Topic: E40 International assistance and funding mechanisms Cross-cutting Theme: Tracking Progress & Accountability Category: Global Monies: International Assistance and Funding Mechanisms Title: Finance accountability – a focused approach by PRHP Authors: P.Lata, T.Kwarteng, J.Cole, R.Verebasaga, S.Tupou, E.Miller Institute: Pacific Regional HIV/AIDS Project, Suva, Fiji

Where we work Pacific Regional HIV/AIDS Project is part of the Australian-French-New Zealand government initiative based in Suva, Fiji. We work closely with 14 Pacific Island Countries which are marked on the map. Our key areas of work is to provide Technical and Management support, Financial Resources and capacity building to government and Civil Society Organisations. My presentation is focused on the PRHP grants scheme and I am going to talk about the financial management of grants scheme, issues and challenges we faced, what we did and what we learnt.

Financial Management of PRHP Grants Scheme Funds available to Government and Civil Society Organisations A$8.1 million has been allocated 160 smaller grants in 14 PICs 46 larger grants in 10 PICs Through a number of Grants Program, PRHP, provides funding to governments, International locally based NGOs, larger Local NGOs and Community Based Organisations to implement HIV responses in PICS. Over the life of the Project, A$8.1m was allocated to 160 smaller grants in 14 countries and 46 larger grants in 10 countries. The smaller grants range from $500 to $50,000 and the larger grants is of $50,000 to $350,000.

Financial Management of PRHP Grants Scheme To date we have disbursed A$5.6m of which 0.6% is reported as irregularity.

Issues and Challenges we faced CSOs operate on limited resources Many do not employ trained accounting professionals and Lack expertise in managing funds Weaker financial and management systems Challenges of disbursing funds to remote areas In the Pacific, many Civil Society Organisations have difficulty accessing and managing funds for their HIV-related work. With a mandate to catalyse the engagement of Civil Society Organisations in national HIV responses, PRHP faced the challenge of building the capacity of organisations in financial management across 14 PICs. Some organisations operate on limited resources and are confined to small-scale interventions; many do not employ trained accounting professionals and lack expertise in managing funds. The smaller NGOs and Community Based Organisations have weaker financial management systems and therefore have reduced capacity in reporting. In addition to this, we faced the challenges of disbursing funds to remote areas where there are no banking or financial institutions and we also faced the challenges with imparting strategies and knowledge in preparing acquittal reports. Despite all of these challenges, Civil Society Organisations are still expected to comply with complex reporting requirements of donors.

What We Did Identify and support Capacity Development Organisations (CDO) in 8 countries Develop Financial systems for Managing and reporting of Grants Capacity Building We developed mechanisms to enhance transparent, accountable use and tracking of funds. One of the key strategies for funding community organizations while based in Fiji was to identify a Capacity Development Organisation with sufficient capacity in 8 countries to support smaller community organisations. In addition to this, for further clarity we provided all grant recipients with a manual of Policies and Practical Tools for Financial Management.

1. CDO The Capacity Development Organisations (CDO) provide technical and project management support including training and coaching PRHP works in close partnership with the in country CDOs to provide financial management training and technical assistance through hands-on coaching, ongoing mentoring by phone and email to the partner organisations. The CDOs provide on-going support to minimise the likelihood of bottlenecks occurring in the release of future funding tranches. For example in Vanuatu, the CDO manages 43 small grants and disbursement of funds to remote areas and outer islands is either through the means of sending cash on the plane and boat or hand-carry cash during field visits. The field officers provide support in collating documents and preparing the acquittal reports for smaller community organisations.

2. Financial Management Systems Provided all grant recipients with a manual of Grant Policies & Financial Management Practical Tools Provided tailored guidelines Quarterly tranche system The manual, Financial Management Practical Tool provides step-by-step instructions for budget planning, procedures for maintaining banks accounts and record-keeping of payment vouchers, invoices, bank statements and guidelines on reporting requirements such as preparing cashbook, bank reconciliation and how to handle funds. For larger grants we provide tailored guidelines for financial reporting based on implementation plan. We have quarterly tranche system of transferring funds which is a significant mechanism not only for risk management but it provided us with multiple opportunities in providing support to the partners.

3. Capacity Building of Partner Organisation Looking beyond an ‘audit’ approach Identifying weak areas in Financial Management Financial management and training was also included as part of PRHPs many capacity development trainings such as; ‘Project Design and Management Training’ and ‘Monitoring and Evaluation’ workshops. Implementation budgets are a core conceptual activity within our financial management system. To further strengthen organisations budgets we provide support to partner organisations in developing realistic estimation of costing and resources. Where there are relatively low capacities, in-office mentoring and on-the-job learning is provided. For example Chuuk in Federated States of Micronesia which is a remote island that lacks qualified and experienced accounts people, PRHP staff conducted workshops supplemented by on-the-job training on how to collate documents, setting up record-keeping and implementing financial systems. Hence we have looked beyond an ‘audit’ approach to work with CSOs on a case basis to identify the weak areas and develop appropriate strategies for improvement.

Lessons Learned Essential not to overwhelm smaller organisations with large funds 2. To make the financial reporting format as simple as possible We found that it is essential in the beginning not to overwhelm smaller organizations with large funds. For community organisations with limited experience in managing funds, it is vital to build confidence by starting with small amounts and assisting them to improve their record-keeping and reporting skills. It is necessary to make the financial reporting format as simple as possible and

Annex 1F: Financial Report - Details of Receipts and Payments   Funding Recipient: Region: Reference: Category/Program: Funding Amount: Date Receipts Amount Total Receipts Expenditure Cheque No. Invoice No. Particulars Total Payments Total Receipts - Total Payments

Lessons Learned 3. Provide feedback on the reports 4. Advance financial management training to be a gradual process to provide feedback on the reports to assist the grant recipients on financial monitoring of their spending thereby creating a learning environment. More advance financial management training can be provided gradually for continual improvements.

5. In-office and on-the-job learning is a sound and effective strategy Lessons Learned 5. In-office and on-the-job learning is a sound and effective strategy Although in-office and on-the-job learning is resource intensive, our experience of such trainings has found this to be a sound and effective strategy for significant improvements in developing financial management skills. A regular financial monitoring and communications with grant holders helps to maintain and reduce issues such as gaps in supporting documents, funds not spent as per budget and other implementing and reporting issues.

Lessons Learnt 6. Performance Measurement Budget compared to actual expenditure   Organization: ___________________________________________ Currency:_________________ Item Description Annual Ist Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Budget Actual Balance Personnel Total Personnel Cost Project Support Cost Total Project Support Cost Activities Total Activities Cost Putting in place regular performance measurement and a process for continuous improvement helped us to reduce the amount of fraud and mismanagement of funds.

Next Steps To integrate and streamline financial procedures Minimize overlapping or reporting systems Enhance country capacity to enable CSOs to access and effectively use funds. For continuing financial support for programs, we need to integrate and streamline financial procedures across donors to minimize overlapping of reporting systems and enhance country capacity to enable CSOs to access and effectively use funds.

Thank You