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					      Monitoring and
       Evaluation in
     Humanitarian Aid:
     Quality Procedures
PROJECT – STRAND 1 – Training and Capacity Building
 ANNEX II
   Budget


in collaboration with
Budget
formats
                                       Budget


ECHO – TYPES OF FUNDING
ECHO funds two types of projects:

 Total funding: ECHO funds 100% of the requested
budget

 Co-funding: ECHO co-funds the project with
another donor
                                          Budget

The Budget:

 Is based on three types of different formats

 Presents significant differences with respect to the
  former FPA (a new conception)

 The concept of lumpsum disappears (except for
  indirect costs and the Reserve)

 Is sub-divided into Titles, Chapters, Articles and
  Elements
                                                     Budget

Budget: 3 types of formats

    Budget for                    Does not have details
Financial Request                Unit, Quantity and Unit
   and Interim
 Financial Report
                                          price


       Budget summary                  Contains only items for
          (by the EC)                   Titles and Chapters



                 Budget for                  Contains details Unit,
               Final Financial
                   Report
                                            Quantity and Unit price
                                   BUDGET BREAKDOWN

Total estimated budget
Total direct costs of the Operation
                                                                                                                    Budget
Maximum EC contribution
Percentage of total eligible costs

                                                                                               Actual
     Code                        Heading                              Initial   Modified
                                                                                               Budget

              Goods & services delivered to the
      01
                       beneficiaries
01.01.        Food Security
01. 01. 01.   Basic food security
01. 01. 02.
01. 01. 03.
              Other food distribution
              Food for work
                                                                                                                       Initial
01. 01. 04.
01. 01. 05.
              School feeding
              Public Canteens                                                                                         request
                                                                                                                        and
01. 01. 06.   Agricultural activities
01. 01. 07.   Livestock
01. 01. 08.   Fisheries
01. 01. 80.
01. 01. 99.
              Training, local capacity building
              Other food and security                                                                                 Interim
                                                             BREAKDOWN OF EXPENDITURE - FINAL FINANCIAL REPORT

                                                                                                                          Unit price   Total in
                      Code                                  Heading                 Quantity     Unit   Duration   Unit    in EUR       EUR


                                    TITLE : Goods and services delivered to the
                        01
request




                                             beneficiaries (direct costs)
  Final




                  01.01           Food Security
                  01.01.01.       Basic Food security
                  01.01.02.       Other food distribution
                  01.01.03.       Food for work
                  01.01.04.       School feeding
                  01.01.05.       Public Canteens
                  01.01.06        Agricultural activities
                  01.01.07.       Livestock
                  01.01.08.       Fisheries
                  01.01.80.       Training, local capacity building
                  01.01.99.       Other food and security
                                               Budget

FORMAT FOR ECHO BUDGET PHASES

 FIRST PHASE:        SECOND PHASE:       THIRD PHASE:
  FINANCIAL              INTERIM               FINAL
   REQUEST               REPORT               REPORT


Budget Breakdown     Interim Financial   Pre-final Narrative
                     Report              Report (> 6 months,
                                         except Primary
Budget Summary                           Emergency and
and Financial Plan                       Emergency)

                                         Final Financial
                                         Report
                                                      Budget
DIVISION OF BUDGET IN TITLES
The division of the budget into titles is structured
using a separation of direct costs, indirect costs
and reserve:

 DIRECT COSTS                 INDIRECT               RESERVE
                                COSTS


 Title 0.1. “Goods and    Title 0.3. “Indirect   Title 0.4.
 services delivered to    costs”                 “Contingency
 the beneficiaries”                              reserve – pro
                                                 memoria”
 Title 0.2. “Supporting
 costs”
                                                                      Budget

   The budget is structurated using codes of 2, 4 , 6,
        8 digits which must be followed in the
      presentation of the budget and accounting
 BUDGET      DEFINITION          CODE
                                           DESCRIPTION                        NOTES
STRUCTURE      LEVEL            EXAMPLE
                                                                The 2 digit budget is divided into 4
                                          Goods and services    titles:
                          01.             delivered to the
TITLE       2 DIGITS                      beneficiaries
                                                                01. and 02. Direct costs
                          […]
                                                                03. Indirect costs
                                          […]
                                                                04. Reserve

