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Freetown, 1-3 September 2010Francis Wellens
Programme Estimates in the 10th EDF -
Decentralised Operations
1
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)
Programme Estimates in the 10th EDF Decentralised Operations
1. Where it originates
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Programme Estimates in the 10th EDF Decentralised Operations
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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1. Where it originates
(authorising officer by sub-delegation)
Programme Estimates in the 10th EDF Decentralised Operations
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
1. Where it originates
Programme Estimates in the 10th EDF Decentralised Operations
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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1. Where it originates
Programme Estimates in the 10th EDF Decentralised Operations
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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1. Where it originates
Programme Estimates in the 10th EDF Decentralised Operations
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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1. Where it originates
Programme Estimates in the 10th EDF Decentralised Operations
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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1. Where it originates
Programme Estimates in the 10th EDF Decentralised Operations
Delegation of powers by the NAO
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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1. Where it originates
Programme Estimates in the 10th EDF Decentralised Operations
2. Definitions:
Delegation of powers by the NAO
Decentralised operations
Direct Indirect
Public Private
Delegation Agreement Service contract
Programme Estimate Programme Estimate Programme Estimate11
Programme Estimates in the 10th EDF Decentralised Operations
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
Programme Estimates in the 10th EDF Decentralised Operations
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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Programme Estimates in the 10th EDF Decentralised Operations
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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Programme Estimates in the 10th EDF Decentralised Operations
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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Programme Estimates in the 10th EDF Decentralised Operations
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
Programme Estimates in the 10th EDF Decentralised Operations
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:
Programme Estimates in the 10th EDF Decentralised Operations
2. Definitions:
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Imprest commitment:
Programme Estimates in the 10th EDF Decentralised Operations
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:
Programme Estimates in the 10th EDF Decentralised Operations
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
Programme Estimates in the 10th EDF Decentralised Operations
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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: The roles of the actors
Programme Estimates in the 10th EDF Decentralised Operations
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
: The roles of the actors
Programme Estimates in the 10th EDF Decentralised Operations
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
: The roles of the actors
Programme Estimates in the 10th EDF Decentralised Operations
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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Programme Estimates in the 10th EDF Decentralised Operations
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
Programme Estimates in the 10th EDF Decentralised Operations
3. Programme Estimate in the Cycle of operations
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Programme Estimates in the 10th EDF Decentralised Operations
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.
Programme Estimates in the 10th EDF Decentralised Operations
4.Drawing up and approving a programme estimate
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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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Programme Estimates in the 10th EDF Decentralised Operations
4.Drawing up and approving a programme estimate
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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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32
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Programme Estimates in the 10th EDF Decentralised Operations
4.Drawing up and approving a programme estimate
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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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Programme Estimates in the 10th EDF Decentralised Operations
4.Drawing up and approving a programme estimate
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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
Programme Estimates in the 10th EDF Decentralised Operations
4.Drawing up and approving a programme estimate
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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:
Programme Estimates in the 10th EDF Decentralised Operations
4.Drawing up and approving a programme estimate
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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.
Programme Estimates in the 10th EDF Decentralised Operations
4.Drawing up and approving a programme estimate
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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
Programme Estimates in the 10th EDF Decentralised Operations
4.Drawing up and approving a programme estimate
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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
Programme Estimates in the 10th EDF Decentralised Operations
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:
Programme Estimates in the 10th EDF Decentralised Operations
5 Financial impl. of the imprest component of the budget of a PE
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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
Programme Estimates in the 10th EDF Decentralised Operations
5 Financial impl. of the imprest component of the budget of a PE
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Sequences in the financial implementation
Advance
Commitment of expenditure
Payments
Replenishment(s)
Commitment of expenditure
Payments
Closure
Programme Estimates in the 10th EDF Decentralised Operations
5 Financial impl. of the imprest component of the budget of a PE
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Sequences in the financial implementation
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
Programme Estimates in the 10th EDF Decentralised Operations
5 Financial impl. of the imprest component of the budget of a PE
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Sequences in the financial implementation
1: The Advance PaymentThe Circuit
Drafting+ Signing request for initial advance
Verification
IA + IAOEC Delegation
Scrutinizes
NAO
Payment order
HoD
Signs payment
order
Programme Estimates in the 10th EDF Decentralised Operations
5 Financial impl. of the imprest component of the budget of a PE
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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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Programme Estimates in the 10th EDF Decentralised Operations
5 Financial impl. of the imprest component of the budget of a PE
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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
Programme Estimates in the 10th EDF Decentralised Operations
5 Financial impl. of the imprest component of the budget of a PE
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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
Programme Estimates in the 10th EDF Decentralised Operations
5 Financial impl. of the imprest component of the budget of a PE
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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
Programme Estimates in the 10th EDF Decentralised Operations
5 Financial impl. of the imprest component of the budget of a PE
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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
Programme Estimates in the 10th EDF Decentralised Operations
5 Financial impl. of the imprest component of the budget of a PE
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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
Programme Estimates in the 10th EDF Decentralised Operations
5 Financial impl. of the imprest component of the budget of a PE
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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.
Programme Estimates in the 10th EDF Decentralised Operations
5 Financial impl. of the imprest component of the budget of a PE
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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
Programme Estimates in the 10th EDF Decentralised Operations
5 Financial impl. of the imprest component of the budget of a PE
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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.
Programme Estimates in the 10th EDF Decentralised Operations
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
Programme Estimates in the 10th EDF Decentralised Operations
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