Summer Training Project Report

Undertaken at
Ministry of Urban Development Affairs, Afghanistan



Submitted in Partial Fulfillment of the Requirement for the Award of the Degree of

Master of Business Administration
By
KOUBRAH TAWASOLI
11-MBA-25
11-(----)

Under the Supervision of
MR. Filani
Finance Director


Centre for Management Studies
Jamia Millia Islamia, New Delhi 110025

DECLARATION

I, Koubrah Tawasoli, a bonafide student of MBA (Full Time) Programme at the Centre for Management Studies, Jamia Millia Islamia,
New Delhi, hereby declare that I have undergone the Summer Training at Ministry of Urban Development Affairs, Afghanistan under
the supervision of Mr. Filani on and from 23
rd
May, 2012 to 15
th


July, 2011.

I also declare that the present project report is based on the above summer training and is my original work. The content of this project
report has not been submitted to any other university or institute either in part or in full for the award of any degree, diploma or
fellowship.



Further, I assign the right to the university, subject to the permission from the organization concerned, use the information and
contents of this project to develop cases, caselets, case leads, and papers for publication and/or for use in teaching.


Koubrah Tawasoli
11-MBA-25
Place: Kabul, Afghanistan
Date: 15
th
July, 2011


CERTIFICATE

This is to certify that Ms. Koubrah Tawasoli has completed her Summer Training Project under my direct supervision. She
underwent the Summer Training on and from 23
rd
May, 2011 to 15
th
July, 2011 during which she was assigned the task of
_________________________________________ which he has successfully completed and the same is presented in the form of
present Project Report.

It is further certified that the project report submitted by Ms. Koubrah Tawasoli reflects her original work and based on the work
assigned to her for the Summer Training and that the present project report has not been submitted elsewhere for award of any degree,
diploma or fellowship.

Signature of Supervisor
Designation of Supervisor

ACKNOWLEDGEMENT

I take this opportunity with much pleasure to thank all the people who have helped me through the course of my journey towards
producing this project. First and the foremost deepest gratitude go to the placement committee for helping me in getting the internship
at Ministry of Urban Development Affairs, Afghanistan.

I sincerely thank my mentor, Mr. Filani (Finance Director) as well as my team members for their guidance, help and motivation.
Apart from the subject of my research, I learnt a lot from them, which I am sure, will be useful in different stages of my life. I would
like to express my heartily gratitude to all the members of the ministry who they made my stay enjoyable and my work unforgettable.

My sincere gratitude also goes to all those who instructed and taught me through the years.

Finally, this project would not have been possible without the confidence, endurance and support of my family and friends. My family
has always been a source of inspiration and encouragement.


Executive Summary

Table of Contents

Part A: Brief Profile of the Company of the summer internship
About the MOUDA



Ministry of Urban Development
Management &
Operations
Urban Infrastructure
& Services
Urban Development
& Housing Policy
Urban Governance &
Planning
Codes,
Legislative
Policy
Framework
Safeguarding
of
Afghanistans
Urban
Heritage
Capacity
Development
& Institutional
Reform
Urban &
Regional
Planning
Land
Development
& Housing
Policy
Upgrading of
Formal
Informal
Settlements
Urban
Infrastructure
Water Supply,
Sewerage &
Environmental
Services
Administration
& Finance
National
codes &
standard
services
Urban
develop
ment
services
Policy &
coordination
services
Safeguard
urban
heritage &
old cities
services
Housing &
policy
services
Upgrading of
settlements
Building and
Construction
Services
Water Supply,
sewerage &
environmental
services
Administrative
and financial
services
Support services
for codes,
legislative and
policy
framework
Support
services for
urban and
regional
planning
Support services
for capacity
development &
institutional
reform
Support
services for
safeguarding
of urban
heritage
Support
services for
land
development
and housing
policy
Support
services for
upgrading of
settlements
Support
services for
buildings
Support
services for
water supply,
sewerage and
environmental
9
Introducing Ministry of Urban Development Affairs
Core Investment Department in 1340 as the Urban Planning (General Manager of Urban
Development) in the time frame of the Ministry of Public Works took place.
In the 1344 presidential Urban Housing promotion was given.
In 1346 the name of public Presidential Housing and Urban Development was called.
In the year 1357 the government policy was to consider the head repair and time to
head in the frame of the Urban Development Ministry of Public Works worked as a
public enterprise called profit (Da Shari Aw Tamirati Prozho Jorawal) Institute (Shepta)
began its activities.
In 1363 the name of the Central Institute for building projects (Pama) was learned.
In the year 1368 as the Central Bureau of Urban Development has time to shoot wide.
In 1371 the Ministry of Urban Development and Housing, there can be wide.
In 1375 the creation of the Taliban regime Other sections in the Ministry of Urban
Development and Housing Department of Public Works a seat frame and the General
Presidency (Pama) with specific duties through legislation to keep the Taliban regime
formed in the frame of the Ministry of Public Works remained.
In 1380 the interim government coming to power. Or to a better coherence in the field
of urbanism and urban problems as the Ministry of Urban Development and Housing will
shoot wide again.
In 1385 the state c under sentence presidency. Or by national and international policies
in urban areas to the Ministry of (Urban Development) was called.
Based on number (2005) dated 30.3.1389 the Supreme President of Islamic Republic of
Afghanistan official name according to the Ministry of Urban Development was formed
in 1389 to the Ministry of Urban Development Affairs name was called.

Bill duties and jurisdiction of the Ministry of Urban Development
Urban Development Ministry's major tasks include:
Plan, implementation arrangements and development plans, training (technical,
technical, professional and engineering) and seminars, conferences, workshops and
educational symposium at the arena of urban life long grudge improve intellectual and
10
scientific knowledge and awareness of ministry staff and citizens Urban environmental
arena togetherness.
Control and implementation of all health care plans by the Department is visa.
Balanced Urban Development and Housing good citizens in all cities in the country and
the situation of national strategy and policy through the approval status of bills and
regulations and procedures.
State building codes and construction according to policy and government policy and
accepted international standards with consideration of national culture and historical
country.
Design, development and care plans in the urban water sector, Canalization,
environmental protection and water filtration, removing dirty water and create urban
parks and sports fields, and urban transport systems.
Rational use of budget development, financial and technical assistance and
international and long increase their efficiency in promoting the lives of citizens.
Attract aid and material assistance, spiritual, technical, engineering, and engineering
foreign governments and international institutions through competent.
Establishing training courses according to the Ministry staff requirements and if
possible to create academic programs and vocational training and development to carry
out their scientific strain through domestic and foreign competent authorities.
Measures needed to advance knowledge and promote professional, scientific and
technical staff within the Department and abroad through the use of scholarships and
creating long term conferences.
With consideration specific conditions of each region, the National Urban
Development Strategy and the situation across Afghanistan through the use of global
experience in particular countries resolve the problems and obstacles resulting from non-
balanced growth and non-Shot have been successful, as we like create a system that we
can overcome obstacles.
Understanding requirements and solve urban problems, and the pursuit of government
policy towards the balanced growth of cities in the country, the Ministry of
Municipalities to cooperate to carry out public policy to build closer economic policies,
social and cultural city in the country in which all citizens have an active contribution,
shall follow.
The Ministry to carry out their elimination series, the plans reflect leading urban
regional development plans, detailed plans and technical plans for building a San policy
towards the civil and government buildings, and thus carry out cooperation and
11
coordination between public and private sector through the participation of all
institutions, it is visa.
Encourage collective household, the investor institutions, banks, municipal and private
interest organizations to create sustainable homes and urban areas through legislation and
state bills and regulations and procedures.
Visa All Detailed city plans by municipalities, government agencies and private sector
projects and will design.
Intention to follow and respect the full and correct implementation of plans and
projects and urban construction, the Department map of all cities, towns and public
buildings, public and private sector make up more than four home care and provides visa.
Plan, design and Visa homes and residential buildings, including a long home, had in
view the public policy requirements of government resolve to carry out the public and
especially low-income segments, and without shelter, in all countries.
To assist citizens in the areas of life for those living non-Shot, the Ministry of Non-
policy reform areas and the plan to develop cooperation municipalities, citizens and their
elected institutions, the implementation leaves.
Intention to support and protect the ancient civilization, remains of historical buildings
and historical and cultural cities in the country and maintenance of parks and green areas,
the situation and implementing balanced and appropriate strategy in all cities in the
country
By: Information and public relation department of MuDA

12
Housing Sector:
Design and arrangement of architecture plans, design of engineering and technical, estimation
and order of characteristics (90) government project and request of government departments.
Permanent attention of 45 government projects inside and out side of country (Afghanistan all
embassies).
Development in the field of standards, headquarters and construction codes of architects
parts, engineering and networks (different system of fire, automatic sprinkler, continual and
automatic silencer).
Pipe stands, transmissible silencers, alerts and detectors and alert fire, immediately alert, the
smoke control, fire command center, contact center parking fire and loading easier for
passengers.
Residential units and sleep, special facilities and dirt lateral loads, building plan, intercourse of
fixed loads, temporary and snow, dirt lateral loads, raining, spate and earthquake.
Work progress of Salangha plan
Work on 15th block of borough housing
Construction of the remaining work on 22th block of macroyan 4th
Construction of second stage Sardar Muhammad Dawod Khan school
Product of marble, fraction gravel, oxygen, iron concrete for applicants including hospitals
Soil testing and complete maps of blocks part A Khushal khan
Stonework of citation walls Kabul sea side in Pool Artal
Work progress on comprehensive Sharif mosque of Qandahar
Work progress on 21th block of macroyan
work progress for consolidate Repair Chancellery
activities which is planed for next five months
start work of 8th blocks of 9 residential Constitutes
permanent care of 45 government plan
Monitoring and evaluation of development plans according linear graph of plan
13
Architecture design, engineering, technical and order of names characteristics of plans of other
government offices complement sketches of 16th religious structures and historical of Ghazni
city and 10 kilometer survey Kabul Qandahar highway
Progress in the field of standards order, terms and construction codes of architecture parts,
engineering and networks (fire protection systems, automatic sprinkler, intermittent and
automatic silencer, pipe stand, silencer which are transferable, warnings and detectors and fire
warning, urgent warring, smoke controller, fire command center for ease of connection fire
center parking.
Downloads of passengers, residential units and sleep, special facilities and dirt lateral loads,
building plan intercourse of fixed loads, temporary and snow, dirt lateral loads, raining, spate
and earthquake.)
Complete plan and design of architectures and engineering maps of primary school of tropic
and cold regions, tropic and cold clinic of provinces: Qandahar, Hearat and Mazar e sharif,
design of detailed plan adaption 5000 residential units of Nengarhar province and 1000
residential units in Gardiz province.

Major problems and challenges:
Lack of technical and managerial capacity especially in urban sector intention major
requirements of ministry.
Lack of attention toward downers and international society for providing expenditure of urban
development
Why was not timely budget allocation of ministry from ministry of finance
Lack of equipment and transport for resolution and requirement of ministry in the field of
urban development

Designs proposal:
Create capacity by organizing workshops, training, burses, and employment of consultants
Especial attention of donors and international society for supply costs of urban development
sectors
Lack of Approval of budget on time (in start of every fiscal year) from ministry of finance.
Receive of budget for the purpose of providing equipment, vehicles and equipment
requirement for solving the needs of ministry in urban development field
14
Budget:
As it is clear from the purpose of mention programmed accomplishments and compilation of
them are include expenditure of budget and short term plans to fund programs housing for next
3 years is predicated for 6.25 million Afghani.
The total suggested budget of ministry for all purposes and programs for three nest years is
estimated (12.1) milliard Afghani and the urban development ministry wants that the mention
amount of money will be provide from ministry of finance, in order that planed targets will be
realized .

