1 LIST OF ANNEXES PART I – GUIDING PRINCIPLES by variablepitch336

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									LIST OF ANNEXES PART I – GUIDING PRINCIPLES Chapter 1 -- GENERAL PRINCIPLES (no annexes) Chapter 2 -- SPECIFIC PRINCIPLES (no annexes) PART II – PROGRAMME-LELEL MANAGEMENT Chapter 1 -- MANAGEMENT ARRANGEMENTS FOR DEVELOPMENT COOPERATION BETWEEN VIET NAM AND THE UNITED NATIONS (no annexes) Chapter 2 - MONITORING AND EVALUATION OF THE ONE PLAN Annex II.2.1 Standard Annual Cluster Progress Report format Annex II.2.2 Standard Annual (and Mid-Term) One Plan Progress Report PART III – PROJECT-LEVEL MANAGEMENT Chapter 1 –- PREPARATION OF DETAILED PROJECT OUTLINE Annex III.1.1 Standard Detailed Project Outline Chapter 2 – PROJECT ACTIVATION (no annexes) Chapter 3 – REPARATION, APPRAISAL, APPROVAL AND SIGNING OF ANNUAL WORK PLAN AND PROJECT DOCUMENT Annex III.3.1 Standard Annual Work Plan Chapter 4 – PREPARATION AND APPROVAL OF QUARTERLY WORK PLAN Annex III.4.1 Quarterly Work Plan Chapter 5 – Annex III.5.1 Annex III.5.2 Annex III.5.3 Annex III.5.4 Annex III.5.5 Annex III.5.6 Annex III.5.7 Chapter 6 – Annex III.6.1 Annex III.6.2 Annex III.6.3 PROJECT PERSONNEL Sample Terms of Reference Sample Job Description Health Statement for Consultants Labour Contract Amendment to Labour Contract Certification for Payment Local Travel Request/Authorization PROJECT TRAINING Sample TOR for Training Activities Participant Training Evaluation Form Sample Report on Training Activities

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Annex III.6.4 Sample Report on Overseas Study Tours, International Conferences Chapter 7 – PROCUREMENT OF GOODS AND SERVICES Annex III.7.1 Receiving and Inspection Report Chapter 8 – Annex III.8.1 Annex III.8.2 Annex III.8.3 Annex III.8.4 FINANCIAL MANAGEMENT Funding Authorization and Certificate of Expenditures Itemized Cost Estimates by Activity Inventory of Non-expendable Equipment Harmonized Approach to Cash Transfers to Implementing Partners

Chapter 9 – PROJECT MONITORING, EVALUATION AND REPORTING Annex III.9.1 Standard Report on Field Monitoring Visits (and Spot Checks) Annex III.9.2 Sample TOR for Conducting Spot Checks Annex III.9.3 Annex III.9.4 Annex III.9.5 Annex III.9.6 Sample TOR for a Programme/ Project Evaluation Standard Quarterly Project Progress Report Standard Annual Project Progress Report Standard Terminal Project Report

Chapter 10 – PROJECT COMPLETION (no annexes)

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Annex II.2.1 Annual Cluster Progress Report format
(Maximum length 7 pages) Outcome No.....: Thematic Cluster title: a) Outputs under cluster (as per One Plan Results Matrix) – ½ page Outputs as in OP document How the cluster relates to: - SEDP - Millennium Declaration and/or Millennium Development Goals - UNDAF List of projects, agencies and main implementing partners b) Resources Used – ½ page Allocated resources UN contribution - Regular resources - Non-regular resources Government contribution Other * Total * E.g. donations/technical assistance in kind, private sector funds, etc. c) Results Achieved – maximum 5 pages Output Indicators Actual achievements, progress against outputs, target and indicators Pending issues / reasons for adjustments Approved budget Estimated disbursement %

Disaggregate results by sex, age, ethnic/indigenous origin, household type and geographic location where possible. Monitoring, study and evaluation activities undertaken during the reporting year; how the results of these M&E activities were used; and summary of knowledge gained from recent evaluations and studies in this area (whether funded by UN or by others).

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d) Future directions – ½ page Adjustments planned for the coming year and beyond to overcome constraints, address new challenges, take advantage of emerging opportunities, build on programme achievements and strengthened partnerships, and to use any lessons learned during the previous and earlier years. Amounts of regular resources, non-regular resources, emergency aid and any other major resources which are expected to be available for this cluster in the next year and beyond, and any major resource gaps.

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Annex II.2.2 Annual One Plan Progress Report
Country Situation in relation to the Millennium Goals and Commitments of the Millennium Declaration (2-3 pages) Major changes in social, political, economic and legal/administrative conditions in the country during the current year Major policy initiatives, legislative reforms, budget decisions or disease trends. Changes in country conditions which may affect the MDGs Changes in policies and strategic frameworks of relevance to the MDGs (e.g. Sector Wide Approaches, MDG-focused Poverty Reduction Strategies, national, municipal and local development plans) New developments in the ratification status of human rights treaties and national reporting to international treaty bodies (e.g. UN Committees on the CRC and CEDAW) and the use made of State Party Reports and Committee observations One Plan Analysis and Results One Plan Analytical Overview (4 - 5 pages) An overview analysis of the main issues in programming in the reporting year in relation to the Core Functions of the One UN as per section IV.1 of the One Plan: Capacity to monitor and evaluate development progress and to use knowledge more effectively to improve planning and policymaking Capacity to engage in policy research and policy dialogue Convening role, especially in aid coordination Helping Government agencies to strengthen capacity to implement the SEDP Provision of technical assistance and fostering South–South cooperation Support the efforts of Government and civil society to monitor, evaluate and analyze Viet Nam’s progress towards meeting its international commitments and achieving international standards with regards to economic, social, cultural, civil and political rights 2.2. Report on Progress and Results per OP Outcome (5 pages / each) Summarize the findings of the Annual Review with national partners for each One Plan Outcome. Please use the following standard format. Outcome No. .....: a) Thematic Clusters (as per One Plan Results Matrix) b) Resources used for each outcome Allocated resources UN contribution Approved budget Estimated disbursement %

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- Regular resources - Non-regular resources Government contribution Other * Total * E.g. donations/technical assistance in kind, private sector funds, etc. c) Results Achieved: Clusters Actual achievements Pending issues / reasons for adjustments

d) Future directions at Outcome level Adjustments planned for the coming year and beyond to overcome constraints, address new challenges, take advantage of emerging opportunities, build on programme achievements and strengthened partnerships, and to use any lessons learned during the previous and earlier years. Amounts of RR, OR, Emergency OR and any other major resources which are expected to be available for this cluster in the next year and beyond, and any major resource gaps. Operations and Programme Management (4 - 6 pages) INTERNAL TO UNCT Please provide a concise narrative providing analysis and information on each of the following: a) The functioning of and results achieved by the UNCT and other structures of OP governance in the reporting year. b) Major initiatives which were taken during the reporting year to improve operations and programme management performance and the coordination of the operations and programme functions among the participating agencies. [e.g. OPMP, HPPMG, HACT, benchmarks, MEF, common services, measures taken to improve staff and office security as well as preparedness planning for potential crisis situations] c) Issues affecting staff performance and initiatives taken in the current reporting year in human resource management, including recruitment, learning, staff morale, performance appraisal, capacity assessment, etc.

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d) Comment on efforts made by the UNCT in the reporting year to promote Staff Wellbeing (including Stress Management, HIV/AIDS in the Workplace and any other areas). e) The functioning of the supply component, including emergency interventions. f) Major issues with respect to Information Technology Innovations and Lessons Learned (3 - 5 pages) This Section provides high quality documentation of no more than 2 – 4 recent innovative experiences in UN cooperation in the country. The aim is to inform about initiatives or recent breakthroughs that have the potential to provide "lessons" which are relevant on a wider scale. If no such experiences are currently available, this Section can be omitted. A “lesson learned” is knowledge gained: i) based on actual experience; ii) based on some form of objective review and validation process (not necessarily a formal evaluation); and iii) of potential wider relevance beyond the area or country where the experience took place. The write-up should be in a concise, clear and self-explanatory style that would potentially be suitable for wider dissemination within UNCT and beyond. The format is as follows: a) Title of the initiative; b) Outline of the issue addressed; c)Strategy used and actions taken to address the issue; d) Results so far achieved or anticipated; e) Why the experience is considered innovative or a potential “Lesson Learned”; f) Remaining challenges and future activities planned (if any); g) Contact person for further information. Any “Lessons” should be stated as specifically as possible, together with an explanation of how the lesson was derived and validated. References should be provided to the evaluation, review, consultations or other forms of validation and documentation on which the Lesson is based. Strongly encouraged to present well-assessed and documented experience from both “successes” and “failures”.

Annexes
I. Studies, Surveys, Evaluations and Publications Completed by the end of the reporting year

A. In this section of the Annual Report, agencies should list all studies, surveys and evaluations completed this year, providing the following information (only) for each one: Title Year Type of report (study, survey or evaluation) Whether recommended or not recommended for inclusion in the Evaluation and Research Database [to be created by RCO] . Note that all evaluations are considered to be in the public domain and may be posted on the UN VTN website if the agencies agree. An exception is made if the agency decides restricted release is justified and informs MEWG.

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B. Please list all other publications (print, CD, video) that were issued by the UNCT or issued jointly with other partners during 2006 (i.e. publications primarily for external distribution and for communication and advocacy purposes). Please provide the following information for each: Title of the Publication Main intended audience(s) and objectives of the publication Authors (including any other organizations/agencies which are co-authors) Quantities printed (or electronic only) C. Please list the main studies, surveys, evaluations which are planned for the next year or which are ongoing (titles only), separating the list according to these three categories. D. Please list all other publications which are planned for the next year or which are ongoing (titles only). II. Special Reports Viet Nam Development Report (VDR) National MDG Report HDR (if there’s a feature on VTN) State of the World’s Children (if there’s a feature on VTN) State of the World’s Population (if there’s a feature on VTN)

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ANNEX III.1.1 FORMAT FOR DETAILED PROJECT OUTLINE Cover page: 1. Project title and code (if available): 2. Line agency1: 3. Project focal point2 (provide contact address, telephone, fax, e-mail): 4. Other participating agencies3: 5. Estimated start and end dates (e.g. 1/1/06 – 31/12/10) 6. Estimated budget 6.1 Total ODA grant: a. Committed funds: a.1 Regular Resources: a.2 Co-financing (indicating funds from each donor country and organization) b. Other Resources to be Mobilized: 6.2 Government contribution: a. In cash: b. In kind: 7. Project implementation sites (indicating district levels, if applicable): 8. Government priority areas to be addressed4: I. Project justification: 1. Brief situation analysis and assessment (including an overview of sectoral problems) 2. Relevant government strategies/ plans/ programmes, etc…5 3. Lessons learned from previous cooperation 4. Development cooperation with other donors in related sector(s) 5. Comparative advantages of UNDP (UNICEF, or UNFPA) 6. Statement of problems/issues to be addressed by the project

II. Project overview (brief summary of project results framework:): 1. Summary statement of the project, including CP outcomes, project outputs and key groups of activity 2. Project structure, including sub-projects if applicable III. Indicative budget structure, indicating anticipated proportion of budget to be spent on: a) expertise (estimated proportion national/ international); b) equipment/supply; c) training; d) subcontracting; e) management costs, including e.1) project staff, e.2) project M&E, e.3) other administrative costs. NOTE: Show total and annual budgets using UN Agency budget line items & code nos., and also Government contribution (using Govt lines & codes(?). IV. Project implementation strategy: 1. Overall approach.
1 2

Ministerial agency, national institution, people’s committee of provinces or centrally-managed cities Substantive or technical department that is directly responsible for project implementation 3 Other agencies that is involved in implementation of the project and its sub-projects 4 As per Government Decree 17/2001 on ODA management, utilization and coordination 5 Including guidelines, policies, strategies, programmes, projects and other relevant activities

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2. Strategic approach to address cross-sectoral issues (e.g. gender, environment, HIV/ AIDS, sustainability, ethnic minorities, adolescents, emergencies). V. Project implementation structure: 1. Project steering committee6 (optional): Members Suggested TOR 2. Project management unit (mandatory): Members Suggested TOR 3. Sub-project management unit7 (optional) : Members Suggested TOR 4. Participating agencies (if any) NOTE: Specify NIP & CIP/s; take out Steering Committee & Sub-project unit (?); specify if PPP and PRP to be established; VI. Project coordination: 1. Coordination between concerned agencies in Viet Nam: o Between PMU and related departments of the line agency: o Between implementing agencies and other agencies: o Between line agency, implementing agencies, PMU and Government Aid Coordinating Agencies: 2. Coordination with donors: 3. Financial management mechanism: specify Cash Transfer modality/ies that NIP will use (based on micro-assessment) 4. Monitoring and evaluation mechanism: NOTE: Add section on Monitoring, Review and Audits VII. Other considerations: 1. Anticipated impact on social and gender equity: 2. Anticipated environmental impact: 3. Sustainability: Signed and sealed by the Head of the Line Agency Annex 1: List of major equipment/supplies (indicating the method of purchasing, i.e. imported or locally supplied). Annex 2: Results framework: See attached.

The PSC might include Vice-Minister(s), representatives of key international partners Sub-Project Management Unit would be set up only when there is a big sub-project or when the PMU itself is not enough to effectively manage all its components
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FORMAT OF RESULTS FRAMEWORK Method of verification Related UNDAF outcome Only for Project outcome level. Related priority area in Decree 17 Risks and assumptions

# 1. 1.1 1.1.1

Level Project result Project objective (or related CP outcome) Project output: Groups of activity: Project output: Groups of activity: Project objective (or related CP outcome) Project output: Groups of activity: Project output: Groups of activity:

Indicators

Baseline

Target

(only indicators for output, not for activity) (only indicators for output, not for activity)

Only for Project outcome level.

Only for Project outcome level.

1.1.2

1.2 1.2.1

(only indicators for output, not for activity) (only indicators for output, not for activity)

Only for Project outcome level.

Only for Project outcome level.

Only for Project outcome level.

1.2.2

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Annex III.3.1 ANNUAL WORK PLAN
Country: ___________________ UNDAF Outcome: _____________________________________________________
(Quote the full statement of the Outcome mentioned in the UNDAF that the AWP contributes to)

Expected OP Outcome: Expected OP Output(s):

_____________________________________________ _____________________________________________

(Quote the full statement of the Outcome mentioned in the One Plan that the AWP contributes to)

(Quote the full statement(s) of the Output(s) mentioned in the OP that the AWP contributes to)

Expected CPD/CPAP outcome(s) (if applicable):_____________________________ Implementing partner(s): _____________________________________________

Other parties (e.g. Co-Implementing Partners): _______________________________ Brief Summary of the Output(s) envisaged in the AWP and key activities that will be implemented during the planning year to produce the planned output(s)

One Plan Period: ____________________ One Plan Cluster: ____________________ Project Title: _______________________ Project Code: _______________________ Duration: __________________________

Estimated annual budget: _______ Allocated resources: _______ • Government _________ • Regular _________ • Other: o Donor _________ o Donor _________ o Donor _________ Shortfall (if any) in meeting budget requirement: _______

Agreed by [the implementing partner(s)]: _______________________________ Agreed by [the funding UN Agency]: _______________________________

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NNUAL WORK PLAN: Project title ____________
PLANNED ACTIVITIES

Year:................

EXPECTED AWP OUTPUT(S),

TIMEFRAME Q1 Q2 Q3 Q4

INDICATORS, AND ANNUAL TARGETS

List all the activities, incl. M&E activities, to be undertaken during the year towards stated project output

RESPONSIBLE PARTY (can be the implementing partner or other parties. When listing the other parties, also specify the implementing. partner)

PLANNED BUDGET Source of Funds Budget Description Amount

Outcome 1 (This may be the annual outcome identified for a project or the output quoted from the One Plan (if it’s a one year output but most outputs in OP are actually five-year ones), depending on the way the project has been designed. Most likely, this will be the one-year contribution to the five-year OP outputs.)
Output 1.1:
INDICATOR 1.1.1 WITH TARGET FOR THE YEAR: INDICATOR 1.1.2 WITH TARGET FOR THE YEAR: Activity Activity Activity Activity Activity Activity Activity

Output 1.2:
INDICATOR 1.2.1 WITH TARGET FOR THE YEAR:

Outcome 2 Output 2.1:
INDICATOR 2.1.1 WITH TARGET FOR THE YEAR:

Activity Activity Activity

TOTAL

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The Annual Work Plan (AWP) Monitoring Tool CP Component______________________ National Implementing Partner ________________ EXPECTED CP OUTPUTS AND INDICATORS INCLUDING ANNUAL TARGETS PLANNED ACTIVITIES List all the activities including monitoring and evaluation activities to be undertaken during the year towards stated CP outputs EXPENDITURES List actual expenditures against activities completed RESULTS OF ACTIVITIES For each activity, state the results of the activity

Year_______

PROGRESS TOWARDS ACHIEVING CP OUTPUTS Using data on annual indicator targets, state progress towards achieving the CP outputs. Where relevant, comment on factors that facilitated and/or constrained achievement of results including: - Whether risks and assumptions as identified in the CP M&E Framework materialized or whether new risks emerged - Internal factors such as timing of inputs and activities, quality of products and services, coordination and/or other management issues

OUTPUT 1: INDICATOR 1.1 WITH TARGET FOR THE YEAR: INDICATOR 1.2 WITH TARGET FOR THE YEAR: INDICATOR 1.3 WITH TARGET FOR THE YEAR: OUTPUT 2: INDICATOR 2.1WITH TARGET FOR THE YEAR: ETC.

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Program Code & Title:………………………. Project Code & Title:………………………… Responsible Officer: …………………………. Implementing Partner: ……..............................................

Annex III.4.1 QUARTERLY WORK PLAN
Period: MM – MM/YYYY

FORM No. 1

EXPECTED PROJECT OUTPUTS, INDICATORS AND ANNUAL TARGETS

PLANNED ACTIVITIES List all activities including M&E to be undertaken during the year towards stated project outputs

TIMEFRAME (date specified) Month Month Month 3 1 2

PLANNED BUDGET Budget Description Amount

Sub-Project__Objective__Activity__

Prepared by Date

Approved by Date

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Annex III.5.1 Guidelines for Preparation of Terms of Reference A TOR should be prepared for a major event, assignment, service contact or operational unit. A draft TOR should already have been included in the DPO or Project Document. Such a TOR can either be used as is or revised if necessary to meet the needs of the project. In the event that no TOR has been prepared, such a TOR should be developed and should, at least, include the following main elements: TERMS OF REFERENCE 1. 2. CONTEXT: Provide general background information on the context of the event, assignment, service contract or unit. OBJECTIVES: Provide a brief, succinct description of the objective(s) that the event, assignment, service contract or unit will attempt to reach. Such objective(s) should be linked to particular outputs or results of the project. DELIVERABLES: Give a clear, unequivocal definition of the outputs or products that should be produced by the event, assignment, service contract or unit(e.g., survey completed, reports prepared, data collected/ analyzed, policy recommendations made, etc...). This section should include criteria or indicators to measure the quantity and quality of the deliverables. SCOPE: Define the key issues or problems that will be addressed by the event, assignment, service contract or unit. METHODOLOGY: Describe the methodology or approach with which the event, assignment, service contract or unit will be carried out. Such a methodology may also include monitoring and progress controls, such as reporting requirements, periodicity, format and deadlines. IMPLEMENTATION PLAN: Provide key milestones of the implementation process, including when key activities will be organized, which people will get involved and their roles, when sub-outputs and/ or final products will be produced, where the resources will come from and when payments will be made. QUALIFICATIONS AND WORK EXPERIENCES: In cases where it is necessary to select an individual or entity to undertake the event, assignment or service contract, or to form the operational unit, describe the qualifications and work experiences that would be required from the individual or entity. Such qualifications and work experiences would include academic degree, specialized knowledge, practical experience, competencies/ skills, working language, selection criteria, performance standards

3.

4. 5.

6.

7.

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Annex III.5.2 Guidelines for Preparation of Job Description
A job description should be prepared for all project personnel on long-term (six months or more) assignments. A draft job description should already have been included in the DPO or Project Document. Such a job description can either be used as is or revised if necessary to meet the needs of the project. In the event that no suitable job description has been prepared, the following outline should be used. JOB DESCRIPTION 1. 2. 3. 4. JOB TITLE: DUTY STATION: DURATION OF ASSIGNMENT: QUALIFICATIONS: a. b. c. d. 5. 6. Level and field of study of university or equivalent education and training; Length and type of practical experience at national and/or international level; Language proficiency in speaking, reading and writing; Specific skills and/or specialized knowledge that would be advantageous to the candidate in the performance of his/her duties.

DUTIES AND RESPONSIBILITIES: Describe the regular duties to be performed and activities for which the person would be responsible. OUTPUTS TO BE PRODUCED: State explicitly the outputs that the person should be produce during the assignment (e.g. survey, data analysis, progress reports, technical reports, final reports, etc...) SUPERVISION AND PERFORMANCE EVALUATION: State the title of supervisor and evaluator of this staff member.

7.

