Financial and Contractual Procedures of 10th EDFFamiliarization Session
Financial and Contractual Procedures of 10th EDF
Source of Information
Source Info. Availablehttp://ec.europa.eu EC main website for any
info related to EDF, EC Contract and more
http://ec.europa.eu/europeaid/prag/document.do?locale=en
Practical Guide and all its annexes
http://ec.europa.eu/europeaid/work/procedures/index_en.htm
Europe Aid procedure and documents
Financial and Contractual Procedures of 10th EDF
Short BackgroundThe European Development Fund (EDF) was created in 1958 to provide aid to certain developing countries/territories that have historical links with certain EU countries.It falls within the broader framework of development cooperation with African, Caribbean and Pacific (ACP) countries. The EDF is not funded from the EU's general budget, but rather from direct contributions from EU countries, the amounts of which are agreed in negotiations.The EDF is generally renewed every 5 years (next renewal in 2013), with a new EDF financial regulation.
As the EDF is not included in the EU budget, it is not subject to the principle of annuality (one-year validity). Moreover, since it is a fund there are no time limits for implementing projects (although normally this will not take more than 10 years). These funds are the main source of EU development aid for the African, Caribbean and Pacific (ACP) countries and the overseas territories (3% of the annual EU budget in 2008-13).Each EDF is directly financed by the EU countries, has its own financial regulation, and is managed outside the framework of the EU's general budget.
Financial and Contractual Procedures of 10th EDF
Short Background (cntd…)
Financial and Contractual Procedures of 10th EDF
Short Background (cntd…)
Brief History:Treaty of Rome(1957)The Yaoundé Agreements 1&2 (1957, 1969)The Lomé Conventions 1-5 (1975, 1980, 1985,
1990,1995)The Cotonou Agreement (2000)(signed in June 2000 by
78 ACP countries and the EU-15)
The Cotonou Agreement (2005) (Ammended inLuxumburg in 2005 by 78 ACP and 25 EC countries, OUAGADOUGOU June 2010)
Cotonou agreement fundamental principles:PartnershipParticipationDialogue and mutual obligationsDifferentiation and regionalization
Source: http://en.wikipedia.org/wiki/File:ACP_EPA_Groups.svg
Financial and Contractual Procedures of 10th EDF
Short Background (cntd…)
ACP Countries
Financial and Contractual Procedures of 10th EDF
10 EDF
The 10th EDF has a budget of €22 682 million:€21 966 million to the ACP countries (97% of the total),€286 million to the OCTs (1% of the total),€430 million to the Commission as support expenditure for programming and implementation of the EDF (2% of the total).In particular, the amount for the ACP countries is divided as follows:€17 766 million to the national and regional indicative programmes (81% of the total),€2 700 million to intra-ACP and intra-regional cooperation (12% of the total),€1 500 million to Investment Facilities (7% of the total).
Financial and Contractual Procedures of 10th EDF
Institutions ACP-EC
ACP•Council of Ministers•Committee of ambassadors•General Secretariat
EC•Council of Ministers•European Commission•European Parliament•Court of Auditors•European Investment Bank
Financial and Contractual Procedures of 10th EDF
Relevant Institutions with in the EC
ECDG Development, Development cooperation with ACP states and OCTs (DG Dev. EuropeAid Cooperation Office (AIDCO) (Overseas Countries & Territories)DG Budget(treasury and accounting) (EU BUDG)DG External Relations (DG Relex)ECHO, Humanitarian Aid Office.Delegation Offices (HoDs)
Financial and Contractual Procedures of 10th EDF
Introducing major concepts in EDFFinancial and contractual procedures
Step Document Responsibility NotePrograming Indicative resource
allocationCommission in Brussels
Based on Country Support Strategy
Preparation of CSS NAO, CommissionPreparation of Indicative Programme
NAO, Commission ACP State or Regions draws up draft NIP/RIP
Identification Identification of projects
NAO CSP, PRSP etc.