Prepared by : Information and public affairs deparment

15
Planning and urban development areas
Arrangement of detailed plan, topographic and road building: Afghan kut and meyamana tatar
khana, Dolat Abad district, development area of aziz Abad, khan Abad district, migrants mania,
part I, II, III and IV Taqi refugee settlements, the third part of Essa khan plain, karte mamoren,
knjk area, north of Charikar Glghndy hills, bucolic borough area, karte lagan, lashkar Gah
strategic plan, a part of Lashkar Gah, Lashkar Gah area detailed plans, topographical plans,
respectively feminine garden area, landscaping and repairing areas of Kabul province, Bayes
Avlng areas, Bayes Gowhara sang, jabalal Saaraj parking,Avlang parking vehicles, Bayes Hafta
noor, south of salang, north of Bayes salang, Qalat city development area, No 2 presidentail
place,Grand chancellery area, industrial area, carpet weavers, commercial area, Gulghndy area
development, industrial park development, sanjddrah area, development area of incumbency
housing, immigrants mania area, Khoshal khan school which is located in podala belong to
ministry of boundaries, Abolfaz pilgrimage, industrial parks of kapisa located in Bolghen, officers
retired township, old town of Badakhshan and closed bester shekh zahed hospital and all
planning of urbanity in mentioned provinces(Faryab, Ghor, hearat, Kunduz, Bamyan, Logar,
Parwan, Kabul, zabul and Helmand) is .
Development of project and design of Engineering maps primary school and cold and hot garlic
clinic of Kandahar, hearat and Mazar, provinces design of detailed plan 1000 residential units of
nangarhar and adaptive 5000of gardez province.
Surveying topographic Order plans, construction plans, detailed planning, water supply
network computing external line, managing book launch areas, Estates guidance teachers
provinces: Paktia, Nangarhar, Kunduz, Balkh, Helmand, Kandahar, Faryab, Sarpul, Khost,
Bamyan, Jowzjan, parwan, Takhar, Naamroz, Samangan,Kabul province and 4th macroyan park.
Preparation of Regional development plan of: Jawzjan, Helmand and Kondoz
Preparation of cities strategic plan of Yakawolan, Lal wa Saar Jangal, Baghlan, Chaghcheran,
Aybak, Saarpul, Jaghory, Andkhoy, Behsood, Turkham, and jabalal Sarag
Development of Kabul city to settle three million populations in da-sabz and barek Haab which
was 740 square kilometers area and adapting in two stage, the first stage start from 2007 to
2024 and second stage till end of year will be completed and according to 2010 plan, till end of
second quarter of this year seem 22% of the field advances have been made.
Survey and making plan and sketch of Ghanzne city
Making plans of architecture , estimation bring of volume, and supervising of projects of
Bagha Ali Mardan and Lahore Gate,30 historical houses in Lahore Gate and Bagh Ali Mardan
areas, Charchata market, tradition school of Shazada Charlis, old city of Charekar, first and
second district of old city Qandahar, roads and streets are under planning areas of Ghazni city
16
and 16th religion buildings, solving problem of changing roads campaniles of Heart city and
survey of 10 kilometers highway of Kabul, Qandahar, and Ghazi
Action plans for 5 next months
Making details plan of ten (10) areas in different provinces
Compilation towns of teachers under planning according to data Ministry of education.
Compilation of development plane areas of under planning provinces
Papering and making strategic plans under planning
Major problems and challenges:
Lack of technical and managerial capacity specially in urban sector for important needs of
ministry
Lack of attention toward downers and international society for providing expenditure of urban
development
Why was not timely budget allocation of ministry from ministry of finance
Lack of equipment and transport for resolution and requirement of ministry in the field of
urban development
Designs proposal:
Create capacity by organizing workshops, training , burses, and employment of consultants
Special focus downers and international society for providing of expenditures of development
of township sectors
Lack of purpose on time budget of ministry (at the beginning of year) from ministry of finance
Receive of budget for the purpose of providing equipment, solving needs of ministry area of
township development.

Budget:
As it is clear from the purpose of mentioned programmed accomplishments and compilation of
them are include expenditure of budget and short term plans, that for the donate of planning
programmers and building of urban for three next years estimated (1.86) milliard Afghani
The total suggested budget of ministry for all purposes and programs for three next years is
estimated (12.1)milliard Afghani and the urban development ministry wants that the
17
mentioned amount of money will be provided from ministry of finance ,in order that planed
targets will be realized .
Prepared by: information and public relation department

18
Urban Infrastructure
Concrete form; build roads without grill combined with the earthly body length 17.5 km,
construction of water rejected 20.5 km in length, water pipe extending the length of 19.5
kilometers, making the number seven shit you know, installing lights and illumination of the
streets Number 496 built in 1228 letter back home and open 12 health transition in Kabul, which
finally passed three hundred percent of the work has been completed.
6 km of roads; build the basic shape and cooked.
Design of roads in urban areas
Extended supply network length (5.985) km-long and extended network Seurij system (3.9)
km.
Set, Water and Environment Protection Regulation for urban planning, preparation and supply
policy canalization supervising the work of water supply projects over water policy.
More extended ring network in the city of Mazar Sharif, Sheberghan, Taloqan, Maimana,
Pul_e_Khumri, Jalalabad, Mehterlam, Charikar, Gardez, Kandahar, Qalat, Kabul, Ghazni, Herat,
and four new town plans in accordance with the projected year current.
Activities planned for the next five months
Build of asphalt roads and concrete form without the grill along with the body length of 10.9 km
of the earth, rejected building 7.5 km-long water, water supply pipe extending 3.5 km in length,
making the number 6 bitch know, installing lights and illumination of the streets 80 350 letters
back home and built in 12 pass health OPEN Kabul.
Build of 6.7 km of roads and basic form of baked earth in the body combined with public roads
and road design.
Extend the length of water supply (1.5) km.
Design of urban roads in different areas.
Water development policy field.
Major problems and challenges
Shortage of technical and managerial capacity, especially in the urban sector Ministry to carry
out major requirements.
Due to lack of funding Visitors and the international community to provide urban sector
development expenditure
Why not timely budget allocation from the Ministry of Finance Ministry.
19
Lack of vehicles and equipment to eliminate requirements in the field of Urban Development
Department
Proposals
Creating capacity through establishing workshops, training, the stock and recruitment
consultants.
Special attention and international donors provide expenditures for urban sector development
Why was not timely Department budget (at the start of each new year) from the Ministry of
Finance
Get prepared to carry out budget requirements for removing vehicles and equipments in the
field of Urban Development Ministry.
Budget:
So that the apparent objective of taking the program is to advance and complete the activity,
the function uses the medium term budget plan for the financing of urban infrastructure
program for the next three years 9.9 billion is expected Afghans.
Total budget proposed to fund ministry programs ministry of all purposes and over the next
three years the amount of 12.1 billion Afghani is considered and the Ministry of Urban
Development is expected to such sums from the Ministry of Finance to be available to the goals
set forth implementation planning has been placed at risk.

20
Program of Administration and Execution


Objectives:
1 Create centralized financial , procurement and human resource management systems.
2 Capacity building of various departments of the Ministry.

The most important role of the Program of Administration and Execution is to ensure that the
Ministry fulfills its responsibilities in order to achieve the targets of the Afghanistan National
Development Strategy (ANDS) in the Urban Development Sector.

Details of the functions of this Program are as follows:
Preparation of budgets and plans for development projects to be implemented by the
Ministry of Urban Development Affairs in the next five years based on Kabul Conference.
Prioritize the development projects of the ministry within cluster programs
Preparation of development projects proposals as per the required format
for the ministerial cluster.
Preparation of detailed budgets as to be included as per requirements of the cluster
programs.
Preparation of Annual action Plan for the Ministry. on a regular basis.

Monitoring and evaluation of the Ministry directorates, project and all kinds of development
activities.

1 - Major problems and challenges
Insufficient technical and managerial capacity especially in the urban sector
Lacks of attention from donors community with regards to their assistance for supporting
the urban development sector.
21

No on-time budget allocation from the Ministry of Finance.
Lack of vehicles, equipment and technical resources to address the needs of the Ministry in
the Urban Development Sector.
2 Proposed Proposals
Creating capacity through workshops, trainings, scholarships and and recruitment of
consultants.
Special attention from international donors to provide necessary financial resources for
supporting and strengthening of the urban development sector.
On time budget approval and allocation from the M

22

Vision Mission and Objectives
Ministry of Urban Development Affairs Vision on organizational development and its
legal identity change under the name of:
Ministry of Urban Development Affairs

Draft:
For Ministry of Urban Development to explain the reasons for its organizational
development and change of its legal identity under the name "Urban Development
Affairs", it is necessary to refer to the constitution, fundamental law of the state
organizations, national development strategy, facts and current needs.
1- Constitution:
Article No 6:
Government is obliged to create a prosperous and progressive society based on social
justice, human dignity, protects human rights, democracy, national unity, security,
equality among all ethnic groups and tribes and balanced development in all regions
of the country.
Article No 14:
Government drafts and implements effective programs for Agriculture and Livestock
Development, improving economic conditions, social, livelihood and housing of farmers
and peasants, and improving their lives, in limits of governments financial resources.
Government in order to provide housing facility and distribution of public properties to
deserving citizens in accordance with the law in limits of financial resources makes
necessary decisions.
2- Basic Law of Government Organization:
23
The sixth paragraph of first section:
Draft, arrange and organization of urban Services plans like, water supply, canalization,
environmental protection and urban transport and supervision of its implementation.

The seventh paragraph of first section:
Plans, arranges and sets policies, national and social housing plans, upgrading of informal
settlements and preservation and rehabilitation of historic and cultural cities of the
country and monitoring of their implementation.

The eighth paragraph of first section:
To provide basic and infrastructural services for urban citizens
3- Afghanistan National Development Strategy:
Urban sector strategy writes that: Ministry of Urban Development: Is responsible
for making Guidelines and urban policy, to support municipalities and preparation of
Urban Master Plans, construction and maintenance of houses.
By drafting this strategy MUDA wants to determine its duties and responsibilities in
urban development affairs.

4- Facts and current Needs:
Rapid growth of Urban Population:
Population growth in Kabul city in the years 1999- 2008 was about 9.4 percent
since normal growth of urban population is estimated about 2.7 percent in the
world. (Based on a JICA report)

Rapid growth of Cities:
Urbanization is increasing and MOUDA estimates the number of new
cities around 400 cities.
It shows the number of district centers which needs urban master plans.
24

Lack of urban infrastructure:
Including Kabul, capital of the country all cities dont urban
infrastructures

Growth of lawlessness:
Including Kabul 70 percent of cities are build without considering any
urban development principle and dont have access to urban services and
causes problems in those areas and the main reason is lack of update
urban plans required for todays life.

Environment:
Urban environments are rapidly getting contaminated.

Urban poverty and Housing problems:
Due to lack of specific policies most of urban residents dont have access
to adequate housing and are living in informal settlement in borders of
cities.
Lack of required Urban Laws:
Many of the urban issues that must have a legal framework are lacking that, such
as Law of companies, law of new cities, law of urban lands, urban construction
control law, law of city limits, the High Council of Urban Planning Law and
Engineering and etc.

The aforementioned reasons show a legal requirement for the ministry to take care of urban
development affairs and housing as well as the demand of people for provision of services by the
government.
Therefore Ministry of urban Development which was previously known as a policy
maker ministry cant fulfill the abovementioned needs so it has to revise its service
delivery area, vision, basic goals and strategic objective.
25
To this end, in the following the above listed items will be discussed:
1- Service Delivery areas of Ministry of Urban Development Affairs:
a. Planning
b. Urban Development
c. Housing
d. Construction and Urban infrastructure affairs.
2- Outlook of Ministry of Urban Development:
Foundation of basic principles of modern cities which will be the center of economic
growth, technology and representing Islamic and Afghani values and culture, so that all
citizens have a prosperous life free from discrimination and they can allegory their
legitimate desires.
3- Basic goals of Ministry of Urban Development Affairs:
a. To create safe and sound cities and urban systems based on sustainable
development principles.
b. To provide all citizens access to basic infrastructure services.
c. To bring social welfare in housing.
4- Strategy of Urban Development Affairs:
This strategy is drafted in accordance with the Afghanistans National development
Strategy for five years 1389- 1393 to achieve Urban Sectors objectives.
Urban sector strategy writes that: Ministry of Urban Development: Is responsible
for formation of Guidelines and urban policy, to support municipalities and preparation
of Urban Master Plans, construction, maintenance of houses.
By drafting this strategy MUDA wants to determine its duties and responsibilities in
urban development affairs.
Ministry of Urban Development Affairs in order to respond to current challenges and
achieving the goals of Urban sector in accordance with the Afghanistan National
Development Strategy (ANDS) has aligned its plans in seven national programs which
will be described hereunder.
These programs has been identified and prioritized by the technical team of urban experts
and are put in this strategy.