                          01.01           Food security         The 4 digit budget is divided into 22
CHAPTER     4 DIGITS                                            chapters referring to title 1 (13) and
                          […]             […]                   2 (9)


                          01.01.01        Basic Food Security   The number of articles referring to
ARTICLE     6 DIGITS                                            each chapter is varied
                          […]             […]


                                                                The nomenclature of the budget
                                                                proposed by ECHO does not exceed
                          01.01.01.01.    Corn Flour            6 digits. The detail level
ELEMENTS    8 DIGITS      01.01.01.02     Vegetable oil         corresponding to 8 digits is not
                          […]             […]                   coded, and is free (mandatory for
                                                                the presentation of the final financial
                                                                report)
                                     Budget
Eligible Costs, NEW

 The new conception gives eligibility to cost
 previously non-eligible:
Costs of offices on location (rent and office
 consumable & supplies)
Personnel in headquarters (directly
 connected with operations)
Personnel in HQ for feasability studies (to
 concord with ECHO), monitoring and
 evaluations
Costs for conscienceness raising for EC
 operations
                                          Budget


Non-eligible Costs, NEW

   In accordance with the new EU funding
   norms from January 1, 2003 these are no
   longer eligible:

 Costs calculated in forfait (except Indirect costs
  and Reserve)
  Practical
application of
 the budget
                                       Applications
                                        ANNEX II
SUMMARY
1. Principles of budget flexibility and amendment
   procedures
2. Times requested for the presentation of Financial
   Reports (Financial Request, Interim Financial
   Report, Pre-Final Narrative Report and Final
   Financial Report)
3. Form requested for the presentation of Financial
   Reports
4. Sensible points and the “Trenino”: practical
   applications
                                      Applications
                                       ANNEX II


1. BUDGET FLEXIBILITY AND AMENDMENT
A. “Unilateral modification of the Budget by the NGO,
  notifying ECHO”
B. “Exchange of written correspondence approved by
  ECHO”
C. “Supplementary Agreement”
                                             Applications
                                              ANNEX II


 A. Unilateral modification of budget by NGO
                 notifying ECHO
When ?

A. The budget modifications introduced do not affect a basic
   element of the Operation;
B. The financial impact is limited to a transfer between Title
   01 and Title 02 equal or inferior to 15% of the total
   eligible direct costs, independently of the use of the
   reserve.
                                            Applications
                                             ANNEX II

 A. Unilateral modification of budget by NGO
                 notifying ECHO

What type of procedure to follow ?

 Formalize a modification made in the Interim Report (if
  foreseen) and/or address a letter to the Field Officer and
  Desk Officer of ECHO. Acceptance is not required by
  ECHO in this case.

 It is always advisable to inform ECHO in writing and to file
  the relative correspondence.
                                  Applications
                                   ANNEX II
     B. Exchange of written correspondence
               approved by ECHO
When?
A. For a transfer between Title 01 and Title 02 > 15% of the
   total eligible direct costs (Title 01. + Title 02.),
   independently of the use of the reserve.
B. To request the use of the Reserve, in the case in which
   funding had been granted in the Grant Agreement
C. Intend, for operational and/or contingency reasons, to
   carry out a change affecting a significant element of the
   operation (location, beneficiaries, sustainability);
D. To request a change of the bank account used by the HO.
E. Modification of indicators and source of verification.
                                                                         Applications
                                                                          ANNEX II
     B. Exchange of written correspondence
               approved by ECHO
What type of procedure to follow?
1. The NGO shall present a written request to ECHO duly
   founded and motivated (before such a request is made to
   the Desk Officer of ECHO in Brussels it should be
   discussed with the ECHO Field Expert [1])
2. Await the written confirmation by ECHO for acceptance or
   refusal of request (ECHO shall respond within 15 days, in
   any case silence does not mean acceptance)
   [1] in these cases correspondence with Field Expert and Desk Officer should be filed.
                                 Applications
                                  ANNEX II
           C. Supplementary Agreement
When ?