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ANNEX III.5.3 Health Statement for Consultants PROJECT ID TITLE: __________________________________________________________ NATIONAL IMPLEMENTING PARTNER:___________________________________________ PROJECT OWNER: _____________________________________________________________ HEALTH STATEMENT FOR CONSULTANTS PART I (to be completed by the Subscriber) Name: Project Number and Title: I certify that I am in good health and I am able to perform the proposed functions to the best of my knowledge and belief. Signature of Subscriber Date of birth:

PART II (to be completed by the UNDP (UNICEF, or UNFPA) Country Office) The above subscriber has been offered a Service Contract commencing on the day of 200…..

Signature of Personnel Officer This form is valid for SSAs of up to three months only. N.B. This form cannot be used if the Subscriber is required to travel outside the country of his/her normal residence other than between points in Europe and North America.

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Annex III.5.4 FORMAT OF THE LABOUR CONTRACT
Issued together with Circular No. 21/2003/TT-BLĐTBXH dated 22 September 2003 by the Ministry of Labour, Invalid and Social Affairs ________________________________________________________________________
SOCIALIST REPUBLIC OF VIET NAM Independence – Freedom – Happiness __________________________ Employing Unit: ...........................………………………….. No: ………………………………….

LABOUR CONTRACT
We, on the one side, Mr/Mrs. :…………………………………. Nationality: …..........….…..… Title: ………………………………………………………………………………………..…….. Representing (1): ……………………………………………… Phone: ………………...…….. Address: ……………………………………………………………………………………………… And, on the other side, Mr/Mrs. …………………………….....……Nationality: ………………….. Born on date ..…… month ………. year ……… in ......................................................……………… Profession (2): ……………………………………………………………………………………….. Permanent address: …………………………………………………………………………………… ID card No: …………………. issued on ……./……../ …….. in ……………………………………. Labour permit (if applicable) …………..issued on ……./……../ …….. in …………………………. Hereby agreed to sign this Labour Contract and are committed to adhere to the following provisions: Article 1: Validity and Contracted Work Type of labour contract (3): ……………………………………………………………………… Valid from date ….. month ….. year ……… until date ……month …… year ........…………….. On probation from date ….. month ….. year……… until date ……month …… year ……………. Work place at (4): …………………………………………………………………………………. Professional position: ……………………………………… Title (if any): .........………..…….. Contracted work (5): ……………………………………………………………………...……… Article 2: Working Conditions - Working time (6): …………………………………………………………………………………. - Working facilities to be provided: ..................................………………………………………….. Article 3: Responsibilities and Entitlements of the Employee 1. Entitlements: - Transport means (7): ………………………………………………….........………………………. - Level of salary or wage (8): ……………………………………………………………………....... - Payment modality: ………………………………………………………………………………….. - Allowances (9): …………………………………………………………………………………… - Payments are made on ………..................................................…………………. every month. - Incentives: …………………………………………………………………………………………

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Salary increments: ………………………………………………………………………………… Labour safety facilities: .............…………………………………………………………………… Leave entitlements (weekends, annual leave, public holidays, ...): ………………………………… Social and medical insurance (10): ………………………………………………………………… Training benefits (11): ………………………………………………………………………………. Other entitlements (12): ……………………………………………………………………………

2. Responsibilities: - Accomplishing the tasks that have been agreed in the Labour Contract. - Being compliant with production/ business discipline, working regulations, safety regulations. - Making compensations for non-compliance (13): ……………………………………………….. Article 4: Responsibilities andAuthorities of the Employing Unit 1. Responsibilities: - Ensuring adequate work and accomplishing all the commitments made in the Labour Contract. - Making full and timely payments for the entitlements of the employee in accordance with the Labour Contract and collective labour MoU (if any). 2. Authorities: - Providing guidance to the employee so that the latter can accomplish the contracted work (deploying or re-assigning the employee, or temporarily suspending his/her work). - Temporarily suspending or cancelling the Labour Contract, taking disciplinary actions against the employee in accordance with prevailing legislation, collective labour MoU (if any) and working regulations of the employing unit. Article 5: Implementation Provisions - Labour issues that are not recorded in this Labour Contract shall follow the available collective labour MoU. In case no such MoU is available, they will follow relevant provisions of the Labour Code. - This Labour Contract is made in two (2) copies of equal validity. Each party is in possession of one copy which comes into effect as of date ....... month .......... year ........Whenever the two parties sign an amendment to this Labour Contract, the contents of the amendment shall be of the same validity as those contents of this Labour Contract. This Labour Contract is made in ...............................on date ......…… month ……… year ……….... Employee (signed) Full name Employing Unit (signed and sealed) Full name

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Guidelines for the Preparation of the Labour Contract
1. Write the name of the employing enterprise, agency, organization, e.g. Ha Noi Housing Construction Company. 2. Write the name of the profession (in case the person has more than one profession, write the main profession), e.g. Engineer. 3. Write the type of the Labour Contract, e.g. indefinite duration or six months’ duration. 4. Write the name of the main work place, e.g. No. 2, Đinh Lễ Street, Hà Nội; and subsidiary work place (if any), e.g. No. 5, Tràng Thi Street, Hà Nội. 5. Write the main work to be performed by the employee, e.g. installing, inspecting, maintaining electric systems; ventilation equipment; refrigeration equipment, ... in the enterprise. 6. Write the number of working hours per day or per week, e.g. 08 hours/ day or 40 hours/week. 7. Specify the transport means and which party shall provide it, e.g. the employing unit or the subscriber shall be responsible for arranging day-to-day transport from and to the working place. 8. Write the level of salary applicable at the employing unit, e.g. Level A.1. Mechanics, Electrics, Informatics; Group III; Step 4/7; Ratio 2.04; the amount of salary at the time when the Labour Contract is signed is VND 428,400/ month. 9. Write the types of allowance, the level and ratio when the Labour Contract is signed, e.g. Responsibility allowance for Deputy Chief of Division, ratio 0.3, amount VND 63,000/ month. 10. For a person who is subject to mandatory social insurance contributions, specify the percentage that the two parties shall deduct from the monthly salary to pay to the insurance authorities, i.e. each month the employing unit shall deduct 6% from the employee’s monthly salary and from its own payroll an amount equal to 17% of the employee’s monthly salary in order to contribute 20% to the social insurance authority and 3% to the medical insurance authority. For a person who is not subject to mandatory social insurance contributions, the amount of social insurance shall be added to the employee’s monthly salary so that he/she can make voluntary social insurance contributions or shall take care of his/her own social insurance, i.e. the amount of social insurance that is added to the employee’s monthly salary is equal to 17% of his/ her monthly salary. 11. Write explicitly the obligations and benefits of the employee in case he/she is sent to training by the employing unit, e.g. During the training period, the employee shall accomplish the training activity in a timely manner, shall receive the full salary and enjoy other entitlements as a person at work, except the allowance for toxical working conditions. 12. Write those entitlements that are not available or already available in the Labour Code, in the collective labour MoU but are in favour of the employee, e.g. Visits, tourist trips, sightseeing tours, birthday gifts, etc... 13. Specify the level of compensation for each case of non-compliance, e.g. The employee shall pay VND six million if he/she quits the enterprise upon completion of a training activity or VND three million if he/she quits the enterprise less than two years upon completion of such training.

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Annex III.5.5 AMENDMENT TO THE LABOUR CONTRACT Issued together with Circular No. 21/2003/TT-BLĐTBXH dated 22 September 2003 by the Ministry of Labour, Invalid and Social Affairs ___________________________________________________________________________
SOCIALIST REPUBLIC OF VIET NAM Independence – Freedom – Happiness __________________________ Employing Unit: ...........................………………………….. No: ………………………………….

LABOUR CONTRACT
We, on the one side, Mr/Mrs. :…………………………………. Nationality: ……............…....… Title: ……………………………………………………………………………………………........ Representing (1): ……………………………………………… Phone: ……………………........ Address: ……………………………………………………………………………………………….. And, on the other side, Mr/Mrs. …………………………….....……Nationality: ………………….. Born on date ..…… month ………. year ……… in ......................................................……………… Profession (2): ……………………………………………………………………………………….. Permanent address: …………………………………………………………………………………… ID card No: …………………. issued on ……./……../ …….. in ……………………………………. Labour permit (if applicable) …………..issued on ……./……../ …….. in …………………………. Based on the Labour Contract No. ........ signed on ............/...…../ ……. and the needs for labour, the two parties hereby agree to amend the following contents of the Labour Contract that the two parties have signed: 1. Changes to the contents of the Labour Contract (Describe clearly what changes are being made): ………………………………………………………………………………………………………… ………………………………………………………………………………………………………… ………………………………………………………………………………………………………… 2. Validity (Write clearly the validity period of the changes described on Point 1 above): ................ ………………………………………………………………………………………………………… …………………………………………………………………………………………………………. ………………………………………………………………………………………………………… This Amendment which constitutes an integral part of the Labour Contract No. ........... is made in two (2) copies of equal validity and each party is in possession of one copy that shall serve as the basis for resolution of any labour dispute that may occur. Employee (signed) Full name Employing Unit (signed and sealed) Full name

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Annex III.5.6 Certification for Payment
PROJECT ID AND TITLE: _____________________________________________________ NATIONAL IMPLEMENTING PARTNER: ______________________________________ PROJECT OWNER: ___________________________________________________________ CERTIFICATION FOR PAYMENT 1. Name: Nationality: Starting/Expiry dates: Fee: Expected number of work days/week: PROJECT USE ONLY SSA# PSA # Maximum duration: Project No: Account Code: MOD Number: Amend. #

Vendor Number:

2. TO BE COMPLETED BY THE SUBSCRIBER For payment of fees, please complete below and send to: Requesting NPD: Project: , Viet Nam I certify that the dates indicated below are an accurate account of the services and duties performed under the terms of this contract. Important: Payment will not be made if this form is not completed properly. Duty station Dates worked No. of days Total payable US$ Other From/To worked

Please note that payment will be made in the VND. Bank charges related to payment will be borne by the subscriber. Please make payment as indicated below: 1 Name of Bank: Account title and No: Address: Date: Signature: This information should agree with that provided in the Personnel Service Agreement or Special Service Agreement. 3. TO BE COMPLETED BY THE REQUESTING PROJECT I certify that the work was satisfactory performed: during the above-mentioned dates as per the terms of the contract Name/signature (Requesting PM) Name/signature (Requesting NPD) 4. UNDP (UNICEF, or UNFPA) Finance Section Subscriber Requesting Project Date Date
1

Please check appropriate box Final report accepted Final report not required Evaluation Sheet attached

21

Annex III.5.7 UNDP (UNICEF, or UNFPA) Local Travel Request Form for Project Personnel Local Travel Request/Authorization
Name: Title: Agency: Duty Station: Level: Project ID and title: (a) Number of days: Estimated DSA cost: Chargeable to A/C No: (estimated) (b) Mode of travel: Estimated cost: Chargeable to A/C No: (c) Travel to be arranged by UNDP (UNICEF, or UNFPA) Project Traveler (d) ITINERARY Commencing date(s) Duration (no. of days) Location Purpose of visit

Date: Traveler's signature Approved by: Date:

22

Annex III.6.1 Guidelines for the preparation of Terms of Reference for Training Activities
PROJECT ID AND TITLE: ____________________________________________ NATIONAL IMPLEMENTING PARTNER: _______________________________ CO-IMPLEMENTING PARTNER (as relevant)______________________________________ TOPIC OF TRAINING ACTIVITY: ______________________________________ A. OBJECTIVES AND EXPECTED RESULTS 1. Objective(s) of the training activity: This section should outline the knowledge/ skills that the training activity is intended to bring to the participants or the improvements in terms of attitudinal/ behavioral change that they are expected to gain from the training activity. 2. Expected specific outputs of the training activity: This section should a. Provide a brief explanation of the specific outputs that the training activity is expected to produce; b. Specify key issues to be studied/trained in order to produce the above expected results. B. TRAINING ARRANGEMENTS

1. Scope of work: This section should outline the scope and types of work that the trainor or training institution is expected to undertake during the training period (training needs assessment, consultations with future trainees, study/ design of training programme, or adjustment to or updating of available training materials, conduct of the training activity, evaluation of the training activity, technical / advisory support to follow-up actions, etc...).
2. Training methodology: This section should specify what methods or tools would be used to deliver the training, in order to ensure maximum participation and effectiveness. The contents in the TOR should serve as the basis for the trainor or training institution to select and suggest a methodology and modality that is suitable to the training contents and trainees. 3. Training venue: It is important to identify the venue where the training activity will be organized (or an address where the main components of the training activity will take place). If the training activity is organized at the location of the training institution that will be selected by the project, the Project Director should specify this in the TOR the requirements expected from such a location. 4. Estimated timing and duration of the training activity: This section should indicate the

estimated duration, start date and end date of the training activity as well as key milestones for preparatory activities (e.g. the deadline for the completion of the TOR, the date for the selection of the trainor or training institution, the timing for the signing of the service contract, the date for the completion of preparatory activities, etc...).
5. Participants and selection criteria: This section should describe titles, positions,

qualifications and number of intended participants and, if possible, classify them by

23

profile and by sex. It is necessary for the project to create conditions for women to take part in training activities and ensure gender equality in training.
In general, study tours should be attended primarily by key and senior officials involved in the project. In contrast, for short-term technical/professional training activities, preference should be given to younger personnel who are involved in operational activities of the project. 6. Qualifications of trainor or training institution: Based on the DPO/ Project Document, the Project Director should prepare a TOR which may consist of objectives and expected results of the training activity, requirements set out for the trainor or training institution in terms of academic qualifications, technical/ professional knowledge and skills, work experiences, major activities expected from the trainor or training institution and their estimated deadlines, etc...). These will serve as the basis for the selection of the trainor or training institution and the evaluation of the training activity. The recruitment of the trainor follows provisions in Chapter 4 (Project personnel) whereas the contracting of the training institutions follows provisions in Chapter 6 (Procurement of Goods and Services). 7. Pre-Training activities: This section should specify activities that should be undertaken

before the start of the training activity (by the project team, trainees as well as the trainor/ training institution). Key pre-training activities are:
a. Collection and review of key supporting materials/information relevant to the objectives/ topic of the training activity; b. Design of the programme/ materials for the training activity (or updating of, or adjustment to the requirements/ objectives of the training activity; the need to conduct a survey in order to prepare case stuties for the training activity; etc.... The above contents can also be described in Section B.1 Scope of work. 8. Post-training activities: Post-training activities can be suggested from the beginning or can be consolidated based on suggestions made by the trainees. trainor or training institution, or project personnel. There may be different ways to undertake these follow-up activities, for example: a. A debriefing session where the participant(s) would share the above results/lessons learnt from the training activity. In this case, it is important to clearly specify the roles to be played by the project personnel. b. Application of the new knowledge/ skills acquired from the training activity (based on the action plans developed by the trainees following the completion of the training activity). c. Implementation of other administrative/ institutional requirements as set out by the trainees’ employing organizations 9. Training budgets: Training budgets for the training activity should include only those items that are available in the approved AWP. The TOR should indicate the total budgets for the training activity and their components (budget for trainor/ training institution; tuition fees; travel costs and DSA for trainees; costs for training venue/ facilities; costs for training materials; etc...). The norms for such costs should follow the existing cost norms issued by the United Nations.

24

Annex III.6.2
Sample Participant Training Evaluation Form PROJECT CODE AND TITLE: ………………………………………………………………. NATIONAL IMPLEMENTING PARTNER: ................……………………...................... CO-IMPLEMENTING PARTNER: .................................…………………………………….................... PARTICIPANT TRAINING EVALUATION FORM Name of Training Activity: “....................................................................................” Training venue: ............................................................................................................ Date: ............................................................................................................................ Strongly Disagree (1) Disag ree (2) Neither Agree nor Disagree (3) Agree (4)

TRAININGN CONTENT
1. Contents of the training activity were useful to my work 2. The duration of the training activity was appropriate to cover the planned content 3. The training activity provided me with new knowledge 4. The steps of the training activity were 5. The time I spent on the training activity was worthwhile 6. My expectations from the training activity were met 7. I am interested to introduce this training activity to other people TRAINING MATERIALS 8. The training materials helped me understand the training contents. 9. The training materials were very useful to my work General remarks: ..................................................................................................................................................... ................................................................................................................................................................................... ................................................................................................................................................................................. TRAINING METHODOLOGY 10. The methodology to conduct the training activity was appropriate to deliver the contents. 11. The examples used were relevant to and helped illustrate the subject matters. 12. The timing for practices/ exercises was appropriate.

General remarks: ......................................................................................................................
.............................................................................................................................................................................

...............................................................................................................................................

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LOGISTICAL SUPPORT 13. I was happy with the training venue. 14. I wasn happy with other support services (refreshment, toilet, hotel room, etc...). 15. The training facilities were adequate. General remarks: ........................………………………………………………………………………………… .................................................................................................................................................................................. ................................................................................................................................................................................. RESOURCE PERSONS 16. The resource person(s) was/were knowledgeable about the subject matters. 17. The resource person(s) was/were dedicated to the training activity. 18. The resource person(s) gave satisfactory answers to my questions. 19. The resource person(s) made satisfactory presentation(s) on their topics. 20. The resource person(s) made proper preparations for the training activity. 21. The resource person(s) had good skills to engage trainees in discussions. General remarks: ..................................................................................................................................................... .................................................................................................................................................................................. .................................................................................................................................................................................

22. I wish to add the following comments on the training activity: .......................................................................... ..................................................................................................................................................................................... ..................................................................................................................................................................................... ..................................................................................................................................................................................... ..................................................................................................................................................................................... ..................................................................................................................................................................................... ..................................................................................................................................................................................... 23. Overall assessment on the training activity (including suggestions for improvement): ........................................ ..................................................................................................................................................................................... ..................................................................................................................................................................................... ..................................................................................................................................................................................... ..................................................................................................................................................................................... ..................................................................................................................................................................................... ..................................................................................................................................................................................... Many thanks for your contributions

26

Annex III.6.3 Report on Training Activities
Project code and title: ..................................................................................................................... National Implementing Partner: ................................................................................................................
Co-Implementing Partner (if relevant): .......................................................................................................... Topic of the training activity: .............................................................................................................................

1. Objectives of the training activity: This section discusses the objectives that determined the the design of the training activity and the actions taken during the training process. These objectives should be judged against the objectives set out in the original TOR for the training activity to see to what degree such objectives have been achieved. 2. Training methodology: This section describes the approaches used in order to implement the objectives outlined in the TOR and the methods that the trainor/ training institution applied in order to meet the requirements set out in the TOR. These contents should be compared with the approaches/ methods that were suggested by the trainor/ training institution to see how (successful) the originally suggested approaches/ methods were. 3. Activities undertaken during the training process: This section refers to all the main activities that were undertaken in order to implement the training objectives as set out in the TOR during the preparation for and conduct of the training activity. For example: - Activities that were undertaken during the preparatory phase (e.g. training needs assessment; design of or adjustment to the training programme and training materials; updating of project information on the training materials; etc...) - Activities that were undertaken during the conduct of the training activity, including activities in and outside the course (e.g. plenary sessions, group discussions, site visits, role plays, practical exercises, development of action plans, etc...) - Post- training activities (e.g. advisory support to apply the knowledge/ skills acquired or to reorganize day-to-day work, etc...) 4. Results achieved: This section outlines the results that were achieved during the training activity through the use of quantifiable indicators (e.g. the number of people that took part in the training activity, the number of hours for practical exercises, the issues/ case studies discussed/ analyzed, the number of topics/ contents learned against the originally designed targets). It is equally important to list the types of knowledge/ skills that the trainee acquired through the training activity. This section may also include the trainee’s own assessment/ analysis of the design and outcomes of the training activity. 5. Lessons learned from the training activity for application to future training activities: 6. Recommended follow-up actions (a debriefing session to share the knowledge learned from the training activity; sharing of the training materials; organization of an in-depth training activity; etc...). 7. Annexes

27

-

List of trainees Training programme A summaray of major points from training evaluation forms completed by the trainees and training evaluation report prepared by the responsible project staff (if available) Other materials relating to the contents and results of the training activity

28

Annex III.6.4 Report Format for Overseas Study Tours, International Conferences
PROJECT ID AND TITLE: …………………………………………..................................... NATIONAL IMPLEMENTING PARTNER: ......................................................................... CO-IMPLEMENTING PARTNER (if relevant): ........................................................................ 1. Title of study tour or international conference: 2. Brief description of the study tour or international conference: - The place(s) visited and activities undertaken at each place - Participants - Names/ addresses of the training/host institutions - Dates and duration of stays at the training/ hos institutions 3. Objective(s) of the study tour or international conference: This section outlines the objectives that should be achieved through the study tour or international conference, for example: - Knowledege to be provided - Techniques/ skills to be trained - Practical experiences to be introduced - Models to be introduced/ demonstrated 4. Detailed description: a) Results of the study tour or international conference (the knowledge and skills gained, the practical experiences introduced, the models demostrated, and how these are relevant to the substantive matters that are being addressed by the project and how they can be applied in the project and the participant’s regular work); b) Lessons learned and recommendations on the application of the newly acquired knowledge, skills, models to day-to-day work of the project and the trainee; c) Objectives that were not met (if any). 5. Lessons learned from the study tour or international conference for application to future events: 6. Recommended follow-up actions (a debriefing session to share the knowledge learned from the training activity; sharing of the training materials; organization of an in-depth training activity; etc...). 8. Annexes:
List of participants in the study tour or international conference Places visited A summary of major points from evaluation forms or reports prepared by the participants

-

Other materials relating to the contents and results of the training activity

29

Annex III.7.1

Receiving and Inspection Report

PROJECT ID AND TITLE: ______________________________________________________ NATIONAL IMPLEMENTING PARTNER:_________________________________________ CO-IMPEMENTING PARTNER: ___________________________________________________ RECEIVING AND INSPECTION REPORT To: From: (Full name, title and signature of the NPD or PM) Date: Country Representative UNDP (UNICEF OR UNFPA) - Hanoi

We have received the equipment delivered under SHIPPING ADVICE/PURCHASE ORDER No. Dated___/___/____, AIRWAY BILL or BILL OF LADING No. The equipment received is in good working condition The equipment is not in good working condition (damaged), therefore we are following the instructions provided on the back of the SHIPPING ADVICE form for insurance coverage. We have not received the equipment ordered under SHIPPING ADVICE/PURCHASE ORDER No. .