26
First program: National Housing Policy:
General Purpose: Till 1393 around 30 percent of urban poor citizens will have access to
affordable housing.
Goals:
Draft of housing policy is completed and will take a legal form.
150,000 housing plans will be drafted and actions will be taken to build those
houses.
Planning of 500,000 houses.
Second Program: National Upgrading
General Purpose: Review of upgrading of informal settlement policy and its legal process till
1393.
Goals:
National upgrading policy of informal settlement is prepared and compiled and will be
applied as law within the country after the approval of Council of Ministers.
30 percent of informal settlement of urban areas will be provided with the minimum
urban services.
Affordable housing with long term loans will be provided for 20 percent of population
living in informal areas.
Development of informal settlement will be seriously prevented.

Third Program: National Program of Planning and Construction of Urban Infrastructure:
General Purpose: Till 1393 basic urban infrastructure plans will be prepared for major cities.
Goals:
From 148 cities for 4 major cities urban infrastructure plans will be prepared and actions
will be taken to implement those plans.
50 percent of urban residents will have access to hygienic drinking water.
30 percent of Kabul residents will have access to canalization system.

27
Fourth Program: National Program of Urban Master Plans:
General Purpose:
Till 1393 from 148 cities for 100 percent of them urban mater plans and Detailed
plans will be prepared.
Goals:
Master Plan of New Kabul city will be completed and action will be taken for its
implementation and supervision.
Master plans will be prepared for 148 cities.
Preparation of Detailed plans for 90% of Master Plans.
Finalization of economic and social studies of all cities.
Fifth Program: Establishment of Urban Information System:
General Purpose: With Cooperation of Central Statistics Office Till 1393 Urban Information
System will be established.
Goals:
Urban Information System will be established and work in the Ministry of Urban
Development Affairs.
Urban Affairs Monitoring System will be established.
Sixth Program: Preservation and Rehabilitation of Historic areas:
General Purpose: Identifying all historic cities, region and valuable historic and
traditional relations, and comprehensive planning for preservation and rehabilitation of
them.
Goals:
To prepare Ghazni city for the year 2013 which is determined as the center of
Islamic culture and history
To finalize historical areas preservation and rehabilitation plans and supervision
of their implementation.
Seventh Program: Administrative Reform
General Purpose: Reformation of organizational structure is a priority so that ministry can
implement its programs according to its strategy.
Goals:
28
New organizational structure will be prepared for the ministry.
Reformation of financial, administration and procurement systems.
Establishment of independent offices of Finance, Admin and procurement with update
systems of management to respond to the requirements of construction affairs of the
ministry.
Capacity development of Human Resource.
Supervision of their implementation:
Ministry will establish a system which will supervise the quality and quantity of the
projects. It will supervise the projects on time and will use the experiences gained from
these projects for drafting new effective programs.
All ministry staff will be ready to respond to the increasing urban challenges and todays
technological challenges by short term, mid- term and long term strategies with close
cooperation of Civil Service Commission..





29

30
Nine-month Achievement Summary of the year 1390 A.H.
Ministry of Urban Development Affairs, during the past nine months, arranged and implemented
the programs according to national strategy in four departments namely (Planning and Urban
Development, Housing, Infrastructure and Civil Services, Administration and Implementation).
The following are the summary of what MUDA did in the past nine months:
I- Planning and Urban Development Program
Survey, preparation of land use plan, arrangement of improvement areas, outline of the
infrastructural plan of provinces: Logar, Paktika, Nimroz, Faryab, Kunduz, Samangan, Maidan,
Wardak, Parwan, Ghazni, Farah, Kabul, Daikundi, Sar Pul, Herat, Saroobi, Islam Qila, Baraki
Barak, Shahr Bandari Hairatan, Balkh, Baharak Badakhshan City, Behsood and Maidan City,
Maimana City, Jabal-as-Saraj, Parwan, Pul Alam, Kutwaz City, Zaranj City, Nimroz, Bandar Aqina
City, Sher Khan City, Bandar and Khan Abad City, Dara-e-Sauf, Samangan, Bazarak City of
Panjsher.
Cooperation in implementing the first phase of launching new Kabul City.
Participation in debates on national unity of the cities.
Cooperation in implementing the new structure of the Loya Jirga.
Development in the field of Urban Strategic Planning of Abu Nasr Farahi, Pul Alam, Baharak,
Maidan Shahr, Maimana, Sher Khan, Bandar Islam Qala.
Development in the field of Mazar-i-Sharifs Master Plan Review.
The completion of Capacity improvement of employees, integration of environmental issues in
policies and programs of Ministry, canalization structure policy and technical monitoring
environmentally of Kabul and Provinces water supply networks, a draft of water-supply-services
policy, synchronization of job description with other governmental offices, synchronization with
the donors of water supply network, coordination of job description with governmental and non-
governmental offices, general balancing of
Afghan Water-Supply and Canalization Company and procedures of using water resources.
The completion of survey and detailed planning of Shadiyan Road, the C1s east area of
Lashkargah City, Ebak City, Khaash District in the provinces such as Mazar-i-Sharif, Helmand,
Samangan and Badakhshan, Bolan area of Lashkargah City, the third portion of Essa Khan
Desert, the improving areas of east highways of Ebak Samangan, the industrial park of Bolghin
District (Kapisa Province), improvement in the field of detailed planning, reform planning of
Chashma Janqals Business Centers (Baghlan Province), Almar District (Faryab Province),
residential area of Band Salma (Herat Province, carpet weaving and carpet cleaning of Herat
province, the improving area of east Ebak City (Samangan Province), Khaash District
(Badakhshan Province), the carpet-weaving and carpet-cleaning area (Herat Province).
Completion of Survey, topography of 500-family Kochis, Khwaja Daku, 21000 Jirib land in
Maidan Wardak Province and carpet-weaver area, Herat, the Jozjan Road area of Faryab, the
31
231-dislacted-family area of Qarqin District.
Completion of surveys of Wazir Mohammad Akbar Khan Hill, 600-family Kochis, Band Salma,
Kotal Takht Maidan City (Maidan Wardak Province), Bolan area of Lashkargah City (Helmand
Province) and the third portion of Essa Khan Desert.
Improvement in survey and accumulation of information and sketching of religious places
(abbeys, mosques) and school of historical city of Ghazni, historical houses of Chindawol, an
ancient city of Kabul and preparation of architectural detailed planning of Chindawol area.
Permanent care and supervision of reconstruction and repair of 35 historical houses, 36
historical towers, 3 historical doors, and repair of enclosed walls and streets of historical Ghazni
City.

II- National Housing Program
Evaluation of residential facilities in BB Mehro Project.
Improvement in designing and planning cold-areas high schools, the type 1 and 2 maps of
Jawar residential block, the construction of one-storey building in the premises of Ministry of
Urban Development Affairs, inspection of appropriate housing and social standard housing,
inspection of residential facilities in the BB Mehro Project, study and inspection of residential
complex in the Housing Project.
Planning and designing of engineering work, engineering calculation, estimation and outcome,
ventilation, cooling and warming system, weak and strong power supply and water-supply and
canalization design of 68 governmental projects.
Improvement in the constructional project of (102) rooms of Mashrano Jirga, 9-storey blocks
of 4th Macrorayan, the constitutes of protective troop of copper mine in Logar, construction of
water supply networks of Phase A2 (26 Dalawa Project), 2500-people National Olympic
Committee Sports Gymnasium, urgent construction of Salangs, the project of Omar Farooq
Mosque and strengthening of security and the Council of Ministers.
Completion of the construction work of Block 19, 4th Macrorayan.
Completion of Kabul Zoo Project in the improving area.
Completion of the building of office in ISA organization area.
Completion of guards room, registration and parking of ISA organization.
Improvement in Survey, topographic planning, road planning and calculation of external water
supply networks in Teachers Town of Provinces: Kapisa, Nimroz, Laghman, Herat, Wardak,
Logar, Farah, Daikundi, Khost and Khochian Towns of Logar Province (Zargoon City, Khooshi
and Khalil Abad).
Plotting of 34 town in Provinces: Kabul, Kandahar, Wardak, Kunduz, Parwan, Helmand,
Balkh, Samangan, Bamyan, Takhar, Kapisa, Nimroz, Laghman, Herat, Logar and Farah.
Completion of the survey and preparation of topographic plan of Dastgah-e-Afghani area
32
situated in Guzargah, Bagh Baala Sadarat Aazma and new construction of Ministry situated in
Macrorayan.
Permanent care and supervision of 38 governmental projects.
Improvement in construction of remaining work of Blocks of 18, 19, 21 and seven 9-storey
blocks that include 387 apartments, the provision of apartments 11 and 31 in the block 22 of 1st
Macrorayan.
Completion of the process of the residential blocks situated in Qasaba that is assisted by the
UAE.
Completion of great measures in mapping, constructional violation commission, the
procedures of registration and registration of private companies.
Completion of the draft code of constructions of Engineering Department, guidelines for public
facilities, facility use guidelines for people with disabilities.
Improvement in coding regarding parking facilities for passengers and loads, residential units,
special establishments, and plotting.
Improvement in internal preservation and care coding, ventilation and climate control system,
illumination, houses and playground, transmission of voice, the distance of internal dimensions,
access to non-occupied areas, the surrounding material.
Improvement in external walls coding, installation of wall coverings, refractory material in the
inner parts of the outer walls, mixture of metal in material.
The construction of 5.763-kilometer road, 8.615-kilometer water, 8.96-kilometer water-supply
networks, 374 clean bathrooms, 2 garbage cans and installation of 673 LED for the illumination of
the streets in the Lahori Gateway, Deh Ghochak, Deh Afghanan, Andarabi, Joi Shir, Murad
Khani, and Itefaq Mosque.
III Infrastructural and Urban Services Program
The construction of 23 kilometer dirt road along with the lateral furrows on the sides in the
20000-Residential-Unit-Project area.
Design of road, water-supply, canalization and electricity of the remaining areas of 20000-
Residential-Unit Project.
IV Administration and Executive Program
Planning of activities of the year1390 A.H. and preparation of work effort reports of first
quarter of Ministry of Urban Development Affairs.
Studying and receiving of working links of Ministry with other parts of Afghanistan National
Development Strategy.
Progress in determining the implementation strategy of Ministry.
Consumption of improvement budget of ministry according to financial plan.
Preparation and provision of the 3 and 6-month report of MUDAs performances and their
transmission to concerned authorities.
33
23rd, 24th and 25th Urban Development Journal of Ministrys publishing department, each
with a number of 1000 volumes in three languages and 10-page English articles in 150 standard
pages.
Making interviews by the ministrys administration with the TV channels such as Channel 1,
Tolo, Kabul News, BBC, Ariana and radios like Sada-e-Azadi, Bayan, Millie, Kilid, BBC and
Hewad and Anis Newspapers.

The interviews led to a Ministry Batlvyzyvn, Dawn, Cable News, BBC, Ariana, and the radio
voice of freedom, expression,national press, BBC journalists Vhyvad Anis.
Number twenty-third and twenty fourth and twenty-fifth, "Journalof Urban Development"
organization publishing ministry, Eachwith a circulation 1,000 volumes of material, research
reports,Events to discuss policy and strategy department, with three languages and 10-page
English text in the 150-page measure.



