Annex 10 Integrated Financial Management System under the Program Approach ‘FORM FOLLOWS FUNCTION’ Consultancy Group PQF Monrovia March 2010

OUTLINE  Objective  Methodology  Findings and Recommendations  Characteristics – Barriers - Solutions  JD and structure  Competencies  Accounting Dimensions  Structure

OBJECTIVE Propose a program management system for CARE Liberia (’s FISP) that integrates program and program support functions Note: emphasis was put on CO level

METHODOLOGY  References:  WA Finance Group Discussions  Program Characteristics  CARE Competency Guide  Interviews (2 partner staff, 3 CARE Liberia staff, 1 CI, 1 RMU, 2 other CO program staff)  Desk review of CARE Liberia JD (6) and Organograms (CO, UPA, ReCCA)

CHARACTERISTICS - West Africa Finance Group  Based on collective vision and goal  Reflects CARE values  Collective accountability  Beyond spreadsheets, reports and deadlines  Reconciling compliance and quality  Provides direction for strategic investment of limited resources: Functions & Accountabilities Systems and Tools Staff capacities

CHARACTERISTICS – Program Approach 1 Ch1: long term objective for change in the lives of an impact population  Defining financial resources needed for a long term program  Monitor and analyze funding pipeline with regards to mid and long term coverage of program structure, program development, shared costs … Ch2: analysis of underlying causes of poverty  Analyze cost efficiency of approaches addressing different underlying causes of poverty Ch3: theory of change  Tracking financial resource use at different levels of program implementation: from global (CARE USA strategic plan and strategies of change) to program initiatives  Tracking costs related to different program elements: program initiatives, strategies of change, M&E and impact measurement …

CHARACTERISTICS – Program Approach 2 Ch4: coherent set of initiatives  Allow for financial analysis at different levels / in different dimensions of a program  Ensure flexible use of financial resources within a program while maintaining transparency and compliance  Support the integration of financial management functions into the program structure Ch5: Learning  Reconciling the diversity of funding sources  Financial Management capacity building: Develop competencies, skills, and behaviors needed for analytical financial management  Influence donors with regards to the need for change in the financial reporting requirements

CHARACTERISTICS – Program Approach 3 Ch6: social movement  Facilitate transfer of resources to partners  Ensure compliance in the use of resources by partners  Respect of local policies, rules and regulations as well as donor requirements  Ensure transparency of resource use by CARE Ch7: efficiency  The analysis of resource needs and use to achieve impact Ch8: Accountability  To donors (financial reporting)  To local program stakeholders (participation)  To the public (transparency)  To agreed responsibilities (performance)  To participants (cost benefits / aid efficiency)

CHARACTERISTICS (findings from interviews)  Program and program support working together as a team that allows stakeholders to exercise ownership., commitment and build relationships  Minimal overlapping / duplication of tasks  All users are connected and have access to the system simultaneously and in real time  Program managers / Budget holders are able to working directly and independently with the financial management system (reading reports or do analysis on their reports)  Integrate all program information to produce a report on the program activities beyond budget vs expenditure (eg cost analysis by components or sectors)  A system that reflects the CO performance management triangle of UBORA: Impact – Quality – Support  Clear performance standards and indicators of success  Capable, committed and competent people

CHARACTERISTICS – CARE Liberia structure and JDs FINDINGS  There seems to be some policy and some structural arrangements where admin and finance functions are integrated into the project/program.  The JDs of project/program managers clearly mention that they have finance and administration management responsibilities.  Some functions are not clearly assigned or assignments are not consistent  Required skills and competencies do not always match financial management functions assigned to a particular position  Contacts/Key Relations are not always clearly stipulated or purpose is not clear (e.g. Finance Controller) especially as far as integrate financial management is concerned  JDs have many different formats and do not specifically provide clearly identifiable performance standards for financial management, especially for non-finance positions