30

Annex III.8.1 Funding Authorization and Certificate of Expenditures

27

Annex III.8.2 Itimized Cost Estimates by Activity

28

Annex III.8.3 Inventory of Non-expendable Equipment
PROJECT ID AND TITLE M· sè vµ tªn dù ¸n: ___________________________________________________________________________ NATIONAL IMPLEMENTING PARTNER C¬ quan chñ qu¶n: ________________________________________________________________ PROJECT OWNER C¬ quan chñ dù ¸n: ________________________________________________________________________________ NON-EXPENDABLE PROPERTY LEDGER Sæ c¸i theo dâi tµi s¶n kh«ng tiªu hao ACQUISITION Mua s¾m # Inventory No. Sè kiÓm kª Full description including serial No., chassis and engine No. (if applicable) M« t¶ chi tiÕt vÒ sè s¶n xuÊt, sè khung, sè m¸y (nÕu cã) Manufacturer Nhµ s¶n xuÊt Date of Purchase Ngµy mua Unit Value §¬n gi¸ (US$) Present Location §Þa ®iÓm hiÖn t¹i T/D CG hay TL TRANSFERS/DISPOSALS ChuyÓn giao/thanh lý Amount Thµnh tiÒn (US$) Destination N¬i chuyÓn ®Õn Explanation Chó thÝch

- Present Location: Where equipment is located - T: Transfer - D: Disposal - Amount: Value of equipment when transferred/disposed - Destination: Where equipment is transferred to

§Þa ®iÓm hiÖn t¹i: N¬i thiÕt bÞ hiÖn ®−îc l−u gi÷ CG: ChuyÓn giao TL: Thanh lý Thµnh tiÒn: Gi¸ cña thiÕt bÞ khi chuyÓn giao/thanh lý N¬i chuyÓn

29

Annex III.8.4

HARMONIZED APPROACH TO CASH TRANSFERS TO IMPLEMENTING PARTNERS

United Nations Development Group

September, 2005

30

TABLE OF CONTENTS 1. SUMMARY AND RATIONALE ......................................................................................................32 2. PRINCIPLES ......................................................................................................................................32 CASH TRANSFER MODALITIES ................................................................................................................32 HARMONIZED PROCEDURES ...................................................................................................................33 MANAGING RISK .....................................................................................................................................33 3. CAPACITY ASSESSMENTS...........................................................................................................33 3.1 MACRO ASSESSMENT OF THE COUNTRY’S PUBLIC FINANCIAL MANAGEMENT SYSTEM ......................34 3.2 MICRO ASSESSMENTS OF IMPLEMENTING PARTNERS’ FINANCIAL MANAGEMENT CAPACITY .............35 4. CASH TRANSFER PROCEDURES ................................................................................................35 5. ASSURANCE ACTIVITIES .............................................................................................................37 6. IMPLICATIONS OF THE CASH TRANSFER FRAMEWORK ON THE PROGRAMME PROCESS................................................................................................................................................38 7. ANNEXES ...........................................................................................................................................39 ANNEX I: GUIDELINES FOR USE OF THE FUNDING AUTHORIZATION AND CERTIFICATE OF EXPENDITURES (FACE) FORM. ......................................................................................................................................39 ANNEX II: GUIDELINES FOR THE REVIEW OF A COUNTRY'S PUBLIC FINANCIAL MANAGEMENT SYSTEM (MACRO ASSESSMENT) ............................................................................................................................43 ANNEX III: GUIDELINES FOR ASSESSING THE FINANCIAL MANAGEMENT CAPACITY OF IMPLEMENTING PARTNERS RECEIVING CASH FROM AN AGENCY (MICRO ASSESSMENT)....................................................49 ANNEX IV: MAINTAINING ASSURANCE OF THE USE OF CASH TRANSFERS PROVIDED TO IMPLEMENTING PARTNERS ..............................................................................................................................................63 ANNEX V: SUGGESTED CLAUSES RELATED TO CASH TRANSFER MODALITIES AND PROCEDURES............69 ANNEX VI: TECHNICAL ASSISTANCE .......................................................................................................73 ANNEX VII: TECHNICAL NOTES ............................................................................................................75 ANNEX VIII: SAMPLE FUNDING AUTHORIZATION AND CERTIFICATE OF EXPENDITURES (FACE) FORM …… 69

31

1. SUMMARY AND RATIONALE Pursuant to the UN General Assembly Resolution 56/201 on the triennial policy review of operational activities for development of the United Nations system, UNDP, UNICEF, UNFPA and WFP (UNDG ExCom Agencies) adopted a common operational framework for transferring cash to government and non-government Implementing Partners. Its implementation will significantly reduce transaction costs and lessen the burden that the multiplicity of UN procedures and rules creates for its partners. Implementing Partners will use common forms and procedures for requesting cash and reporting on its utilization. Agencies8 will adopt a risk management approach and will select specific procedures for transferring cash on the basis of the joint assessment of the financial management capacity of Implementing Partners. They will also agree on and coordinate activities to maintain assurance over the utilization of the provided cash. Such jointly conducted assessments and assurance activities will further contribute to the reduction of costs. The adoption of the new harmonized approach is a further step in implementing the Rome Declaration on Harmonization and Paris Declaration on Aid Effectiveness, which call for a closer alignment of development aid with national priorities and needs. The approach allows efforts to focus more on strengthening national capacities for management and accountability, with a view to gradually shift to utilizing national systems. It will also help Agencies shape their capacity development interventions and provide support to new aid modalities. In preparing the Framework relevant recommendations and good practices of OECD/Development Assistance Committee have been considered. It will be rolled out in a phased manner. *** 2. PRINCIPLES Cash Transfer Modalities Four cash transfer modalities are available to Agencies, within the frameworks of programme content and operational agreements described in the Country Programme Actions Plans (CPAPs): • Direct cash transfers to Implementing Partners, for obligations and expenditures to be made by them in support of activities agreed in annual work plans (AWPs); • Direct payments to vendors and other third parties, for obligations incurred by the Implementing Partner in support of activities agreed in AWPs; • Reimbursement to Implementing Partners for obligations made and expenditure incurred by them in support of activities agreed in AWPs; • Direct agency implementation through which the Agency makes obligations and incurs expenditure in support of activities agreed in AWPs. It is desirable that Agencies agree on a preferred common modality for each Implementing Partner, but each Agency may choose the most appropriate modality for specific programmes and Implementing Partners. Table 1: Responsibilities for Obligations and Payments for Cash Transfer Modalities Modality Obligation Payment

Throughout this Note the term “Agencies” will be used to refer to the UNDG ExCom Agencies and any other UN Agencies that choose to adopt these procedures.

8

32

Direct Cash Transfer Direct Payment Reimbursement Direct Agency Implementation Harmonized Procedures

Government/NGO Government/NGO Government/NGO Agency

Government/NGO Agency Government/NGO Agency

The procedures for transferring cash, including the periodicity of disbursements, reporting on cash utilization, and maintaining assurance over the accuracy of the reports, are essentially the same for the four modalities. Whenever an Implementing Partner receives cash transfers from more than one Agency, the Agencies will use the same procedures. All Implementing Partners will use the same standard format for requesting cash transfers and reporting on their use (see Annex I). Agencies will continue to account for cash transfers in accordance with their established polices and procedures. Managing Risks There is a risk that cash transferred to Implementing Partners may not be used or reported in accordance with agreements between the Agencies and the Implementing Partner. The level of risk can be different for each Implementing Partner. For each Implementing Partner the Agencies effectively and efficiently manage this risk by: 1) assessing the Implementing Partner's financial management capacity; 2) applying appropriate procedures for the provision of cash transfers to the Implementing Partner; and 3) maintaining adequate awareness of the Implementing Partner's internal controls for cash transfers through assurance activities. For each Implementing Partner the level of risk may change over time, and this may result in changes in the cash transfer procedures and assurance activities, and possibly in the choice of modality. *** 3. CAPACITY ASSESSMENTS The Agencies will assess the risks associated with transactions to an Implementing Partner, before initiating cash transfers under the harmonized procedures. Two types of assessments are required: • Macro Assessment In order to ensure adequate awareness of the Public Financial Management (PFM) environment within which Agencies will provide cash transfers to Implementing Partners, a review of existing assessments of the PFM system will be conducted. This review is expected to be undertaken once per programme cycle, preferably during Common Country Assessment (CCA) preparation, and may be updated whenever significant changes in the country’s governance system are noticed. The Macro Assessment findings provide information on the national context that is useful for each Micro Assessment. The findings related to the national audit system establish whether the audit system can be relied on to conduct the required audits of Implementing Partners who receive cash transfers. The Macro Assessment does not include an overall risk rating. Micro Assessment This assesses the risks related to cash transfers to the partner and is done once every programme cycle, or whenever a significant change in the Implementing Partner’s organizational management is noticed. Assessments should be done for partners (government or NGO) that receive or are expected to receive cash transfers above an annual amount (usually US$ 100,000 combined from all

•

33

Agencies; as initially defined in the CPAP or AWPs or as locally agreed among the Agencies). For Implementing Partners with planned annual cash receipts below the US$100,000, assessments may be conducted if so desired by the involved Agencies to determine the most effective and efficient procedures. These assessments could be more basic in nature.9 The Macro and Micro Assessments serve two objectives: • Development objective: The assessments help Agencies and the Government to identify strengths and weaknesses in the PFM system and the financial management practices of individual Implementing Partners, and identify areas for capacity development. • Financial management objective: The assessments help Agencies identify the most suitable resource transfer modality and procedures, and scale of assurance activities to be used with each Implementing Partner. The assessments do not establish conditionality for assistance from the Agencies. Each Micro Assessment concludes with a statement of the overall risk related to cash transfers, rated as low, moderate, significant or high. A “low risk” rating indicates a well-developed financial system and functioning control framework. A “significant risk” or “high risk” rating is given if the system is more nascent and the control framework is inadequate to assure that cash transfers are used and reported as agreed with the Agencies. The findings of the Micro Assessment primarily guide the frequency and coverage of assurance activities. In exceptional situations, when a Micro Assessment of an Implementing Partner cannot be conducted, the Agencies will apply modalities and procedures applicable to a high-risk partner. When a Macro Assessment is not conducted, the national audit system will not be called upon to undertake the audits. 3.1 Macro Assessment of the Country’s Public Financial Management System Before the harmonized procedures for cash transfers with Implementing Partners are introduced, the Agencies must examine and interpret – in collaboration with national development partners – existing assessments of a country's Public Financial Management (PFM) system undertaken by multilateral or bilateral development partners10 in the past five years. Even if no other assessments exist, the Agencies should not themselves undertake or contract for original research for a Macro Assessment. If there is inadequate data to complete the Macro Assessment, the Agencies should advocate to the Government that such work be undertaken. The Macro Assessment will normally be undertaken as part of the preparation of new Country Programmes. Guided by the expertise of independent and suitably qualified consultants, the Agencies and Government will conduct an open and transparent review of the findings of existing PFM assessments and other related available diagnostic work. The review covers: areas of the national budget development and execution process, the functioning of the public sector accounting and internal control mechanisms, audit and oversight, and financial recording systems and staff qualifications. The review should result in a report of about four pages and conclude with a completed table of the risk areas. For details on how to conduct a Macro Assessment see Annex II.

9

10

Materials exist among Agencies for lighter assessments A list of assessments often conducted by other development partners in included in Annex II.

34

3.2 Micro Assessments of Implementing Partners’ Financial Management Capacity Together with the Implementing Partners, Agencies will conduct a financial management capacity assessment of each Implementing Partner (government or NGO, but not other Agencies) that receives or is expected to receive cash transfers above an annual amount (US$ 100,000 combined from all Agencies, or as locally agreed among the Agencies) and is responsible for using the Funding Authorization and Certificate of Expenditures (FACE) form to report the use of the funds. For each Implementing Partner, the findings of the Micro Assessment, together with the findings of the Macro Assessment, inform the identification of appropriate modalities and procedures for the provision of cash transfers, and the scale of assurance activities. Agencies working with the same Implementing Partner will jointly conduct the assessment of that Implementing Partner. If assessments need to be prioritized, common Implementing Partners should be assessed first. If an assessment is not completed for a specific Implementing Partner, the Agencies will apply the procedures and assurance activities that are applicable to a “high risk” partner. For Implementing Partners with planned annual cash receipts below US$ 100,000, assessments may be conducted if so desired by the involved Agencies to determine the most effective and efficient procedures. These assessments could be more basic in nature.11 The micro assessment reviews the Implementing Partner’s system of accounting, reporting, auditing, and internal controls. The overall risk rating for the management of cash transfers is rated “low” if the Implementing Partner’s system: is considered capable of correctly recording all transactions and balances, supports the preparation of regular and reliable financial statements, safeguards the entity’s assets, and is subject to acceptable auditing arrangements. The assessments should be done in a transparent manner and the Implementing Partners should participate in the process. Guidelines (Annex III) establish the areas to be assessed and follow a twostage process. When adequate information (e.g., reviews of past experience with the Implementing Partner, recent assessments by other Agencies, NEX audit reports) exists and it confirms that the overall risk related to cash transfers to this Implementing Partner is low, only Checklist A in Annex III needs to be completed. If information is inadequate or does not confirm a low risk rating, a more detailed assessment of the Implementing Partner shall be completed, using Checklist B in Annex III. For each Implementing Partner, the Agencies may conduct the Micro Assessment themselves, or hire a suitably qualified consulting firm, such as a public accounting firm. When the Micro Assessment is conducted by a consulting firm, the Agencies will discuss and adopt the assessment findings as appropriate. When a thorough and reliable assessment has been completed by a significant development partner, the results should be reviewed and adopted. Each Micro Assessment should result in a report of about four pages and conclude with an overall rating of the related risks (low, moderate, substantial, or high). The micro assessment must be documented and shared with the assessed partner. For details on how to conduct a Micro Assessment see Annex III. *** 4. CASH TRANSFER PROCEDURES

11

Materials exist among Agencies for lighter assessments

35

All Agencies providing cash transfers under any of the modalities (direct cash transfer, direct payment, reimbursement, direct agency implementation) will apply the procedures described in this framework.12 Whenever the Agencies support the same Implementing Partner, they will apply the same cash transfer procedures with that partner, even in instances where the modalities are different. The basic elements of the cash transfer procedures are: Basis for disbursements: • The basis for any cash transfer, regardless of the modality, are the activities to be carried out by an Implementing Partner, as described in AWPs; • Implementing Partners will submit a request to the Agency for release of funds or for agreement that the Agency will reimburse or directly pay for a planned expenditure. This request is part of the FACE form. Periodicity of disbursements: • Direct cash transfers are expected to be requested and released for programme implementation periods not exceeding three months. • Reimbursements for previously authorized expenditures are expected to be requested and released quarterly or after completion of activities. • Direct payments for previously authorized activities shall be made based on a request signed by a designated official of an implementing partner. Reporting on cash utilization: • Implementing Partners who receive cash will use the FACE form to report on the utilization of cash received, or to request reimbursement for expenditure already incurred. A designated official of the Implementing Partner will authorize direct payments to vendors. • The same FACE form is also used for requesting new transfers, or requesting authorization to incur future expenditure (for reimbursement or direct payment to vendors). • Cash disbursed but not utilized by the Implementing Partner may be re-programmed by mutual agreement if it is consistent with the purpose and timeframe of the funding source; or may be refunded. Table 3: Periodicity of Disbursement and Reporting Type Periodicity of disbursement Direct cash transfer Direct payment to vendors Reimbursement of expenses Direct agency implementation Quarterly Activity based Activity based N/A

Reporting FACE FACE FACE By Agency

Assurance over accuracy of reporting: • The coverage, type and frequency of assurance activities is guided by the level of risk associated with the Implementing Partner, as determined through the micro assessment. Implementing Partners assessed as “high risk” will, when compared to “low risk” partners, be subject to more frequent spot checks, more frequent and in-depth programmatic monitoring activities, and more frequent audits. Unfavourable findings of assurance activities may result in a reconsideration of the modalities, procedures and assurance activities for that partner. The assurance activities will include at least one

12

For WFP the framework does not apply to transfers for transport, distribution and monitoring of commodities

36

audit for each Implementing Partner who is expected to receive a minimum of US$500,000 within the programme cycle. *** 5. ASSURANCE ACTIVITIES For each Implementing Partner the initial scale of assurance activities required by the Agencies is guided by the risk rating and the magnitude of the cash transfers received from the Agencies. For each Implementing Partner the results of the assurance activities may lead to changes in the procedures and modalities for disbursing cash transfers, and the type and frequency of future assurance activities. The specific combination, frequency and scale of assurance activities for each Implementing Partner will be determined by the country representatives of the Agencies who provide cash transfers and by any Agency-specific requirements. The strongest assurance activities will be directed to Implementing Partners with the weakest financial management practices. When an Implementing Partner receives cash from more than one Agency, the Agencies will coordinate their assurance activities, share the results among the Agencies, and implement the assurance activities jointly when practical. Even if a single Agency provides cash transfers to an Implementing Partner, it is expected that these assurance guidelines should be applied. The assurance activities are: • Periodic on-site reviews of the Implementing Partner’s financial records for provided cash transfers. These may include spot checks by Agency staff and special audits by audit firms, and they may be conducted and documented on a routine basis, or when warranted due to concerns about the functioning of a partner’s internal controls for cash transfers. Programmatic monitoring of activities supported by cash transfers—following Agencies’ standards and guidance for site visits and field monitoring. Scheduled audits of Implementing Partners’ financial management systems. For each Implementing Partner, audits should be scheduled at least once during the programme cycle if more than US$500,000 in cash transfers is received/disbursed (or is expected to be received/disbursed) collectively from the Agencies during the period covered by the CPAPs, or for Implementing Partners who receive less than US$ 500,000 if considered necessary by one or more Agency. If the Macro Assessment establishes that the Supreme Audit Institution (SAI) has adequate capacity, it may undertake the audits of government partners. If the SAI does not undertake the audits as frequently as required by the Agencies, the Agencies will commission the audits following the terms established in the CPAP, and they will be undertaken by private sector audit services. Audits of NGO partners will be determined by the Agencies.

• •

Agency-specific guidance already exists for on-site reviews and programmatic monitoring activities. Guidance for the management of the audit activities is provided in Annex IV, the Technical Notes referenced in Annex VII, and in guidance issued by the Agencies. Technical assistance for audit activities has been articulated in the Technical Notes and if any further assistance is required, please contact the audit focal points listed in Annex VI. ***

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6. IMPLICATIONS OF THE CASH TRANSFER FRAMEWORK ON THE PROGRAMME PROCESS Decisions about the modalities, procedures, and assurance activities for cash transfers are an integral part of the common country programming process. Common Country Assessment (CCA) – section on financial accountability The key findings of the Macro Assessment should be summarized in the CCA. Among them should be one that specifies areas where national capacity is lacking. While working on UNDAF, the UNCT should collectively discuss the results of the CCA analysis and agree on what interventions they may undertake to address the identified gaps and name the Agency best positioned to do so. Country Programme Action Plan (CPAP) The CPAP sets out the expected key results and strategies of the country programme and programme management arrangements. For the management of cash transfers the following should be recorded in it: • • • • • • the available resource transfer modalities which the Agency and Government agree to utilize; that applicable procedures depend on risk ratings for transfer of cash to each Implementing Partner; that a (micro) financial capacity assessment will be undertaken for each Implementing Partner; the principles and scope of the assurance activities; that cash transfer modalities and procedures applied with a particular Implementing Partner may change subject to experience and the results of assurance activities, the commitments of both government partners and Agencies for the transfer and utilization of cash resources, reporting, and assurance activities, including audits.

