

School Milk Program initiated by CRM unit is completed in August, 2010. The baseline and impact assessment study was carried out for the program by MER unit but it has not been issued to share the findings. Implication Outcomes of the School Milk Program cannot be ascertained in the absence of sharing of results of the impact assessment. Recommendation Findings of impact assessment be shared so that any such programs could be modified to get optimized benefits. Unit comments Will follow up with MER unit.

3.4

LFA of a unit outlines the activities to be carried out during a financial year. It has been noted that CRM unit has not formulated its LFA for the financial year July 2011 - June 2012. Implication In the absence of LFA the objectives of unit cannot be achieved in an optimized manner. Moreover, accountability of the unit cannot be assessed in the absence of targets. Recommendation LFA of the unit be formulated and approved from competent authority. Unit comments LFA FY 2011-2012 will be finalized once the strategy framework is approved; the unfinished activities/ targets will be carried forward. 6

Pakistan Poverty Alleviation Fund (PPAF) System Review of Corporate Relationship Management Unit
3.5 It has been noted that two modes have been adopted for transfer of funds from Corporate Social Partners (CSP) to POs. In the first mode funds of CSP are routed through PPAF to POs and in the second mode funds are directly transferred to the PO by CSP. In cases where CSP make direct disbursement to POs, PPAF is not informed of the amount of contribution that CSP has made against its share. Implication The commitment of CSP towards contribution of their share could not be ascertained that may result in delay in implementation of a project. Recommendation Reporting guidelines are devised to ensure flow of financial information both from CSP and the relevant PO. Unit comments This is again the strategy decision that how deeply the unit would be involved in operational activities with operating units. Discussion is undergone the matter would be taken up as per guidelines and ensure proper reporting through CRM unit. 3.6 It has been generally observed that CRM unit is only involved at the stage of formulation of MoU with Corporate Social Partner. But at the time of implementation of a project the unit is not aware of the progress as required by draft operational manual of CRM unit which states that an executive of CRM unit will be appointed as a focal person. Implication A problem encountered by implementing unit with CSP may not be addressed in an effective manner if the focal person is not appointed from CRM unit. Recommendation Requirement of draft operations manual pertaining to appointment of focal person should be adhered. Unit comments The implementation is done by the relevant unit and CRM unit coordinates the agreed visits and steering committee meetings. CRM unit will more closely work with relevant operational units to overcome the observation. CRM unit is taking guidance from SGH and CEO for finalizing the strategy which will definitely address the issues and concerns.

Pakistan Poverty Alleviation Fund (PPAF) System Review of Corporate Relationship Management Unit
4. 4.1 Conclusion We have discussed all the observations mentioned in our report with ME - CRM and General Manager - CRM and their comments are obtained and incorporated in the report. On the basis of our review we consider that following matters needs to be resolved on a priority basis; The unit is lagging behind its target of raising funds from corporate sector. The unit is lagging behind its targets defined in its LFA for the year ending July 2010 June 2011. In cases where CSP make direct disbursement to PO, PPAF is not informed of the amount of contribution that CSP has made against its share. CRM unit is not aware of the progress during the implementation phase of a project as required by draft operational manual of CRM unit.

4.2

Rating of unit: Component Operations Achievement of targets Rating Moderately Satisfactory Unsatisfactory

__________________ Junaid Ul Aroog Tariq

Pakistan Poverty Alleviation Fund (PPAF) System Review of Corporate Relationship Management Unit
5. Time line for agreed actions Annexure A Observation No 3.1 3.2 3.3 3.4 3.5 3.6 Agreed Timeline