On the signing of a Letter of Agreement between the Republic of Kazakhstan and the International Bank for Reconstruction and Development on the allocation of a grant to finance a project to strengthen the capacity of public sector auditing

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On the signing of a Letter of Agreement between the Republic of Kazakhstan and the International Bank for Reconstruction and Development on the allocation of a grant to finance a project to strengthen the capacity of public sector auditing

Decree of the President of the Republic of Kazakhstan dated March 11, 2010 No. 935

In accordance with the Law of the Republic of Kazakhstan dated May 30, 2005 "On International Treaties of the Republic of Kazakhstan"

I DECREE:

1. To approve the attached draft Letter of Agreement between the Republic of Kazakhstan and the International Bank for Reconstruction and Development on the allocation of a grant to finance a project to strengthen the capacity of public sector auditing.

2. Authorize Omarkhan Oksikbayev, Chairman of the Accounts Committee for Control over the Execution of the Republican Budget, to sign on behalf of the Republic of Kazakhstan a Letter of Agreement between the Republic of Kazakhstan and the International Bank for Reconstruction and Development on the allocation of a grant to finance a project to strengthen the capacity of public sector auditing with the right to make amendments and additions to it that are not fundamental.

3. This Decree shall enter into force from the date of signing.

President of the Republic of Kazakhstan N. Nazarbayev

APPROVED By Decree of the President of the Republic of Kazakhstan dated March 11, 2010 No. 935

project

Grant from the World Bank Foundation for Institutional Development

COMPANY N TF094540APPLICATION

Article I Standard conditions; Definitions

1.01. Standard conditions. The Standard Terms and Conditions for Grants paid by the World Bank from various funds, as amended on July 1, 2008 (Standard Terms and Conditions), form an integral part of this Agreement. 1.02. Definitions. Unless otherwise indicated in the context, the capitalized terms used in this Agreement have the corresponding meanings assigned to them by the Standard Terms or this Agreement.

Article II Project Implementation

2.01. Objectives and description of the Project. The objectives of the Project are to support the strengthening of the legal and institutional framework, and to strengthen the capacity of the Accounts Committee to perform its functions under the national legislation of the Republic of Kazakhstan and in accordance with the Guidelines of the International Standards of the International Organization of Supreme Financial Control Authorities (INTOSAI). The project consists of the following components:

Part A: Legal and institutional framework: provision of consulting services, both as separate contracts and as partnership agreements: (i) review the organization of the Accounts Committee, including its legal and institutional framework; (ii) preparation of an institutional development plan; (iii) development of audit guidelines and methodologies, providing a basis for conducting an audit of financial statements and performance audits in accordance with international practice; and (iv) conducting pilot audits, peer review, and evaluation of budget performance reports as part of testing using the methodological framework and guidelines developed for external audit.

Part B: Conducting trainings and seminars: providing goods, consulting services and training to enhance the capacity of the Accounts Committee to conduct training in-house, including teacher training; internal training seminars; study trips, if necessary, to develop the skills of auditors of the Accounts Committee and managers in the field of financial audit and performance audit, using the best international practices.

2.02. General conditions of the Project implementation. The Recipient declares his commitment to the goals of the Project. To this end, the Recipient will ensure that the Project is implemented in accordance with the provisions of: (a) Article II of the Standard Terms; (b) the Guidelines for Preventing and Combating Fraud and Corruption in Projects Financed from IBRD Loans and MAP Loans and Grants, as amended on October 15, 2006; (c) and this Article II.