Standard text for inclusion in the CPAPs is contained in Annex V. This text should be used by all Agencies. For those Implementing Partners not covered by a CPAP (e.g., NGOs), the appropriate clauses should be included in the respective agreements between the Agency and each Implementing Partner. Annual Work Plan (AWP) The AWPs detail both the activities to be carried out by Implementing Partners, and the associated budgets. The AWP is the basis of disbursements and efforts should be undertaken to determine reasonable costing of the planned activities. The AWP should indicate, among other elements, the resource transfer modalities to be applied. Annual Review Each AWP is subject to an annual review by the Implementing Partner and the respective Agency. In the case of joint programmes, the annual review is to be carried out jointly by participating Agencies. This is a good opportunity to also review the effectiveness of the applied resource transfer modalities and procedures, based on the findings of the assurance activities undertaken during the year. ***

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7. ANNEXES Annex I: Guidelines for use of the Funding Authorization and Certificate of Expenditures (FACE) Form. Purpose The harmonized Funding Authorization and Certificate of Expenditures (FACE) form simplifies the paperwork to authorize expenditure or transfer cash to Implementing Partners. (See Annex VII for a sample form.) The FACE supports several important functions: • Request for funding authorization: The section “Requests / Authorizations” will be used by the Implementing Partner to enter the amount of funds to be disbursed for use in the new reporting period. Against this request, the Agency can accept, reject or modify the amount approved. Reporting of expenditures: The section “Reporting” will be used by the Implementing Partner to report to the Agency the expenditures incurred in the reporting period. The Agency can accept, reject or request an amendment to the reported expenditures. Certification of expenditures: The section “Certification” will be used by the designated official from the Implementing Partner to certify the accuracy of the data and information provided.

•

•

In the process of certification, the designated official attests to one or both of the following statements: • That the funding request shown represents estimated planned expenditures as per the Country Programme Action Plan (CPAP)/Annual Work Plan (AWP) and itemized cost estimates have been attached and/or; That the actual expenditures for the reported period have been disbursed in accordance with the CPAP/AWP and previously approved itemized cost estimates. Further, the designated official attests that the supporting accounting documentation will be made available, upon request, for a period of five years.

•

When processing a payment to an Implementing Partner, a copy of the approved FACE should be returned to the Implementing Partner along with the notice of disbursement, cheque, etc. A detailed discussion of each segment of FACE follows below. Overall Approach and Guiding Principles • The FACE is intended to replace all other documentation used by partners for requesting funds and reporting expenditure. Not all sections of the form will be used at all times. For instance, for an initial disbursement, only the request section of the form will be completed. For a final payment upon AWP completion, only the reporting section will be used. The FACE will be used for direct cash transfers, reimbursements to Implementing Partners and direct payments. No FACE will be processed without the appropriate signature from the designated official.

• •

39

• •

The FACE is aligned with the AWP. The activities for which funds authorisation is requested, or for which expenditure is reported, will be the activities specified in the AWP. The FACE is normally certified by the designated official who signs the AWP. In all other circumstances, the AWP will specify any other official authorized to certify the FACE. For instance, the designated official signing the AWP may be from the central Ministry of Health while the actual expenditures may be incurred by a regional health office. In such cases, the AWP should specify whether the central authority will process and sign a consolidated FACE or whether individual FACE forms will be processed by other authorized officials from the subordinate offices and Implementing Partners. The respective reporting relationship must be specified in the AWP. A request for funding included in FACE must be accompanied with an itemized cost estimate of the activities to be funded as per individual Agency guidelines. The nature and detail of this list can be negotiated at the country level. The normal disbursement cycle for the FACE will be quarterly.

•

•

Header Area The header area of the FACE allows the Implementing Partner to report on the reason and purpose of the funding/ reporting request. This data is usually needed for correct coding in financial and management accounting systems. The specific data elements include: • • • • • • • • • Name of the Agency Date of the request Type of request (direct cash transfer, direct payment, reimbursement) Country where the programme takes place Programme title and code (as appropriate) AWP title and code Responsible officer(s) Implementing Partner Currency of the request/disbursement

Body of the Form Activity Description: This is a text field containing a short description of the activity as it appears in the underlying AWP, as well as its duration. This data is normally needed for the Agency’s programme or project management systems. Coding Column: The second column will allow the Agency to enter its own account codes. This data is required for the Agency’s financial accounting system. The Agency may enter this data itself or it may require the Implementing Partner to fill it in. If the latter, the training of the counterpart staff will be required. Reporting Area The FACE is a dynamic form that must balance and reconcile from one reporting period to the next. The first column on the new form, Column A, therefore repeats the last one, Column G, from the previously submitted and authorized FACE form. Note that Column C, D, F and G are shaded. They are blank when the FACE is submitted to the Agency. They are filled out by the Agency prior to the financial processing of the form. All non-shaded Columns are to be completed by the Implementing Partner.

40

Column A – Authorized Amount: Column A will be blank for the first request from an Implementing Partner. It should include the date of the most recent previous authorization. Column B – Actual Expenditure: Column B reports the actual expenditures by the Implementing Partner for the period. The expenditures reported by the Implementing Partner are, at this point, still subject to review and approval by the Agency. The designated official of the Implementing Partner is certifying that these expenditures are reported in accordance with the stipulation of the AWP, CPAP and/or other related agreements with the Agency. Column C – Expenditures Accepted by Agency: Column C is used by the Agency to review and approve, reject or request an amendment to expenditures reported by the Implementing Partner. If the amounts are accepted as reported, no further adjustments to this part of the FACE or communication with the Implementing Partner about these expenditure is required. However, if changes are made (e.g., to query or reject a reported expenditure), then the amount recorded by the Agency in Column C will differ from that reported in Column B. In this case, the change needs to be communicated with the Implementing Partner. Column D – Balance: Column D records the balance of funds authorized for use in the reporting period that remained unspent as of the date of the form. The term unspent can also reflect expenditures which are either known or ongoing as of the date of the FACE, but which cannot be certified by the Implementing Partner due to timing or internal reporting delays. The outstanding balance of funds authorized by activity can be carried forward, reprogrammed or refunded, depending on the internal policies of each Agency. Requests / Authorizations Area Column E – New Request Period & Amount: Column E determines the period of the new request, which is normally contiguous to the last reporting period. The Column contains the requests for the authorization to spend or receive funds, by activity and for that period. Each time a request for new or additional funds is submitted, it will be accompanied by an itemized list of expenditures in line with the AWP. This column can also reflect any balance for an activity in column D, which is requested for reprogramming. This will reduce the total amount of the new disbursement request accordingly. Column F – Authorised Amount: Column F is used by the Agency to establish the amounts of funds, by activity, to be disbursed for the new reporting period. This Column is filled in by the Agency. It can be used to accept, reject or modify the amounts requested in Column E. Any credits for reprogramming will be reflected in this column for reconciliation of the amounts. Column G – Outstanding Authorized Amount: Column G is the sum of Columns D and F, and indicates the total outstanding authorized amount. For subsequent period reporting, the amount of this column will be carried forward to the column A of the new FACE form Certification Area The Certification Area is used by the designated official of the Implementing Partner to request funds and/or to certify expenditures. This area requires a date, the signature of the official and his/her title. For Agency Use Only Area Approvals Box: The “For All Agencies” box in the lower left hand corner of the FACE form should be signed by the appropriate Agency official. This indicates the review and approval of the request for funds and authorizes the recording of the reported expenditures. The official should sign, date and provide his/her title.

41

Accounting Coding Boxes: The remainder of the form is used by Agencies to complete the coding as required by their financial and management accounting systems. Usage is by individual Agency. ***

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Annex II: Purpose

Guidelines for the Review of a Country's Public Financial Management System (Macro Assessment)

As part of the Common Country Assessment process, the Agencies will examine and interpret existing assessments of a country's Public Financial Management system (PFM). This exercise serves two purposes: • Capacity development objective: The review supports the Agencies and Government to identify strengths and weaknesses in the country’s PFM and areas for capacity development by the Government and others. Financial management objective: The review (in combination with the assessment of Implementing Partners) assists in the establishment of appropriate cash transfer modalities, procedures, and assurance activities to be applied by the Agencies.

•

The assessment’s scope is consistent with the recommendations of the paper by the OECD/DAC Task Force on Donor Practices, "Public Financial Management Diagnostic Work". Overall Approach and Guiding Principles The Agencies will review existing PFM assessments, and draw conclusions from these documents relevant to the management of cash transfers from the Agencies - using the guidelines established in this annex. The Agencies will request the Government to participate in the review. Where no relevant PFM assessments exist, the Agencies should advocate with the Government and other major development partners for such assessments to be undertaken. In countries with decentralized financial management systems, the Agencies may undertake more than one assessment to address the administrative structures and locations that are relevant to the areas where they operate. Positive results from an assessment are not required for cash transfers to be provided to Implementing Partners by the Agencies. The review will normally be conducted during the preparation of the Common Country Assessment (CCA) and the findings may be summarized in the CCA document. If the harmonized cash transfer framework is to be introduced by the Agencies during an existing programme cycle, the review should be conducted before the harmonized cash transfers procedures are applied. While one review is required per programme cycle, the Agencies may undertake additional reviews, if warranted by significant changes in the programme environment and/or availability of new PFM assessments. If it is not possible to conduct a review, the Agencies will document the reasons why it cannot be undertaken. If an assessment is not conducted, all required audits will be undertaken by private sector audit firms commissioned by the Agencies. Conducting a Review of the PFM Assessment The Agencies should inform government and relevant institutions of the purpose, process, and schedule for the PFM assessment review and seek the involvement of these parties in the exercise.

43

The review begins with the collection of existing PFM assessments (such as those listed at the end of this Annex). The assessment exercise reviews the existing documentation and Agencies’ experience to address the issues raised in the checklist in this Annex. Reviews may be undertaken by staff from the Agencies and other individuals agreed by the Agencies or by a qualified consultant such as a reputable private accounting firm (see Technical Note 2). Consultants will be contracted by the Agencies. Costs for the consultancy should be shared among the Agencies or paid for through the Resident Coordinator’s funds. The macro assessment findings should be presented in a report of approximately four pages (excluding annexes) that will detail: • • • • • • • Objective of the review, statement of process, and list of participating institutions; Summary of findings—to address each of the issues identified in checklist; Any key risks the PFM poses to the functioning of the cash transfer framework; Assessment of Supreme Audit Institution’s capacity to undertake required audits; Suggested opportunities for capacity development (if any); Bibliography of information sources used in the assessment; Annex—the completed checklist.

The draft report should be shared and validated with government officials and the institutions that provided the materials used in the review, and a copy of the final report should be presented to the coordinating government ministry and relevant development partners. A summary of the assessment should be incorporated into the CCA. If the timing of the assessment does not coincide with the preparation of the CCA, the summary of the assessment should be communicated through the annual UNDAF review. Use of the Assessment The Agencies will use the assessment report as background information in the selection of suitable cash transfer modalities and the establishment of appropriate cash transfer procedures and assurance activities to be used with the Implementing Partners who will receive cash transfers. The Agencies will also use the assessment to establish the capacity of the Supreme Audit Institution (SAI) to undertake audits of cash transfers. List of Public Financial Management Reviews That May Exist in the Country The following reviews have been conducted in a number of countries. The assessment team should contact the World Bank office at the outset of the review to develop an initial list of assessments conducted by the Bank and others. World Bank • • • Country Financial Accountability Assessment. CFAAs vary in format and presentation. Public Expenditure Review. This analyzes a country’s fiscal position, expenditure policies, and public expenditure management systems. Country Procurement Assessment Review. This reviews public procurement institutions and practices.

44

• •

Institutional and Governance Review. This reviews the quality of accountability, policymaking, and service delivery institutions. Capacity Assessments of Heavily Indebted Poor Country (HIPC) PFM. Done jointly with IMF, This assessment covers some of the same issues as a CFAA.

Assessments by Other Institutions • • • • Fiscal Transparency Review. IMF. This uses the code of good practices on fiscal transparency adopted by the IMF in 1998. Diagnostic Study of Accounting and Auditing. Asian Development Bank. Ex-ante audits of PFM systems undertaken by the European Commission. Assessments by CIDA, DFID, EU, ADB and other Agencies.

Technical Notes The following Technical Notes are available to assist the Agencies (see Annex VII): • • Technical Note 1: Pre-qualification of a Consulting Firm/Consultant to Conduct a Micro Assessment or Audit Technical Note 2: Terms of Reference for Conducting a Review of the Assessments of a Country’s Public Financial Management (PFM) System ***

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A Checklist for Determining Risks Related to a Country’s PFM No 1 Indicator The annual budget contains all significant government expenditures, including relevant donor contributions Budget and performance High Risk No Significant Risk Moderate Risk Yes Low Risk No info

2

3

To what extent are internal controls and financial procedures adhered to?

Budget decisions are only nominally debated. Little consideration of previous performance is taken into account when setting future budgets. Procedures are frequently over-ridden or ignored. Emergency procedures are routinely used.

4

Bank reconciliations

Many accounts are not reconciled monthly. Reconciliations are often poorly performed.

Procedures are generally followed. However, there are significant exceptions. Doubt exists as to whether or not the internal control system can be relied upon. A number of significant accounts are not reconciled monthly. Quality in is some instances is poor. Cash transfers from central / regional levels to projects level takes between two

Procedures are generally followed. While exceptions exist, they are not frequently enough to prevent reliance on the internal control system. Generally banks are properly reconciled each month. Exceptions exist but appropriate follow up action is taken in all cases. Cash transfers from central / regional levels to projects level takes between one and two

Budget decisions are fully debated with assistance from expert committees. Full consideration of previous performance is taken into account when setting future budgets. Always.

Performed to a high standard for all bank accounts at least once a month.

5

Transfer of cash resources

Cash transfers from central / regional levels to projects level takes more than one month.

Cash transfers from central/ regional levels to projects level take a week or less.

46

weeks and one month. 6 Reporting of cash and asset position to government Analysis of cash and asset position made to government contains significant omissions.

weeks. Full analysis of cash and asset position is made to government.

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7

External audit / the auditor general (supreme audit body) Follow up action to audit reports

8

External audit covers less than 80% of central government expenditures. Points raised by external audit are infrequently followed up.

9

Transparency of audit process

10

Staff qualifications and skills

Statutory external audit reports are infrequently published. These are rarely debated in the press, even where of public interest. It is often not clear that staff have the skills and qualifications necessary to discharge their duties. Financial systems only capture and report on the most basic financial data, and this is frequently unreliable. System maintenance and performance is generally poor.

11

Financial systems

External audit covers 80 to 90% of central government expenditures Points raised by external audit are usually, but not always, followed up. A significant number of points re-occur in following years. Most statutory external audit reports are published. These are sometimes debated in the press when of public interest. In some cases it is not clear if staff do not have the skills and qualifications necessary to discharge their duties. Financial systems only capture and report on the most basic financial data. While there are system maintenance and performance problems, generally the system is stable.

External audit covers 90% of central government expenditures. Points raised by external audit are always followed up. In a few cases points reoccur in following years. All statutory external audit reports are published. These are usually debated in the press when of public interest. In only some isolated case is it not clear if staff do not have the skills and qualifications necessary to discharge their duties. Financial systems are adequate for most but not all existing data capture and reporting needs. They are reliable and properly maintained.

External audit covers all central government expenditures. Points raised by external audit are always properly followed up. Points generally do not re-occur in following years. All statutory external audit reports are published. They are debated in the press where of public interest. It is always clear that all staff have the skills and qualifications necessary to discharge their duties. Financial systems are adequate for all existing data capture and reporting needs. They are reliable and properly maintained.

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Annex III: Guidelines for Assessing the Financial Management Capacity of Partners Receiving Cash from an Agency (micro assessment) Purpose

Implementing

The Financial Management Capacity Assessment of an Implementing Partner has two purposes: • Capacity development objective: The review will assist in identifying capacities of an Implementing Partner with the objective of identifying those areas in need of strengthening. Where deficiencies are noted, the assessment should include recommendations to address them. The recommendations may be considered by the Implementing Partner, the Agencies, and others in the planning of capacity development activities. Financial management objective: The review will assist in the identification of the most suitable modalities, procedures and assurance activities by the Agencies for the transfer of cash to the Implementing Partner.

•

These guidelines consider the findings of OECD/DAC Good Practice papers13 and replace any other instruments for assessing the financial capacities previously issued by the Agencies. Overall Approach and Guiding Principles Agencies will conduct a financial management capacity assessment of each Implementing Partner (government or NGO, but not other Agencies) that receives or is planned to receive cash transfers above an annual amount (usually US$100,000 combined from all Agencies; or as locally agreed among the Agencies) and is responsible to use the Funding Authorization and Certificate of Expenditures (FACE) form to report the use of the funds, as defined in the Annual Work Plans (AWP). For Implementing Partners with planned annual cash receipts below US$100,000, assessments may be conducted if desired by the involved Agencies to determine the most effective and efficient procedures. These assessments could be more basic in nature14. Agencies should prepare an annual assessment and audit plan of relevant partners, and ensure that an assessment is done before they apply the new procedures (see Technical Note 5). When two or more Agencies provide (or plan to provide) cash transfers to the same Implementing Partner, the assessment will be done jointly and as a priority. Agencies must arrive at a common conclusion of the assessment findings. Prior to conducting an assessment Agencies should determine whether a similar assessment already exists, and consider using its findings. The assessments do not establish conditionality for the provision of cash from Agencies, but the procedures will very depending on the level risks. The assessment provides an overall rating in addition to risks associated with the financial management capacity of the Implementing Partner. Financial management arrangements -including those related to accounting, reporting, auditing, and internal controls -- would be rated as fully acceptable if: they are considered capable of recording correctly all transactions and balances,
13 14

See: http://www.oecd.org/dataoecd/0/48/20896122.pdf Materials exist among Agencies for lighter assessments

49

support the preparation of regular and reliable financial statements, safeguard the entity’s assets, and are subject to acceptable auditing arrangements. Financial management capacity should be assessed against international standards. The assessments should be conducted in a transparent manner and each partner should be invited to participate in the assessment of their institution. Each assessment requires the completion of a first-stage review, and some assessments may also require the completion of a second-stage review. • When adequate information exists and confirms that the overall risk related to cash transfers to this Implementing Partner is low, only Checklist A needs to be completed. In this case no further assessment is required. If information is inadequate or does not confirm a low risk rating, the Agencies will conduct a second more detailed assessment of the Implementing Partner, using Checklist B in Annex III.15

•

The Agencies shall draw from available information about the financial management capacity of the Implementing Partner, such as reviews of past experience with the Implementing Partner, recent assessments by other Agencies (e.g. for the GFATM), NEX audit reports, or recent assessments completed by other development partners, including bilateral Agencies. In cases where such assessments have already been conducted, these should be reviewed, evaluated and adopted. Agencies should budget about US$5,000 for each Micro Assessment of an Implementing Partner, and the actual costs should be pro-rated among the Agencies.16 When an assessment cannot be undertaken, the Agencies will apply the procedures and assurance activities that are applicable to a “high risk” partner. Planning, Conducting and Reporting on the Assessment of a Partner For each Implementing Partner, the assessment should ideally be completed before cash transfers are provided by the Agencies through the harmonized framework. Where this is not possible, the assessment should be completed before the preparation with the Implementing Partner of next AWP. Normally, one assessment of each Implementing Partner should be completed during each programme cycle. However, a major change in the programme environment (e.g., significant changes in leadership, introduction of new national procedures, results of other major reviews) may call for the completion of another assessment during the programme cycle. The assessments may be undertaken by staff from the Agencies, or may be undertaken by qualified consultants such as a reputable and experienced private accounting firm contracted by the Agencies (Technical Note 1). Ideally, the assessment team should be led by a person experienced in assessing control frameworks and risk, in particular the application of the IFAC International

15 16

Based on International Public Sector Accounting Standards (IPSASs). This is a preliminary figure, and will be revisited as more experience is gained.

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Standard on Auditing 400 “Risk Assessment and Internal Control”17, the basis for the content of checklist B. For the assessment of each Implementing Partner, a lead agency (typically the Agency which has most experience with the Partner) should be designated to coordinate the assessment, and identify and recruit a consultant if so decided. Costs should be shared by Agencies, proportionally to the anticipated amount of cash transfers to the Implementing Partner. Checklists A and B provide an indicative list of issues and questions to be considered in the assessment of the capacity of the Implementing Partner’s financial management system to receive, record, disburse, and report on cash transfers from the Agencies. Questions may be added, deleted or modified as appropriate, and attention to individual control areas may vary based on the findings of the macro-assessment (see: Guidelines for the Review of a Country's Public Financial Management System - Annex II). Following the completion of appropriate checklists, the Agencies will establish an overall risk management rating for the Implementing Partner that summarizes the level of risk for the appropriate use and accurate reporting of cash transfers provided by the Agencies. The financial management assessment report for each Implementing Partner should not exceed four pages, excluding annexes. It will include: • • • • • • • an executive summary, with the overall conclusion and risk rating (high, significant, moderate, low) related to the Implementing Partner’s financial management capacity for cash transfers; a brief summary of the methodology used in the assessment; a description of the financial management capacity in each of the subject areas of the checklists; a description of the most significant risks to the receipt, recording, disbursement and reporting of cash transfers; recommendations to the Implementing Partner to address areas of risks; any other information considered useful for Agencies to determine the appropriate procedures and assurance activities; annex the completed checklists.

The draft assessment report should be discussed with the Implementing Partner and the final report should be shared with the Implementing Partner. Implementing Partners should also be encouraged to undertake self-assessments of their internal control systems. Use of the Assessment The Agencies will use the assessment report to select the most suitable cash transfer modality, and establish appropriate cash transfer procedures and assurance activities to be used with the
17

The International Federation of Accountants (IFAC) is responsible for setting international standards, such as the International Standards on Auditing (ISAs).