CHARACTERISTICS – CARE Liberia structure and JDs Recommendations:  JD should clarify levels of integration: CO (e.g; CD, ACD, Finance Controller), Program (Program Manger, Admin/Finance Officers/ Assistants, Accountant, partners), sub office level;  In JD specifically identify peers, relations and functions for integrated financial management  TOP: Team Operation Plan for key staff responsible for integrated financial management at different level (CO, Program, Sub office)

BARRIERS (findings from interviews)  Current financial management system does not have the ability to handle the change/shift  Lack of proper communication between program and program support  People not accepting the change and the implication of the new shift  Lack of capacity and competences to handle an integrated system, to generate and manage new tools  Bureaucratic nature of the system that may not allow speedy actions or decisions on urgent matters  Lack of integration of financial management in program design stages  Cost implication of the change  Inadequate training in donors rules and regulations in order to properly support the programs  Lack of Flexibility: Rigid procurement rules and regulation that do not reflect volatile business environment (inflation, unexpected price rises)  finding the balance between compliance and programme quality  Imposed rules and regulations: on CARE, on local partners - perceived as contractors

SOLUTIONS (findings from interviews)  Revision of some of the existing systems, policies and procedures and adapt them to the current needs  Influence support and commitment at higher levels including allocation of resources to support change and integration  Set clear roles and responsibilities for program and finance in program design, implementation and monitoring  Educate and develop the understanding of people about the change  Encourage team work  Influencing and changing the mindset of all stakeholders to reduce resistance  Improve communication between program and finance so as to have the same level of understanding  Build staff capacities to be able to function within the new program approach  Hire competent, committed people who are willing to accept the new approach  Involvement of finance at program design stage  Regular field visits by finance staff  Change in peoples language (instead of your program we should say our program)

COMPETENCIES Care’s Competency Self-Assessment Guide provides at least 90% firm basis for attaining the corporate objectives through an integrated program management approach. Thus it provides a good basis for defining key competencies for an integrated financial management. Examples:  Developing teams  Building partnerships  Operational Decision Making  Delegating Responsibilities In addition, for the application of the proposed solutions it will be essential for financial managers and leaders to be able to  Faciltate change

ACCOUNTING SYSTEM Findings:  SCALA is limited as far as dimensions for tracking expenses and costs is concerned  Thus it is not adapted to serve in an integrated financial management system that support the program approach Recommendations:  Need for a financial systems that allows for additional accounting dimensions as needed in a program  Dimensions for tracking expenses should be set in advance / standardized as much as possible  Budget holders remain responsible for providing information about dimensions to be tracked  Any financial transaction should be initiated by the budget holder with the information about all the relevant dimensions

ACCOUNTING DIMENSIONS Dimension for tracking expenses / costs in an integrated financial management system at CO level SCALA Program: as the highest level of strategic, conceptual and operational aggregation Impact Group: strategic / conceptual, sometimes contractual or governmental requirement Initiative / Project: operational and conceptual as well as in many cases contractual level PN Component / sector: operational and conceptual as well as in more and more cases contractual level (e.g. Buffet: M&E), sometimes governmental requirement Theme / domains of change: conceptual level – often donor specific or CO specific (testing cost efficiency of ToC; cost-benefit analysis) Grant/Contract: contractual levelFC Funding sources (contract/grant subcategories, e.g. USAID)

ACCOUNTING DIMENSIONS Dimension for tracking expenses / costs in an integrated financial management system at CO level SCALA Location: operational level, sometimes governmental requirementLoc Partner / sub-grantee: operational / contractual levelEFC? / SA Budget lines and categories: contractual level – donor specificEFC / SA? Historical cost for a specific type of activity, service, goods Expense account: generic operational level – CARE, highest level of desegregation ACC Match / co-financingSA?

INTEGRATED STRUCTURE ACD-PQ CD Techn. STAFF IMPACT M INT AUDIT FIN CONT PROG MGR FIN COORD PARTICIPANTS Policy compliance CO performance Pipeline / Viability Cost/BenfitsAccountability ContractualAccountability Budget Management Transparency Capacity Building