34
Financial Policy
The objectives of LANs financial policy are as follows:
- Maintain cash balances that are adequate for operating levels.
- Maintain medium-term and long-term debt at levels that are in reasonable proportion to growth in
operations, and which will preserve the companys Investment Grade credit rating
- Carry no short-term debt except for certain specific operations.
- Make appropriate investments that maximize future cash flows and facilitate efficient operations.
- Invest cash surpluses in financial instruments in accordance with policies established by the Board of
Directors
- Respond effectively to external conditions beyond the companys control in order to maintain stable cash
flows and protect LAN from market risks such as exchange rate, fuel price and interest rate fluctuations
- Maintain adequate credit lines with Chilean and foreign banks.
- Maintain an appropriate risk rating through ongoing control of the distribution of risk among countries
and businesses.
Liquidity
In 2006 LAN continued its policy of maintaining a significant degree of liquidity to guard against possible
external shocks. Thus, at year end the company held US$218 million in cash balances and highly liquid
securities. While remaining committed to this policy LAN has nevertheless sought alternatives for making
the best use of these resources, and last year continued to internally finance the great majority of
predelivery
payments on future aircraft acquisitions from Boeing and Airbus. In order to maintain its solid
liquidity position LAN obtained committed credit lines totaling US$62 million as of December 2006.
Investment and Financing
The great majority of LANs investments are concentrated in its fleet acquisition programs, which are
generally financed through a combination of long-term financial debt and the companys own resources.
Boeing 767 Program
Between 2004 and 2005 LAN ordered twelve Boeing 767-300s for delivery between 2005 and 2008.
Although the plan specifies the purchase of seven Boeing 767-300ER passenger planes and five Boeing
767-300F freighters, there is a certain margin of flexibility regarding aircraft types. In 2004 LAN structured a
new syndicated loan for US$250 million to finance the entire cost of the two Boeing 767s received in 2005
35
and the first delivery in 2006. This loan is guaranteed by Ex-Im Bank for 85% of the amount with a term of
12 years.
In 2005 LAN finalized two new syndicated loans to finance the Boeing 767-300ERs slated for delivery
between 2006 and 2008. Both loans are backed by Ex-Im Bank guarantees with 12-year terms and below-
LIBOR interest rates. The first loan, which is for US$280 million, covers 85% of the last four deliveries in
2006, while the second will finance 85% of the five final deliveries scheduled for 2007 and 2008 under
conditions similar to those for the previous one.
In December 2006 LAN ordered three Boeing 767-300s for delivery during the last quarter of 2009, but has
yet to solicit financing for the purchase. Also in December LAN refinanced certain pre-delivery payments for
three aircraft to be received in 2007-2008. Three Boeing 767-300s remain to be delivered during 2007, with
five more of the same model earmarked for arrival in 2008 and a further three in 2009.
Airbus A320 Family and Airbus A340 Programs
In 1998 and 1999 LAN signed purchase orders for a total of twenty aircraft of the Airbus A320 family and
seven Airbus A340-300s. This package, later changed to twenty-three A320s and six A340s, was financed
through a syndicated loan of US$ 1,311 million from a group of European banks led by Credit Lyonnais.
Backed by guarantees from the European Export Credit Agencies for 85% of the value of each plane, the
LAN Airlines - Annual Report 301
loan has a payment profile of up to eighteen years. It may also be used to structure other types of financing
such as tax leases. Between 2000 and 2005 LAN made use of this loan to support the acquisition of
fourteen Airbus A320s, seven Airbus A319s and four Airbus A340-300s. Still to come as of December 2005
were two Airbus A319s scheduled for delivery in 2006, plus five more for reception between 2007 and
2008 whose purchase options were exercised in 2001 and which were not included in the original credit
arrangement.
This delivery program was modified as a result of a new purchase order for twenty-five planes from the
A320 family agreed in October 2005. With the two orders together LAN now expects to receive twenty
Airbus A318s, eight Airbus A319s and four Airbus A320s between 2006 and 2008. Negotiations to finance
the planes scheduled for reception between 2006 and 2008 via a new syndicated loan were finalized early
in 2006. Under the program as it currently stands, a total of five A318s and two A320s will be received in
2007, with fifteen A318s and two A320s to be delivered in 2008.
Hedging of Financial Risk
36
The main financial risks facing firms in the airline industry are posed by foreign exchange rates, interest
rates
and the price of fuel.
As regards exchanges rates, the nature of LANs operations constitute a natural hedge given that
approximately 85% of revenues and 76% of costs are denominated in dollars. In the case of interest rates,
LAN has used swaps and calls to reduce floating rate risk. Thus, 95.8% of its current exposure was covered
as of December 2006, and the interest rates for the financing of the Boeing aircraft to be delivered in 2006,
2007 and 2008 have already been set.
To reduce exposure to fuel price fluctuations, LAN resorts to various mechanisms including cost pass
through
to customers and financial instruments such as swaps, calls and zero-cost collars. In 2006 the
company hedged approximately 40% of its fuel needs.
LAN Airlines - Annual Report 302

37



Financial Statement Analysis for the past three
years should be comprehensive and should include
a copy of financial statement analysis
38
THE CENTRAL Bank has secured an unprecedented High Court order appointing
a special manager to manage the entire business of New bridge Credit Union amid
serious concerns about its financial position.
Those concerns arose following draft financial statements for 2011 indicating the
credit union does not hold the reserves required under the Credit Union Act and
considerable uncertainty about its true financial position, the court was told.
The president of the High Court, Mr Justice Nicholas Kearns, made the special
management order yesterday evening after being told by Paul Gallagher SC, for
the Central Bank, it was being sought with the agreement of the Minister for
Finance and was considered to be in the interests of depositors. The credit union
has about 37,000 members, the court heard.
The intention was that it would be business as usual following the appointment
of Luke Charleton of Ernst Young as special manager, counsel said. The bank
believed the order would facilitate the reorganisation of the credit union, restore
its financial position and provide reassurance to depositors.
The application to the court, made on an ex parte basis (one side only
represented), is the first of its kind made under the relevant provisions of the
Central Bank and Credit Institutions (Resolution) Act 2011. The order was made
under section 58 of the Act.
Asked earlier by the judge why the order was considered necessary, Mr Gallagher
said the bank had identified serious issues regarding the financial situation of
Newbridge Credit Union with draft financial statements for 2011 showing the
credit union did not hold the regulatory reserves required under the Credit Union
Act and its position had deteriorated.
The fact that the 2011 annual general meeting of the credit union, usually held before
December 31st of the relevant year, had not yet been held had also heightened
concerns about its position, he said. The board had failed to address the concerns in a
timely manner, the court was told.
The true financial position of the credit union, one of the larger credit unions in
the State, had yet to be identified, counsel also said.
In correspondence with the bank read to the court, the board of the credit union
disputed there was a need to appoint a special manager and said it failed to see
how there could be the alleged uncertainty about the credit unions financial
position. No issues had been raised by its auditors and it had a business plan, the
board said.
The board also said it was dismayed at the banks proposal and it had put
measures in place to address the situation at the credit union. It said allegations of
39
regulatory breaches were unreliable and also sought a meeting to discuss an
alternative to the proposed special manager appointment.
Following the making of the order, Mr Charleton is appointed with immediate
effect. He will review and report to the Central Bank within one month on the
credit unions loan portfolio, with particular emphasis on arrears, provisions and
security, with a view to ascertaining the financial position.
Mr Charleton will also develop a plan to restore the credit unions financial
position, considering all available options, However, any decisions on acquiring
assets of the credit union, its winding up or on holding annual general meetings or
extraordinary general meetings will be taken by the Central Bank.
Mr Charleton will be paid 423 an hour, while his assistants will be paid
remuneration ranging from 150 to 423 an hour.
The court heard the governor of the Central Bank had written to the credit union
on January 9th last stating he believed a special manager should be appointed
having reviewed the contents of a report of Anthony McKeon, head of the
prudential analytics and resolution division of the bank, concerning the credit
union.
Under the 2011 Act, the board had 48 hours to make submissions about that
proposal but, having considered its submissions, the governor still believed the
order was necessary, the court heard.
Mr Gallagher said Newbridge Credit Union had a history of regulatory breaches
and the bank believed the board was not capable of taking the necessary action to
address the situation in a timely manner. The bank believed an immediate and
urgent intervention by a suitably qualified and experienced person was necessary
to address the deteriorating position.
Problems identified by Mr McKeon in his report included inappropriate lending
practices, the court heard bring

40
Finance Department of MOUDA
This assessment is compiled from the information gained from the Finance Department staff of
the Ministry of Urban Development Affairs (MUDA) relating to the accounting policies and
procedures governing their financial transactions. The assessment has been supplemented by
information taken from the MUDA Draft Accounting Manual.
The focus of the assessment is on the MUDA finance department internal processes.

Purpose of the Assessment
The purpose of the assessment is to describe the financial department internal procedures used
to record and account for the receipt and disbursement of development budget, operating
budget and donor funds plus the related reporting procedures for facilitating financial
information preparation.
The assessment identifies those procedures where system improvements could be implemented
which are included in the assessment workplan.
The areas covered include:

Payment functions are correctly and efficiently performed in a timely manner
That there is an adequate segregation of duties,
That there is adequate management and supervision,
Clear authorisation and delegation within the Finance / Accounting function;
Implementation of effective systems and uniformity of procedures,
Standardising of forms and records,
Clear defined roles and responsibilities of staff
Compliance with statutory requirements,
Physical safeguards of assets


MUDA financial management is the process which brings together planning, budgeting,
accounting, financial reporting, internal control, auditing, procurement, disbursement and the
physical performance of the Ministrys activities with the aim of managing available resources to
achieve the Ministrys objectives. Sound financial management is critical to program
implementation and hence the achievement of the desired development objectives. Relevant
and reliable financial information provides a basis for better decision-making, improved
management of physical and financial resources, and efficient implementation of project
activities. An effective financial management system is vital for development projects because
41
of the need to deliver services to target groups quickly over a large geographic area and to a
wide variety of stakeholders. Strong financial management systems provide:

To meet the internal and external needs and financial reporting requirements of the
Ministry
Essential information to those who manage, implement and supervise.
The provision of strategic financial support regarding operational and general business
planning
The provision of daily financial services functions
Comfort to MoF, stakeholders and the donor community that funds have been used
efficiently and for the purposes intended.
A deterrent to fraud and corruption due to strong internal control and transparent financial
reporting systems.

















42
Summary Recommendations
Based on the questionnaire and analyses in the subsequent sections of this report, this section
summarises the recommendations which may be implemented by MUDA financial department
to strengthen the financial management systems.



Financial Management Manual

The financial management manual to be developed and updated in order to reflect the
implementation of any reorganisation or financial systems, procedures changes made upon
the following recommendations.


Staffing

The finance department needs to undergo a study to examine the organisational structure
and possible restructuring of the department.
There is need for a training needs assessment and a training plan to be implemented.
Staff performance appraisal to be carried out.
A capacity development plan needs to be studied, planned and implemented.
Finance department staff needs to be assessed for their competency according to their
levels of responsibility and changes made as necessary.
Terms of reference for each position need to be measured against the finance department
staff to ensure qualifications and experience required are met by the individual staff
members.
Vacant positions, subject to any restructuring requirements, need to be appointed.
Training needs to be implemented to fully familiarise financial department staff with the
procedures required by the Financial Management Manual.


Budgets

43
Organisational restructuring required to enable those responsible for budget preparation to
hold an appropriate position in department's hierarchy.
Financial reporting requirements of commitments, expenditure and income against program
budgets need to be further developed.


Asset Management

Asset protection system needs to be established and implemented
Asset accounts need to be up to date and reconciled.
Physical asset inventories need to be performed.


Internal financial Procedures

Finance department record keeping need to be updated, computerised.
Transaction processing needs to be streamlined.
Review payroll processing and the role of AFMIS to determine if improvements can
be gained by implementing a bespoke payroll software package
Finance department to restructure procedures relating to preparation of summary
payment sheets and statements of expenditure (SOEs) to reduce delays.
Procedures to be introduced to enable the finance department to review contracts
prepared by procurement as to reasonableness.


Funds Flow

Funds flow reports and forecasts need to be implemented for all programs.
Organisational restructuring required to enable those responsible for funds flow reports
preparation to hold an appropriate position in department's hierarchy.
Procedures need to be developed to improve the timely supply of funds to operational
units at HQ and field offices.
Procedures need to be modified to reduce delays in disbursement of funds to
contractual partners.


Reporting and Monitoring
44

Finance department is to develop a more efficient reporting system.
Implementation of procedures governing reporting responsibilities, report types and
contents in a timely and accurate fashion required.
Criteria to be developed for procedures for reporting financial management problems
and their possible solutions to the department director.