51

Implementing Partner. All Agencies working with the Implementing Partner and using the same modality will use the same procedures and coordinate their assurance activities. Technical Notes The following Technical Notes are available to assist country teams: • • • Technical Note 1: Pre-qualification of a Consulting Firm/Consultant to Conduct a Micro Assessment or Audit. Technical Note 3: Terms of Reference for Conducting an Assessment of an Implementing Partner’s Financial Management Capacity. Technical Note 5: Developing an Annual Plan for Micro Assessments and Audits. ***

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Checklist A
Financial Management Capacity Questionnaire for Implementing Partners with experience working with the UNCT Summary Assessment Name of Implementing Partner: _______________________________________ Date: _____________________________ Number of years Agency has worked with the IP: ___________________ (if less than two years then the questionnaire in Checklist B should be used) 1. Is the volume of expected expenditure significantly different to that of past expenditures? 2. Has there been a significant change in administration in the past two years? 3. Have there been any incidences that indicate that financial reporting has been inaccurate or unreliable? 4. Have Agencies noted any issues, which could lead to inappropriate use of funds: • lack of segregation of duties • lack of supervision of staff • inadequate monitoring • inappropriate/untrained staff • large cash operation 5. Has there been any incidence of unduly delayed financial reports? Yes/No Yes/No Yes/No If Yes, stop here and go to Checklist B If Yes, stop here and go to Checklist B If Yes, stop here and go to Checklist B If No, attach justification (e.g., NEX audit certification and reports, previous liquidation statements). If Yes in any of the responses, stop here and go Checklist B

Yes/No Yes/No Yes/No Yes/No Yes/No Yes/No Yes/No

If Yes, the UNCT should discuss the reasons. If identified as a significant cause of concern, proceed to use Checklist B. If not a significant cause of concern, attach explanation. If Yes, go to Checklist B If No, proceed to conclude the assessment

6. Is there any indication outside the above that there are weaknesses in internal controls and/or financial management, which would require a specific assessment of the financial management capacity? Result of Assessment

Yes/No

If all answers are ‘No’, then the overall risks are considered low. If any answers are ‘Yes’, then the UNCT should complete Checklist B

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Checklist B: Financial Management Questionnaire18 Implementing Partner: _______________________________________ Date: _____________________________

Summary of Risks related to the Financial Management Capacity of Implementing Partner Tested Subject Area (see subsequent pages for questions for each area that should be completed and summarized in the sections below) Risk Assessment H 1. Implementing Partner 2. Funds Flow 3. Staffing 4. Accounting Policies and Procedures 5. Internal Audit 6. External Audit 7. Reporting and Monitoring 8. Information Systems Inherent Risk List major specific issues identified in the assessment of the country’s public financial management system (macroassessment), or specific risks related to the nature or operation of the Implementing Partner Overall Risk Assessment H – High S – Significant M – Moderate H S M L S M L

Comments

L –Low

18

This questionnaire was developed from a questionnaire used by the World Bank.

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Financial Management Questionnaire Subject Area 1. Implementing partner 1.1 Is the implementing partner legally registered? Please note the legal status/registration of the entity. 1.2 Has the implementing partner received UN resources in the past? 1.3 Does the IP have statutory reporting requirements? Please describe. 1.4 Is the governing body for the implementing partner independent? 1.5 Is the organizational structure appropriate for the work to be carried out under UN cooperation? Risk Assessment (Implementing Partner) 2. Funds Flow 2.1 Can the entity receive and transfer funds? 2.2 Are the arrangements to transfer the funds to the entity satisfactory? 2.3 Have there been major problems in the past in receipt of funds by the entity, particularly where the funds flow from the Government/Ministry of Finance? 2.4 In the past, has the entity had any problems in the management of disbursements from a member of the UN country team? Please describe. 2.5 Does the entity have/need a capacity to manage foreign exchange risks? (if it is expected that the entity will be using funds outside the country.) 2.6 How are the counterpart funds accessed? 2.7 How are payments made from the counterpart funds? 2.8 If some activities will be implemented by communities or NGOs, does the entity have the necessary reporting and monitoring mechanisms to track the use of funds? Risk Assessment (Funds Flow) Yes No N/A Review Remarks/Comments

H

S

M

L

Circle assessed risk for Subject Area 1

H

S

M

L

Circle assessed risk for Subject Area 2

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Subject Area 3. Staffing 3.1 Is the organizational structure of the accounting department appropriate for the level of financial volume? Attach an organization chart. 3.2 Is the level and competency of staff appropriate for the level of financial volume? Identify the accounts staff, including job title, responsibilities, educational background and professional experience. Attach job descriptions and CVs of key accounting staff. 3.3 Is the implementing partner finance and accounts function staffed adequately? 3.4 Are finance and accounts staff adequately qualified and experienced? 3.5 Are accounts and finance staff familiar with UN procedures related to cash transfers? 3.6 What is the duration of the contract of finance and accounts staff? 3.7 Indicate in the remarks/comments section key positions not contracted yet, and the estimated date of appointment. 3.8 Are staff frequently transferred? At what frequency? 3.9 Is there a training policy for the finance and accounting staff? Please describe. Risk Assessment (Staffing) 4. Accounting Policies and Procedures 4.1 Does the entity have an accounting system that allows for the proper recording of financial transactions from UN Agencies, including the allocation of expenditures in accordance with the respective components, disbursement categories, and sources of funds? 4.2 Are controls in place concerning the preparation and approval of transactions, ensuring that all transactions are correctly made and adequately explained?

Yes

No

N/A

Review

Remarks/Comments

H

S

M

L

Circle assessed risk for Subject Area 3

56

Subject Area 4.3 Is the chart of accounts adequate to properly account for and report on activities and disbursement categories? 4.4 Are cost allocations to the various funding sources made accurately and in accordance with established agreements? 4.5 Are the general ledger and subsidiary ledgers reconciled and in balance? 4.6 Are all accounting and supporting documents retained on a permanent basis in a defined system that allows authorized users easy access? Segregation of Duties 4.7 Are the following functional responsibilities performed by different units or persons: (a) authorization to execute a transaction; (b) recording of the transaction; and (c) custody of assets involved in the transaction? 4.8 Are the functions of ordering, receiving, accounting for, and paying for goods and services appropriately segregated? 4.9 Are bank reconciliations prepared by someone other than those who make or approve payments? Budgeting System 4.10 Do the budgets lay down physical and financial targets? 4.11 Are budgets prepared for all significant activities in sufficient detail to provide a meaningful tool with which to monitor subsequent performance? 4.12 Are actual expenditures compared to the budget with reasonable frequency, and explanations required for significant variations from the budget? 4.13 Are approvals from variations from the budget required in advance or after the fact? 4.14 Who is responsible for preparation and approval of budgets?

Yes

No

N/A

Review

Remarks/Comments

57

Subject Area 4.15 Are procedures in place to plan activities, collect information from the units in charge of the different components, and prepare the budgets? 4.16 Are the plans and budgets of activities realistic, based on valid assumptions, and developed by knowledgeable individuals? Payments 4.17 Do invoice processing procedures provide for: • Copies of purchase orders and receiving reports to be obtained directly from issuing departments? • Comparison of invoice quantities, prices, and terms with those indicated on the purchase order and with records of goods actually received? • Comparison of invoice quantities with those indicated on the receiving reports? • Checking the accuracy of calculations? 4.18 Are all invoices stamped PAID, dated, reviewed and approved, and clearly marked for account code assignment? 4.19 Do controls exist for the preparation of the payroll and are changes to the payroll properly authorized? Policies And Procedures 4.20 Describe the basis of accounting (e.g., cash, accrual)? 4.21 Are internationally accepted accounting standards followed? If so, which standard? 4.22 Does the entity have an adequate policies and procedures manual to guide activities and ensure staff accountability? 4.23 Do procedures exist to ensure that only authorized persons can alter or establish a new accounting principle, policy, or procedure to be used by the entity?

Yes

No

N/A

Review

Remarks/Comments

58

Subject Area 4.24 Are there written policies and procedures covering all routine financial management and related administrative activities? Are these accessible? 4.25 Do policies and procedures clearly define conflict of interest and related party transactions (real and apparent) and provide safeguards to protect the organization from them? 4.26 Are manuals distributed to appropriate personnel? Cash and Bank 4.27 Indicate in remarks/comments section the names and positions of authorized signatories on the bank accounts. 4.28 Does the implementing partner maintain an adequate, up-to-date cashbook, recording receipts and payments? 4.29 Do controls exist for the collection, timely deposit, and recording of receipts at each collection location? 4.30 Are bank and cash reconciled on a monthly basis? 4.31 Are all unusual items on the bank reconciliation reviewed and approved by a responsible official? 4.32 Are receipts deposited on a timely basis? Safeguard Over Assets 4.33 Is there a system of adequate safeguards to protect assets from fraud, waste and abuse? 4.34 Are subsidiary records of fixed assets and stocks kept up to date and reconciled with control accounts? 4.35 Are there periodic physical inventories of fixed assets and stocks? 4.36 Are assets sufficiently covered by insurance policies? Other Offices or entities*2

Yes

No

N/A

Review

Remarks/Comments

2

Other offices or entities refers to sub-offices of the implementing partners and/or respective parties.

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Subject Area 4.37 Are there any other regional offices participating in implementation? 4.38 Has the Implementing Partners established controls and procedures for flow of funds, financial information, accountability, and audits in relation to the other offices or entities? Please describe approval process. 4.39 Does information among the different offices/Agencies flow in an accurate and timely fashion? 4.40 Are periodic reconciliations performed among the different offices/Agencies? Other 4.41 Has the implementing partner advised employees, beneficiaries, and other recipients to whom to report if they suspect fraud, waste, or misuse of Agency resources or property? Risk Assessment (Accounting Policies and Procedures) 5. Internal Audit 5.1 Is there an internal audit department in the entity? 5.2 What are the qualifications and experience of audit department staff? 5.3 Is the internal auditor sufficiently independent to make critical assessments? To whom does the internal auditor report? 5.4 Will the internal audit department include the activities financed by the Agencies in its work program? 5.5 Are actions taken on the internal audit findings? Risk Assessment (Internal Audit) 6. External Audit 6.1 Is the entity financial statement audited regularly by an independent auditor? Who is the auditor? 6.2 Are there any delays in audit of the entity? When are the audit reports issued? 6.3 Is the audit of the entity conducted according to the International Standards on Auditing?

Yes

No

N/A

Review

Remarks/Comments

H

S

M

L

Circle assessed risk for Subject Area 4

H

S

M

L

Circle assessed risk for Subject Area 5

60

Subject Area 6.4 Were there any major accountability issues brought out in the audit report of the past three years? 6.5 Will the entity auditor audit the AWP accounts or will a separate auditor be appointed to audit the AWP financial statements? 6.6 Are there any recommendations made by the auditors in prior audit reports or management letters that have not yet been implemented? 6.7 Has the implementing partner prepared audit plans? Risk Assessment (External Audit) 7. Reporting and Monitoring 7.1 Are financial statements prepared for the entity? 7.2 What is the frequency of preparation of financial statements? Are the reports prepared in a timely fashion so as to useful to management for decision making? 7.3 Does the reporting system need to be adapted to report on the AWP related expenditure? 7.4 Does the reporting system have the capacity to link the financial information with the AWP’s physical progress? If separate systems are used to gather and compile physical data, what controls are in place to reduce the risk that the physical data may not synchronize with the financial data? 7.5 Does the Implementing Partner have established financial management reporting responsibilities that specify what reports are to be prepared, what they are to contain, and how they are to be used? 7.6 Are financial management reports used by management? 7.7 Do the financial reports compare actual expenditures with budgeted and programmed allocations? 7.8 Are financial reports prepared directly by the automated accounting system or are they or are they prepared by spreadsheets or some other means?

Yes

No

N/A

Review

Remarks/Comments

H

S

M

L

Circle assessed risk for Subject Area 6

61

Subject Area Risk Assessment (Monitoring and Reporting) 8. Information Systems 8.1 Is the financial management system computerized? 8.2 Can the system produce the necessary financial reports? 8.3 Are the staff adequately trained to maintain the system? 8.4 Does the management organization and processing system safeguard the confidentiality, integrity, and availability of the data? Risk Assessment (Information Systems)

Yes H

No S

N/A M

Review L

Remarks/Comments Circle assessed risk for Subject Area 7

H

S

M

L

Circle assessed risk for Subject Area 8

62

Annex IV: Purpose

Maintaining Assurance of the Use of Cash Transfers Provided to Implementing Partners

The purpose of assurance is to determine whether the funds transferred were used for the appropriate purpose, and in accordance with the stipulated procedures. When an Implementing Partner receives cash transfers from more than one Agency, the Agencies will undertake and fund their assurance activities jointly whenever practical (particularly the audits), coordinate activities they implement on their own, and share the results among the Agencies. When an Implementing Partner receives cash transfers from only one Agency the same assurance standards and guidance should be applied. The specific combination, frequency and scale of assurance activities for each Implementing Partner will be determined by the country representatives of the Agencies who provided cash and any Agency-specific requirements. The strongest assurance activities will be directed to Implementing Partners with the weakest financial management practices. For each Implementing Partner, the results of the assurance activities may lead to changes in the procedures and modalities for disbursing cash transfers, and the type and frequency of future assurance activities. Agency-specific guidance exists for on-site reviews and programmatic monitoring activities. Guidance for the management of the audit activities is provided in this document, the referenced Technical Notes, and from guidance issued by the Agencies. Technical assistance is available within the Agencies and through interagency support. Part I. The Assurance Mechanisms for Cash Transfers There are three mechanisms through which Agencies maintain assurance that the funds provided to each Implementing Partner were received, expended, and reported following the Implementing Partner’s system of internal controls for activities agreed with the Agencies: • • • Periodic on-site reviews of Implementing Partners’ financial records for cash transfers Programmatic assurance of the implementation of supported activities Scheduled audits of Implementing Partners’ internal controls for the management of cash transfers

The Agencies will undertake programmatic assurance activities with all Implementing Partners who receive cash transfers and may undertake periodic on-site reviews of the Implementing Partner’s financial records for provided cash transfers when considered necessary. Audit coverage and frequency is based on the quality of the Implementing Partner’s financial management practices and the total value of the cash transfers provided by the Agencies. A. Periodic On-Site Reviews of Implementing Partners’ Financial Records for Cash Transfers. The Country Programme Action Plan (CPAP) includes an authorization from the Implementing Partners for onsite access to the financial records related to cash transfers. Agencies may review an Implementing Partner’s records as a matter of routine or in response to a particular concern to establish the soundness of the financial controls and the accuracy of the financial records for cash transfers. On-site reviews may include spot checks by Agency staff and external consultants, or special audits. 1. Spot Checks by Agency Staff & External Consultants. The Agencies may conduct on-site reviews undertaken by their own staff/external consultants, following standards and procedures developed by each Agency. When more than one Agency undertakes a spot check of the same Implementing Partner during the same quarter the exercises should be coordinated (see Technical Notes).

63

2. Special Audits. A commercial audit firm can be contracted by the Agencies, collectively or individually, to provide technical expertise for an on-site review, or these audits can be undertaken by the Supreme Audit Institution (SAI) with adequate capacity, if the SAI agrees. (The principle difference is that special audits are commissioned to address specific suspected weaknesses and can be implemented on short notice, while the scheduled audits are based on an annual plan of routine audits). B. Programmatic Assurance of the Implementation of Supported Activities. Programmatic assurance is maintained following standards and guidance established by each Agency and includes receipt of implementation reports from Implementing Partners, site visits by Agency staff, annual reviews, and evaluations. C. Scheduled Audits of Internal Controls for Cash Transfers. Government and NGO partners who receive (or are planned to receive) more than US$500,000 in cash transfers collectively from the Agencies during the period covered by the CPAPs will be audited once or more during the programme period to reinforce the Agencies’ knowledge of the Implementing Partners’ internal control systems used in the management of the cash transfers provided by all Agencies. Implementing Partners who receive (or are planned to receive) less than US$500,000 over the programme period may be audited if one or more Agency requires it. The scheduled audits will assess the internal control systems used by the Implementing Partner to receive, record, and disburse the cash transfers provided by all Agencies, and the fairness of a sample of the expenditures recorded in the Funding Authorization and Certificate of Expenditures (FACE) forms issued during the period under review. The report of each audit should be used to confirm the appropriateness of the existing procedures and modalities, and the scale of assurance activities. Otherwise the report should lead to changes. Part II. Management of Audit Activities The following guidance covers five core aspects of audit management. Additional guidance is available in the referenced Technical Notes and through interagency and Agency technical support. • • • • • Types of Audits: Scheduled Audits and Special Audits The Annual Audit Plan Audit Services to Undertake Scheduled and Special Audits Funding of Audit Activities Accountabilities for Audits There are two types of audits for the assurance of cash transfers.

A. Types of Audits.

Scheduled Audits. Each Audit will assess the existence and functioning of an Implementing Partner’s internal controls for the receipt, recording, and disbursement of cash transfers and the fairness of a sample of expenditures reported in all of the FACE forms issued by the Implementing Partner to the Agencies during the period under audit. It is not expected that the sample will provide assurance for individual FACE forms. For each Implementing Partner subject to scheduled audits, the frequency and total number of audits conducted during the CPAP period is determined by the country representatives of the Agencies based on

64

the initial financial capacity assessment, any on-site reviews of the Implementing Partner’s financial records, programmatic assurance activities, and any Agency-specific requirements. The findings of each Audit will be reported to the Implementing Partner and copied to the Agencies that provided cash transfers to the Implementing Partner and other parties as defined in the relevant CPAPs. The audit report will include an opinion on the fairness of the reported expenditures tested by the Audit and may include recommendations to the Implementing Partner related to the management of cash transfers. Each country representative is responsible to report the results of the audits within their Agency following the procedures and standards established by their Agency. Special Audits. A Special Audit is undertaken by an audit firm to review a possible or confirmed significant weakness in the Implementing Partner’s internal controls over cash transfers. It should be implemented as soon as practical after the weakness is identified. Unless warranted by specific circumstances, these audits will follow the scope and procedures established for the Scheduled Audits. When considering the need for a Special Audit the Agency(ies) should consult with the appropriate offices within their Agencies before the audit is conducted. When more than one Agency is involved the headquarters focal points will confer and advise on actions to take. B. The Annual Audit Plan. The Annual Audit Plan identifies the Implementing Partners who will receive Scheduled Audits during the calendar year and establishes a schedule of audits. The audits may be implemented at any time during the year, and ideally they will be undertaken on a staggered basis through the year to ease the workload on the Agencies and audit services. (See: Technical Note 5, Developing an Annual Plan for Micro Assessments and Audits). Note: In countries where the SAI will undertake the audits of government partners, it is expected that an audit plan will be developed by the SAI following consultations with the Agencies. Scheduled audits of Implementing Partners who receive cash transfers from more than one Agency should provide assurance information for all of the Agencies who have provided funds to the Implementing Partner. Special Audits should, whenever possible, provide assurance information for all of the Agencies who have transferred cash to the Implementing Partner during the period reviewed by the Audit. The Annual Audit Plan should be realistic—with recognition that Scheduled Audits are not expected for any Implementing Partner who receives (or is planned to receive) less than US$500,000 collectively from the Agencies during the period covered by the current CPAPs. For guidance on developing the Annual Audit Plan, please refer to Technical Note 5. Where established in the CPAPs and practical, the Agencies should involve the coordinating government ministry in the development of the Annual Audit Plan. When only one Agency provides cash transfers to a specific partner, it is for the Agency to determine if and when an audit should be conducted. Audits commissioned by individual Agencies should be included in the overall annual audit plan and implemented with the same terms of reference as audits commissioned by more than one Agency. C . Audit Services to Undertake the Scheduled and Special Audits. The determination of the audit services that may undertake the audits of government partners is based on the macro assessment. Audits of NGO partners are undertaken by private sector audit services.

65

•

Supreme Audit Institution. If the Macro Assessment establishes that the SAI has adequate capacity, it may undertake the audits of government partners. If the SAI does not undertake the audits to the frequency required by the Agencies, the Agencies will commission the audits following the terms established in the CPAP, and undertaken by private sector audit services. Private Sector Audit Service. Private sector audit services may undertake the audits (including audits of government partners when a capable SAI does not undertake the audits).