Preparation of Identification Sheet
HoD
Appraisal Sheet Commission.Formulation Joint Formulation NAO, HoD of (the
EU Delegation)Draft Financing Proposal
HoD By way of a consultancy on a framework contract
Draft FA and TAP (Technical Administrative Procedures)
HoD By way of a consultancy on a framework contract
Financing Appraisal of Projects
Commission
Creation of Global Financing Commitment
Commission
Financing Decision CommissionAdoption of Global Financing Commitment
Commission
Signing of Financing Agreement
NAO, Commission
Financial and Contractual Procedures of 10th EDF
Introducing major concepts in EDF (Cntd…)
Main Actor DescriptionNational Authorizing Officer (NAO)
Appointed By ACP StateRepresents the State in all Operations
Chief Authorising Officer (CAO) Appointed by the CommissionResponsible for the management of EDF resources
Head of Delegation Appointed by the commissionTo be approved by the ACP stateRepresents the commission in all its activities in the ACP State
Financial and Contractual Procedures of 10th EDF
Main Actors
Cotonou ACP-EC partnership agreement and the amended Overseas Association Decision.
EC-OCT Group Decision
General Regulations General Conditions
Internal Agreement - EDF 10
Financial Regulation -EDF 10Regulations OCT
Group
User Guide to to Financial procedures
Practical Guide toContractual Procedures
Practical Guide to Direct Labour Operations
& Programme Estimates
Other User Guides
Financial and Contractual Procedures of 10th EDF
Legal Framework and Manuals
Financial and Contractual Procedures of 10th EDF
Accounting
Online Accounting System (CRIS):All financial transactions are recorded on centralized Online Accounting SystemIntegrated Accounting and Financial Transactions.
Stage Responsible RoleImplementation NAO/RAO Issue tenders, receives tenders, presides over opening and evaluation of
tenders, signs contracts, clears and authorizes expenditurePrepares tender Dossiers (international Tenders) approves proposals for award of contract, takes care of publications of international tendersCommits, clears and authorizes expenditures
HoD Approves Tender Dossiers Assists in tenders, approves proposals for award of contracts
Accounting Officer (comm.)
Execution of payments, collection of revenue and recovery of receivable amounts.Keeps accounts, prepares financial statements. Responsible for treasury management
Paying agent National financial institution (ACP) Agreed up on ACP and ECPayment in local currency
Paying agent effects the payments
Monitoring and evaluation
Comm.NAO/RAO
Joint monitoring and evaluationPreparation and implementation by comm. And ACP General SecretariatReporting to ACP-EC Development Finance cooperation Committee.
Financial and Contractual Procedures of 10th EDF
Implementation
Financial and Contractual Procedures of 10th EDF
Most Basic Documents
PRAG This Guide provides users with the comprehensive information necessary to undertake procurement or grant procedures from the very first steps to the award, signature and implementation of contracts. The annexes cover both the award phase and the execution of contracts. The Guide outlines the contracting procedures to be used in centralized management (centralized and indirect centralised2) and decentralized management with ex-ante approval or with ex-post controls by the European Commission. Found at: http://ec.europa.eu/europeaid/prag/document.doPRAG is updated continuously. It might even be updated in the middle of an ongoing financing agreement. Hence users must always refer to the Europa website for latest releasesThere are instances for which this Guide does not apply: eg. humanitarian aid operations or emergency operations carried out by ECHO.
Financial RegulationsThis Regulation lays down the rules for the establishment and the implementation of the general budget of the European Union and the presentation and auditing of the accounts.
Rules and proceduresAnnexesList of Annexes Available at: http://ec.europa.eu/europeaid/prag/document.do?chapterId=8.&id=41
Practical Guide for Direct Labor OperationsThe PRAG for Direct Labor Operations provides the procedures and implementation modalities to be followed by on implementing direct labor operations where there is a decentralized management in place.
Financial and Contractual Procedures of 10th EDF
Most Basic Documents (cntd…)
Financial and Contractual Procedures of 10th EDF
Most Basic Documents (cntd…)
Financing Agreement/ TAP•Financing agreement is the final implementable project that follows the financing decision.•The financing agreement includes an annex: Technical and Administrative Procedures document. •The FA outlines the project financing procedures, implementation modalities to be followed, applicable legal framework, indicative allocation of funds by component and sub-component, Indicative implementation time framework, monitoring and evaluation arrangements and more.•The FA is based on a log frame approach. •The FA indicates the management mode for a given project.
Financial and Contractual Procedures of 10th EDF
Implementation methods/Management Modes
Direct centralised management. The European Commission is the Contracting Authority and takes decisions for the beneficiary country so, in such cases, references in this Guide to the ‘Contracting Authority’ in fact refer to the European Commission, acting on behalf of and for the account of the beneficiary country.