Cash and Bank

New procedures need to be developed for cash and bank reconciliations.
Policies and procedures are to be developed for the safe custody of funds


















45
MUDA Finance Department Work Plan

Task
Systems
Examine financial systems with the view to increase finance department efficiency.
Develop organisational structure in line with changes implemented following financial
systems review.
Financial Manual
Developed and update the financial management manual to reflect the implementation of
new financial systems and restructuring following systems and organisational review.
Finance Department Staff
Conduct training needs assessment of finance department staff.
Prepare training plan, Nationally sourced training
Prepare training plan, Internationally sourced training
Conduct national training local
Review finance department TORs and modify as required.
Conduct staff performance appraisal and comparative evaluation of staff according to their
TOR.
Assess staff for competency according to their responsibilities
Formulate and prepare staff training and capacity development plan.
Asset Management
Establish and implement Asset protection system to include:
Regular updating and reconciliation of all asset accounts.
Plus the performance of regular physical asset inventory checks.
Internal financial Procedures
Structural assessment of finance department staff to enable those staff to hold an
46
appropriate position in the department hierarchy in relation to their responsibilities.
Conduct study to examine the further computerisation of finance department record
keeping.
Examine transaction procedures to enable quicker processing.
Review payroll processing and the role of AFMIS to determine if improvements can be
gained by implementing a bespoke payroll software package
Analyze the current procedures for funds transfers to provinces to allow for a speedier
transfer.
Analyze the current procedures for payments to contractors and suppliers to allow for
speedier payments or bank transfers.
Procedures to be introduced to enable the finance department to review contracts prepared
by procurement as to reasonableness.
Reporting and Monitoring
Conduct a review of all financial management reports to examine their content and
effectiveness plus recommendations as necessary to include the implementation of
procedures governing reporting responsibilities, report types and contents in a timely and
accurate fashion.
Cash and Bank
Evaluate policies and procedures for the safe custody of funds plus review current
procedures for cash and bank reconciliations.


Finance Department

The Key Legislative Framework governing the operations of the Finance Department consists of:
Public Finance Management and Expenditure Law (enacted 1384); and
Finance Regulations (gazetted by the Treasury Department of MOF in 1384).
The Ministry of Finance also issues the following instructions and guidance which must be
adhered to by Finance Department in their operations:
Annual Budget Procedures: Including under the heading Annual Budget Execution
Guidance in the Annual Budget Document;
Budget Circulars: Issued by the Budget Department of the Ministry of Finance; and
47
Finance Circulars: Issued by the Treasury Department of the Ministry of Finance.

In specific areas, staff in the Finance Department must also be aware of other aspects of the
Legislative Framework.
Income Tax Law and Regulations;
Procurement Law and Regulations;
Audit Law; and
Civil Service Law.


Finance Department Structure
The Finance Department is headed by the Director of Finance.

The Director of Finance is supported by the following section heads:

1. Development Budget Section Head
2. Operating Budget Section Head


Development Budget Section
The Development Budget Section is comprised of 3 units
1. Program Budget Unit
2. Allotment Unit
3. Payment unit


Description of duties:

1. Program Budget Unit
48
Prepare a budget calendar for preparation of the annual development and operating budgets
based on MoF recommendations.
Attend MoF workshops training sessions as needed in a train-the-trainer capacity. Often
information presented will then need to be disseminated to other areas in MUDA by the Budget
Department.
Provide instructions and assistance to departments/programs on how to complete the budget
forms.
Ensure that departments/programs have submitted forms within policy guidelines provided by
both MUDA and MoF.
Maintain records of Budget Formulation and Allocation decisions taken through the Budget
Cycle.
Provide completed MUDA budget to MoF.
Attend MoF budget hearings and answer questions as needed.
Calculate and issue quarterly budget allotments to provinces for the operating budget.
Issue allotments for expenditure on development budget projects.
Monitor budget expenditures on a monthly basis.
Provide analysis or reports to senior management on an as-needed basis throughout the budget
implementation cycle.

2. Allotment Unit
Allotments
The appropriations issued are based upon agreed budgets. Allotment is the process whereby the
Ministry of Finance confirms availability of funds to allow the Ministry to execute their budgeted
programme expenditure.

Development Budget allotments
The Budget Department also issues allotments for expenditure on development budget projects
from donor funds, as agreed by donors, according to the rules and procedures set out in the
MoF Accounting Manual and finance circulars. Currently, procedures for allotments from the
Core Development Budget differ from those for allotments from the Core Operating Budget.
49

There are four key types of allotments issued from Development Budget: construction / capital
projects (National and International Competitive Bidding NCBs/ICBs), Technical Assistance (TA)
(salary allotments), Operation cost allotments and Training cost allotments.

For each of these types of allotment, the procedures to be followed and forms to be prepared
for MOF approval are the same but the internal procedures and supporting documents, required
by the Development Budget Unit of the Budget and Allotment Section, for preparing the
allotment requests differ.

3. Finance and Payments Unit
The management of expenditure of development budget funds is carried out by the
Development Finance section within the Finance Department.
Finance Manager
The Finance Manager has overall responsibility for ensuring that the procedures established for
payments and receipts of cash are properly followed. The Finance Manager is supported by
both junior and senior finance officers.
3. (a) Payment Cell
The payment cell prepares M16s payment requests for development budget funded projects.
The liquidation unit reviews and approves all sources of entry documents, such as contracts or
payment vouchers, for accuracy concerning the authorising signatures and account codes used.
The finance officers may not process any payment that has not been reviewed and approved for
the accuracy of the approving signatures and AFMIS account codes.
For Development Budget expenditure, Finance Officers ensure that all payments made are for
eligible expenditures under the grant(s) and that all payment requests for on-going contracts are
supported by duly authorised documents such as signed invoices and supported by all relevant
documentation of reimbursable expenses.
They ensure that payment requests for goods are supported by approved procurement
documents (quotation statement or comparative statement) and reports on the items being
procured.
For donor grants or loans they ensure that all project expenditures and contract payments are
carried out according to provisions and conditions of the contract.
50
3. (b) Liquidation Cell
The liquidation unit receives liquidation documents for advances paid within the Central
Ministry and prepares M12 forms and Statement of Expenditures (SOEs). These are then
submitted to the Special Disbursement Unit (SDU) in MOF-Treasury where they are processed in
AFMIS for acquittal of advances.
3. (c) Replenishment Cell
The replenishment unit prepares Statement of Expenditure for replenishment of World Bank
and other donor special accounts.
3. (d) Cash Management Cell
The cash management unit is responsible for petty cash drawn from special accounts to pay for
expenditure on seminars and workshops and for operating costs of projects etc.
The cash management unit is responsible for maintaining a cash book on a daily basis that
records all receipts and payments. The cash book must clearly segregate different funds
operating budget petty cash as opposed to various donor funds. This means that if two grants
are received from the same donor, cash taken from each grant must be recorded separately in
the cash book even the same donors funds must not be mixed.
Cash management is responsible for issuing receipts and maintaining the cash records in
accordance with sound financial management policies and the following specified procedures.
Cash receipts shall be banked intact on a daily basis and not later than the morning of the
working day following the date of receipt,
Cash received shall be banked with the appointed bankers in the appropriate account opened
for the purpose,
Details of cash receipts and disbursements shall be entered into the Excel cash book workbook
system daily.
No cash shall be disbursed without an accompanying cash advance receipt signed by the person
receiving the cash.
Cash on hand shall be reconciled to the Excel cash workbook each day.
A summary report on cash on hand, as well as a summary report of transfers and advances, shall
be signed by the Cashier and the Finance Manager each day and given to the Director of
Finance.
3. (e) Reconciliation Cell
The reconciliation unit is responsible for reconciling MUDA records with MoF (AFMIS) and DAB.
The reconciliation unit is responsible for ensuring that the Excel tracking records and the AFMIS
accounting records are reconciled with the various donor account bank statements monthly.
51
These bank reconciliation statements should be reviewed and approved by the finance manager
and verified by internal auditors.
The reconciliation unit prepares and then follows up and ensures that the MoF SDU submits
timely and accurate requests to replenish any donor Special Accounts in accordance with donor
procedures.
The reconciliation unit compares bank statement entries every week with the MUDA tracking
record entries. If differences are discovered, then they are promptly taken up with the bank
concerned or MoF SDU as appropriate.
The reconciliation unit checks entries to the various MUDA tracking records and AFMIS general
ledger every month to see if they balance, and reports any discrepancies to SDU. They shall
follow up until corrections are made in the AFMIS records or adjust the MUDA tracking records
as appropriate.
The reconciliation unit prepares Statements of Expenditures, Withdrawal Applications,
Applications for Replenishment, Financial Management Reports (FMRs) and other donor-
related reports on an as-needed basis.
3. (f) Reporting
The reporting unit coordinates reports from DAB, MoF and MUDA programs on expenditure on
donor projects.
3. (g) Filing unit
The filing unit keeps records of all documents received and sent.
The filing unit is responsible for maintaining all paper files in a logical, ordered manner so that
M16 and advance payment requests can be verified by internal or external auditors and donors.
The filing unit is responsible for maintaining files verifying budget allotments and contracts for
use by the Liquidation unit in verifying the appropriateness of requests for payments to
construction companies, consultants, and other contractors.


Operating Budget Section

The Operating Budget Section is comprised of 5 units

1. Budget Unit
52
2. Payroll and Payments Unit, including AFMIS
3. Revenue Unit, Planning and Collection
4. Inventory Control Unit
5. Filing Unit


Description of duties:

1. Budget Unit
The Bookkeeping unit is responsible for keeping records of the approved budget and issued
allotments for the Ordinary Budget of the Ministry, verifying the availability of allotted funds in
the appropriate object code and program before expenditure commitments are made, verifying
the correct accounting codes are used on all payment request documents submitted to MoF,
keeping records of all processed payments against the allotment ledgers.

2. Payroll and Payments Unit, including AFMIS unit
The Payroll unit prepares M40 and M41 payroll payment requests based on staff attendance
records. The unit also prepares M16 payment requests for both salary payments and purchases
of goods and services and assets from the Ministrys Operating budget funds.
AFMIS Unit. The AFMIS unit enters the initial data entry of M16 Payment Requests financed
through the Operating Budget into local terminals of the Afghanistan Financial Management
Information System (AFMIS) maintained by Treasury Department of MOF. The MUDA AFMIS
unit verifies the accuracy of the accounting codes before entering data into AFMIS. M16s with
incomplete or inaccurate information are returned to finance unit for correction. The AFMIS unit
also keeps a record of all M16s submitted to MoF and tracks their progress to payment. Once
and M16 is entered, the transaction reference number (Expenditure Voucher, or EV number) is
notated on the supporting documents and these are forwarded to MoF for posting and payment
approval.
If a payment submitted is rejected by MOF, it is received back by the AFMIS unit and returned to
the finance unit for correction, or, infrequently, complete cancellation of the payment.
The AFMIS unit also produces regular and ad-hoc reports of the MUDA Budget status with MOF
from AFMIS for other units in the Finance Department and Programs or Departments in MUDA.

3. Revenue Unit, includes Planning and Collection
53
Revenue Unit is responsible for the, estimation, recording, control, collection and verification of
the revenue of the ministry, reconciliation with DAB and MoF, and quarterly report of revenue
to the MoF. The unit is also responsible for preparation of final Qatia for revenue of the year.

4. Inventory Control Unit
Inventory Unit receives goods and goods inwards reports from the Ministry Goods Received
Office, checks the goods with all documents and issues M7 Form for both Developing Budget
goods and Operating Budget goods. The unit delivers the goods to the intended recipient, issue
FC5 Form and enters details in the large asset register (price, quantity, details) and the 2
nd

asset register (including recipient details).

Filing Unit
The Operating Budget Section Filing Unit has 2 functions:
5. The filing unit keeps records of all documents received and sent. The filing unit is responsible
for maintaining all paper files in a logical, ordered manner so that M16 and advance payment
requests can be verified by internal or external auditors and donors.
The filing unit is responsible for maintaining files verifying all budget allotments and payroll and
general payments.
2. The Filing Unit verifies all cash advance fund paperwork, both allotments and payments,
completes M12 documentation and processes same through section procedures to MoF for
clearance of the Advance Fund account.



Finance Department Process procedures

Budget preparation process
Budgets are prepared to the timing and format required by the MoF and are according to the
MoF chart of accounts. The Budget Section, following MoF procedures, prepares and sends out
yearly budget preparation guidelines which include requests for budget proposals from the
programs whose activities form the MUDA integrated budget. After collation and reviews of
54
these proposals by the Budget Section a draft budget proposal including all the cost implications
is prepared and submitted to the Minister for approval. The proposed budget is submitted to
the Budget Department of the MoF .Budget hearings organized by the MoF are attended by
MUDA officials; the negotiated proposals are included in the National Budget.

