1. TOPIC: PRINCIPLES AND PRACTIES OF GOOD FINANIAL MANAGEMENT OF GRANTS 6/14/2016PRESENTED BY ERNEST T. KARGBO1

2.  OBJECTIVE OF THE PRESENTATION  What Are Grants  Purpose Of Grants  Grants Life Cycle  Financial Management Of Grants  Internal Control Of Grants

3.  This presentation will try to identify challenges regarding grant accountability and highlights good financial management practices to inform NSA program implementation executives on specific ways to conduct grants management

4.  Grants are the means by which money, property, services, or anything of value can be transferred from one entity to another in order to facilitate the accomplishment of a broadly identified public purpose.  Grants are legal instruments through which funds are transferred to support a public purpose.

5.  To carry out a public purpose.  The awarding of a grant means that the grant objectives matched a broadly identified purpose to serve a public need.  To delegate a portion of funding AND responsibility to those with the knowledge and ability to achieve the purpose.  These areas include healthcare, revenue transparency and accountability, construction of roads and drinking water facilities, education, environmental and natural resource protection, research, and social services.

6.  The grant process is a cyclical one, as shown in chart below.

7. GOALS/PERFORMANCE MEASURES  Performance measures provide agencies with the information they need to assess the achievement of program goals.  The donor agencies through IPFMRP need to establish outcome-focused measures for new grant programs quickly, ideally before awards are made, to incorporate measurement requirements into the grant award.  The measures can serve as a basis for determining progress for individual grants and the grants program as a whole.

8. GOALS/PERFORMANCE MEASURES  To develop good performance measures, agencies need to address:  Linking activities with program goals.  Working with grantees to develop performance measures.

9. PRE-AWARD  Pre-award reviews are essential to reducing the Donors and IPFMRP’s risk when awarding grants.  A thorough assessment of proposed grant projects can reduce the risk that money may be wasted or projects may not achieve intended results.  Prior to awarding grants, agencies can evaluate grantees’ financial capabilities, ability to achieve results, and plans for reporting results.

10. PRE-AWARD  To improve the pre-award grant process, agencies need to address:  Assessing applicant capability to account for funds.  Competing grants to facilitate accountability.  Preparing good work plans to provide the framework for grant accountability.  Including clear terms and conditions in award documents.

11. MANAGING PERFORMANCE  Once grants are awarded, it is important that agencies properly manage the grants.  Agencies need to ensure that grant funds are used for intended purposes, in accordance with laws and regulations, and will lead to planned results.  Effective grant management increases the likelihood that grants will contribute to agency goals.

12. MANAGING PERFORMANCE When managing grants, agencies should address:  Monitoring the financial status of grants.  Ensuring results through performance monitoring.  Using audits to provide valuable information about grantees.  Monitoring sub-recipients as a critical element of grant success..

13. ASSESSING AND USING RESULTS  Assessing the results of a grant program against its goals and objectives is important.  As budget resources shrink and demands for government services grow, competition between various local grant programs for resources increases.  High-level decision makers, such as Parliament and agency heads, need to know which programs are achieving their goals and objectives to make informed decisions about where to allocate resources.

14. ASSESSING AND USING RESULTS  Areas that should be emphasized include:  Providing evidence of program success.  Identifying ways to improve program performance.

15. PRINCIPLES Effective financial management of grants is guided by the following fundamental principles:  Value for money Donor and Public funds are managed with prudence and probity, assets are safeguarded and resources are used effectively, efficiently and economically to achieve donor and governmental objectives.  Accountability: There are clear accountabilities for financial management, which provide assurance to donor and government regarding the effective use of public funds and the results achieved.  Transparency: The donor and government are provided with pertinent, reliable and timely financial and related non-financial information and reports so they can be well informed of the use and management of public funds.  Risk management: Effective and efficient systems of internal control are in place, and controls are proportionate to the risks they aim to mitigate, yet support innovation and results for donor and government

16. OPENING OF BANK ACCOUNT  All funding recipients should be required to maintain an interest bearing account at an approved financial institution (i.e. bank) for all transactions relating to the funding received.  It is necessary for a separate accounts to be opened in respect of each funding source for ease of monitoring and tracking

17. TIMELY INFORMATION Good financial management practice indicates that the recipient should advise the funding department IPFMRP through NSA National Secretariat in the following circumstances:  where a project or service will not commence within 3 months of receiving the funding; and/or  where the project or service has been inactive for a period of 3 months or more.