Indirect centralised management. The European Commission delegates certain budget implementation tasks to a national body, which thus becomes the Contracting Authority. This national body is usually a development agency (or equivalent) of an EU Member State. In most cases, the national body’s rules and procedures are used, so this Guide does not apply, but if the delegated entity awards grants financed by the EU General Budget, the Guide does apply, with the exception of the obligation to publish calls for proposals on the Europeaid website.
Financial and Contractual Procedures of 10th EDF
Implementation methods/Management Modes
Decentralised management: - Ex-ante decentralised management. Decisions on the procurement and award of contracts are taken by the beneficiary country, which acts as the Contracting Authority, following the prior approval of the European Commission. -Ex-post decentralised management: decisions provided for in the Financing Agreement are taken by the beneficiary country, which acts as the Contracting Authority without prior approval by the European Commission-Others: Joint Management
- Shared Management
Financial and Contractual Procedures of 10th EDF
Implementation methods/Management Modes
Financial and Contractual Procedures of 10th EDF
Implementation methods ... (cntd.)
References Regarding Implementation Methods or Management Modes• Special Conditions• Annex 1: General Conditions• Annex 2: Technical and Administrative Provisions• Standard template documentsWhen implementing an EDF project, there is nothing that is written freely. There is a template, for every thing that is done: Financing Agreement, Programme Estimates, Adendums, Ridders all have templates.
Financial and Contractual Procedures of 10th EDF
Important Rules: D+3 Each legal commitment in the form of Financing Agreement is preceded by a financial commitment.Each Global Financial commitment is adopted after the financing decision and before the financing agreementFunds are de-comitted in case the Financing Agreement is not signed with in 31/12 of year N+1.
Date + 3 Years RuleThis is an important rule, Contracts are to be concluded with in 3 years after the adoption of the global financial commitment. The period for the conclusion of contracts and grant agreements by entities entrusted, under indirect management, with implementing external actions should be limited to three years following the signature of the delegation agreement, unless specific exceptional and external circumstances exist.
(Articles 74(2) and 79 of the 10th EDF Financial Regulation)
http://ec.europa.eu/europeaid/work/procedures/legislation/financial_regulation/index_en.htm
Exceptions to ‘date + 3 rule’
• Audit and evaluation contracts• Contracts within other contracts and contracts from the direct labour of programme• Contingencies.
Financial and Contractual Procedures of 10th EDF
Important Rules: D+3 (cntd…)
Financial and Contractual Procedures of 10th EDF
Important Rules: Operational Period
Period of execution starts on the date on which the last parties signed the FA Final date for execution stated in special conditionsPeriod of execution covers two phases
Financial Regulations 10th EDF Chapter 6 Section 3: Article 73-76(centralized), 77-83 (decentralized)
Financial and Contractual Procedures of 10th EDF
Important Rules: Operational Period
Operational Implementation:• Starts on date of entry into force of the FA• Ends at the latest 24 months before the end of period of execution• Costs of principal activities are eligible only if incurred during this period.Financial Regulations 10th EDF Chapter 6 Section 3: Article 73-76(centralized), 77-83 (decentralized)
Financial and Contractual Procedures of 10th EDF
Important Rules: Closure Period
• Starts on the date of end of Operational period• Ends at least 24 months after this date• Eligible costs are related to audits evaluations and technical and financial closure activities.
Financial Regulations 10th EDF Chapter 6 Section 3: Article 73-76(centralized), 77-83 (decentralized)
Financial and Contractual Procedures of 10th EDF
Important Rules: Modifications
• Increase or decrease of committed amount (at the rate of <10% of the FA can be done as a minor modification to FA to be approved by HoD, any thing beyond would constitute a rider to be approved by Comm.)
• Extension of period of execution. • Internal budget adjustments
Financial and Contractual Procedures of 10th EDF
Important Rules: Contingencies
Use of contingencies is not a modification of the FA, hence requires no addendumAmount of contingency can not exceed 10% (As a rule, plan for use of contingency should be in place when PE are prepared, to enable use of these funds at the end of the project if these funds remain untouched)Conditions for use of the contingencies:
Internal budget adjustments are not possibleNAO submitted a formal request justifying why the use of
contingencies is requiredPrior approval of the NAO is required
Financial and Contractual Procedures of 10th EDF
Important Rules: De-commitment
The termination of a project and the decommitment of the funds committed in accordance with Articles 78 and 79 shall be carried out by the ACP State … after conclusion of the legal commitments entered into and after the related payments and collections have been recorded in the EDF accounts.