Budget control and monitoring
Once the Annual National Budget is approved by the National Assembly, the necessary budget
controls are put in place to ensure effective monitoring of the activities under the various
programs. No expenditure or contract commitment may be authorized except in accordance
with the approved budget.

Development Budget Allotment Procedures
Development budget allotments are issued on a case-by-case basis as expenditure on projects is
approved. The documentation to be submitted to the Development Budget Allotment Unit
varies depending on the sort of expenditure the allotment is requested for:

Construction / Capital Projects Allotments
On signing of a Construction Contract, the Procurement Department submit the following
documentation to the Development Allotment Unit for the processing of allotment:
A). National Competitive Bidding (NCBs): Two Copies of contracts, Bid Evaluation Report,
Acceptance Letter, Performance Bank Guarantee, Bid Documents, No Objection of Donor for
the Contract and a Check list for documents.
B). International Competitive Bidding (ICBs): Two copy of contracts, Approval of Special
Procurement Committee, Bid Evaluation Report, Acceptance Letter, Performance Bank
Guarantee, Bid Documents, No Objection of Donor for the Contract and a Check list for
documents.

TA Salary Allotments
In accordance with current MOF procedures, a single allotment is sought for TA salaries
from a particular fund for a particular program in each quarter.
At the start of the year, the Development Budget Allotments Unit obtain a list of existing TA
contracts from the TA cell within the HR Department, and prepare a quarter base allotment
request for approval of MOF for the amount to be paid under all contracts during the
quarter.
During the quarter, if a TA contract is terminated at the request of MUDA or on resignation
of the TA, no adjustment is made to the allotment.
55
On signing of a TA Contract during the quarter, the TA cell within the HR Department submit
two copies of contract in both in English and Dari (4 total) and a soft copy of the TA
contracts list, to the Development Budget Allotments Unit. In the case of contract extension
or increase, the previous contract must be attached. A copy of these documents is also sent
to the Development Finance Unit.
Requirements for no objection letters vary depending on the donor. For example for World
Bank funded positions, a No Objection letter is required only in cases where a position does
not appear in the procurement plan.
As TA contracts are signed during the quarter, the Development Budget Allotment Unit
requests a new allotment from MOF; they do not adjust the existing TA allotment for that
fund / program.
As allotments for TA contracts are not cancelled / adjusted during the quarter as contracts
are terminated, toward quarter end a review must be undertaken to identify allotments that
can be adjusted to free up sufficient appropriation under which allotment can be issued for
new contracts.
Operating Cost Allotments
Requests for allotments to pay operating costs from the Core Development Budget are
submitted by the unit concerned with Request and Budget Sheet, approved by Minister or
Deputy Minister to the Development Budget Allotments Unit and the No objection letter of
the donor.
Training Allotments
Requests for allotments to pay Training Costs from the Core Development Budget are
submitted by the unit concerned with Request and Budget Sheet, approved by Minister or
Deputy Minister to the Development Budget Allotments Unit and the No objection letter of
the donor.
Processing of Development Allotments
The Development Budget Allotment Unit uses a checklist to make sure the necessary supporting
documents are submitted for each type of Allotment Request. Once satisfied that the
documentation is in order, they then check that appropriation is available for the requested
allotment, and that the expenditure is eligible for financing from the fund source in the request.
The necessary paperwork for MOF allotment approval is then prepared, including classification
of the allotment in the relevant chart of accounts.
Once the necessary documentation is prepared and authorised by MUDA, it is submitted for
approval to MOF. Under a covering letter, a development budget B27 and a Project coding
sheet (PCS) approved by Minister or Deputy are submitted to the MoF.
After being registered, approved and recorded by the MoF the issued allotment is then returned
to the Development Budget Allotment Unit of MUDA.

Ledgers and spreadsheets maintained by MUDA
56
The budget, allotments and expenditures of the MUDA budget have traditionally been recorded
in a system of accounting ledgers and forms in the Budget and Finance Departments of MUDA.
The Finance Departments Cash Management sections Cash Advances & Transfers Excel
Workbook is used for cash transactions detailing receipts and disbursements. The advances
portion of this is used to record all types of prepayments and advances taken by staff and
suppliers/consultants together with subsequent repayments or acquittals.
The Finance Departments M16 control register and cheques issued spreadsheet is a listing of all
payment requests sent for processing to MoF and the checks issued based on the payment
requests.

Overview of Expenditure Processes
The Finance Department staff prepare supporting documents for expenditures, payment orders
(Form M16), and advance payment vouchers. The Finance Manager reviews the payment
voucher for arithmetical accuracy and proper coding. Each transaction must be initiated from a
source document such as invoices, bills, receipts, staff invoices, construction progress reports,
and so on. After approval by the Finance Manager, the Director of Finance or Deputy Minister
for Finance and Administration authorizes the payment. The AFMIS section of MUDA enters the
details of the payment request, M16, into AFMIS. The payment documents are then submitted
to the Treasury Department of the MOF. The Treasury, in turn, issues a cheque payable to the
vendor or makes a bank transfer to the payee or the Finance Department Cash Management
Cashier from the appropriate DAB account after verification of supporting documents and
approvals on the payment form.
All of the above transactions are posted daily in the MUDA Finance Departments manual ledger
system (for the Operating Budget) or in Excel tracking spreadsheets for donor projects. Copies
are made of M16s and supporting documents before being sent to the MoF for processing.
Advance payment vouchers and their supporting documents are maintained in the Filing section
for auditing or any other inspection from time to time.
A bank reconciliation statement is prepared for any individual donor bank accounts so that
bank/cash book balances are reconciled with statement of accounts received from banks.

Chart of accounts
All expenditure is classified according to the Chart of Accounts of the Afghanistan Financial
Management Information System (AFMIS). The Chart of Accounts enables transactions to be
classified according to Organisation, Program/subprogram/activity and sub-activity, ANDS sector
and Donors project code, Function, Fund, Donor, Location and Economic Object.
57
The Chart of Accounts has been configured to generate financial data on donor projects
classified by project components and activity types, such as consultancy services, training,
goods, and incremental operating costs.

Tax Revenues
Income Tax Law and other legislation, require income taxes to be withheld from payments and
deposited to the Treasury Single Account (TSA). MUDA Finance Sections calculate the necessary
deductions on each payment and fill this in the sections for deductions in the M16 Payment
Request form.

General
Annually, the MUDA need to submit to MOF an M50 authorisation form which sets the financial
delegations of his senior management team, providing a specimen signature of each individual
and their level of authority, or the maximum amount of a single payment they are able to
authorise.

General payment procedures
Payments are processed using an M16 payment request form. The M16 is supported by
necessary documents such as a contract, quotation summary, or payroll list. No payment
request may be authorised unless an allotment is available to cover the amount of the payment.
The M16 is signed by the appropriate officials before it is authorised by the Deputy Minister for
Finance and Administration. M16 payment requests are entered into AFMIS in MUDA and then
sent to Treasury for processing. Treasury processes the payment request in AFMIS and issues a
cheque. The cheque may be made out to the supplier of the goods or to the MUDA cashier for
cash. For payments in excess of 50,000 Afghanis the funds must be transferred to the payees
bank account.

Payroll
Salary payments to MUDA civil service staff and donor-funded consultants are through bank
accounts, not in cash.
Processing the payroll for these staff and consultants uses the following process:
58
Finance section prepares an M16 for payment of salaries with appropriate supporting
invoices/attendance lists and a listing of employee bank accounts and amounts to be paid for
that months salary.
Finance ensures that a budget allotment has been made for the salaries.
The M16 is approved by the Finance Department and Deputy Minister for Finance and
Administration and submitted to the MoF. A check is issued by Treasury on the appropriate DAB
account and deposited in the nominated bank account.
The bank uses the list provided by the Finance section to make deposits directly into employees
accounts.

Goods, capital acquisitions and construction invoice payments
Suppliers bring their invoices to the Procurement Department.
The Procurement Department certify all pages of the invoice, and prepare a cover letter for
requesting payment of the invoice by the Finance Department.
The Procurement Department takes this documentation to the Finance Department. After
checking that the documentation is in order and that there is an approved allotment form
on file in the relevant Finance Unit for the payment the payment details are recorded in the
hard copy payments register.

Upon receiving an invoice to be paid, the budget finance section checks that:
all documentation submitted is in order,
the payment is in accordance with the contract with the supplier
the allotment is authorised.
If any problems are identified, the payment is marked as rejected in the Payments Register,
and the documentation is returned to the Procurement Department under covering letter
explaining the reasons the payment has been rejected.

Processing of Payments in Finance Unit
The Payment Officer prepares the M16 form for requesting payment through MOF. Once
the M16 form is prepared and signed by the Payment Officer, a covering letter is also
prepared and attached to the M16. At least daily, all M16s prepared in the Finance unit are
consolidated by the Finance Assistant, who registers them in an MS-Excel workbook,
assigning the serial number which he writes on the M16 form.
The finalised payment requests are taken for signature to the MUDA senior manager
holding sufficient M50 delegation to authorise the payment.
Once authorised, the payment documents are submitted to the MOF control section who
certify the payment after checking. After control, the MOF controllers send the payments
documents back to the Finance Unit.
59
The controlled payments are copied, and the copy filed in numeric order in the Finance Unit,
with the original documentation submitted to MOF-SDU for further processing.

The Finance Department uses two sources of payment documents for donor funded payments.
The first is the Payment Authorization, M16 Form, for all transactions involving payments
through DAB. The Finance Department will pay all eligible project expenditures exceeding
$1,000 through the use of the M16 Form. These expenditures, which will be for procurement of
goods, incremental operating costs, and payment of short-term consultants, will have
supporting documents such as the invoices of suppliers/consultants, goods delivery notes (for
goods procured) and the summary remuneration sheet for the short-term consultants.
The second is the advance payment voucher for advances and petty cash transactions. The
Finance Department will enter all payment vouchers into the Excel cashbook (advances and
petty cash transactions) or the excel spreadsheet maintained for M16 payments.
All expenditures will receive approval of the appropriate officer (e.g. a sectional head or
technical officer) before they are authorized by the Finance Department and Deputy Minister
for Finance and Administration, and no expenditure of project funds shall be incurred or
committed unless:
Funds are available and the expenditure is within the approved project budget,
The proposed expenditure is an eligible expenditure
The expenditure to be incurred is in line with approved project policies and procedures, and
For World Bank projects, the Banks No Objection Letter (NOL) has been obtained for
expenditures above the prior review threshold or where applicable, in the case, of consultancy
related expenditure.
Managers giving approval to expenditures must ensure that the account description properly
portrays the nature of the expenditure and the component against which the expenditure is to
be charged.
General petty cash policies and procedures for donor funds
The Finance Department Cash Management section maintains separate Petty Cash accounts for
different donors projects to facilitate the purchase of minor items or to be spent in accordance
with the donor agreement.
The Cash Management team leader (Cashier) is responsible for the security, balancing and
reimbursement of this Petty Cash. He is supported in handling and distribution of cash by the
Petty Cash Officers, Bonded Trustees. Bonded Trustees provide guarantees in cash or land upon
commencement of service.
60
Petty cash funds are operated in accordance with Financial Circulars regarding Petty Cash issued
by the MOF.

Replenishment of Special Accounts
Unless no payments have been made, replenishment is prepared weekly for each Special
Account held at DAB. The payments to be replenished are entered to the Statement of
Expenditures, in both the correct category sheet and the summary sheet, from the Bank
Statement. Taxes deducted from payments are listed separately to the net payment. The details
of each payment, e.g. payee, exchange rate are then entered to the SOE. Copies of all
documentation required are taken, and the replenishment is submitted to SDU in the Ministry of
Finance for final processing, approval and submission to the World Bank Financial Management
team in Kabul.
The finance officer who is responsible for preparing replenishment applications has access to
the World Bank Client Connection system through which he/she can track the progress of
individual replenishment applications and also direct payment requests.
Towards the end of any financing period, the World Bank will offset the last few replenishment
applications against the initial advance.

