Post on 27-Dec-2015
Financial management
Management and control systems
Financial management
Management and control systems
Training for Programme OperatorsMarch 2012
Training for Programme OperatorsMarch 2012
Financial allocation
Allocation within BS
Allocation in programme
Financial model
Pre-financing modelAdvance instalments to POs based on future cash needs
Reporting on use of funds received previously
Pre-financing requests reviewed by FMO and cross-checked against previous requests and reported incurred expenditure
Small amount retained from each claim, released at programme completion
Financial reporting
Interim financial reports and final financial report certified by CA
Fixed reporting periods covering four calendar month every year
Fixed deadline for reporting and fixed payment dates
FMO can withhold payments in case of delayed or incomplete reporting
Financial reporting chart
Financial flow
FMC / NMFA
FMO Certifying Authority
Programmes operated by the FMO
Programme Operators
Donor programme
partners
Project Promoters
Suppliers & Partners
National Focal Point
Small grant scheme operator
Advantages of financial setup
Pre-financing more suitable to the programming approach than reimbursement model
Easier access to liquidity for Programme Operators
De-centralised financial controls can be adapted to the size of grant and type of projects
More predictable workload and more reliable disbursement forecast
Management and control systems – national level (1)
Financial control at national level Responsibility of the Certifying Authority Certification of expenditure declared by POs Exception: programmes operated by the FMO or a DS entity
Certification of financial reports Part of interim financial report and final programme report Certification procedure and method to be designed by CA
Eligible expenditure of a programme Expenditure incurred directly by the PO (programme
management, bilateral funds at programme level, etc.) Re-granting: payments to projects from the PO, and not
expenditure incurred by project promoters
Management and control systems – national level (2)
Management and control functions of the NFP Overall responsibility for reaching the objectives of the FMs Monitor progress and quality of implementation of
programmes Progress towards programme outcomes and objectives Fulfilment of publicity requirements Signing programme implementation agreements with POs
Management and control functions of the AA Audits on effective functioning of management and control
systems both at national and PO level Project audits based on an appropriate sample Annual audit report and opinion Closure declaration
Management and control systems – programme level
Setting up management and control systems Responsibility of the Programme Operator Collecting applications, selecting projects, signing project
contracts Verification of project outputs and project expenditure Ensuring payments to projects Verification of compliance with the Regulation, the
programme agreement, applicable national law and EU law Reporting to the FMO / NFP / CA / Irregularities authority Information and publicity
System design NFP / CA / AA encouraged to give guidance to POs Verification function can be delegated by the POs Consider economies of scale, capacity, past experience
Audit report and opinion (1)
System description by NFP, CA, AA, POs; report and opinion by AA
Compliance with the Regulation and generally accepted accounting principles
Proportionality in relation to the effectiveness of achieving the objectives of the programmes
Assess adequacy of design, not the practical effectiveness
Timing, conditions NFP/CA/AA: before Donor approval of the first programme
or within 12 months of the MoU signature, any payments to programmes are conditional upon Donor review
POs: within 6 months of the submission of the first interim financial report
Audit report and opinion(2)
Approach Formal appointment of relevant entities Approved written procedures covering all areas of
responsibilities foreseen in the Regulation Agreements / acts of delegation of functions, if relevant Detailed verification of procedures can be done at a later
stage during audits on effective functioning of systems
Previous audits AA can rely on previous findings if the entities involved and
the systems are the same Results of SF/CF 2007-13 compliance assessment
Main criticism of FM 2004-09
Trade-off between cost of control and tolerable error rate
Issues to consider when setting up control systems Desk check vs. on-the-spot check 100% verification vs. sample based verification Ex-ante vs. ex-post verification Adequate tools (e.g. IT systems, templates, checklists, etc.) Strict reporting deadlines towards the FMO Adequate payment flow to projects to be ensured
Proportionality
New modalities
Proof of expenditure Option A: invoices or accounting documents of equivalent
probative value Option B: report by an independent and certified auditor Differentiation can be made between project promoters
and donor project partners
Indirect costs (overheads) Project promoters and partners may opt for a flat rate up
to certain limits Methodology to ensure fair apportionment of overall
overheads
Exceptional situations
Specific cases NFP acting as PO PO acting as project promoter DPP acting as donor project partner
Potential risks and issues Financing from different budgets Conflict of interest in project selection Conflict of interest in control functions
Mitigation measures Segregation of functions within the entity concerned Clear responsibilities and reporting lines Transparency, accountability and good governance