Microfinance Case Study

Internal control of Microfinance institutions (MFI’s)

Challenges

A well-known Development Agency and the Central Bank of the Western African States have an objective to promote the inclusive financials sectors in eight countries in Western Africa. This huge program includes many challenges such as a new legal and regulatory framework, institutional changes and the improvement of the internal control systems within the MFI’s, adapted methodologies of external audit, risks central, etc.

In order to achieve their objective of better internal control for MFI’s, the Development Agency and the Western African Central Bank are seeking to improve the audit processes and the quality of financial information issued by the MFI’s of the geographical area.

Amongst other tasks, the Agency and the Central Bank wanted to design and deploy a true practical internal control guide for Microfinance institutions.

PwC Services

Objective

PricewaterhouseCoopers Luxembourg designed a practical internal control guide which includes all recent regulation updates of the Microfinance Industry.

Processes

PwC Luxembourg applied a participative approach to understand the specificities of the MFI’s in the geographical area and leverage on the expertise of the various stakeholders:

• identify and document all types of MFI’s and their characteristics;
• work in close collaboration with a sample of 42 MFI’s in eight Western African countries (visits, interviews, exchange of information and documentation);
• visit of a significant number of auditors of Microfinance institutions in Western Africa;
• document all internal control processes and practices of the Microfinance industry;
• understand the specificities of the microfinance industries and the large number of products including micro assurance;
• identify gaps between local practices and internal controls best practices;
• submit the guide for review to the 42 MFI’s and the auditors which participated to the exercise (restitution meeting and a second and a third round of visits in Western Africa);
• finalise the internal control methodological guide.

Success Details

Benefits

• We provided our client with an internal control guide designed for all the microfinance industry audience updated with all new regulations;
• Our client benefited from a report on the internal controls of microfinance institutions;
• The participative approach facilitate the stakeholders’ ownership of the document provided.