Records Management
The main objective of the filing system is to ensure that documents are filed in logical sequence,
so as to facilitate retrieval, support financial reports and help to establish a clear audit trail and
provide feedback regarding the accuracy of the financial reports. All records are kept in secured
rooms when not in use. No records may be removed from the room or safe storage facility
where they are normally kept, except for audit or legal purposes. In such cases an official receipt
must be obtained.
The Finance Department will maintain complete records of all donor project transactions. The
Finance Department will file and index copies of all sources of entry documents to facilitate
access and retrieval whenever they are needed. In compliance with the requirements of the
SDU, the SDU will keep original copies of M16 Forms and supporting documentation, and
withdrawal applications forms and supporting documents.
The Finance Department retains copies of M16s and withdrawal applications for the Finance
Filing section after they are checked and approved by MUDA and entered into AFMIS prior to
their submission to MoF.
61
Original copies of documents supporting SoEs and advance payment vouchers are maintained in
the Finance Department.
Budget allotment records are maintained in the Budget Department.

Financial Reporting on Donor Projects
Responsibility for preparation of Financial Monitoring Reports is spread between three
departments: The Program Head, the Finance Department and the Procurement Department.
The Finance Department will prepare the financial statements of the quarterly FMRs within 15
days of the end of each quarter. The source data for numbers in the Financial Management
Reports (FMRs) will come from the AFMIS expenditure data maintained by Treasury in the
Ministry of Finance, Client Connection information, Special Account bank information, along
with spreadsheets maintained in the Finance Department and the program finance unit office.
The Finance Department prepare all donor financial statements using the cash basis of
accounting and review all financial statements for accuracy and sign the financial reports.
The FMR report is sent to the MUDA Finance Department and the World Bank.













62











Finance Department Organisation Chart



63
Finance Department
Finance
Department
Director
Development
Budget Section
Head
Operating
Budget Section
Head
Programme
Budget Unit
Allotment Unit Payment Unit
Finance
Manager
Payment Cell
Liquidation Cell
Relenishment
Cell
Cash
Management
Cell
Reconciliation
Unit
Replenishment
Unit
Filing Unit
Budget Unit
Payroll,
Payment and
AFMIS Unit
Revenue,
Planning and
Collection Unit
Inventory
Control Unit
Filing and
Advance
Clearing Unit





64
Ministry of Urban Development Affairs

Finance Department, Process Flow Charts



1. Development Budget Section
2. Operating Budget Section



65
Development Budget, Allotment Section, Project Allotment
Copy Project contract to Allotment Section
Copy
Contract
Allotment
Section
Manager
receives, signs
cover letter and
passes to
Allotment
Officer
Allotment
Officer
Focal Point
Officer
MoF Budget
Dept.
Infrastructure
Section
MoF Budget
Execution
Dept.
MoF Allotment
Approval and
entry to AFMIS
Prepares
1. B27
2. Project Coding Sheet (PCS)
3. Budget Set Aside Form
4. Attaches copy of Contract
Approved
Forms
returned to
FPO
Documents
transferred to
Filing Officer
Filing Officer
records in
database
and files
Database
Files



66
Development Budget, Payment Section, Project Contract Payment
Invoice and supporting documents from Project to Finance Director (FD)
Invoice and
supporting
documents
Finance Director,
attaches 'Maktop'
letter for Process
Approval
Section
Manager,
Process
approval
Payment
Officer
Checks
documents,
issues M16
and cover
letter
Documents to
Section
manager for
checking and
M16 signing
Documents to
Fin. Dir. For
authorisation
Deputy Minister or
Minister sign for
authorisation of
payment
Documents
to Deputy
Minister or
Minister
Filing Officer,
numbers,
copy's, files
MoF Control
Department
at MUDA
Documents to
Filing Officer,
M16 numbered
and copies filed
Forwards
originals to
Focal Point
Officer
Focal Point Officer
takes approved
M16 to the MoF
for the payment to
be processed.


67
Development Budget, Allotment Section, Payroll Allotment
Human Resource Department (HR) issue staff contracts (renewed each year), or on a as contracted basis
HR
Contracts to
Fin Dir.
Fin Dir signs
to process
Allotment
manager
receives,
signs and
passes to
Allotment
officer
Allotment
Officer
Prepares
1. B27
2. Project Coding Sheet (PCS)
3. Budget Set Aside Form
4. Attaches copy contracts
Focal Point
Officer
MoF Budget
Dept.
Infrastructure
Section
MoF Budget
Execution Dept.
Allotment
Approved and
entered into
AFMIS by MoF
Approved
Forms
returned to
FPO
Documents
transferred to
Filing Officer
Filing Officer
records in
database
and files
Database
Files




68
Development Budget, Payment Section, Payroll Payment
Monthly attendance reports and supporting documents from Project to Finance Director (FD)
`
`
Attendance
Reports and
supporting
documents
Payroll Officer
checks
documents and
prepares payroll
Finance
Director,
Process
Approval
Section
Manager,
Process
approval
Prepares
1, Payroll
2. Copy of Allotment
3. Attendance sheets
Payment Oficer
prepares M16
plus cover letter
Documents to
Fin Dir for
payment
authorisation
Documents to
Filing Officer,
M16 numbered,
copies filed,
original to FPO
FPO to MoF
Control Dept. at
MUDA
MoF Control
Dept. to
FPO
FPO to MoF
for payment(s)
to be
processed
M16 to
Payment
Section
Manager for
MoF processes
payment through
DAB
DAB transfers
payroll to Kabul
Bank



69

Development Budget, Allotment Section, Project Invoice Allotment
Project forward Invoice for Allotment
Invoice from
Project to
Allotment
section
Manager
Allotment
Section
Manager
receives,
signs and
transfers to A
officer
Allotment
Officer
Focal Point
Officer
MoF Budget
Dept.
Infrastructure
Section
MoF Budget
Execution
Dept.
MoF approve
Allotment and
enter into
AFMIS
Filing Officer
records in
database and
files documents
Prepares
1. B27
2. Project Coding Sheet (PCS)
3. Budget Set Aside Form
4, Attaches copy contract and
invoice
Approved
Forms
returned to
FPO
Documents
delivered to
Filing officer
Database
Files



70
Development Budget, Payment Section, Project Invoice Payment
Invoice and supporting documents from Project to Finance Director (FD)
Invoice and
supporting
documents
Finance
Director,
Process
Approval
Section
Manager,
Process
approval
Payment
Officer
Checks
documents,
issues M10
(Request
Form) plus
M16 and
cover letter
Documents to
Section
manager for
checking and
M16 signing
Documents to
Fin. Dir. For
authorisation
Filing Officer,
numbers,
copy's, files
MoF Control
Department
at MUDA
Documents to
Filing Officer,
M16 numbered
and copies filed
Forwards
originals to
Focal Point
Officer
FPO takes
documents
to MoF
MoF
1. issue cheque drawn on DAB
or 2. request DAB to transfer
direct to contractor bank account
If cash payment then cash from
DAB to Advance Clearance
Officer
To Minister or
Deputy
Minister for
authorisation




71

Development Budget, Payment Section
Project Request to Purchase Goods, Services
Project makes a request to Dep Minister / Minister for Purchase needs (Purchase Request Form)
Authorised
request to
Proj Admin,
form FS0
raised
FS9 to
Inventor
y Dept.
Inventory in
stock and
supply
If no stock
request to
Payment
Manager for
purchase
PM approves,
verifies if funds
available
Fin. Dir.
Approves
and
authorises
End of
Process
No stock
available
1.Authorised request to
Proj. Admin
2. Proj Admin request to
Procurement Dept.
3.Competitive shopping
4. Proc. Dept evaluaute
5. PO to Dep/Min, Min for
approval
6. PO to MoF Control Dept
7. MoF approval back to
Proc Dept.
8. Proc Dept to Fin Dir.
Fin Dir
approves
request if
accordance
with
procedures
Documents
to Payment
Manager
If less than
$1,000
More than
$1,000 less
than $10,000
More than
$10,000
Docs to
Advance
Clearance
Officer
ACO issues
Advance Form
and gives funds
to Proc. Dept.
Proc. Dept. make
Purchase and
deliver purchase
invoice to ACO
M7 Goods
Received
Form raised.
ACO raises Qtly
M12 form for
fund
replenishment
Then same process as
Project Contract
Allotment and Payment
Standard
Allotment
procedures
followed
Documents
returnred to
Payment
Manager for
approval
Payment
Manager issues
M10, Capital
Advance Form.
Procurement
Dept. back to
Fin. Dir.




72


Operation Budget Department, Budget Section,
Approved Budget received from Ministry of Finance
MoF
Approved
Operation
Budget
Allotment
Section
Manager
receive,and
passes to
Budget
Allotment
Officer
Budget
Allotment
Officer
prepares
Allotment on
Qtly basis
Approved
copies to
Focal Point
Officer
Delivered to
MoF Allotment
section for
Approval and
entry to AFMIS
MoF keeps 2
copies and 2
copies are
returned to
MUDA
Prepares
1. B27 in 4 copies
Documents
transferred to
Filing Officer
B27 to
Section Head
for approval
B27 to Fin.
Director for
approval
B27 to
Minister or
Deputy for
approval,
authorisation
1 copy of
approved B27
to Budget
Section
1 copy of
approved B27
to Payment
Section
Allotment
recorded by
Province, B20
Form, by
province by
code
Copy of B20
Form to
Payments
Section
Focal Point
Officer


73

Operation Budget Department, Payroll Payments Section,
Monthly attendance reports and supporting documents from Project to payment Section
Attendance
Reports and
supporting
documents
Payroll Officer manually
inputs to Payroll register
(Book) employee details
(approx. 600 records) and
produces M41 (monthly
payroll)
Prepares M16
Form with list of
Name, Amount,
Bank Account
number
Operation
Budget Dept.
Manager signs
to approve
Fin. Dir.
Signs to
authorise
payment
Focal Point
Officer takes to
MoF Control
Section
MoF Control
Section at
MUDA checks
documents
To MoF for
payment by DAB
Bank Transfer to
employee bank
account
Individual
Employee's
Bank Account
credited at
commercial
bank
Payroll Payment
Officer records
payroll payment
on B20 Book
Payroll Payment
Officer checks if a
valid allotment
and attaches M41

74
Operation Budget Department, Payments Section
Project makes a request to Dep Minister / Minister for Purchase needs (Purchase Request Form)
Request made by Project through authorising officer (Minister or deputy minister) to procurement
Casier Replenishment
procedures
Procurement Dept
1. Goods in stock
2. Not in stock
1. If in stock, then
project is supplied
2. If Goods
not in stock,
then
Procurement Dept.
commence procurement
process.
3 quotations sought and
M3 evaluation form
completed
Department
manager verifies
and authorises
against available
budget
Focal Point
Officer takes
documents to
MoF Control
Section.
Returns approved
documents to allow
Procurement Dept.
to procure Goods
Once the procurement is
completed Procurement
Dept.confirm to Payments
Section by Cover Letter and
request supplier payment to
be made.
If request
less than Afs
5,000
If request more
than Afs 5,000
but less than
Afs 50,000
If request
Afs 50,000
or more
Cashier makes
payment from
Cashier Cash
account
Payment transferred from
DAB to Ops Section
Cashier Babnk Account at
Kabul Bank.
Payment made by DAB
direct to supplier Bank
Account
Focal Point
Officer
MoF Control
Section at
MUDA checks
documents
3 payment
options
available.
Payment
Officer
prepares M16
To Finance
Director for
approval
To Minister or
Deputy Minister
for authorisation
To MoF
Control Dept.
for approval
To MoF for
payment
If the Payment is
less than Afs
50,000 but more
than Afs 5,000
If the Payment
is more than Afs
50,000
75
Operation Budget Department, Revenue Section
Engineering Department (or other) will inform Operations Budget Revenue Section that a fee for services is due from GoA Agency
Engineering Dept
request Revenue
section to collect
Fees from other
Agency for MUDA
services provided
Revenue
Planning
Officer
Recording Officer
Records details in
Book 28,
completing
Voucher 26,
Voucher 27 and
Voucher 29
Collecting
Officer informed
Issues Letter to
Agency of
amount due to
MUDA
Agency deposit
payment at DAB to
MoF/MUDA
account
DAB issue
payment receipt
slip which Agency
forward to
Revenue section
Recording Officer
reconciles receipt
slips with
Voucher 27
Reconciliation lists
unpaid items plus
balances outstanding
which the Collection
Officer issues nre letter
to agency for collection
Reminder Letters
for balances due
are recorded in '90
Book'
Recording
Officer forwards
Cover Letter to
Collecting
Officer detailing
Fee claim
Planning Oficer
passes details of
Fee claim to
Recording
Officer
76
Operation Budget Department, Inventory Section (Goods Received Section)
Following a succesful procurement of goods the items purchased are delivered to the goods Received
Section of Operation Bedget Department
Goods received
delivered to
Goods
Received Dept.
Goods Received
Officer checks
documents and
goods
Goods delivered
to intended
recipient
Form M7
issued
Form FC5 issued,
2 copies. 1 copy
for recipient 1
copy to GR dept.
Details entered in
Asset Register
(Large Office
Book), Price, Qty,
details etc
2nd Book (Register)
Details entered in
2nd Asset Register
by staff member
Price, Qty, details
etc
Development
Budget Goods
Operating
Budget Goods







77


Operation Budget Department, Filing Section
Filing Section has 2 functions
1 The filing section is responsible for maintaining all paper files, allotments and payments in a logical, ordered manner
2. The preparation and processing of M12 Advance Clearance Form
Filing Officer (1)
files Allotment
and payment
records
Filing Officer (2) checks and
verifies all Cash Advance
Fund accounting paperwork,
both allotment and payment.
Filing Officer (3) Enters
details of all payments
from Fund to M12 form
and attaches all
documents.
M12 is
approved by
Section
Manager
M12 is
approved by
Finance
Director
M12 is
authorised by
Deputy
Minister or
Minister
M12 is taken to
MoF Control
Section for
checking anf
approval
Following MoF control
approval the M12 is
taken to the MoF for the
existing Advance to be
cleared.




