Freetown, 1-3 September 2010 Francis Wellens Programme Estimates in the 10th EDF - Decentralised...

Freetown, 1-3 September 2010Francis Wellens

Programme Estimates in the 10th EDF -

Decentralised Operations

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Programme Estimates in the 10th EDF Decentralised Operations

1. Reminder: where it originates2. Definitions: "Decentralised Operations" ;

"Programme Estimate“; “roles of the main players”

3. Programme estimates in the Cycle of Operations4. Drawing up and approving a programme estimate5. Financial implementation of the imprest

component of the budget of a PE6. Closure of a programme estimate and audits

Content of this workshop

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European Commission Undertakes the financial execution of operations carried out

with EDF resources

has decentralised its functions

Appoints authorising officer by delegation (who designates

authorising officers by sub-delegation)


1. Where it originates

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European Commission

Head of Delegation

• represents the Commission in all its activities in the ACP State

• appointed by the Commission

• to be approved by ACP State

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(authorising officer by sub-delegation)


National Authorising Officer

• Appointed by ACP State

• Represents the ACP State in all EDF financed

operations

• Can appoint Deputy NAO

• Can delegate functions for implementation5



Implementing Agencies

Appointed through the financing agreement

• Responsible for the implementation of the project

• Supervise and monitor the project

• Are in direct relation with the NAO-Office

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Communication – lines of command – transfer of responsibilities

NAO

NAO-Office

Government of Sierra Leone

Technical sections

Finance and Contract Section

Commission of the European Union

HoD

EC Delegation

Technical sections

Finance and Contract Section

Implementing Agencies

Projects

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Legal Framework and documentation

The revised Cotonou Partership Agreement

The Financial Regulation of the 10th EDF

The Practical Guide for PEs 10th EDF

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Delegation of powers by the NAO

if a project is implemented via « Decentralised Operations », the NAO with the EC Delegation can delegate a part of their powers

concerning: implementation of contracts financial execution supervision

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TO : to public departments of the ACP State(s) concerned

Direct Decentralised Operations

to public or by private bodies with a public-service mission and that have first concluded a delegation agreement with the NAO

Public indirect decentralised operations

to private bodies that are legally distinct from the ACP State(s) concerned and that have a service contract with the NAO

Private indirect decentralised operations

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2. Definitions:


Decentralised operations

Direct Indirect

Public Private

Delegation Agreement Service contract

Programme Estimate Programme Estimate Programme Estimate11


2. Definitions:

Programme Estimate :

- a document designed to implement (in principle) one year of a project or programme covered by a financing agreement in decentralised operations.

- the official document for the delegation of powers by the NAO

Only one?

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is


2. Definitions:

Programme Estimate Covers: a work programme a budget estimate a financing plan technical and administrative implementing arrangements

A financing plan can includeEDF funds

specific commitments imprest commitment

other funds national funds own resources other donors

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2. Definitions:

EDF funds can include

specific commitmentsamounts for contracts and grants related to the implementation of

the PE activities that are awarded and managed by the NAO and / or the Commission (values above the max threshold)

Imprest commitmentamount of financing to cover all the expenditure needed to carry

out the planned work programme mentioned in the PE implemented by the imprest administrator and accounting officer (within the limits of the powers delegated by the NAO)

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2. Definitions:

Imprest commitmentThe imprest component of the budget of the programme estimate is implemented, in accordance with the principle of effective separation of the authorisation and payment functions, by:the imprest administrator and the imprest accounting officer,

For special reasons it is possible to set up separate components with their own programme estimates for their implementation with own imprest administrators and imprest accounting officers coordinated by the central onesThe creation of “subimprests” is not authorised.

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2. Definitions:

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National funds

usually finances recurrent costs which will continue after completion of the project, e.g the recurrent salaries, rent of offices etc.

Own resources generated by the project

include any interest on bank account(s), asset sales, services invoiced to third parties, the beneficiaries’ contributions, Must be accounted for

Advance > € 250K : interest yielded on bank account(s) is the property of the European Union.