18. KEEPING RECORDS AND ACCOUNTS DURING THE FUNDING PERIOD The recipient organisation is required to maintain adequate financial and operational records in relation to the operation of the grant received in accordance with the arrangements specified under Grant Agreement.

19. KEEPING RECORDS AND ACCOUNTS DURING THE FUNDING PERIOD  The type of accounting records required to be held will vary according to the funding program but the following list is provided as a guide.  Cash Book  Bank Deposit Book  Cheque Butts/Stubs  Petty Cash Book (kept on imprest system)  Pre-numbered Official Receipt Book

20. KEEPING RECORDS AND ACCOUNTS DURING THE FUNDING PERIOD  Monthly Bank Reconciliation of Cash Book  Documentation of all Expenditure with evidence of approval (e.g. Management Committee or Officers as authorised under the organisation's approved constitution)  Wages Records/Time Sheets (where staff are employed  The above records may be encompassed in an adequate computerised accounting system.

21. KEEPING RECORDS AND ACCOUNTS DURING THE FUNDING PERIOD  The type of financial records required to be held will vary according to the funding program but the following list is provided as a guide:  Budget  Balance Sheet  Statement of Receipts and Payments  Cash Flow Statement  Assets/Inventory Register

22. RETENTION AND ACCESS REQUIREMENTS FOR RECORDS  Financial records, supporting documents, and all other records pertinent to an award shall be retained for 3 years from the date of the final expenditure report. COST PRINCIPLES  The cost principles address what can or cannot (on a very broad scale) be purchased with the donor grant funds.  The budget within the formal Grant Agreement should have far more detail relating to how the funds are to be spent.

23. PRINCIPLE OF REASONABLENESS  A cost is reasonable if, in its nature or amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost.  COMMON SENSE!

24. DEFINITION  Internal controls are the policies and procedures adopted by management to ensure that the organization conducts business in an orderly and efficient manner.  They provide the framework through which management uses the resources at its disposal to achieve the organization’s goals.  These policies and procedures are designed to ensure that:  Assets are safeguarded.  Fraud and error are prevented and detected.

25.  The organization’s operations are efficient and cost-effective.  Accounting records are complete and accurate.  Management information is timely and reliable.

26.  Organizations that award and receive grants need good internal control systems to ensure that funds are properly used and achieve intended results.  These systems, which must be in place prior to grant award, can serve as the basis for ensuring grants are awarded to eligible entities for intended purposes, and are managed appropriately.  Internal control systems that are not adequately designed or followed make it difficult for managers to determine whether funds are properly used.

27.  There are four areas where internal controls are important:  Preparing policies and procedures before issuing grants.  Consolidating information systems to assist in managing grants.  Providing grant management training to staff and grantees.  Coordinating programs with similar goals and purposes.

28.  Organizations receiving grants are responsible for effective on-going monitoring system throughout the course of the funding.  MOFED’s monitoring and evaluation of grantees/recipients will focus on what each project seeks to achieve (objectives), processes or activities outlined, the delivery of the agreed product, expenditure in line with the budget and payment schedule- all in relation to time, as well as compliance to the terms and conditions.  The Work Plan, Budget and Payment Schedule will from important tools for this.

29.  MOFED/SEA may monitor at an time, and report on any the following:  Programme Activities  Agreed-upon procedures and engagement for certain aspect s of Grantee activities including activities allowed or un-allowed  Compliance with donor imposed audit( e.g. Programme specific or single audit)  Financial and progress narrative reports submitted by the grantee including allowance costs  Financial and administrative, programmatic practices and records  Equipment and property management (where applicable)

30.  Levels of effort and time  Amendments of agreement MOFED/SEA shall monitor and evaluate grant and its relative activities by doing the following:  Physical inspection  Confirmation  Tracing  Inquiry  Observation  Reconciliation