2. 1 1 UNDP’s Financial Management and Assurance March 2007

3. 2 2 Index  Governance  Pillars of Financial Management/Programming  Internal Control Framework  Results Based Management  Financial Resource Framework  Assurance and Assessment  Financial Assurance  Reporting to Donors  Going Forward

4. 3 3 Governance – Overview Role of the Executive Board –Approval of Financial Rules and Regulations –Approval of policies and programmes –Review of and comment on statutory reporting –Provide strategic direction Management Group of UNDP –Senior Management Team –Operations Group

5. 4 4 Governance – Flow of Financial Accountability Comptroller Chief Procurement Officer Treasurer Operations Group Audit Advisory Committee Office of Human Resources Office of Planning and Budgeting Executive Board Administrator BOM Director Country Offices Directors of Regional Bureaus Associate Administrator “The Administrator of UNDP is fully responsible and accountable to the Executive Board for all phases and aspects of UNDP activities.” Financial Regulation 2.01 OAPR Evaluation Office UNBOA

6. 5 5 Pillars of Financial Management/Programming Financial Regulation and Rules –The Regulations that govern the financial management of the United Nations Development Programme (UNDP) and shall, unless otherwise provided by the General Assembly or the Executive Board, apply to all resources administered by UNDP and to all the Funds and Programmes administered by the Administrator. –Relates to the new and harmonized programming procedures –Ensures acceptable levels of controls, as well as separation of duties –Only codified document available. Internal Control Framework –Helps UNDP offices implement effective internal controls w/ minimum internal control standards Result-Based Management –Inputs and activities transform Outputs into Outcomes thus reflecting the process of implementing projects and programmes Finance & Budget User Guide –Prescriptive Content on Financial Procedures

7. 6 6 ICF – Delegation of Authority Accountability –All UNDP personnel is responsible to the Administrator for the regularity of actions taken by them in the course of their official duties (Rule 102.02) Internal Control Framework –Helps UNDP offices implement effective internal controls –Describes certain minimum internal control standards that must be observed –The head of the office has overall responsibility for ensuring that the office’s internal control procedures are documented as well as observed –Delegation is the downward transfer of formal authority from supervisor to employee. The employee is empowered to act for the supervisor, while the supervisor remains accountable for the outcome; in other words delegation does not exempt of responsibility

8. 7 7 Results Based Management ‐ Inputs and activities transform Outputs into Outcomes and this in turn reflects the process of implementing projects and programmes ‐ Financial management ensures that the good usage of the inputs will lead to the achievement of the outputs and thus the outcomes Inputs Outputs Outcomes Impact Experts Equipment Funds People trained Study complete Job creation Income increase Conditions improved >

9. 8 8 Financial Resource Framework – Building Blocks Biennial Support Budget 1.Regular resources only 2.Approved every two years 3.Legal framework for Management cost allocation 4.Harmonized presentation among UNDP/UNICEF/UNFPA Programming Arrangements 1.Regular resources only 2.Approved every four years 3.Legal framework for Programme resource allocation Strategic Plan 1.Covers all UNDP resources 2.Approved every four years 3.Corporate development goals

10. 9 9 Financial Resource Framework – Flow of Funds Contributions Biennial Budget Allocation UNDP TRAC and Other Programme Allocations Country Programmes UN Implementing Partners Government Implementing Partners Spending Point * In the case of regional and global programmes, funds are allocated through the Regional and Global Programme Documents respectively. Regular Resources Other Resources UNDP Direct Execution (DEX) NGO/CSO Implementing Partners General Management Support (GMS) (Overhead) General Management Support (GMS) (Overhead)

11. 10 Financial Resource Framework – Implementation UNDP Management Responsibility Other Partners Implementing & Executing Partner Financial Regulations And Rules *UNDP monitors the functions of Implementing Partners through established assurance procedures which have been previously designed.