Funds from these different sources:•into separate bank accounts and •under no circumstances should they be invested or put on term accounts

other funds

interest cannot be considered as own resources, should be deducted


2. Definitions:

implementation arrangements:

Defined in the TAP: Technical and Administrative

Provisions

Describing procedures and conditions for

implementation and financing of the activities foreseen

Part of the Action Fiche

Annexed to the financing agreement

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Imprest commitment:


2. Definitions:

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Imprest commitment:


2. Definitions:

Start-up PE

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• Work programme and budget estimate to prepare operational PE No. 1

• duration: maximum 6 months

• small amount: for preparatory activities

• Can receive an advance up to 100 % of the budgetOperational PEs • Normal 12 months, up to 18 acceptable

• To implement programme

• Not achieved activities can be transferred to next (with budget in full)Final PE

• Max 18 months and includes closure period

• Closure period may be inside closure period of financing agreement

PEs follow on from each other without any overlapping of dates

Imprest commitment:


2. Definitions

Main players in “the game”

- NAO

- Imprest administrator

- Imprest accounting officer

- Third party organisation (public or private)

- Project Steering Committee (if applicable)

- Head of Delegation

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: The roles of the actors


2. Definitions

NAO:

For Direct DecentralisationAppoints the Imprest administrator and the Imprest accounting officer

For Public of Private Indirect Decentralisation:Accepts the nominations of the third party organisation

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2. Definitions:

Imprest administrator and the Imprest accounting officerMust be able to exercise their tasks and duties independently

Imprest administrator

•draws up the PE (technical and operational parts)•submits the PE with the IAO•commits expenditure foreseen for the imprest component of the budget of the PE•authorises corresponding payments

Imprest accounting officer

•draws up the PE (financial part) in cooperation with the IA)•submits the PE with the IA•verifies the correct application of contract and grant award procedures

•verifies and implements payments and recoveries linked to the Imprest component of the budget of the PE

!!!!! Eventually financial responsibility remains with NAO !!!!! 22



2. Definitions:

In case of indirect decentralisation

the delegation agreement and the service contract with the body concerned must clearly designate the two persons who will take on the duties of authorisation (imprest administrator) and payment (imprest accounting officer).

!!!!! Eventually financial responsibility remains with NAO !!!!!

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Imprest administrator and the Imprest accounting officer



2. Definitions: The roles of the actors

The Steering Committee

optional: see the TAP

composed of main parties involved (NAO, HoD (observer), Implementing agency, ...)

• Steers and coordinates the programm• Verification and monitoring of the Pes and workplans• Verifies, arbitrates etc.

May not interfere in any case in the financial implementation of the programme estimates

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3. Programme Estimate in the Cycle of operations

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PIF

Action Fiche

Financing Agreement

TAP

Appointment IA and IAO

Service contract

Delegation Agreement

Drafting Start-Up PE

Drafting TA Tender

Signing start-up PE

Operational PE 1

D+

3 ru

le


3. Programme Estimate in the Cycle of operations

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4.Drawing up and approving a programme estimate

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Content

1. A cover page

2. a work programme;

3. a budget;

4. a financing plan;

5. the technical and administrative implementing arrangements.



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1. The cover page

Content

• identification of the programme estimate in relation to country, global

financial commitment, ministry, sequence of PEs, …

• amount of PE and of imprest component of the budget

• PE number and duration



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Content

2. The work programme;.

• summary of previous activities and results previous PEs

• objectives results activities⇒ ⇒

detailed activities for the duration of the PE required

resources

• provisional timetable for implementation (should be linked to

procurement plan, budget implementation, staff scheduling etc)



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Content

3. The budget.

• budget based on the PE ’s detailed activities in accordance with the TAP

• is costed with as much detail as possible

• provisional timetable for financial implementation

Imprest and specific commitments should be separated.