A. If the HO wants to request an EXTENSION of the project
   implementation period
B. If the HO wants to request a BUDGET INCREASE justified
   by operative reasons
C. For co-financed projects, when a MODIFICATION OF THE
   PERCENTAGE in the co-funding quota is requested
D. For modification or inclusion in the agreement of an article
   9 “specific conditions” (i.e. modification or derogation to
   General conditions);
                                             Applications
                                              ANNEX II

           C. Supplementary Agreement
What type of procedure to follow ?
A. The ONG shall present a written request to ECHO duly
   founded and motivated (before such request is made to the
   Desk Officer of ECHO in Brussels it should be discussed with
   the ECHO Field Expert)
B. If accepted ECHO shall respond to the NGO in writing within
   15 days of receiving the request, sending an amended Grant
   Agreement (in any case, silence does not mean acceptance)
C. The amended Grant Agreement will become effective when
   signed by both parties (ECHO and NGO) and sent to ECHO
EXAMPLE “Budget flexibility and amendment”
 Initial budget
         Digit                          Chapter                             Initial Budget
 01.                    Goods and Services                                      750.000
               01.02.                             Water & Sanitation                           500.000
               01.06.                               Non-food Items                             100.000
               01.13.                                     Personnel                            150.000

 02.                    Support Costs                                            250.000
               02.01.                                   Personnel                              130.000
               02.02.                         Local Logistic Costs                              70.000
               02.03.                          Durable Equipment                                30.000
               02.06.                         Specialised Services                              15.000
               02.08.                                     Visibility                             5.000
 03.                    Indirect Costs                                           70.000
 04.                    Contingency Reserve                                         0
                                                            TOTAL              1.070.000



 Unilateral modifications in budget notifying ECHO
       Digit               Title          Initial         15% of       - 15%               + 15%
                                         Budget        direct costs
 01.              Goods & Services       750.000         150.000       600.000             900.000
 02.              Support Costs          250.000         150.000       100.000             400.000
EXAMPLE “Budget flexibility and amendment”
                                                    Unilateral modification
                                              of budget by NGO notifying ECHO




   Digit         Chapter           Initial    Without change     With change    With change
                                  Budget       between Titles       = 15%          > 15%
                                           TITOLO 01.
01.02.     Water & Sanitation     500.000         350.000           450.000        500.000
01.06.     Non-food Items         100.000         350.000           400.000        400.000
01.13.     Personnel              150.000          50.000            50.000         50.000
                                           TITOLO 02.
02.01.     Personnel              130.000         180.000           50.000          25.000
02.02.     Local Logistic Costs    70.000          50.000           25.000          7.500
02.03.     Durable Equipment       30.000          20.000           25.000          7.500
02.06.     Specialised Services    15.000             0                0               0
02.08.     Visibility               5.000             0                0               0
 TOTAL change between Title 01 and 02               0              150.000         200.000




                                                                                  Exchange of
                                                                                correspondence
                                                                                with approval by
                                                                                     ECHO
                                       Applications
                                        ANNEX II

2. TIMES REQUESTED FOR THE
   PRESENTATION OF FINANCIAL REPORTS

A. Projects of Primary Emergency, Emergency and
  other projects with duration < 6 months
B. Projects with duration > 6 months
                                            Applications
                                             ANNEX II
A. Projects of Primary Emergency, Emergency
   & other projects with duration < 6 months
 MANDATORY                             WHEN
 DOCUMENTS

Budget Breakdown      Presentation of project proposal


Interim Financial     At least one month before the end of
Report (+inventory)   implementation period, unless otherwise
                      specified in the Grant Agreement


Final Financial       Within 6 weeks of end of
Report                implementation period, unless otherwise
                      specified in the Grant Agreement
                                              Applications
                                               ANNEX II
      B. Projects with duration > 6 months
 MANDATORY                              WHEN
 DOCUMENTS


Budget Breakdown       Presentation of project proposal


Interim Financial      Usually halfway through project
Report                 implementation period (date specified in
                       the Grant Agreement)

Pre-Final Narrative    1 month before the end of project
Report (+inventory)    implementation period

Final Financial        Within 3 months of the end of project
Report                 implementation period
                                               Applications
                                                ANNEX II