•

Technical Note 1, Pre-qualification of a Consulting Firm/Consultant to Conduct a Micro Assessment or Audit, provides guidance to the Agencies for the identification and assessment of private sector audit services, and includes a model contract. The selection and contracting of specific private audit services should be done following the Agencies’ established contracting procedures. The Agencies may make use of the contracting procedures of one of the member Agencies on their behalf. Quality assurance over the completed work of the audit services can be secured by the Agencies through a review of the audit reports, audit guidelines and work papers—access to which is established in the model contract. Advisory support for quality assurance may be provided from the Agencies and through interagency support (See Annex VI) D. Funding of Audits. In countries where the macro assessment establishes that the SAI may undertake the audits of government partners, the SAI will normally finance these audits and this should be specified in the CPAPs. In all other circumstances, the audits of government partners will be financed by the Agencies from programme funds, following procedures established by each Agency. Audits of NGO partners will be funded as jointly agreed between each NGO and the relevant Agencies. In most countries, the Agencies can use the audit contracting experience of UNDP and UNFPA to estimate the likely cost of each Scheduled and Special Audit. When the expected cost of each audit is unknown (as in the first year of the application of the cash transfer approach) the Agencies should budget US$ 5,000 for each audit—pro-rated to each Agency based on their share of the total cash transfers provided to the Implementing Partner in the previous year. (See: Technical Note 5, Developing an Annual Plan for Micro Assessments and Audits, and/or seek assistance from the Agency and interagency services listed in Annex VI). The actual cost of each audit should also be pro-rated to each Agency based on their share of the total cash transfers provided to the Implementing Partner in the previous year. E. Accountabilities for Audits. This section defines the accountabilities of the government audit services, the coordinating government ministry, government and NGO partners, and the Agencies—as a sub-group within the UNCT and individually—for audits of cash transfers. Additional guidance is available in the referenced technical guides and through consultation within the Agencies. 1. Government and Private Audit Services. The macro-level financial assessment establishes if the Government’s Supreme Audit Institution (SAI) has the capacity to undertake the scheduled and Special Audits of government partners. In all other circumstances, the audits will be undertaken by private audit services, and the guidance below addresses the major issues to be considered in this scenario. 2. The Coordinating Ministry will perform the duties defined in the CPAP.

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3. Implementing Partners a. Government Implementing Partners. As established in the CPAPs, each government partner who uses FACE reports for cash transfers will: Facilitate Scheduled Audits and Special Audits. Provide the designated auditors with timely access to: • • All financial records held by the Implementing Partner which establish the transactional record of the cash transfers provided by the Agencies. All relevant documentation and personnel associated with the functioning of the Implementing Partner’s internal control structure through which the cash transfers have passed. Receive and review the audit report issued by the auditors. Provide a timely statement of the acceptance or rejection of any audit recommendation to the parties defined in the CPAPs. Undertake timely actions to address the accepted audit recommendations. Report on the actions taken to implement accepted recommendations to the parties defined in the CPAPs.

Receive and Use Audit Reports. Government partners will: • • • •

b. NGOs and Other Implementing Partners. Generally, assurance over the use of cash transfers by NGOs and other Implementing Partners is secured through the same mechanisms as for government partners. However, for each NGO partner, the assurance through audits may be accomplished through either of two options, as determined by the Agencies. Option 1. Provision of Audited Financial Statement Reports. When a partner NGO (or local office of an international NGO) has its local accounts audited annually, the Agencies may rely on the audited annual financial statements, when: • The technical capacity of the NGO’s local external auditor is adequate (See: Technical Note 1, Pre-qualification of a Consulting Firm/Consultant to Conduct a Micro Assessment or Audit). The NGO provides annually to the Agencies a copy of the annual audit opinion and any relevant management letters issued by the external auditor.

•

Option 2. Audits of Cash Transfers Provided by the Agencies. The Agencies may, together or individually, require an NGO partner to commission audits focused specifically on the cash transfers provided by the Agencies. These audits will: • • • 4. UN Agencies a. Agencies, together as a sub-group of the UN Country Team. The Agency members of the UNCT are responsible to cooperate together for: Follow the same terms of reference used in audits of government partners; Be undertaken by an audit service approved by the Agency/Agencies; Be funded by the Implementing Partner or Agency/Agencies from programme funds as jointly agreed.

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• • • • • •

Developing and overseeing the implementation of an annual audit plan—with the involvement of the coordinating ministry if established in the CPAP and practical. Apportioning the share of funds to be provided by each Agency to undertake the scheduled audits, special audits, and other activities as locally agreed. Assessing and contracting private audit services. (See: Technical Note 1 Pre-qualification of a Consulting Firm/Consultant to Conduct a Micro Assessment or Audit). Managing the disbursement of funds for the implementation of audit activities (The Agencies may make use of the procedures of one of the Agencies to handle the contracts and payments). Coordinating the exchange of information between the Agencies—and other members of the UNCT—on audit-related issues and findings for cash transfers. Maintaining an awareness of Implementing Partners’ financial management capacity through the audit reports and other assurance activities, and revising the micro assessment ratings, the cash transfer modalities and/or procedures, and assurance activities as appropriate.

b. Agency representatives. (Technical Note 5) The country representatives of each Agency are individually responsible for: • Providing the other Agency representatives with timely and complete lists of the Implementing Partners who receive cash transfers and use FACE forms, the value of the transfers provided to each Implementing Partner, and any important information about an Implementing Partner’s internal controls learned through other assurance activities; Informing the other Agencies of any specific audit-related requirements issued by their Agencies associated with cash transfers; Providing their Agency’s share of the funds required for carrying out audits scheduled in the Annual Audit Plan, and any other jointly commissioned audit-related activity; Providing the audit service with: timely information on the values and release dates of cash transfers made during the period being audited, FACE forms received from the Implementing Partner, and all relevant documentation associated with any direct payments made on behalf of a Implementing Partner who is being audited. Providing their Agency with a copy of each audit report if required by the Agency. ***

• • •

•

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Annex V:

Suggested clauses related to Cash Transfer Modalities and Procedures, for inclusion in all new CPAP and amendments to existing CPAPs

Text in italics should be included verbatim in new CPAPs (drafted in accordance with the existing UNDG guidance on CPAPs of January 2003. Text in plain font explains the applicability of the suggested text, where necessary. If any of the suggested text is not suitable to a particular country situation, Representatives are advised to contact HQ. Part VI. Programme Management19

This part includes: All cash transfers to an Implementing Partner are based on the Annual Work Plans agreed between the Implementing Partner and [UN agency]. Cash transfers for activities detailed in AWPs can be made by a UN agency using the following modalities: 1. Cash transferred directly to the Implementing Partner: a. Prior to the start of activities (direct cash transfer), or b. After activities have been completed (reimbursement); 2. Direct payment to vendors or third parties for obligations incurred by the Implementing Partners on the basis of requests signed by the designated official of the Implementing Partner; 3. Direct payments to vendors or third parties for obligations incurred by UN agencies in support of activities agreed with Implementing Partners. [In countries where it has been agreed that cash shall be transferred to institutions other than the Implementing Partner (e.g., the Treasury) please replace with the following text] Cash transfers for activities detailed in AWPs can be made by a UN agency using the following modalities: 1. Cash transferred to the [national institution] for forwarding to the Implementing Partner: a. Prior to the start of activities (direct cash transfer), or b. After activities have been completed (reimbursement) 2. Direct payment to vendors or third parties for obligations incurred by the Implementing Partners on the basis of requests signed by the designated official of the Implementing Partner. 3. Direct payments to vendors or third parties for obligations incurred by UN agencies in support of activities agreed with Implementing Partners Where cash transfers are made to the [national institution] the [national institution] shall transfer such cash promptly20 to the Implementing Partner. Direct cash transfers shall be requested and released for programme implementation periods not exceeding three months. Reimbursements of previously authorized expenditures shall be requested and released

The cash transfers described do not apply to WFP transfers for transport, distribution and monitoring of commodities. 20 The UN country team may wish to agree on the specific number of days in lieu of “promptly”.

19

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quarterly or after the completion of activities. The [UN agency] shall not be obligated to reimburse expenditure made by the Implementing Partner over and above the authorized amounts. Following the completion of any activity, any balance of funds shall be reprogrammed by mutual agreement between the Implementing Partner and [UN agency], or refunded. Cash transfer modalities, the size of disbursements, and the scope and frequency of assurance activities may depend on the findings of a review of the public financial management capacity in the case of a Government Implementing Partner, and of an assessment of the financial management capacity of the nonUN21 Implementing Partner. A qualified consultant, such as a public accounting firm, selected by [UN agency] may conduct such an assessment, in which the Implementing Partner shall participate. (Where Government wishes, add: The Implementing Partner may participate in the selection of the consultant.) Cash transfer modalities, the size of disbursements, and the scope and frequency of assurance activities may be revised in the course of programme implementation based on the findings of programme monitoring, expenditure monitoring and reporting, and audits. Part VII. Monitoring, Assurance and Evaluation

This part includes: Implementing partners agree to cooperate with [UN agency] for monitoring all activities supported by cash transfers and will facilitate access to relevant financial records and personnel responsible for the administration of cash provided by the [UN agency]. To that effect, Implementing partners agree to the following: 1. Periodic on-site reviews and spot checks of their financial records by [UN agency] or its representatives, 2. Programmatic monitoring of activities following [UN agency’s] standards and guidance for site visits and field monitoring, 3. Special or scheduled audits. [UN agency], in collaboration with other UN agencies (where so desired: and in consultation with the [coordinating Ministry]) will establish an annual audit plan, giving priority to audits of Implementing Partners with large amounts of cash assistance provided by [UN agency], and those whose financial management capacity needs strengthening. To facilitate assurance activities, Implementing partners and the UN agency may agree to use a programme monitoring and financial control tool allowing data sharing and analysis. Select from the following two options:
•

(Where an assessment of the Public Financial Management system has confirmed that the capacity of the Supreme Audit Institution is high and willing and able to conduct scheduled and special audits.) The Supreme Audit Institution may undertake the audits of government Implementing Partners. If the SAI chooses not to undertake the audits of specific Implementing Partners to the frequency and scope required by [UN agency], [UN agency] will commission the audits to be undertaken by private sector audit services. (Where no assessment of the Public Financial Management Capacity has been conducted, or such an assessment identified weaknesses in the capacity of the Supreme Audit Institution.) The audits will be commissioned by [UN agency] and undertaken by private audit services. (Where

•

21

For the purposes of these clauses, “the UN” includes the IFIs.

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government insists on selecting the audit services, replace last sentence with: The Implementing Partner may select such a public accounting firm from a shortlist of accounting firms pre-approved by the UN agency.) Assessments and audits of non-government Implementing Partners will be conducted in accordance with the policies and procedures of [UN agency]. Part VIII Commitments of UN Agency

This part includes: In case of direct cash transfer or reimbursement, [UN agency] shall notify the Implementing Partner of the amount approved by [UN agency] and shall disburse funds to the Implementing Partner in [here insert the number of days as per agency schedule]. In case of direct payment to vendors or third parties for obligations incurred by the Implementing Partners on the basis of requests signed by the designated official of the Implementing Partner; or to vendors or third parties for obligations incurred by [UN agency] in support of activities agreed with Implementing Partners, [UN agency] shall proceed with the payment within [here insert the number of days as per agency schedule]. [UN agency] shall not have any direct liability under the contractual arrangements concluded between the Implementing Partner and a third party vendor. Where more than one UN agency provides cash to the same Implementing Partner, programme monitoring, financial monitoring and auditing will be undertaken jointly or coordinated with those UN agencies. Part IXCommitments of Government This part includes: A standard Fund Authorization and Certificate of Expenditures (FACE) report, reflecting the activity lines of the Annual Work Plan (AWP), will be used by Implementing Partners to request the release of funds, or to secure the agreement that [UN agency] will reimburse or directly pay for planned expenditure. The Implementing Partners will use the FACE to report on the utilization of cash received. The Implementing Partner shall identify the designated official(s) authorized to provide the account details, request and certify the use of cash. The FACE will be certified by the designated official(s) of the Implementing Partner. Cash transferred to Implementing Partners should be spent for the purpose of activities as agreed in the AWPs only. Cash received by the Government and national NGO Implementing Partners shall be used in accordance with established national regulations, policies and procedures consistent with international standards, in particular ensuring that cash is expended for activities as agreed in the AWPs, and ensuring that reports on the full utilization of all received cash are submitted to [UN agency] within six months after receipt of the funds. Where any of the national regulations, policies and procedures are not consistent with international standards, the UN agency regulations, policies and procedures will apply.

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In the case of international NGO and IGO Implementing Partners cash received shall be used in accordance with international standards in particular ensuring that cash is expended for activities as agreed in the AWPs, and ensuring that reports on the full utilization of all received cash are submitted to [UN agency] within six months after receipt of the funds. To facilitate scheduled and special audits, each Implementing Partner receiving cash from [UN agency] will provide UN Agency or its representative with timely access to: • all financial records which establish the transactional record of the cash transfers provided by [UN agency]; • all relevant documentation and personnel associated with the functioning of the Implementing Partner’s internal control structure through which the cash transfers have passed. The findings of each audit will be reported to the Implementing Partner and [UN agency]. Each Implementing Partner will furthermore • • • • Receive and review the audit report issued by the auditors. Provide a timely statement of the acceptance or rejection of any audit recommendation to the [UN agency] that provided cash (and where the SAI has been identified to conduct the audits, add: and to the SAI). Undertake timely actions to address the accepted audit recommendations. Report on the actions taken to implement accepted recommendations to the UN agencies (and where the SAI has been identified to conduct the audits, add: and to the SAI), on a quarterly basis (or as locally agreed).

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Annex VI:

Technical Assistance

Agency Support UNDP, UNICEF, UNFPA and WFP have adopted this harmonized framework, and are currently in the process of adapting existing policy, procedure and regulations accordingly. At the same time, personnel in the areas of programme, finance and audit at HQ and regional level are being oriented on this framework. Therefore, staff of Agencies should be able to obtain needed clarifications and support for implementation of the harmonized cash transfer procedures through the established support and oversight channels. However, it should be realized that this framework, or at least components of it, is new for most staff, and they are encouraged to consult across Agencies if in doubt. For the Executive Committee Agencies, the following are the focal points: UNDP Programme BDP /Capacity Development Group Mari Matsumoto +1-212-906-5950 Dien Le +1- 212-906-5169 Nick Beresford +1-212-906-5624 Dale Leach +1- 212-906-5812 Diane Kepler +1- 212-906-5664 Samuel Momanyi +1- 212-326-7131 Bijaya Mallapaty +1- 212-326-6386 Detlef Palm +1-212-824 6028 Richard Barr +1- 212-297-5322 Peggy Nelson +1- 212-963-5508 Eric Whiting +39-06-6513-2701 Sean O’Brien +39-06-6513-2682 Helen Hall +39-06-6513-2194

Finance

OFA

Audit UNICEF Programme Finance Audit UNFPA Programme Finance Audit Programme Finance Programme Guidance Unit Division of Policy and Planning Budget section Division of Finance and Administration Office of Internal Audit Finance Branch Office of Oversight and Evaluation NY Office Policy & External Affairs Department Finance Division Administration Department Office of Internal Oversight Oversight Services Division

WFP

Audit

Agencies have been encouraged to use regular management meetings (e.g., regional management team meetings) to further promote the correct use of this framework, and orient staff as necessary. Inter-Agency Support

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The Inter-agency Working Group on Resource Transfer Modalities, which prepared this framework, will continue to be available as a Standing Committee. It includes UNDP, UNICEF, UNFPA and WFP staff responsible for the development of policy and procedure in the areas of programme, finance and audit. The Standing Committee will periodically meet, as required, to agree on substantive clarifications needed during the implementation of these policy and procedures, and to consider supplements or changes to this framework based on feedback from UNCTs. The Development Group Office (DGO) will be responsible for receiving requests for clarification, as well as general feedback and suggestions for further improvements of this framework. The contact in the DGO will be Waheed Hassan, Associate Director, Simplification and Classification Cluster, waheed.hassan@undp.org, 1212 906 6204. The DGO will also coordinate the roll-out of the harmonized approach to cash transfers, including briefings and orientations for country teams.

***

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Annex VII:

Technical Notes

Technical Note 1: Pre-qualification of a Consulting Firm/Consultant to Conduct a Micro Assessment or Audit Technical Note 2: Terms of Reference for Conducting a Review of the Assessments of a Country’s Public Financial Management (PFM) System Technical Note 3: Terms of Reference for Conducting an Assessment of an Implementing Partner’s Financial Management Capacity Technical Note 4: Terms of Reference for Financial Audit of Implementing Partners Technical Note 5: Developing an Annual Plan for Micro Assessments and Audits Technical Note 6: Terms of Reference for Conducting Spot-Checks

***

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Technical Note 1.

Prequalification of a Consulting Firm/Consultant to Conduct a Micro Assessment or Audit

Generally, a reputable public accounting firm/consultant should be competent to conduct such an assessment/audit. To allow for economies of scale, taking into account human resource capacity, a single firm/consultant may be engaged to assess/audit a number of implementing partners. Or, a firm/consultant who has conducted a prior assessment/audit may be most suitable to assess financial management since the firm/consultant would have knowledge of the implementing partner’s systems and procedures. Key requirements: • The consultant must be impartial and independent from all aspects of management and should not have financial interests in the entity being reviewed or in directly related entities. S/he should not, during the period covered by the assessment nor during the undertaking of the assessment or during the last year prior to the assignment, be employed by, or have any financial or close business relationships with any senior official in the management of the entity. The consultant should disclose in writing that s/he does not have any relationship that may possibly compromise his/her independence. The consultant should be experienced in applying international standards for auditing -- either ISA22 or INTOSAI23 audit standards. If hiring staff, the consultant should employ staff with recognized professional qualifications and suitable experience with ISA or INTOSAI standards, including experience in reviewing similar entities. Curriculum vitae (CV) of all members of the assessment team should be provided. The CVs should include details on audits carried out by the relevant staff, including ongoing assignments indicating responsibilities assumed by them, and their qualifications and experience in undertaking audits.

•

Eligibility Questionnaire: The attached Questionnaire (taken from the OECD-DAC Good Practice Paper on Harmonizing Donor Practices for Effective Aid Delivery) should be sent to firm/consultants to assist UN agencies in their selection of firm/consultants. Only those firm/consultants that are deemed to be independent, that have professional competence and well-trained staff (in case of firm/consultants) may be considered for engagement through a competitive process.

22 23

ISA - International Standards of Audit INTOSAI - International Organization of Supreme Audit Institutions is an international and independent body that aims at promoting the exchange of ideas and experience among Supreme Audit Institutions (SAI) in the sphere of public financial control. INTOSAI upholds the following general auditing standards: the auditor and the SAI must be independent; the SAI should avoid conflict of interest; must possess the required competence; and must exercise due care in planning, specifying, gathering and evaluating evidence, and in reporting findings, conclusions and recommendations.

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Private Sector Audit Firm/Consultant Application for Eligibility Questionnaire24 Basic Information 1. Legal Name of Firm/consultant 2. Street and Postal Address of Firm/consultant 3. Telephone (include country and area code) 4. Fax (include country and area code) 5. Email address 6. Address and Telephone of Branch Offices (use attachment if necessary) Branch Name Address & Telephone Officer in Charge

7. Practice license or permit number 8. Date of license/permit issuance 9. Expiry date of license/permit 10. Name of licensing/permit agency 11. State the legal nature of the firm/consultant 12. Fully describe the ownership structure and management structure of the firm The firm/consultant’s Independence 13. Does the firm/consultant have a written independence or conflict of interest policy? (If yes provide a copy. If no, provide a brief description of the policy with comparison to the relevant IFAC Code). Are all professional staff provided training in the firm’s independence or conflict of interest policies? Have staff members attended training courses in professional ethics, including training in IFAC’s International Professional Practice Statements or Code of Ethics for Professional Accountants? 14. Does the firm/consultant provide consulting services involving accounting or internal control matters to audit clients? 15. Has the firm/consultant, any partners of the firm/consultant or any staff of the firm/consultant ever been subject to disciplinary action by any national accounting body to which the firm/consultant or its partners belong? If so, please indicate the nature of the disciplinary action and the reasons for it. 16. Has the firm/consultant, any partner of the firm/consultant or any staff of the firm/consultant ever been subject to a court order involving the provision of professional services? If so, please indicate the nature of the court order and the reasons for it.

24

This Questionnaire is taken from the OECD-DAC Good Practice Paper on Harmonizing Donor Practices for Effective Aid Delivery.