Authorised expenditure:

• service, works, supply, grants cf thresholds• Office operating costs: salaries, rent, tel, electricity etc• Scholarship costs • Bank charges

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Imprest commitment

Specific commitments

1. Activities 2 066 984 3 499 388 5 566 372

1. 1. Better understanding of rules, procedures by the NAO office staff and relevant stakeholders

62 100 62 100

1. 2. Efficient MIS and tracking and monitoring systems for projects, PEs and contracts in place

453 450 453 450

1. 3. Enhanced capacity of the NAO for programming, coordination, reviews and dialogue

1 149 400 1 149 400

1. 4. Improved coordination w ith other stakeholders 7 500 7 500

1. 5. Improved staffing levels and improved NAO office facilities

283 534 3 499 388 3 782 922

1. 6. Improved visibility of EDF interventions and results is assured

111 000 111 000

2 Investment costs 625 759 5 925 630 6 551 389

3 Running Costs 2 101 352 1 097 924 3 199 275

TOTAL 4 794 095 9 425 017 1 097 924 15 317 036

4 Bank charges (0.5% of imprest component) 23 970 23 970

5 System and financial audit 300 000 300 000

TOTAL 4 818 065 9 425 017 1 097 924 15 341 006

6 CONTINGENCY (10% of imprest component) 481 807 481 807

GRAND TOTAL 5 299 872 9 425 017 1 097 924 15 822 813

EU resources Government contribution TOTALBudget in 1000 Leones



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Content

4. The financing plan

• Recapitulates all the sources of funds,

• Sets out in detail the interventions to be financed by each.

• Justification of the availability of funds should be given



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Content

5. Technical and administrative implementing arrangements.

Derived from TAP annexed to the financing agreement

detail all rules regarding the imprest component of the budget of thePE

management structure

procedures to operate

Such as:



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Content

5. Technical and administrative implementing arrangements.

• the names of the IA and IAO as well as of their substitutes;• the period covered by the programme estimate;• The bank account(s) details• the amount of the advance allocation• provisions on submission of the supporting documents related to expenditure

incurred;• procedures and thresholds for the award of contracts and grants;• cash disbursement procedures;• rules on the currency of payments;• staff management rules• the content and timing of reports;• provisions on closure of the imprest component• provisions for internal and external controls;• tax and customs arrangements.



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Approval and signature circuit of the programme estimate

Drafting Verification

IA + IAO Steering com

Finalising+

Signing

IA + IAO

ApprovesSigns

NAO HoD

EndorsesSigns

Commitments&

PaymentsPosssible



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Some tips and thoughts about the preparation of PE

• Amendments to proposed programme estimatesTake same time as whole circuit PE preparation: in depth analyse + meetings

• Opening of the “programme estimate” or “project” bank account(s) and deposit of signatures: LEF and FIF Preferably in advance

• Time-limits for approving programme estimates: Takes time but max 4 month in advance planning

• Use of the contingency reserve max 10%. With authorisation, when reallocation is impossible, no rider needed

• Budget reallocation (internal adjustment): without change of budget structure, needs authorisation based on full

justification and showing previous reallocations, no rided needed.

• Amendments to the PESame circuit as PE, no retro-activity no extension more than 6 months


5 Financial impl. of the imprest component of the budget of a PE

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Reminder: Main Players, how did they become

responsible for the implementation of the budget of the PE’s imprest component

•direct decentralised operations: NAO appoints

•Public indirect decentralised operations: The delegation agreement states

•Private indirect decentralised operations: The service contract names

IA and IAO:



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Reminder: Main Players, their roles

Imprest administrator

•Commits expenditure

•Signs contracts

•verifies payment request (operational aspects)

•co-signs payments with IAO

Imprest accounting officer

•verifies application of EDF contractual procedures

•verifies payment requests (contractual & financial aspects

•co-signs payments with the IA

•prepares requests for replenishment/ closure



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Sequences in the financial implementation

Advance

Commitment of expenditure

Payments

Replenishment(s)

Commitment of expenditure

Payments

Closure



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1: The Advance Payment

Conditions

•opening of an EDF “programme estimate” bank account•signatures of IA and IAO deposited FiF and LEF submitted and registered •PE signed by IA + IAO + NAO•PE endorsed by HoD•Request for payment of the advance payment drawn up and signed by IA and IAO