12. 11 Financial Resource Framework – Definitions Execution (shall mean):  For UNDP programme activities carried out under the harmonized operational modalities established in response to General Assembly resolution 56/201, assuming the overall ownership over and responsibility for specific UNDP programme activities and the acceptance of accountability for results. Implementation (shall mean):  For UNDP programme activities carried out under the harmonized operational modalities established in response to General Assembly resolution56/201, the management and delivery of programme activities to achieve specified results including the procurement and delivery of UNDP programme activity inputs and their use in producing outputs, as set forth in a signed document between UNDP and the implementing partner. National Execution  The overall management of UNDP programme activities in a specific programme country carried out by an eligible national entity of that country.

13. 12 Assurance & Assessment Implementing Agents Results of Monitoring and Audits used in scope of future Assessments Substantive -Project Reports -Project Site Visits -Final Project Review Report Spot-checks Financial -Review and Evaluation of Funding Agreement and Certificate of Expenditure (FACE) -Quarterly Work Plan -Review of Advances -NEX Audits -Special Audits -Audit confirmation from Panel of External Auditors OAPR and BOA Audit Reports Process Feeds Information -Macro -Micro

14. 13 Assurance – Audit & Evaluation Office of Audit and Performance Review (OAPR) ‐ Submits its Annual Report of the Internal Audit to the Executive Board in June providing a summary of audits and investigations performed. This year a management response will be prepared. ‐ Assesses how effectively control systems ensure that business objectives are met ‐ Makes recommendations to improve the effective operation of control systems ‐ Providing assurance to the Administrator on:  Complete and accurate accounting records  Economic, efficient, and effective use of resources  Compliance with UNDP's established policies, plans, and procedures ‐ Entrusted with responsibility for oversight of the UNDP accountability system Evaluation Office (EO) ‐ Has the responsibility to support the Executive Board and the Administrator in their substantive accountability function and contributing to organizational learning through provision of systematic and independent assessment of results, effectiveness and impact of the substantive activities of the programme, including the special purpose funds under the Administrator's responsibility ‐ Presents a Paper to the Executive Board every June.

15. 14 Assurance – Audit & Evaluation External Audit Regulation 4.01 The External Audit provisions of Article XII of the United Nations Financial Regulations shall apply to UNDP, except that: ‐ Presents the Financial Report and Audited Financial Statements and the comments thereon of the Advisory Committee to the Members of the Executive Board every biennium. ‐ The Administrator presents to the Executive Board every year, in January, a report on the Implementation of the Recommendations of the Board of Auditors ‐ Organizations of the United Nations system and the United Nations Office for Project Services, entrusted with the execution or implementation of UNDP programme activities shall transmit to the Administrator, for submission to the Executive Board, biennial accounts showing the status of funds allocated to them by the Administrator. Such accounts shall bear audit certificates from the External Auditors of the organizations and shall be accompanied by their reports, if any, and copies of any relevant resolutions adopted by their legislative or governing bodies ‐ In submitting the above biennial accounts to the Executive Board, and as part of the comments submitted with the audited financial statements of UNDP, the Administrator shall comment on the Auditors' substantive observations and on their follow-up

16. 15 Assurance – Audit & Evaluation Audit Advisory Committee ‐ Composed by five members, all external to UNDP, and responsible for performing the external audit of UNDP operations ‐ To assist the Administrator regarding financial management and reporting; internal and external audit matters; risk management arrangements; and systems of internal control and accountability and advise him taking into consideration the Financial and Staff Regulations and Rules

17. 16 Reporting to Donors Responsibility ‐ The Annual Certified Financial Statements provided by the Comptroller’s Division, Office of Finance are an extract of the audited financial statements and are delivered on or before 30 June of the following year ‐ Interim reporting (financial and substantive) by the country office or the headquarters unit concerned

18. 17 Conclusion Going Forward ‐ Development of Enterprise Risk Management ‐ Development of the Management Accountability Framework

19. 18 Questions