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17. Has the firm/consultant, any partner of the firm/consultant or any staff of the firm/consultant ever been barred from auditing firm/consultants listed on any securities exchange or otherwise been subject to sanction or penalty by any securities exchange? 18. Are the firm/consultant’s partners or staff members allowed to hold shares or other investments in audit clients? Affiliations with other Firm/consultants 19. Does the firm/consultant have an affiliation or association with any other foreign or local professional firm/consultant(s) such as accountants, auditors, consultants or lawyers etc? If so, please provide the following: Firm/consultant Name Legal Address Home Country Contact Person

20. Please describe the general nature of the affiliation(s), as follows: • • • • Are any partners of the firm/consultant also domestic or international partners of the affiliated firm/consultant? Does your firm/consultant or any partner of the firm/consultant share in the profits or liability exposure of the affiliate? Does the affiliate provide training courses for the firm’s staff? If the firm/consultant is affiliated with a foreign accounting/audit firm does the foreign firm have an audit manual/guideline, and does the firm have access to and use of that manual/guideline? Does the firm use it exclusively in relation to audits resulting from the foreign affiliation or does the firm also use it in relation to audits that do not result from the affiliation? Other important matters. Firm/consultant’s Professional Orientation 21. Indicate which of the following services are provided by the firm/consultant and show the share of each service in relation to the firm/consultant’s last complete year’s total fee income. Please separate any income derived from a foreign accounting/auditing firm/consultant affiliation. Nature of Income Auditing _ In accordance with ISA _ In accordance with national standards Accounting _ In accordance with Derived from Foreign Acc’t/Audit Affiliate(s) % National Income % % Total Fee Income

•

%

%

%

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IAS _ In accordance with national standards Consulting Services % Other Fee Income % Total Fee Income 100 % ISA — International Standards on Auditing IAS — International Accounting Standards % % 100 % % % 100 %

22. Indicate the percentage of the firm/consultant’s last complete year’s total fee income attributable to foreign aid/funding agreements with international agencies, bilateral aid agencies or other sources (information may be aggregated where common audit arrangements are adopted by donors). Nature of Income IMF/ World Bank % Regional Develop’ t Bank(s) % Bilateral Aid Agencies % Other Int’l Agencies % Private Sector Nationa l Gov’t % Total Fee Income %

Auditing _ In accordance with ISA _ In accordance with national standards Accounting _ In accordance with IAS _ In accordance with national standards Consulting Services Other Fee Income Total Fee Income

%

%

%

%

%

%

%

%

% % 100%

% % 100%

% % 100%

% % 100%

% % 100%

% % 100%

% % 100%

23. Does the firm/consultant use an audit procedures manual or guideline for staff? If so, when was it last updated? How does the firm/consultant ensure that staff adheres to the audit manual/guidelines, at all times? (Please attach a copy of the manual/guideline). 24. Is the firm/consultant aware that various multilateral and bilateral agencies have guidelines covering accounting and auditing for projects they fund? If so please list the guidelines the firm/consultant has. 25. Discuss the firm/consultant’s quality assurance programme. Does the firm/consultant participate in a peer review programme on a national basis and has the firm/consultant ever participated in a peer review as a result of an affiliation with a foreign accounting/audit firm? If so, what were the results of the last national/ foreign peer review(s)? 26. Describe the firm/consultant’s utilization of information technology, i.e. software tools and computer assisted audit techniques to support auditing assignments.

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Professional Services Liability Insurance Coverage 27. Has the firm/consultant ever directly settled a claim involving professional services, that is, without utilizing the insurance coverage? If so please state the main issues involved in the settlement and the amount of the settlement. Personnel 28. Composition of staff 29. (Attach a schedule(s) if needed. In a larger firm, individual staff profiles will normally only be reviewed for staff working on the audit of donor supported projects) Member of Professional Body*/ Year of Qualification With Relevant Audit Experience In Other Public Constructio Cash Sector n Accountin Contracts g Systems

Name

Partners/Associates Managers Supervisors Other prof. staff *Refers to a member currently in good standing with the named IFAC member accounting body. 30. For each person listed in item 28 above, provide a separate attachment with a brief summary of their qualifications and professional experience, including: • • • • Academic or other qualifications Membership of foreign professional bodies Details of professional audit and accounting experience, stating relevant industry(ies), including experience in the public sector, construction contracts and cash accounting systems, separating domestic and foreign experience. Mother tongue and any other languages with written and spoken fluency.

31. What has been the turnover rate of the firm’s partners and personnel (partners/associates, managers, supervisors, seniors, and other professional staff) during the last 5 years? Staff Training 32. Briefly state the firm’s training philosophy 33. Indicate post qualification training or professional education courses taken, year taken and total hours by each major staff category in the last three years, as follows:

80

Category Partners/Associates Managers Supervisors Seniors Other professional staff

Training/Courses/Year/Total Hours IAS* ISA+ National Other Courses Standards

*International Accounting Standards +International Standards on Auditing 34. Does the firm have a professional training manual, and is a copy provided to each professional staff member? Indicate types of training and number of hours of training by staff category, provided by any affiliate firm over the last three years, as follows (attach a schedule if necessary): Staff Category Partners/Associates Managers Supervisors Seniors Other professional staff Certification I certify the above information is true and correct. Signed Name Position Date The firm/consultant should feel free to submit any additional information that further describes the firm/consultant. Training Year/Total Hours In Country Out of Country

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Technical Note 2: Background

Terms of Reference for Conducting a Review of the Assessments of a Country’s Public Financial Management (PFM) System

The purposes of the assessment undertaken by the Agencies utilizing harmonized procedures for cash transfers are: • Capacity development objective: The review supports the Agencies and Government to identify strengths and weaknesses in the country’s Public Financial Management (PFM) and areas for capacity development by government and others. • Financial management objective: The review (in combination with the assessments of government Implementing Partners) assists in the establishment of appropriate cash transfer modalities, procedures, and assurance activities to be applied by the Agencies. The review establishes the capacity of the Supreme Audit Institution (SAI) to undertake audits of cash transfers provided to “low risk” Implementing Partners.

Scope The assessment is based entirely on work on PFM conducted by development partners. Examples of such reports include: Assessments by the World Bank • Country Financial Accountability Assessment. CFAAs vary in format and presentation. • • • • Public Expenditure Review. This analyzes a country’s fiscal position, expenditure policies, and public expenditure management systems. Country Procurement Assessment Review. This reviews public procurement institutions and practices. Institutional and Governance Review. This reviews the quality of accountability, policy-making, and service delivery institutions. Capacity Assessments of Heavily Indebted Poor Country PFM. Done jointly with the IMF, this assessment covers some of the same issues as a CFAA.

Assessments by Other Institutions • • • • Fiscal Transparency Review. IMF. This uses the code of good practices on fiscal transparency adopted by the IMF in 1998. Diagnostic Study of Accounting and Auditing. Asian Development Bank. Ex-ante audits of PFM systems undertaken by the EC. Assessments by CIDA, DFID, EU, ADB and other Agencies.

The review covers: areas of the national budget development and execution process, the functioning of the public sector accounting and internal control mechanisms, audit and oversight, and financial recording systems and staff qualifications. Methodology

82

The assessment begins with the collection of existing PFM reviews and will also consider the Agencies’ own experience and knowledge of the PFM. The assessment reviews the existing documentation and Agencies’ experience to address the issues raised in the checklist in this annex. A draft report should be prepared, and then shared and validated with government officials and the institutions who provided the materials used in the review. A copy of the final report should be presented to the coordinating government ministry and relevant development partners (how the results will be shared with the government will be discussed during the course of the assignment). Note: The user should decide on whether to request the consultant to discuss the findings with the Government, as this could be a sensitive issue. Deliverables 1. The review should result in a report of about four pages (excluding annexes) and conclude with a completed table of the risk areas (see Annex II). The report should include: • • • • • • • Objective of the review and statement of process and participating institutions; Summary of findings—to address each of the issues identified in checklist; Any key risks the PFM poses to the functioning of the cash transfer framework; Assessment of the SAI’s capacity to undertake required audits; Suggested opportunities for capacity development (if any); Bibliography of information sources used in the assessment; Annex—the completed checklist.

2. A briefing on the results of the assessment. Duration of assignment Two to four weeks, depending on the volume and availability of data. Qualifications of Consultant • • • • • Independent of the Government and should have prior experience advising on the PFM; Experience and expertise in reviewing public financial management systems such as consultants who have worked on preparing a CFAA or other similar report (Note: consultancy firms working in public accounting may have suitable individuals for this type of assignment); Broad understanding governance and accountability issues; Ability to identify and collect reports on the PFM; Excellent written and oral communications skills. ***

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Technical Note 3: Background

Terms of Reference for Conducting an Assessment of an Implementing Partner’s Financial Management Capacity

The purposes of the assessment undertaken by the United Nations Agencies utilizing harmonized procedures for cash transfers are: • Capacity development objective: The review supports the Agencies and government to identify strengths and weaknesses in the Implementing Partner’s capacity for financial management and areas for capacity development by government and others. Financial management objective: The review assists in the establishment of appropriate cash transfer modalities, procedures, and assurance activities to be applied by the Agencies.

• Scope

The assessment would provide an overall assessment of the Implementing Partner’s financial management capacity and review funds flow, staffing, accounting policies and procedures, internal audit, external audit, reporting and monitoring and information systems. Methodology The consultant should utilize “Checklist B: Financial Management Questionnaire.” In completing the questionnaire, she/he should also assess the partner’s control system with equal emphasis on: (1) the effectiveness of the system in providing the partner’s management with useful and timely information for the proper management of the partner; (2) the general effectiveness of the internal control system in protecting the assets and resources of the partner. The consultant should have full and complete access at any time to all records and documents (books of account, legal agreements, minutes of committee meetings, bank records, invoices and contracts, etc.) and all employees of the Implementing Partner. The consultant should be advised that he/she has a right of access to banks and depositories, consultants, contractors and other persons or firms engaged by the partner. If the consultant may have restricted access to any records, person or location during the course of the assessment, this restriction should be clearly defined, with reasons, in the report. Deliverables The consultant should submit a report with the following: • • • • • An overall risk rating (H-high risk; S-significant risk; M-moderate risk; L- low risk) of the Implementing Partner’s financial management capacity Risk ratings for funds flow, staffing, accounting policies and procedures, internal audit, external audit, reporting and monitoring and information systems. A summary of the financial management assessment of the Implementing Partner. A description of the Implementing Partner including the physical address, phone numbers, fax numbers, web sites and general e-mail addresses. A description of the standards applied such as International Accounting Standards (IAS) published by the International Accounting Standards Board or the draft International Public Sector

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• • • •

Accounting Standards (IPSAS) on Cash Accounting published by the Public Sector Committee (PSC) of the International Federation of Accountants may also be described. A description of any specific internal control weaknesses noted in financial management Recommendations for monitoring and assurance activities to address or compensate for the weaknesses in the short term. Recommendations to resolve/eliminate the internal control weaknesses noted, including short and medium-term capacity development measures. Completed Checklist B: Financial Management Questionnaire.

A briefing on the results of the assessment should be given to the Agencies as well as Implementing Partner officials and the government coordinating authority. How this will be done should be at the discretion of the UNCT. It may be desirable to summarize all proposed Implementing Partners at the signature of the Country Programme Action Plan (CPAP), or separately when Annual Work Plans (AWP) are initiated. Duration of Assignment The duration of the assessment should be two to four weeks, depending on the complexity of the assignment. Qualifications of Firm (also refer to Technical Note 1) Generally, a reputable public accounting firm should be competent to conduct such an assessment. To allow for economies of scale, a single firm may be engaged to assess a number of Implementing Partners. A firm who has conducted a prior audit may be most suitable to assess financial management since it would have knowledge of the Implementing Partner’s systems and procedures. The firm must be completely impartial and independent from all aspects of management or financial interests in the entity being reviewed or those of its implementing/supervising agency or directly related entities. The firm should not, during the period covered by the assessment nor during the undertaking of the assessment, be employed by, or have any financial or close business relationships with any senior participant in the management of the entity. It may be appropriate to remind the firm of any existing statutory requirements relating to independence and to require it to disclose any relationship that might possibly compromise its independence. The firm should be experienced in applying international standards for audit, using either ISA or INTOSAI audit standards. The firm must employ adequate staff with appropriate professional qualifications and suitable experience with ISA or INTOSAI standards, including experience in reviewing entities comparable in size and complexity. The firm should provide Curriculum vitae (CV) of the staff who would be responsible for drafting the report, together with the CVs of members of the assessment team. The CVs should include details on audits carried out by the applicable staff, including ongoing assignments indicating capability and capacity to undertake the audit. ***

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Technical Note 4:

Terms of Reference for Financial Audit of Implementing Partners

Throughout this Technical Note the term "Implementing Partner" is used to refer to the institution that signs the Funding Authorization and Certificate of Expenditure (FACE) forms. The term ”Agencies” is used to refer to the UNDG ExCom Agencies and any other UN Agencies that choose to adopt the Framework for Cash Transfers. This sample Terms of Reference (TOR) is intended to provide guidance to the Agencies and the Implementing Partners. Background Section and Scope of Audit The purpose of the audit is to assess the existence and functioning of an Implementing Partner’s internal controls for the receipt, recording and disbursement of cash transfers and the fairness of a sample of expenditures reported in the Face forms25. This section of the TOR should include: • A broad description of the programme management arrangements (CPAP, AWPs, FACE forms) between Agencies, the Implementing Partner and other relevant Government authorities or other partners. • A summary of activities for which funding was provided by the Agencies under the AWPs, the intended major results, budgets and total amount disbursed. This should enable the auditor to understand the overall purpose for which the funds were intended. • Any major findings of the macro- and micro-assessments, and previous audits, or any observations from ongoing programme and financial monitoring that help to establish the scope of the audit. • A statement that the audit will cover (1) a review of the Implementing Partner’s internal controls (2) a review of the implementation of recommendations made in the (Micro-) assessment and previous audits of the Implementing Partner (3) verification of a sample of transactions, drawn from a sample of the FACE forms (4) recommendations to the Implementing Partner to improve its internal controls. • A list of AWPs and Face forms signed by the Implementing Partner. Implementing Partner This section contains details of the Implementing Partner including: • The physical address, telephone numbers, fax numbers, web sites and relevant e-mail addresses. • An organization chart of the audited institution and – if appropriate – a chart showing the place of the institution/unit within the larger organization. • A list of senior officers together with their contact details. • A list of the contact persons responsible for accounting, financial management and internal audit together with telephone numbers and email addresses. Consultations with Agencies and Implementing Partner This section describes the requirements for consultations, including: • Prior to the start of work, the auditor should meet with the Agencies to hear their concerns. • Prior to the start of work, the auditor should meet with senior officials of the Implementing Partner, to understand how cooperation with the Agencies is managed, and any issues of concern they may have. • Upon completion of the draft report, the auditor should first hold a debriefing meeting with the Implementing Partner, to discuss findings and recommendations for future improvements, as well as to seek their feedback thereon.
25

It is not expected that the sample will provide assurance for individual FACE forms.

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•

The auditor will then meet with the Agencies to discuss the draft report prior to its finalization.

Tasks: 1. Review of the Implementing Partner’s programme management system

This section describes the specific tasks that will facilitate an overall review of the management of the AWP implementation by the Implementing Partner. These tasks will include: • Review CPAP(s), AWP(s), FACE forms and – where applicable – Agency relevant manuals, to determine whether periodicity of FACE form submissions was in accordance with the planned timeline, and whether requests for disbursements and reports on utilization of cash were provided for activities described in AWP(s). • Through interviews and review of progress reports prepared the Implementing Partner, establish whether activities were implemented as planned. Where activities (timeliness, type, quantity) deviated significantly from the original AWP(s), establish whether this was by mutual agreement between the Implementing Partner and the Agency(ies). Determine and comment on the causes for significant delays or changes, if any. • Review the Implementing Partner’s system of monitoring progress and review of reports, including field monitoring visit reports and progress reports, to assess whether the Implementing Partner met its responsibilities for monitoring as described in the CPAP and AWPs. • Review whether recommendations recorded in field/project monitoring reports or minutes of meetings between the Implementing Partner and the Agency(ies) have been implemented by the Implementing Partner. 2. Assessment of the Implementing Partner’s internal controls

This section describes the specific tasks that will provide an overall assessment on the functioning of the Implementing Partner’s internal controls, with emphasis on (i) the effectiveness of the system in providing the Implementing Partner’s management with useful and timely information for the proper management of the AWP and (ii) the general effectiveness of the internal control system in protecting the assets and resources provided for implementation of AWP activities. These tasks will include: • Conduct a general assessment of internal controls according to established internal control standards. An example of the established internal control standards is available from the Organization of Supreme Audit Institutions (INTOSAI). The INTOSAI standards are intended to be used by government managers as a framework to establish effective internal control structures. For further information, the INTOSAI Guidelines for Internal Control Standards can be found on the INTOSAI Web site www.intosai.org. • Review whether recommendations made in the micro assessment or previous audit(s) were implemented or, if not, determine the implementation status. • Review FACE forms, including the records of requests for direct payments, to assess whether they were signed by designated officials of the Implementing Partner. • Review the processes used by the Implementing Partner for authorizing expenditures and assess whether they are in accordance with the CPAP and AWP. • Review the process for procurement/contracting of supplies and services and assess whether it is transparent and competitive. • Review the use, control and disposal of non-expendable equipment and assess whether it is in compliance with government policies (or the Agency relevant manuals, where so specified in the

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• • • • 3.

CPAP/AWP); and also, whether the equipment procured met the identified needs and whether it is used in accordance with intended purposes. Review relevant IT systems. Where Agency’s funds pay for the personnel or consultants, review the process followed for recruiting the Implementing Partner’s personnel and consultants and assess whether it is transparent and competitive. Review the Implementing Partner’s accounting records and assess their adequacy for maintaining accurate and complete records of receipt of funds provided by the Agency(ies) and disbursements of cash. Interview officials of the Implementing Partner, as necessary, to ensure full understanding of the functioning of the internal control system. Review of a sample of FACE forms and transaction testing

This section describes the specific tasks for the audit team, designed to test compliance with the Implementing Partner’s internal controls. These tasks will include: • Assess whether the funds received from the Agency were deposited into the Implementing Partner’s bank account by verifying the bank statement. • Reconcile the expenditure totals, per activity, on the FACEs to the list of individual transactions (i.e. the Implementing Partner’s accounting records). • For each activity, review the nature of expenditure and assess the reasonableness. Discuss any concerns with management. • Select a sample for testing considering the UNCT’s assessment of risks This pre-audit risk assessment will be provided by the Agency(ies) during the initial consultation, and may depend on the ratings from the Micro-assessments of the Implementing Partner, previous audits, spot-checks, and any concerns that have arisen during the period under review, materiality, and required confidence level. The use of statistical sampling should be considered as a tool for the audit. Samples should be drawn from sets of transactions stratified by transaction type (including - Agency(ies) to specify: procurement of supplies and services; institutional contracts; contracting of consultants; salary supplements, where applicable; per diems; travel related expenditure; other type of expenditures; locations. Agency(ies) may also specify whether the sample shall include transactions made by certain or all Agencies) with emphasis on materiality/high value items. Alternatively, the Agency(ies) may consider to allow for random sampling techniques. • For this sample of transactions, carry out a verification of the accuracy and completeness of supporting documentation (e.g vouchers, invoices, purchase orders, receipt of goods, bank transfers/checks, bank statements) to assess whether they are properly authorized, documented, certified and accounted for; and are consistent with the description of the transaction (per the accounting records) and per the AWP. • (Optional) Compare the price paid for goods or services against market benchmarks. Include other appropriate measures of value for money. Deliverables This section should describe the expected content of the audit report. It includes at the minimum: • An Opinion on the functioning of internal controls. • An Executive Summary with the key findings, risks and recommendations. • A summary of the main identified risks to the management of agreed activities and the use of funds provided by the Agencies, arising from weak internal controls. • Any identified specific internal control weaknesses in the financial management of the Implementing Partner.

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•

• • •

Recommendations on how the identified risks may be better managed, and how the Implementing Partner’s internal controls can be strengthened. Recommendations should clearly identify those responsible for their implementation within the Implementing Partner. The comments of the Implementing Partner should be included in report, under the recommendation. Comments on the follow-up to the recommendations from previous audits or assessments and the management response to those. A list of transactions tested. For any exceptions identified, the report should list the transaction details and the nature of the exception. If applicable, any “good practices” that were developed by the Implementing Partner and could be shared with other Implementing Partners.

This section also states the expected delivery date of the draft report. Available Facilities and Right of Access This section describes the nature and the location of all records related to the implemented activities under the AWPs. This list should specify those records kept at the Implementing Partner's headquarters and those that are located at other offices. This section states that the auditor will have full and complete access at any time to all records and documents (including books of account, legal agreements, minutes of committee meetings, bank records, invoices and contracts, etc.) and all employees of the entity. The auditor should be advised that he/she has a right of access to banks, consultants, contractors and other persons or firms engaged by the Implementing Partner’s management. If an auditor is to have access only to some records, individuals or location during the course of the audit, this restriction should be clearly stated in the TOR.