•private indirect DO: financial guarantee submitted and handed to EC-DEL



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1: The Advance PaymentThe Circuit

Drafting+ Signing request for initial advance

Verification

IA + IAOEC Delegation

Scrutinizes

NAO

Payment order

HoD

Signs payment

order



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2. Commitment of expenditure

Authorised• service contracts < Thshold• supply contracts ≤ Thshold• works contracts < Thshold• grant contracts ≤ Thshold• staff costs• Administrative expenditure• expenditure related to scolarship

holders and trainees• expenses linked to the financial

guarantee

Disallowed• service contracts: audit, evaluation,

framework contract• salaries of seconded civil servants

expenditure and • Salaries of staff covered by service

contract



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• expenditure must be foreseen in the imprest component of the budget of the PE

• incurred during the period covered by the PE• to be paid until max. three months thereafter!

2. Commitment of expenditure

Further conditions



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3. PaymentRecommended: by cheque or bank transfer

Cash should be avoided (responsibility of cash money) Only small amounts of administrative expenditure Or only if other means of payment are not possible

Imprest Administrator Imprest Accounting Officer

operational verification

Financial and Contractual verification

authorisation

CosignaturePayment

Account keeping



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3. Payment

Each payment needs supporting documents

a payment file has to be made for each payment in order to check that:

expenditure was committed validly

expenditure was correctly validated

expenditure was correctly paid and discharged



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3. Replenishment

Plan your cash flow to avoid cash flow problems

Principles

- Based on Replenishment request

-Total payment can’t exceed allowed advance

- Follow same circuit as advance payment

Drafting+ Signing

request for initial advance

Verification

IA + IAO

EC Delegation

Scrutinizes

NAO HoD

Signs payment

order



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3. Replenishment

• Replenishment request

• Record of expenditure

• Statement justifying the initial allocation

• Record of own resources and of their use

• Estimate of cash requirements

Documents requested for a replenchment

After verification: documents must be dated and signed by the IA and the IAO



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3. Replenishment

• Minimum documents requested for a Record of Expenditure

1. Cover page, containing at least

•the title of the project or programme, the accounting numbers

•the title or number of the programme estimate;

•the period covered by the record;

•the total amount of justified expenditure in the period covered by the record.



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3. Replenishment

Min. documents requested for a Record of Expenditure

2. Budgetary monitoring documents including at least•a summary table of the monitoring of the budget consumption of the the programme estimate;•detailed tables of the monitoring of budget consumption by heading and by item;•the analytical balance sheet.

3. Financial monitoring documents•summary table plus detailed tables of expenditure•reconciliation of the bank balance•list of ongoing contracts•statement of the monitoring of the advances/prefinancing•statement of the monitoring of the fin. Guarantee•inventory of investments and capital goods



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3. Replenishment

Min. documents requested for a Record of Expenditure

4. Detailled supporting documents including at least

•bank statements for the period•the bank ledger;•the cash ledger;•petty cash statement;•the contracts signed by the imprest administrator•the payment files

Payment not paid (cheque or transfer) at the date of accounting is not an expenditure as such.

Advance payment to date is not an expenditure as such exception can be made for advances/initial payment in “EU procurement”.

Well justified expenditure reporting can lead to replenishment and/or to advance clearing.


6: Closure of a programme estimate and audits

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Conditions for closure

• all expenditure must have been justified

• initial allocation completely cleared

• rejected expenditure refunded

• request for closure sent to NAO and HoD

• “programme estimate” or “project” bank account closed


6: Closure of a programme estimate and audits

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Request for closure

Not later than 3 months after the period covered by the PE

States the final balance to be refunded or recovered

Closure to be finalised not later than 6 months after the implementation

period of the PE

if closure is not done within the time-limit:

•HoD has the obligation to withhold approval of next PE (N+2)•If necessary: suspension of decentralised operations with the ACP State(s) concerned

Freetown, 1-3 September 2010 Francis Wellens Programme Estimates in the 10th EDF - Decentralised...

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Transcript of Freetown, 1-3 September 2010 Francis Wellens Programme Estimates in the 10th EDF - Decentralised...