1. Harmonized Approach to Cash Transfers (HACT) to Implementing Partners

2. Why HACT? Call from member-states (TCPR): Reduce transaction costs
Call from donors (Rome and Paris):
Simplify policies and procedures;
Progressively align with national systems
National ownership, grounded in strengthened capacity and increased use of national systems

3. HACT: key provisions
One for all and significantly simplified set of procedures :on requesting/disbursement/reporting on funds (FACE) and audit
Risk Management vs. System of Controls
!!! The risk management approach allows to reduce the time spent on administrative processes and focus more on programmatic needs

4. Risk Management vs. System of Controls
Step 1. Upfront assessment of risks (at 2 levels)
Step 2. Leveraging identified risks through:
Choice of an appropriate cash transfer modality and procedures;
Scope and frequency of assurance activities

5. Key elements/tools of HACT
Macro and Micro Assessments
Assurance Activities
Funding Authorization and Certificate of Expenditure (FACE)

6. Macro Assessment
A review of the national public financial management system
Based on existing assessments
No formal risk rating; no conditionality
Government - part of the process
Once per cycle
Issues covered by the Macro Assessment include:
National budget development & Execution
Compliance with public sector accounting standards and internal control mechanisms
Control of cash
Audit and oversight
Strength of the financial systems and staff

7. Objectives: Management Objective: Development Objective
Background for cooperation modalities selection
Info on SAI
Development Objective
Opportunities for capacity development
Management objective:
Provides background information for selection of appropriate cash transfer modalities & assurance activities
Assist in establishing whether the SAI can be relied upon for auditing IPs
Development objective:
Ensure awareness of PFM environment, including weaknesses & strengths of PFM
Identify opportunities for capacity development

8. Micro Assessment
Assessment of the adequacy of the implementing partner’s financial management systems and practices and internal controls;
Once per programming cycle done by a PA firm;
Threshold: US$ 100,000 collectively from UN Agencies per year

9. !!! Risk rating, but no “pass or fail”
Objectives:
Development objective:
areas for capacity development of IP
Management objective:
most suitable CTM
frequency and scope of assurance
!!! Risk rating, but no “pass or fail”
Development objective:
Establish strengths & weaknesses of financial management practices of IP
Identify possible areas for capacity development
Management objective:
Assist in identifying the most suitable CTM
Guides the decision on frequency and scope of assurance activities
Micro Assessment envisages a risk rating, but does not provide “pass or fail” to IPs

10. Assurance is…
Determination whether funds were used for the purposes intended
Checking accuracy of partner’s reporting on the use of funds to ensure expenditure is true and fair

11. Key Principles
Scope and Frequency of assurance activities depend on the risk and amount of cash transfers
Invest more in assurance activities for weaker partners

12. Assurance Activities Once in a cycle audits Periodic On-site reviews
Spot checks
Special audits to address specific weaknesses
Programmatic assurance
Field monitoring
Annual reviews

13. What’s FACE? One unified form: certification, request, invoice, report
Requires no supporting documentation (e.g. invoices, contracts attached, etc.)
Same format by all ExCom Agencies, all partners
Cash disbursed, but not utilized - reprogrammed
Certifies expenditures
Provides a basis for the disbursement of funds for the next period
Serves as a request to spend, a verification of what was spent and as an invoice
Permits disbursements quarterly, not on a transaction basis
Supports advances, direct payments and reimbursements

14. Why Funding Authorization and Certificate of Expenditure (FACE)?
To lower complexity and amount of procedures for IPs
To save time and effort for Partners and UN Agencies staff
Allow more time for focus on programmatic issues
Point 2 in answer. One system for all. This reduces the administrative burden on implementing partners.

15. How does it all come together?
Links between HACT and the UN’s Country Programming Process…
What to do – When to do it
Point 2 in answer. One system for all. This reduces the administrative burden on implementing partners.

16. More info…