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Technical Note 5:

Developing an Annual Plan for Micro Assessments and Audits

Coordinated by the Resident Coordinator, the UNCT will decide the specific procedures on how the list of audits, assessments and spot checks of Implementing Partners will be shared. The Resident Coordinator’s office will maintain a schedule of Implementing Partners and the planned transfers, by year, for the programme cycle. The schedule will also indicate whether micro assessments and audits have taken place for each Implementing Partner. In December of each year (after completing the annual reviews) the Agencies will revise the schedule to reflect the latest estimates of planned transfer for the upcoming year. For any Implementing Partner with planned transfers expected to exceed US$100,000 for the upcoming year (and for which a Micro Assessment has not already been done within the programme cycle) the Agencies will arrange a micro assessment. Prior to utilizing an Implementing Partner, the Agency must check with the Resident Coordinator’s office to determine what rating was assigned to the Implementing Partner, or to ensure that an assessment is carried out. The assessment should take place before the Agencies transfer significant resources to the Implementing Partner although, for the first year of the programme cycle, this may not be possible. The overall objective is to ensure that, prior to transferring significant resources, the Agencies have reasonable assurance that the Implementing Partner has adequate internal controls to manage the financial resources. For any Implementing Partner with planned transfers expected to exceed US$500,000 for the entire programme cycle (and for which an audit has not already been done) the Agencies will agree on the timing for an audit. Note: The audit does not necessarily need to take place within the upcoming year as long as it takes place before the end of the programming cycle. The Agencies will consider whether additional audits should be scheduled, beyond the minimum described in the above paragraph. This consideration will be done on a number of factors including results of the Micro Assessment and results of assurance activities (audits, spot checks, etc.) The scope of the audit will include an update of the Micro Assessment and will test a sample of transactions in all FACE forms. The Agencies will decide which FACE forms will be included in the scope of the audit. As a general rule, the FACE forms will include those issued during the 12-month period preceding the date of the audit. For government partners, the Agencies should prepare the plan of Micro Assessments and audits in consultation with the coordinating government ministry. If the Supreme Audit Institution (SAI) has the capacity then the SAI may undertake the Micro Assessments and the audits. If the SAI does not undertake the micro assessments and audits then the Agencies will assume responsibility. The Country Programme Action Plan (CPAP) should describe the role of the SAI in the Micro Assessments and audits. Where an Implementing Partner is expected to have both a Micro Assessment and an audit, a recommended best practice is for the firm that undertook the micro assessment to also undertake the audit. This should result in lower overall costs because the audit work will benefit from the micro assessment work. ***

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Technical Note 6:

Terms of Reference for Conducting Spot-Checks

Background and Principles. Throughout this Technical Note the term "Implementing Partner" is used to refer to the institution that signs the Funding Authorization and Certificate of Expenditure (FACE) forms. The term ”Agencies” is used to refer to the UNDG ExCom Agencies and any other UN Agencies that choose to adopt the Framework for Cash Transfers. On-site reviews undertaken by agency staff or external consultants on their behalf are referred to as “spotchecks.” Spot checks by Agency staff and special audits by audit firms may be conducted and documented on a routine basis, or when warranted due to concerns about the functioning of a partner’s internal controls for cash transfers. This Note refers to spot-checks related to cash transfers, however such spot-checks may often be combined with spot-checks related to other resources (e.g. supplies), and/or with other programme monitoring activities. It is advisable that at least one spot-check related to cash transfers per Implementing Partner per year be conducted. If significant weaknesses are identified during the spot-check, Agencies may decide to increase the scope and frequency of future spot-checks or whether a special audit is required. Similarly, for Implementing Partners with an overall micro-assessment risk level of “moderate” or higher, several spot-checks (e.g. quarterly) may be conducted per year. Spot checks can be done by Agency staff or by a representative of the Agency. When Agencies support the same Implementing Partner in the same location, joint spot-checks should be conducted, with the Terms of Reference reflecting specific concerns of Agencies. Alternatively, one agency can authorize another Agency to conduct the spot-check on its behalf. Otherwise, each Agency arranges for necessary spot checks, but should share their results with other Agencies. The Agencies may also conduct spot-check reviews following standards and procedures already developed by each agency. Objective The spot-check will assess the soundness of the internal controls and the accuracy of the financial records for cash transfers by the Agency(ies). The spot check is not an audit. Scope The scope of the spot-check may be adjusted to the specific needs of each assignment. Spot checks of Implementing Partners with internal controls assessed as weak, or spot checks made in response to a particular concern may be more detailed, than those of Implementing Partners whose management capacity has been rated as high. Prior to the spot-check, members of the spot-check team should review the FACE forms issued during the period under review, and the relevant AWPs and progress reports. The team should also be familiar with the findings of the micro assessment of the Implementing Partner, reports of relevant field monitoring visits, available audits reports and other documentation that may help to understand the Implementing Partner’s internal controls and supported activities. A spot-check may take up to 3 days, however the duration may vary according to the level of expenditures. The review should take place at the Implementing Partner’s location. To the extent possible, schedules of planned spot-checks should be shared with the concerned Implementing Partner. For each spot-check, sufficient advance notice should always be provided to the Implementing Partner, together with a copy of the TORs. Tasks

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Spot-checks include the following tasks: • Review a sample of the expenditures recorded in the FACE reports issued during the period under review. The review should include, but not be limited to, the following steps: o Reconcile the expenditure totals, per activity, on the FACE reports selected to the list of individual transactions (i.e. the Implementing Partner’s accounting records). o Select a sample of receipts from the Agencies, assess whether they were deposited into the Implementing Partner’s bank account by verifying the bank statement. o Select a sample of transactions; review the reasonableness of the expenditure through discussions with management. o Verify that the FACE reports were signed by authorized officials. For a sample of disbursements: • Review the adequacy of supporting documentation (e.g. invoices, purchase orders, receipt of goods, bank transfers/checks, bank statements) to ensure that it is consistent with the description of the transaction (per the accounting records) and that it is consistent with the activity described in the AWP. • Verify if there is adequate segregation of duties in processing the transactions. • Verify if payment vouchers are authorized and checks are signed by the designated officials. • Review mathematical computation of individual payments and total payments against the expenditures. • Check the detailed expenditure against the approved budget. If there is any deviation from the budget, assess whether they were authorized. • Check the dates of the supporting documents to ensure that the expenditure was incurred during the period under review, as per the approved AWP. • Update the status of recommendations from the Micro-assessment or previous audits. • Optional: review internal controls, especially when these might have changed compared to the MicroAssessment or previous audits. • Discuss the findings of the review with the designated official of the Implementing Partner. Report Following the completion of the spot-check, a report will be prepared containing: • A summary of the findings, with the indication of risks. • A list of transactions tested. For any exceptions the report should list, by Agency, the payment details and the nature of the exception. • Recommendations to the Implementing Partner. • Final comments by the Implementing Partner. The report will be addressed to the Implementing Partner (and other parties as stipulated in the CPAPs) and copied to the ExCom Agencies.

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Annex III.9.1 REPORT ON FIELD MONITORING VISIT (AND SPOT CHECK)
Reported by: Title: Purpose of visit Date of report: File: / / 200..

Under the framework of project

Location

From (date/mon.)

To (date/mon.)

Working with agency/organisation

Mission members from UN Agency (name and title, if any) Mission member from other agencies (if any)

Key persons met Full name

Title

Organisation

Methodologies used (specify data collection methods used during the field visits such as interview, observation, document review, using checklist, etc, attached, if any)

Other FORM(s)/document(s) attached (if any) Other: ................................................... (See the findings and recommendation in the next page)

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Findings and recommendations Findings Recommended Action Responsible Party Proposed deadline

Attachments:

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Annex III.9.2 Terms of Reference for Conducting Spot Checks
Background On-site reviews undertaken by agency staff or external consultants on their behalf are referred to as “spot-checks”. Spot checks by Agency by audit firms may be conducted and documented on a routine basis, or when warranted due to concerns about the functioning of a partner’s internal controls for cash transfers. This Note refers to spot checks related to other resources, e.g. supplies, and/or with other programme monitoring activities. The frequency of spot checks is based by the risk rating associated with each IP as determined by the micro assessment. UN Agencies in Viet Nam have agreed upon a common schedule of spot checks as follows: Level of Risk High Risk Frequency of Spot Checks 4 per year Significant Risk 3 per year Medium Risk 2 per year Low Risk 1 per year

When Agencies support the same IP in the same location, joint spot checks should be conducted, with the ToR reflecting specific concerns of Agencies. Alternatively, one agency arranges for necessary spot checks, but should share their results with other Agencies. The Agencies may also conduct spot check reviews following standards and procedures already developed by each agency. Objective To assess the soundness of the internal controls and accuracy of the financial records for cash transfers by the Agency(ies). The spot check is not an audit. Scope The scope of the spot check may be adjusted to the specific needs of each assignment. Spot checks of IPs with internal controls assessed as weak, or spot checks made in response to a particular concern may be more detailed, than those of IPs whose management capacity has been rated as high. Prior to the spot check, members of the spot check team should review the FACE forms issued during the period under review, and the relevant AWPs and progress reports. The team should also be familiar with the findings of the micro assessment of the IPs, reports of relevant field monitoring visits, available audits reports and other documentation that may help to understand to IP’s internal controls and supported activities. A spot check takes place at the NI’s location and its duration may vary according to the level of expenditures. To the extent possible, schedules of planned spot checks should be shared with the concerned IPs. For each spot check, sufficient advance notice should always be provided to the IPs, together with a copy of the ToR. Tasks Spot checks include the following tasks: Review a sample of the expenditures recorded in the FACE reports issued during the period under review. The review should include, but not be limited to the following steps:

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o o o o

Reconcile the expenditure totals, per activity, on the FACE reports selected to the list of individual transactions. i.e. the IP’s accounting records Select a sample of receipts from the Agencies, assess whether they were deposited into the IPs bank account by verifying the bank statement Select a sample of transactions, review the reasonableness of the expenditure through discussions with management Verify that the FACE reports were signed by authorized officials

For a sample of disbursements: Review the adequacy of supporting documentation, e.g. invoices, purchase orders, receipt of goods, bank transfers/checks, bank statements, to ensure that it is consistent with the description of the transaction (per accounting records) and that it is consistent with the activity described in the AWP. Verify if there is adequate segregation of duties in processing the transactions Verify if payment cvouchers are authorized and checks are assigned by the designated officials Review mathematical computation of individual payments and total payments against the expenditures Check the detailed expenditure against the approved budget. If there is any deviation from the budget, assess whether they were authorized Check the dates of the supporting documents to ensure that the expenditure was incurred during the period under review, as per the approved AWP Update the status of recommendations from MA or previous audits Optional: review internal controls, especially when these might have changed compared to the MA or previous audits Discuss the findings of the review with the designated official of the IP Report Following the completion of the spot check, a report (sample of the report is attached) will be prepared containing: A summary of the findings, with the indication of risks A list of transactions tested. For any exceptions the report should list, by Agency, the payment details and the nature of the exception Recommendations to the IP Final comments by the IP The report will be addressed to the IP (and other parties as stipulated in the CPAPs) and copied to the ExCom Agencies.

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Annex III.9.3 WHAT GOES INTO THE TERMS OF REFERENCE OF A PROJECT/PROGRAMME EVALUATION26? Ask yourself: Why evaluate? Why now? For whom? Title Identify what is being evaluated. Use appropriate project/programme titles. Clarify the time period covered by the evaluation. Background Briefly describe the history and current status of the project/programme, including objectives, logic of project/programme design or expected results chain, duration, budget, activities. Situate with reference to the organization’s overarching country programme, as well as parallel or linked national programmes. Situate the important stakeholders, including donors, partners, implementing agencies/organizations. Purpose of the evaluation Clarify why the project/programme is being evaluated. Describe how the evaluation process and/or results will be used and what value added they will bring. Identify the key users/target audiences. Situate the timing and focus of the evaluation in relation to any particular decision-making event (e.g. review meeting, consultation, planning activity, national conference) and/or the evolution of the project/programme. Output of the evaluation This section is meant to describe shortly the products that the evaluation manager wants to obtain, e.g. an evaluation report with findings, recommendations, lessons learned, rating on performance. This also includes a list of best practices in a certain area or in the appropriate niche for the UN intervention.

Ask yourself: What is being evaluated? Scope and focus An “objectives” format can be used with or instead of evaluation questions. Where both are used, one objective is usually discussed through a number of questions. List the major questions the evaluation should answer — they should relate to the purpose and be precisely stated so that they guide the evaluator in terms of information needs and data to collect. Group and prioritize the questions. They should be realistic and achievable. Specify evaluation criteria to be used given the evaluation’s objectives and scope. Evaluations should use standard OECD/DAC criteria (relevance, efficiency, effectiveness, sustainability and impact) as well as additional criteria for evaluation of humanitarian response (coverage, co-ordination, coherence and protection). An explanation for the criteria selected and those considered not applicable should be given and discussed with the evaluation team. Consider including a cost analysis of the project/programme. Good cost analysis strengthens results-based management and increases the utility of the evaluation.
26

From Evaluation Technical Notes Nr. 2: What goes into a Terms of Reference? UNICEF New York, December 2003.

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Specify key policies and performance standards or benchmarks to be referenced in evaluating the project/programme, including international standards. Existing information sources Identify relevant information sources that exist and are available, such as monitoring systems and/or previous evaluations. Provide an appraisal of quality and reliability. Ask yourself: How? Evaluation process and methods Describe overall flow of the evaluation process — sequence of key stages. Describe the overall evaluation approach and data collection methods proposed to answer the evaluation questions. An initial broad outline can be developed further with the evaluation team. Ultimately it should be appropriate and adequate providing a complete and fair analysis. The final TOR should define: - Information sources for new data collection - Sampling approaches for different methods, including area and population to be represented, procedures to be used and sampling size (where information is to be gathered from those who benefited from the project/programme, information should also be gathered from eligible persons not reached) - The level of precision required - Data collection instruments - Types of data analysis - Expected measures put in place to ensure that the evaluation process is ethical and that participants in the evaluation (e.g. interviewees, sources) will be protected Highlight any process results expected, e.g. networks strengthened, mechanisms for dialogue established, common analysis established among different groups of stakeholders. Specify any key intermediate tasks that evaluator(s) are responsible for carrying out, and a preliminary schedule for completion. Consider for example: - Meetings, consultation, workshops with different groups of stakeholders - Key points of interaction with a steering committee - Process for verification of findings with key stakeholders - Presentation of preliminary findings and recommendations. Accountabilities Specify the roles and responsibilities of the evaluation team leader and team members, as well as other stakeholders and advisory structures involved, e.g. steering committees. This section should clarify who is responsible for: - Liaison with the evaluation team - Providing technical guidance - Coordinating the stakeholders involved - Selection, orientation and training of team members, data collection assistants where applicable, interpreters - Approval of intermediate and final products - Capacity-building with stakeholders, national or other (a possible responsibility of the evaluation team). Specify the means to protect and limits to evaluators’ independence. Specify any concerns or restrictions related to conflicts of interest. Ask yourself: By whom?

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Evaluation team composition Identify the composition and competencies of the evaluation team. This should follow from the evaluation focus, methods, and analyses required. Distinguish between desired and mandatory competencies, as well as whether competencies are required by the whole team or by certain members. Multidisciplinary teams are often appropriate. The qualifications and skill areas to be specified could include: - Areas of technical competence (sector, issue areas) - Language proficiency - In-country or regional work experience - Evaluation methods and data-collection skills - Analytical skills and frameworks, such as gender analysis - Process management skills, such as facilitation skills - Gender mix (not to be confused with gender analysis skills) Ask yourself: With what means? Procedures and logistics Specify as necessary logistical issues related to staffing and working conditions: - Availability and provision of services (local translators, interviewers, data processors, drivers) - Availability and provision of office space, cars, laptops and procedures for arranging meetings, requirements for debriefings - Work schedule (hours, days, holidays) - Seasonal constraints, travel constraints/conditions and socio-cultural conditions that may influence data collection Ask yourself: In what form? Products List products to be delivered, to whom and when. Consider: - The evaluation report - Completed data sets (filled out questionnaires or surveys) - Dissemination materials (newsletter articles, two-page summaries, presentation materials) Ask yourself: How much? Resource requirements Estimate the cost and prepare a detailed budget. Note the source of funds. Link the budget to the key activities or phases in the work plan. Cost estimates may cover items including: - Travel: international and in-country - Team member(s) cost: salaries, per diem, and expenses - Payments for translators, interviewers, secretarial services, etc.

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Program Code & Title:………………………. Project Code & Title:………………………… Responsible Officer: …………………………. Implementing Partner: …………………… ………………………………………………… EXPECTED PROJECT OUTPUTS, PLANNED ACTIVITIES

Annex III.9.4
QUARTERLY PROGRESS REPORT Period: MM – MM/YYYY ACTUAL ACHIEVEMENTS, PROGRESS AGAINST OUTPUTS, INDICATORS & TARGETS

FORM No. 3

INDICATORS AND ANNUAL TARGETS

List all activities including M&E to be undertaken during the quarter towards stated project outputs

PENDING ISSUES/ REASON FOR ADJUSTMENTS/ EMERGING ISSUES

Sub-project__Objective__Activity___

Prepared by Date

Approved by Date

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Project Code & Title:………………………….......................... Responsible Officer: ………………………….......................... Implementing Partner: …………………….............................

Annex III.9.5

FORM No......

ANNUAL PROJECT PROGRESS REPORT
Period: MM – MM/YYYY

EXPECTED PROJECT OUTPUTS & INDICATORS

MAJOR PLANNED ACTIVITIES
List major activities, including M&E activities , to be undertaken during the year in order to produce the stated project outputs

ACTUAL ACHIEVEMENTS, PROGRESS AGAINST OUTPUTS, INDICATORS & ANNUAL TARGETS

PENDING ISSUES/ REASONS FOR ADJUSTMENTS

(including annual targets)

1. Quote the output from the approved AWP

1.1 Quote the activity from the approved AWP

1.2 1.3

Describe the actual achievements (in terms of measurable products that were produced from and/or services that were delivered by the undertaking of the planned activities during the reporting year.

Describe the issues/risks that would have arisen and thus would have negatively influenced the degree of actual achievement and/or progress as reported in the earlier section. Based on the level of “severity” of such issues/risks, suggest adjustments to the AWP for the next year.

2.

3.

4.

2.1 2.2 2.3 2.4 3.1 3.2 3.3 3.4 4.1 4.2

Prepared by Date

Approved by Date

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Annex III.9.6 (Source: Annex 3- Decision 803/ 2007/ QĐ- BKH)
National Implementing Partner: .......................................................................................................... Project Owner: .......................................................................................................................................

TERMINAL PROGRAMME/ PROJECT REPORT
(for a programme/ project financed from ODA) Title and code of the programme/ project: ..........................................................................

TABLE OF CONTENTS
1. General Information General information on the programme/ project Programme/ project description Programme/ project objectives and scope Management arrangements 2. Results Achieved Implementation of the programme/ project objectives Implementation of the components and outputs Financial performance Factors that affected the implementation of the programme/ project 3. Analysis of Socio-Economic Benefits Analysis of the results achieved against the programme/ project objectives and design Impact on sectoral and regional development Sustainability 4. 5. Lessons Learned Annexes

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1.
1.1.
-

General Information
General information on the programme/ project
Title and code of the programme/ project (in Vietnamese): .................................................... Title and code of the programme/ project (in English): ......................................................... Programme/ project location(s): ............................................................................................. Donor(s): ................................................................................................................................. National Implementing Partner: ............................................................................................. Project Owner: ....................................................................................................................... Duration: Date of approval (Investment Decision, Feasibility Report, Project Document, etc...); Date of signature, Start date, End date (date of revision if any); Actual end date, and codes of above documents. .................................................................................................... Funding sources: Total programme/ project budget; ODA budgets, counterpart contributions (specify budget revisions if any and dates of such revisions)..........................

-

1.2.

Programme/ project description

1.2.1. Programme/ project objectives and scope
Objectives and scope based on the Investment Decision, Feasibility Report or the Project Document that has been approved. Objectives and scope following programme/ project revision (if any)

-

1.2.2. Management arrangements Management arrangements Project personnel

2. 2.1.

Results Achieved Implementation of the programme/ project objectives
Analyze the degree of achievement of the objectives that were set out in the approved Feasibility Report or the approved Project Document (of the subsequent programme/ project revision if any)

2.2.
-

Implementation of the components and outputs
List the main components and outputs as identified in the Project Document and describe the extent to which these components/ outputs were accomplished (in accordance with the success indicators established in the log frame) List the components and outputs that have been revised if any and analyze the degree to which they were accomplished. (Annex 3.1: The Log frame

-

2.3.

Financial performance

103

-

-

Make an analytical comparison between the total programme/ project budget as identified in the Project Document and the total actual disbursements (including both ODA resources and counterpart funds) List the main revisions to the total programme/ project budget as identified in the Project Document and the budgets following the signing of contracts and actual disbursements. Describe the main factors that affected the implementation of components that incurred large disbursements and those components that incurred small disbursements compared to the planned budgets (Annex 3.2: Final financial report)

2.4.
-

Factors that affected the implementation of the programme/ project
List the factors that affected the implementation of the programme/ project, for example: Legal and policy environment + Government policy + Donor policy Programme/ project management + Assess the capacity to ensure financial resources, technical support, organizational structure as agreed in the approved Project Document + Implementation arrangements for the programme/ project + Implementation capacity for the programme/ project + Compliance with reporting requirements and M & E requirements during the programme/ project implementation process + Risk and change management Bidding and procurement Technical assistance, training and capacity building Ground clearance and resettlement Environment management Gender issues Technology and know-how In addition, while listing the influencing factors, it is important to clarify the advantages, difficulties and remedial measures that were undertaken by the PMU.

-

-

3. 3.1.

Analysis of Socio-Economic Benefits Analysis of the results achieved against the programme/ project objectives and design
Analyze the progress made towards the achievement of the objectives of the programme/ project and its contributions to the implementation of the goals and tasks identified in the Five-Year Socio-Economic Development Plan of the Government.

3.2.

Impact on sectoral and regional development
Analyze the impact that the implementation of the programme/ project has generated or is expected to generate on sectoral and regional development in terms of economic, social, cultural, environmental and technological aspects.

3.3.

Sustainability
Describe factors that are expected to impact on or ensure the sustainability of the results achieved by the programme/ project.

4.

Lessons Learned

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Identify lessons learned from the implementation of the programme/ project and offer recommendations on how to promote its results, effectiveness and sustainability and/ or to address its constraints.

5.

Annexes
The log frame which is an integral part of the Project Document and which has been revised if any The final financial report Report on the success indicators and outputs List of major technical reports generated during programme/ project implementation Other main annexes as appropriate to the individual programme/ project

Date ..…...month ….....year ..…...

Project Owner (Signed and sealed

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