78
Part B of the report: Report on work experience and task
accomplishment.



79
Staffing
Is the organizational structure of the finance department appropriate for the level of financial volume?
The finance department needs to be restructured to relocate it to its relevant level in the
organizational structure according to the level of financial transactions volume.

Is finance department staffed adequately?
The finance department was found to be staffed adequately as per the requirements of the
department.

Is the level and competency of staff appropriate for the complexity of financial transactions and their
volume?
The finance department is not staffed by fully competent individuals according to the level of
complexity of financial transactions and their volume.

Are the finance staff adequately qualified and experienced?
Finance staff possessed the appropriate qualifications, in most cases, but was not sufficiently
experienced according to the requirements of the department.

Are any key positions in the department vacant?
Certain key positions were found to be vacant and new appointments will be made imminently

Is there a training policy in place for the finance staff and are trainings provided based on that plan?
There is not currently a training policy or training plan for finance department staff nor is any
training being provided on a as needs basis.

Is the finance staff familiar with procedures required by the Financial Management Manual?
The finance department staff are familiar with their area of duty. However the Financial
Management Manual is in need of updating and additional training will be needed to fully familiarise
financial department staff with the procedures required by the updated manual.

Is the progress of staff capacity development adequate to ensure the smooth running of the
department?
No, the capacity development progress is lacking, progress made to date does not currently enable a
reasonable estimate to be made with respect to the achievement of the desired objective. A training
needs assessment and capacity development plan needs to be implemented.
80

Budgets
Do prepared budgets lay down both financial and non financial targets?
Budgets are prepared to Ministry of Finance guidelines and instructions and lay down both financial
and non financial targets for the financial year.

Are procedures in place to plan activities, collect information from the units in charge of the different
programmes and components, and prepare the budgets?
Procedures to plan activities and collect information from units are issued by the MoF and are
sufficiently documented and implemented.

Does the person(s) responsible for preparation of the budgets have both experience in budgeting
activity and an appropriate position in the finance department hierarchy to enable the preparation of an
objective budget?
The responsible person (s) have experience in budgeting activity but does not hold an appropriate
position in department's hierarchy to gain access to the information required to enable him to
prepare an objective budget.

Are the plans and budgets of programme activities found to be realistic and based on valid assumptions?
Plans and budgets of the programme activities were determined to be realistic and based upon valid
assumptions.

Are approvals for variations from budget allowed under MoF procedures, if so are they required in
advance or subsequent to the expenditure being made?
Approval for variations from budget is required in advance, the MoF, at the budget Mid Year
Review, allow ministries to review their budgets and request amendments to be made if necessary.

Are the budgets prepared for all operations account units, program fund units and field offices in
sufficient detail to provide a meaningful tool with which to monitor subsequent performance and actual
expenditure versus budgeted expenditure?
Budgets are prepared in sufficient detail to assist in monitoring subsequent performance on a yearly
basis.

Are actual expenditures compared to the budgets with reasonable frequency, and explanations required
for significant variations from the concerned programmes?
81
Comparison of actual expenditure with the budgeted expenditure is carried out on a regular basis
and all significant variations are explained and addressed.

Asset Management
Is there a system of adequate safeguards to protect assets from fraud, waste and abuse?
There is a documented system to protect the assets from fraud, waste and abuse, but it lacks
implementation.

Are subsidiary records of assets kept up to date and reconciled with control accounts?
Subsidiary records of assets are kept, but there is no record of whether up to date or not,
additionally reconciliations with control accounts are not carried out.

Are physical inventories of assets carried out?
Physical inventories of assets are not carried out.

Are procedures in place for employees to follow if they suspect fraud, waste, or misuse of programs
resources or property?
Finance Department is in the process of drafting policies and procedures for employees to follow for
reporting issues related to fraud, waste or misuse of program resources or property.

Are assets sufficiently covered by insurance policies in compliance with the terms of relevant Grant
agreements?
There is no insurance cover for program's assets as may be required by a grant agreement.

Internal financial Procedures
Does the finance department have a computerised accounting system that allows for the proper
recording of financial transactions, according to MoF chart of accounts, Donor regulations and Financial
Management Manual (FMM) and is all expenditure recorded properly in the system?
Finance department has a computerized accounting system, MoF AFMIS system that allows for the
proper recording of financial transactions into the MoF system according to the MoF chart of
accounts. However there is no computerised accounting system that allows for the proper recording
of all financial transactions.

Are controls in place concerning the preparation and approval of transactions, ensuring that all
transactions are correctly made and adequately explained?
82
Controls are in place and are generally sound but lack in design in that they are repetitive and time
consuming but appear to possess some operational effectiveness.

Are cost allocations to the various funding sources made accurately and in accordance with
established agreements?
Cost allocations to various funding sources are made accurately and in accordance with established
donor agreements.

Are the following functional responsibilities performed by different units or persons: (a) authorisation to
execute a transaction; (b) recording of the transaction; and (c) custody of assets involved in the
transaction?
All of the above functional responsibilities are performed by different units or persons.

Are all accounting and supporting documents retained on a permanent basis in a defined system that
allows authorized users easy access?
All accounting and supporting documents are retained for a specified time, per GoA regulations and
access is restricted to authorized users only.

Do contract and invoice processing procedures provide for:
-Copies of purchase orders and receiving reports to be obtained directly from operational units.
-Comparison of invoice quantities, prices, and terms with those indicated on the purchase order and
with record of goods actually received.
-Comparison of invoice quantities with those indicated on the receiving reports.
-Checking the accuracy of calculations.
All of the above procedures are being performed.

Are all invoices stamped PAID, dated, reviewed and approved, and clearly marked for account code
assignment?
Invoices are stamped PAID and account codes assigned to then but are not reviewed and approved.

Is there a computerized system in place for the preparation of payroll? Also, do controls exist for the
preparation of the payroll and are changes to the payroll properly authorized?
The payroll is prepared manually, some controls are in place for its preparation and no change can
be made except by the authorized personnel.

83
Are the financial management manuals and MoF procedures distributed to the appropriate personnel?
Finance department key employees have access to the manuals and MoF procedures.

Do the procedures in place enable accurate and timely preparation of Summary Sheets (SS's), Statement
of Expenditure's (SOE's), Direct Payment (DP) and supporting applications for Grant, Development
Account, Operations Account and Program Fund Units?
There are procedures in place that enable the accurate preparation of SS's, SOE's, DP and supporting
applications but there are certain time delays. Finance department is in the process of restructuring
some of their procedures.

Are the contracts prepared by procurement department reviewed by finance department for the
reasonableness of cost estimates?
No.

Funds Flow
Are funds flow forecasts (for all programmes and operational units) prepared in a timely and accurate
fashion and according to grant category, to show a clear picture of requirements and to identify any
shortfalls at the earliest?
Funds flows forecasts are not prepared in a timely and accurate fashion to achieve the desired
objective.

Does the person responsible for the preparation of fund flow forecasts have the required knowledge
and experience for the preparation plus access to the necessary information.
The responsible person(s) has experience in preparing such forecasts but does not hold an
appropriate position in department's hierarchy to gain access to the information required to enable
him / her to prepare an objective forecast.

Are there procedures in place for supply of funds to operational units at HQ and field office to ensure
the continuous supply of funds?
Procedures are being developed to improve the supply of funds and reduce existing delays.

Are grant, development budget and operation funds disbursed after ensuring compliance with all
procedures required by the MoF, donor agreements and the Financial Management Manual?
Yes, all procedures are complied with before any disbursement is made.

84
Are there any unwarranted delays in the disbursement of funds after the receipt of request for payment
along with required documentation from contractual partners?
There are considerable delays in the disbursement of funds after the receipt of request for payment
along with the required documentation but procedures are to be modified to reduce the
unwarranted delay in disbursement of the funds.

Does the finance department have a computerized system in place that allows for proper recording of
funds disbursements? Is access restricted to authorized user's only?
The finance department uses an ad hoc system using hand written records plus spreadsheet
applications in place that allows for the recording of funds disbursements. The system access is
restricted to authorized users only.

Is liaison with MoF and donors carried out on timely basis and in an effective manner on financial
matters affecting the programs?
The strategy and procedures for timely and effective liaison with MoF and donors needs to be
further developed.

Reporting and Monitoring
Are financial statements prepared for the programs?
Yes statements are currently prepared but the finance department is to examine the reporting
guidelines to develop a more efficient reporting system.

What is the frequency of preparation of financial statements?
Financial statements are currently scheduled to be prepared on monthly basis.

Are there established financial management reporting responsibilities (including those required by
Programme management) that specify what reports are to be prepared, what they are to contain, and
how the are to be used?
Reporting responsibilities, report types and contents are defined but the system lacks
implementation, finance department is to examine and improve the process of implementing
financial management reporting responsibilities.

Are the reports prepared in a timely and accurate fashion so as to be useful to management for decision
making?
The reporting system is in need of being modified to prepare reports in a timely and accurate
fashion so as to be useful to management.

85
Are monthly statements prepared and submitted to senior management, showing for the period and
cumulative actual and planned budget availability and expenditure by main expenditure classifications
by program to analyze programs financial status, funding delays and causes of liquidity crunches (if any)
etc.
Monthly statements are prepared and submitted to senior management showing for the period and
cumulative actual and planned expenditure by main program income and expenditure
classifications. The reporting system is in need of being modified to prepare reports in a timely and
accurate fashion so as to be more useful to management.

Do the financial reports compare actual expenditures with budgeted and programmed allocations?
Financial reports compare actual expenditures with budgeted and programmed allocations. The
reporting system is in need of being modified to prepare reports in a timely and accurate fashion so
as to be more useful to management.

Are there established criteria for reporting of financial management problems and their possible
solutions to the Finance Director and have effective solutions been found by following this process?
There are currently no such established criteria, finance department is to develop procedures for
reporting financial management problems and their possible solutions to the Director.

Cash and Bank
Are cash and bank reconciliations prepared by someone other than those who make or approve
payments?
No. Finance department is to develop new procedures for cash and bank reconciliations.

Are bank and cash reconciled on a regular planned schedule?
Bank and cash are reconciled on monthly basis.

Does the finance department maintain an adequate, up to date cash book, recording receipts and
payments?
The finance department maintains an adequate, up to date cash book, recording receipts and
payments.

Are the cash and bank reconciliation reviewed and approved by a responsible official on a timely, regular
basis?
All reconciliations are reviewed and approved by a responsible official on a timely basis.

86
Are there any policies and procedure relating to safe custody of funds?
Policies and procedures are to be developed for the safe custody of funds.

Others
Are the working relations with the MoF and all key stakeholders amicable, productive, mutually
beneficial and conducive to a good working relationship?
The working relations are improving with the time and are on the right track to become amicable,
productive, mutually beneficial and conducive to a long term relationship

Do the current disbursement policies and procedures require improvement?
The current disbursement policies and procedures require improvement, the finance department is
to develop new procedures for disbursement procedures.