The new aid modalities PART IV. PRATICAL ASPECTS LAF seminar Controlling - June 2009

INTRODUCTION PART III. ROLE of the LAF PART IV. PRATICAL ASPECTS PART I. GENERAL 1.1. Context 1.2. Position Paper 1.3 Sharing experiences 1.4. Content PART II. RISK MANAGEMENT & MODALITIES 2.1. Risk management 2.2. Framework for the definition of the modalities 2.3. Case study PART III. ROLE of the LAF PART IV. PRATICAL ASPECTS 4.1. Implementation agreement tool 4.2. Approval of the disbursements 4.3. Financial staff 4.4. Managing FIT and BTC Financial reporting 4.5. Management of Audits

PART IV. PRATICAL ASPECTS 4.1. Tool for the implementation agreement and monitoring Objectives Content Monitoring Process 4.2. Approval of disbursements 4.3. Financial staff 4.4. Managing FIT and BTC Financial reporting 4.5. Management of audits

4.1. IMPLEMENTATION AGREEMENT: Financial aspects - objective By the end of the training, the participants will be able to identify when and how implementation agreements have to be drawn up and monitored

4.1. IMPLEMENTATION AGREEMENT: Financial aspects - introduction If BTC’s project aid plans to have part of the activities and therefore of the budget delegated to the partner an implementation agreements will be drawn up with the partner in order to put down the obligations of each party (Mind: sometimes, the TFF can be enough)

4.1. IMPLEMENTATION AGREEMENT: Financial aspects - introduction = Conditions that the partners have to meet to access to funds Mutual commitment

4.1. IMPLEMENTATION AGREEMENT: Financial aspects - objectives Have sufficient financial information to ensure the good management of Belgian funds in the context of delegated activities Ensure that the partner respects the agreements made Master the financial risks Enable BTC to commit the funds in a reasonably secure way Organise the financial management with the partner

4.1. IMPLEMENTATION AGREEMENT: Financial aspects - content  Document that enables to provide certain financial aspects that have to be included in the implementation agreement The financial aspects of the agreements will always be validated by Controlling  

4.1. IMPLEMENTATION AGREEMENT: Financial aspects - content Preliminary conditions Amount of the financial contribution Duration of the agreement Budget Financing Reporting Audit Closure Annexe: Implementation agreement: Recommendations relating to financial aspects

4.1. IMPLEMENTATION AGREEMENT: Financial aspects - monitoring Monitoring table for agreements = Inventory the agreements by project Annexe: Follow-up table for Implementation agreements

4.1. IMPLEMENTATION AGREEMENT: Financial aspects - process

4.2. APPROVAL OF DISBURSEMENTS PART IV. Practical Aspects 4.1. Tool for the implementation agreement and monitoring 4.2. Approval of disbursements 4.3. Financial staff 4.4. Managing FIT and BTC Financial reporting 4.5. Management of audits

4.2. APPROVAL OF DISBURSEMENTS - objective By the end of the training the participants will be able to monitor the conditions of the agreements/TFF and justifiy the disbursement of instalments to the partner

4.2. APPROVAL OF DISBURSEMENTS - Checklist Checklist approval of disbursements = Ensure that the financial conditions of the implementation agreements have been respected and that the disbursement can be made. Annexe: Checklist Approval of disbursements

4.2. APPROVAL OF DISBURSEMENTS - process

4.2. APPROVAL OF DISBURSEMENTS - archives      

4.3. FINANCIAL STAFF 4.3. Financial staff PART IV. Practical Aspects 4.1. Tool for the implementation agreement and monitoring 4.2. Approval of disbursements 4.3. Financial staff 4.4. Managing FIT and BTC Financial reporting 4.5. Management of audits

4.3. FINANCIAL STAFF - Objectives By the end of the training the participants will be able to explain the particularities of financial staff in the context of the new modalities

1. Financial Staff Case 1 A part of the activities is implemented by the partner using their system. To compensate the increase in workload financial staff can be recruited. Question 1 : Will the budget line be in Regie, Cogestion or NEX? And why? Who will sign the contract? Question 2 : What will be the tasks of the financial staff? Question 3 : How would you organize the recruitment process? Explorative After citing these questions : separate group into smaller groups of 4 persons Let them brainstorm about their role in projects with new implementation modalities (30) Let them write it down on cards. List all the answers on the wall and go through them briefly (15)

2. Financial Staff Case 2 A part of the activities of the project consists of improving the financial management of the partner institution. For these capacity building activities a person will be recruited for 2 years? Question 1 : Will the budgetline be in Regie, Cogestion or NEX? And why? Question 2 : Will this person also prepare the financial reports? Explorative After citing these questions : separate group into smaller groups of 4 persons Let them brainstorm about their role in projects with new implementation modalities (30) Let them write it down on cards. List all the answers on the wall and go through them briefly (15)