ATTENTION          !
1. The Report shall be presented using the standard forms
   supplied by ECHO in the same language of the Grant
   Agreement
2. All Reports must be expressed in Euro
3. The EU may request further information which must be
   supplied within 30 days of the request
4. Failure to respect expiration dates, without valid motivation,
   may cause cessation of the Grant Agreement and is
   considered a threat to the continuation of the FPA
                                    ApplicaTIONS
                                      ANNEX II

3. FORM REQUESTED FOR THE
   PRESENTATION OF FINANCIAL REPORTS

A. Projects of Primary Emergency and Emergency
B. Other projects with duration < or > 6 months
                                 Applications
                                  ANNEX II

     A. Projects of Primary Emergency and
                     Emergency
 MANDATORY                    BUDGET
 DOCUMENTS                  DEFINITION

Budget Breakdown              4 Digits


Interim Financial             6 Digits
Report


Final Financial               8 Digits
Report
                                   Applications
                                    ANNEX II

    B. Other projects with duration < or > 6
                      months
 MANDATORY                     BUDGET
 DOCUMENTS                   DEFINITION

Budget Breakdown                6 Digits

Interim Financial               6 Digits
Report


Final Financial
Report                          8 Digits
• At least 8 digits                        Phase I:
• Use only format Annex II                 Financial
                                           Request     • 6 digits
                                                         4
• Do not fill in the Budget Summary
                                                       • Use only format Annex II
• Insert Cost and Element type
                                                       • Do not fill in the Budget Summary
• Insert Accounting Reference N°
                                                       • Use only column INITIAL Budget
                                                       • Do not fill in “Special Mandates”
         Fase III:
        Phase IV:
           Final
     Financial Report                      DIGIT
                              Primary Emergency
                                 Other projects
                                 Other projects
                                  < Emergency
                                 and6 months
                                         > 6 months                    Phase II:
          Phase III:
          Pre-Final                                                     Interim
          Narrative                                                 Financial Report
           Report
                                                       • 6 digits
• Use format Annex II Interim
Financial Report (6 digits) in case of                 • Use only format Annex II
modifications introduced into the
budget                                                 • Do not fill in the Budget Summary
                                                       • Highlight changes with the
                                                       columns INITIAL/MODIFIED
                                                       • Insert amount spent/committed
                                                       in column ACTUAL BUDGET
• within 6 weeks of the end of
  Within 3 months of the end of      Phase I:
the project implementation
project implementation period        Financial
period, Unless otherwise specified   Request
by the Grant Agreement

                                                 • Presentation of project
                                                 proposal

        Fase III:
       Phase IV:
          Final                      TIMING
    Financial Report
                            Primary Emergency,
                               Other projects
                                >Emergency,
                                  6 months
                                 other < 6 months
        Phase III:                                             Phase II:
        Pre-Final                                               Interim
        Narrative                                           Financial Report
         Report
• 1 month before the end of                        Normally month before the
                                                 • at least 1 halfway through the
project implementation period                    end of the implementation
                                                 project implementation period
(only narrative + inventory)                     period (with inventory),
                                                 (date specified in the Grant
                                                 Agreement)
                                                 Unless otherwise specified by the
                                                 Grant Agreement
The “Trenino”
                                   Budget:
                                 Instruments

   To facilitate the work an instrument was
created to apply to the budget and accounting
                    expenses




               Trenino
                            Instruments:
                            the “Trenino”

               OBJECTIVE



“To facilitate writing the budget and the
  correct monitoring of accounting for
                expenses”
                                Instruments:
                                The “Trenino”

                What it isn’t
1. It is not an instrument to substitute ECHO
   documents
2. It is not an instrument for planning and
   controlling the activity
3. It is not an instrument for controlling
   expenses met in relation to programmed
   expenses
4. It is not an instrument for integrating
   accounting & managing systems adopted by
   the single HOs
                                 Instruments:
                                 the “Trenino”
                   Contents

1. A summary by topic of the funding
   information in the various FPA documents
2. Specific charts for each budget Article with
   the purpose of:
     Supplying information (cfr. ECHO
       guidelines)
     Defining eligible expenses for each
       Chapter
     Define the vouchers for each article of
       expense
The end

				
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