2.03. Monitoring, reporting and evaluation of the Project. (a) The Recipient shall monitor and evaluate the progress of the Project and, upon request by the World Bank, prepare Project Reports in accordance with the provisions of Section 2.06 of the Standard Conditions and based on the indicators set out in paragraph (b) of this Section. Each Project Report must cover the period specified in the World Bank's request and submitted to the World Bank no later than one month after the date of receipt of the request. (b) The performance indicators referred to in paragraph (a) of this Section include the following: (i) The draft law on external audit approved by the Accounts Committee and submitted to Parliament. (ii) An institutional development plan prepared and approved by the Accounts Committee. (iii) The institutional structure established in accordance with the national legislation of the Republic of Kazakhstan. (iv) The audit methodology and guidelines developed, adopted by the Accounts Committee and subsequently implemented. (v) Auditors of the Accounts Committee who are trained and equipped with appropriate auditing skills. (vi) Successfully conducted joint pilot audits in at least two budget organizations receiving substantial funding from the National budget. (c) The Recipient shall ensure, upon request by the World Bank, that a Project Completion Report is prepared in accordance with the provisions of Section 2.06 of the Standard Conditions. The Project Completion Report must be submitted to the World Bank no later than five months after the Closing Date.

2.04. Financial management. (a) The Recipient ensures the operation of the financial management system in accordance with the provisions of Section 2.07 of the Standard Conditions. (b) The Recipient shall ensure that interim unverified financial statements for the Project are prepared and sent to the World Bank within one month from the end of each calendar quarter, each such report covering the relevant quarter, and the form and content of such report must comply with the requirements of the World Bank. (c) The Recipient shall ensure that its financial statements for the Project are audited in accordance with the provisions of Section 2.07 (b) of the Standard Terms and Conditions. The audit of the financial statements should cover the entire period during which funds were withdrawn from the Grant account. Audited financial statements must be sent to the World Bank no later than six months after the end of the relevant period.

2.05. Procurement (a) General provisions: All goods and services necessary for the implementation of the Project, financed from the Grant funds, are purchased in accordance with the requirements set out in: (i) Section I (with the exception of paragraph 1.16) of the "Procurement Guidelines for IBRD Loans and MAP Loans" published by the World Bank in in May 2004, and revised in October 2006 (the "Procurement Manual") in the case of the purchase of goods; and (ii) Sections I (with the exception of paragraph 1.24) and IV of the Guidelines for the Selection and Hiring of Consultants by World Bank Borrowers, published in May 2004 and revised in October 2006 (Guidelines for the Selection of Consultants) in the case of consulting services. (b) Definitions. The capitalized terms used in the following paragraphs of this Section to describe private procurement methods or the World Bank's review of individual contracts refer to the relevant methods described in the Procurement Manual or the Consultant Selection Manual, as appropriate. (c) Private methods of purchasing goods. The purchase of goods is carried out on the basis of contracts concluded based on the results of a tender. (d) Private methods of procurement of consulting services. (i) Unless otherwise provided in subparagraph (ii) below, the procurement of consultants' services is based on contracts concluded based on the selection of consultants based on quality and cost. (ii) The following methods may be used to purchase consultants engaged in assignments agreed by the World Bank as meeting the requirements specified in the Consultant Selection Guidelines: (A) Fixed budget selection; (C) Lowest cost selection; (C) Qualification-based selection; (D) Single-source selection; (E) Selection of individual consultants; and (F) Procedures for selecting individual consultants from a single source. (e) Review of procurement decisions by the World Bank. The following contracts are subject to prior review by the World Bank, unless otherwise notified by notification to the Recipient by the World Bank: (a) the first contract for each procurement method; (b) each contract for the purchase of goods equivalent to USD 10,000 or more; (c) each contract for the purchase of consulting services by firms based on the amount of 30,000 US dollars and more; (d) each contract for the services of individual consultants, for an amount equivalent to 15,000 US dollars or more. In addition, technical assignments for consultants, regardless of the cost of the assignment, are subject to prior review by the World Bank. The remaining contracts are subject to further review by the World Bank.

Article III Withdrawal of Grant funds

3.01 Acceptable expenses. The Recipient may select Grant funds in accordance with the provisions of: (a) Article III of the Standard Terms; (b) this Section; and (c) additional instructions that the World Bank may provide by notification to the Recipient (including the "World Bank Guidelines for Project Disbursements" as amended in May 2006, periodically reviewed by the World Bank and applicable to this Agreement on the basis of such instructions) to finance eligible expenditures set out in the following table. The table shows the categories of expenditures that can be funded from the Grant (Categories), the amounts allocated to each category from the Grant, as well as the percentages of expenditures to be funded as eligible expenditures for each Category.:

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