3. Attention points Make sure that authority lines are clear Be clear about responsibilities and task Try to avoid a mixture of control and operational activities Try to avoid a mixture of support and operational activities Try to avoid a mixture of control and support activities If national responsibility -> partner staff and NO BTC-staff Explorative After citing these questions : separate group into smaller groups of 4 persons Let them brainstorm about their role in projects with new implementation modalities (30) Let them write it down on cards. List all the answers on the wall and go through them briefly (15)

3. Attention points Risk measures Participate in recruitment process Force partner to recruit additional staff Ask auditor to verify to what extent the financial staff masters the financial processes Foresee capacity building activities in budget Explorative After citing these questions : separate group into smaller groups of 4 persons Let them brainstorm about their role in projects with new implementation modalities (30) Let them write it down on cards. List all the answers on the wall and go through them briefly (15)

4.4. Managing FIT and BTC Financial reporting PART IV. Practical Aspects 4.1. Tool for the implementation agreement and monitoring 4.2. Approval of disbursements 4.3. Financial staff 4.4. Managing FIT and BTC Financial reporting 4.5. Management of audits

4.4. Managing FIT and BTC Financial reporting - Objectives By the end of the training the participants will be able to explain the consequences of the new modalities on the management of FIT and the BTC -reporting

4.4. Managing FIT and BTC Financial reporting - Content Financial mode in Budget Budget Financial planning Cash call Transfer to partner account Accounting Who manages FIT

1. Financial mode in Budget Regie : expenses are paid via Regie account (= only BTC signature) Cogest : expenses are paid via Cogestion account (= joint signature) NEX : expenses are paid via account managed by partner (= only partner signature) (not via main account cogestion) That is the ONLY meaning of Regie / Cogestion / NEX in the budget NEX does not exist yet in FIT : use COGEST Explorative After citing these questions : separate group into smaller groups of 4 persons Let them brainstorm about their role in projects with new implementation modalities (30) Let them write it down on cards. List all the answers on the wall and go through them briefly (15)

2. Budget Budget in the DTF = Budget of partner Budget in FIT = 1 budgetline by partner institution / account on which transfers are registered Alternative : result by partner institution / account is split up in a few budget lines + budgetline for transfer (keep track of last budget version) FIT is not longer a tool for budget follow-up -> tool from partner Budget structure will be defined during formulation Explorative After citing these questions : separate group into smaller groups of 4 persons Let them brainstorm about their role in projects with new implementation modalities (30) Let them write it down on cards. List all the answers on the wall and go through them briefly (15)

2. Budget Explorative After citing these questions : separate group into smaller groups of 4 persons Let them brainstorm about their role in projects with new implementation modalities (30) Let them write it down on cards. List all the answers on the wall and go through them briefly (15)

3. Financial planning Planning BTC each Q1 – For partner this can be a different rythm BTC planning is based on reports of partner BTC planning is done by representation Budget in FIT = 1 budgetline by partner institution / account on which the planned transfers are registered Financial planning in FIT has to be documented with reports of partner Explorative After citing these questions : separate group into smaller groups of 4 persons Let them brainstorm about their role in projects with new implementation modalities (30) Let them write it down on cards. List all the answers on the wall and go through them briefly (15)

4. Cash call The call for cash is no longer based on the cash call template from BTC but is an official request from partner to transfer funds based on implementation convention / DTF This request is always necessary also for first transfer No cash call to register in FIT Explorative After citing these questions : separate group into smaller groups of 4 persons Let them brainstorm about their role in projects with new implementation modalities (30) Let them write it down on cards. List all the answers on the wall and go through them briefly (15)

4. Cash call What if budget COGEST AND NEX with direct transfer to partner? Create cash call cogestion with main account cogestion and indicate which amount which has to be transfered to partner account and joint cash request from partner Register the two transfers seperately Explorative After citing these questions : separate group into smaller groups of 4 persons Let them brainstorm about their role in projects with new implementation modalities (30) Let them write it down on cards. List all the answers on the wall and go through them briefly (15)

5. Transfer to partner account From HQ Create account in FIT (P, EUR, Cogest (in the future NEX))= partner account Select this account as main account Register transfer HQ (580010) Immediately register expense with same amount (606010 financial contribution) Explorative After citing these questions : separate group into smaller groups of 4 persons Let them brainstorm about their role in projects with new implementation modalities (30) Let them write it down on cards. List all the answers on the wall and go through them briefly (15)

5. Transfer to partner account From Cogestion account Register transfer as expense : 606010 financial contribution Explorative After citing these questions : separate group into smaller groups of 4 persons Let them brainstorm about their role in projects with new implementation modalities (30) Let them write it down on cards. List all the answers on the wall and go through them briefly (15)

6. Accounting Accounting is done in partner system In BTC accounting only transfer to partner account Explorative After citing these questions : separate group into smaller groups of 4 persons Let them brainstorm about their role in projects with new implementation modalities (30) Let them write it down on cards. List all the answers on the wall and go through them briefly (15)

