The Asian Development Bank (ADB) is a multilateral development finance institution
founded in 1966 to promote social and economic progress in its developing member
countries in Asia and the Pacific (see ADB’s website: http://www.adb.org/about/main).
2.2 ADB’s principal functions are
- lending funds,
- providing grants,
- providing technical assistance and advisory services,
- promoting investments for development purposes, and
- assisting in coordinating the development policies and plans of developing
member countries.
Inquiries
2.3 Loan disbursement is handled by the Loan Administration Division of the Controller’s
Department.
2.4 For loan service payments and billing matters, inquiries are addressed to the
Accounting Division of the Controller’s Department.
Loan or Grant Regulations
3.4 The regulations4
further set out conditions for the use of loan or grant proceeds
financed by ADB, or proceeds administered by ADB.
5
These documents are expressly
incorporated in the associated loan agreement, guarantee agreement, or grant
agreement. If any provision of a loan agreement, guarantee agreement, or grant
agreement is inconsistent with a provision of these regulations, the provision of the
loan agreement, guarantee agreement, or grant agreement governs.
Loan Documents
3.5 Loan documents
6
include the following documents and agreements:
ȕ Thereport and recommendation of the President to the Board of Directors
(RRP) presents the project proposal for consideration by the ADB Board.
ȕ Theproject administration manual (PAM)
7
includes all the information and
schedules describing project implementation and project readiness filters
covering major preproject implementation actions (e.g., government approvals,
procurement, and resettlement) to ensure a rapid start-up and enable early
disbursement. It is mandatory
8
that the PAM be referenced in the RRP and in
the loan (or facility) agreements, is presented as a stand-alone linked document
to the RRP, and serves as the main document describing implementation details.
The PAM is prepared in the course of loan processing and initially agreed with
the government at the loan fact-finding stage. At loan negotiations, the borrower
and ADB shall review and confirm the PAM agreed during loan fact-finding to
ensure consistency with the loan agreement, and such confirmation shall be
reflected in the minutes of the loan negotiations. The detailed cost estimate by
financier (one schedule included in the PAM) is prepared based on Section J6 of
the ADB Operations Manual (Appendix 3A).
9
Related illustrative tables are also
provided in this handbook (Appendix 3B).

insufficiently supported or ineligible for ADB financing, ADB may offset the

10:12 AM    

Ineligible Payments
9.22  Where ADB subsequently finds any payment made under the SOE procedure to
be insufficiently supported or ineligible for ADB financing, ADB may offset the
amount of the unjustified or ineligible payment against subsequent withdrawals for
reimbursement, or request the borrower or EA to refund the same amount to the
loan account.
Audit Arrangements
9.23  SOE records must be audited regularly by independent and qualified auditors
acceptable to ADB. The audit is carried out as part of the regular annual audit of
project financial statements.
5



Review by ADB Staff
9.24  ADB reserves the right to conduct spot or random checks of expenditures covered
by SOEs through disbursement missions or review missions. Documents are to
be kept in the office of the EA or IA as appropriate (see Section 4.29 for retention
period of supporting documents) and must be made readily available for checking by
ADB’s disbursement and review missions or upon ADB’s request for submission of
supporting documents on a sampling basis.
Suspending Use of the Statement of Expenditures Procedure
9.25 ADB may suspend the use of the SOE procedure when the EA/IA’s capacity is no
longer deemed adequate. Examples of inadequate capacity, amongst others, are:
ȕ the borrower continuously claims ineligible expenditures;
ȕ the borrower fails to submit the audit report before the deadline;
ȕ the audit report and/or the management letter indicates significant irregularities
in financial management, accounting, internal control, or the use of the ADB
funds in project implementation; or
ȕ the disbursement or review mission finds significant irregularities in the use of
ADB funds.
Force Account Works Procedure
9.26  The force account works (FAW) procedure is a procedure for reimbursing the
borrower for expenditures in carrying out certain approved civil works required for
the project. The FAW procedure may also be used under the imprest fund procedure.
Two certificates are used instead of the usual supporting documents: the first on the
project’s physical progress (Part 1) and the second on its financial progress (Part 2)
(Appendix 9D).
5
See OM J7, PAI 5.07, and Technical Guidance Note on Financial Reporting and Auditing.