1 UNRWA FINANCIAL UPDATE Presentation to Advisory Commission Meeting -29 November 2010

2 General Fund Budget 2010 ( US$ m) 598.5Programme Requirements (Budget) (57.0)Less Unfunded Requirements (541.5)Downsized Envelope (1/1/2010) (552.9)Updated End of Year Forecast Expenditure (A) 519.8Updated F/C Income (Donor Income, UN Funding, PSC, Other Income ) – (B) (33.1) Updated Forecast Deficit (A) – (B)* * As at early November 2010

3 End of Year Forecast General Fund This scenario End of Year Forecast is predicated on: a)All Fields plus Department spending up to the 2010 Forecast b)UNRWA receives the remaining Budgeted Forecasted donor income of $20.8m for the balance of 2010 c)US Challenge fund is not included (Estimated $10.0m) along with other mooted donor monies. US$ m

4 Draft End of Year Forecast General Fund

5 First Step: The starting point of the process was the draft 2011 budgets developed during the biennium budgeting process in The process was initiated under with two guiding principles in mind: –No cut to services –Taking into consideration the relative need of Palestine refugees across Fields Second Step: Fields and headquarters departments were asked to justify their existing envelopes and highlight any additional needs. These were presented in a transparent open process to the Budget Review Committee. Third step: With an initial projected draft deficit of well over USD 100 million after all submissions, hard decisions had to be made to bring the projected budget deficit for 2011 to a more manageable level. Taking into account the guiding principles and utilizing a four percent efficiency target the revised budget deficit is USD 61 million. Update on the Budget Process for 2011

6 UNRWA one of few entities to effect Hard Close of Accounts each month (Income Statement, Balance sheet, Cash Flow and Forecast) by Working Day 5. Finance reports available to Donors. Internet Banking for Fields roll out in Q – Expect Live in all Fields by July 2011 Implementation of Hedging for 2011 budgeted Non US Income ($303m of $453m) marked reduction in Fx variability for 2011 Each quarter updated, detailed End of Year Forecasts. New 14 Initiatives with ERP team, Accounts Receivable and Fixed Assets sub-legers to improve efficiency and transparency in reporting Actively working on finalizing new ERP RFP (pre 31/12/2010) & discussion exploring ERP partnership with UN entities Pre 31/12/11 – Fully International Pubic Sector Accounting Standards (IPSAS) compliant Improvements in 2011 Financial Reporting Processes

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