7. Who manages FIT? If only NEX : representation If only Regie and NEX : representation If Cogestion and NEX : project management unit with clear instructions for NEX from representation -> clear separation of responsabilities Explorative After citing these questions : separate group into smaller groups of 4 persons Let them brainstorm about their role in projects with new implementation modalities (30) Let them write it down on cards. List all the answers on the wall and go through them briefly (15)

4.5. Management of audits PART IV. Practical Aspects 4.1. Tool for the implementation agreement and monitoring 4.2. Approval of disbursements 4.3. Financial staff 4.4. Managing FIT and BTC Financial reporting 4.5. Management of audits

4.5. Management of audits -Objectives By the end of the training the participants will be able to explain the particularities of audits in the context of the new modalities

4.5. Management of audits - Content From ex-ante control to ex-post control National system for audit What is audited? When is audit done? Joint audits What if the conclusions of the audit are negative? Action plan and monitoring 8. Tools

1. From ex-ante control to ex-post control Audit = Key instrument for BTC !!! Partner Implements BTC controls Explorative After citing these questions : separate group into smaller groups of 4 persons Let them brainstorm about their role in projects with new implementation modalities (30) Let them write it down on cards. List all the answers on the wall and go through them briefly (15)

1. From ex-ante control to ex-post control Cogestion : Audit is requested by Steering Committee NEX : Audit is done by BTC to verify correct use of Belgian public funds by partner (sub-constracted to audit firm) Explorative After citing these questions : separate group into smaller groups of 4 persons Let them brainstorm about their role in projects with new implementation modalities (30) Let them write it down on cards. List all the answers on the wall and go through them briefly (15)

2. National system for audit Is important to keep this But it is insufficient to guaranty a proper management and use of Belgian public funds Quality of reports Timing : frequency and delay -> Audits by BTC Explorative After citing these questions : separate group into smaller groups of 4 persons Let them brainstorm about their role in projects with new implementation modalities (30) Let them write it down on cards. List all the answers on the wall and go through them briefly (15)

3. What is audited ? Do the financial statements give a correct representation of the reality (financial audit) - Certification of financial reports Are expenses related to budget / activities (eligibility of funds)? Are funds used efficiently and economically? Is the internal control system working properly? (system audit) Remark : also in financial audit some internal control aspects are verified Explorative After citing these questions : separate group into smaller groups of 4 persons Let them brainstorm about their role in projects with new implementation modalities (30) Let them write it down on cards. List all the answers on the wall and go through them briefly (15)

3. What is audited ? Points 1 to 3 always Point 4 in specific cases : Start-up Change in modalities Large budget Many weaknesses found during assessment phase (formulation) Do not over-audit partner institution ! Explorative After citing these questions : separate group into smaller groups of 4 persons Let them brainstorm about their role in projects with new implementation modalities (30) Let them write it down on cards. List all the answers on the wall and go through them briefly (15)

4. When is audit done? Normally annually, sometimes each 6-months Often required before new transfer to partner institution Audit period has to be in coherence with timing of transfers In case there is serious doubt on the correct use of funds Explorative After citing these questions : separate group into smaller groups of 4 persons Let them brainstorm about their role in projects with new implementation modalities (30) Let them write it down on cards. List all the answers on the wall and go through them briefly (15)

5. Joint audits Together with other donors To reduce transactions costs and audit overload on partner institution Not so easy to implement at project level Explorative After citing these questions : separate group into smaller groups of 4 persons Let them brainstorm about their role in projects with new implementation modalities (30) Let them write it down on cards. List all the answers on the wall and go through them briefly (15)

6. What if the conclusions of the audit are negative? Case by case Consequences will depend on audit report but also on the quality and commitment to action plan and also on diplomatic considerations Possible Consequences Reject of expenses Change in modalities Blocking of transfer until corrective measures have been taken … Explorative After citing these questions : separate group into smaller groups of 4 persons Let them brainstorm about their role in projects with new implementation modalities (30) Let them write it down on cards. List all the answers on the wall and go through them briefly (15)

7. Action plan and monitoring After audit partner has to make action plan and report on it Representation can provide support Representation has to monitor actively action plan Explorative After citing these questions : separate group into smaller groups of 4 persons Let them brainstorm about their role in projects with new implementation modalities (30) Let them write it down on cards. List all the answers on the wall and go through them briefly (15)

8. Tools See module audit See implementation convention Explorative After citing these questions : separate group into smaller groups of 4 persons Let them brainstorm about their role in projects with new implementation modalities (30) Let them write it down on cards. List all the answers on the wall and go through them briefly (15)

PART V. CONCLUSION Subsequent steps for the Country Team... Know the projects that apply new financial modalities Describe and know the financial modalities of each project - diagram Identify the financial risks Monitor the current agreements Create a permanent file Etc.

thank you for your attention QUESTIONS? thank you for your attention