IMPORTANTWHEN IMPLEMENTING A PROJECT UNDER EDF PROCEDURES, THE MAIN THING IS TO LEARN HOW THE EDF PROCEDURES ARE ORGNIZED, HOW TO READ THEM AND HOW TO USE THEM IN DAY TO DAY IMPLEMENTATION OF PROJECTS.
MEMORIZING THE PROCEDURES DOES NOT HELP.
EDF DOCUMENTS ARE LIVING DOCUMENTS.
NEW VERSIONS COME OUT QUITE OFTEN.
LEARN TO REFER TO LATEST DOCUMENTS BEFORE FINALIZING ANY GIVEN DOCUMENT (Tender document, Report, Addendum, Programme Estimat…).
Start the Learning Process:Step 1. Learn the Background to your given project. Your CSS (Country Support Strategy), your PRSP (Poverty Reduction Strategy Paper), any other consultancy report, or other agreements between your NAO (National Authorizing Officer) and EC Delegation to your country.Step 2. Learn your Financing Agreement and TAP in detail (most important: the applicable Special Conditions):Reading the PE with out understanding the PRAG can be difficult, but any ways do it. This will give you an idea of how to use the important documents mentioned in earlier section (the PRAG, Financial Regulations, Cotonoue Agreement, PRAG for Programme Estimates, and related annexes and templates).Step 3. Familiarize yourself with ALL pertinent EDF Documents inter alia:Cotonou Agreement (Pertinent to EDF 10 latest version)General Regulations (Pertinent to EDF 10 latest version)PRAG Contract Procedures (Pertinent to EDF 10 latest version)Financial Regulations (Pertinent to EDF 10 latest version)Guide for Financial Regulations ((Pertinent to EDF 10 latest version)PRAG for PEs (Pertinent to EDF 10 latest version)
Introduction to PRAG
Practical Guideline
BIRD’S EYE VIEW: FINANCING AGREEMENT
IN THIS SECTION INSERT THE APPLICABLE FINANCING AGREEMENT DO NOT GO IN DETAIL OF WHAT THE FINANCING AGREEMENT SAYSJUST SCAN THROUGH THE HEADINGS AND INDICATE WHAT THINGS THE FINANCING AGREEMENT CONTAINS.
A bird’s eye view of applicable Financing Agreement (FA)
BUDGET or EDF??Depending on the conditions the EC puts forward, your project can be categorized as:
Budget or EDF.
DO NOT BE CONFUSED:Projects Under Budget have their own General Regulations (Pertinent to EDF 10 latest version)Special Conditions and General ConditionsFinancial Regulations (Pertinent to EDF 10 latest version)In the PRAGs (both for contracts and Finance) Budget and EDF are treated separately often Budget coming first, then followed by things
applicable to EDF.HENCE:
MAKE SURE YOU USE WHAT IS APPLICABLE TO YOUR PROJECT.
YOUR FINANCING AGREEMENT DEFINES WHETHER YOUR PROJECT IS UNDER BUDGET OR EDF.
FINANCING AGREEMENT
FINANCING AGREEMENT
Financing Agreement is Based on a Logical Frame Work Approach.
The Logical Framework Approach is the main tool used for project design during the Identification and Formulation phases of the project cycle. Using the LFA during Identification helps to ensure that projectideas are relevant, while during Formulation it helps to ensure feasibility and sustainability.
Logical Frame Work:
FINANCING AGREEMENTLogical Frame Work:
GO THROUGH APPLICAPLE LOGICAL FRAME WORK FOR THE PROJECT FROM THE APPLICABLE FINANCING AGREEMENT
Brief look at the Applicable Logical Framework.
FINANCING AGREEMENTLogical Frame Work:
Learn your Logical Frame work Very Well.
Why?It gives Birth to your Project
Organization: components, sub components
It gives birth to you subsequent Implementation Plan, budget etc.
It gives birth to your monitoring and evaluation strategy
Your project is weighed against the OVIs and targets set in your Log Frame
FINANCING AGREEMENTNature of Financing – Implementation Modalities:
1.Tenders2.Direct Labor
Operations3.Grants4.Budgetary Support,
Sectoral Support etc.
}Projects
EXECUTION OF PROJECTS
EXECUTION OF PROJECTSWAYS TO EXECUTE PROJECTS
Once project is defined, and implementation plans and financing details provided, execution of project naturally comes down to:
Tenders:WorksSupplies Services
Direct Labour OperationsGrants
EXECUTION OF PROJECTSWAYS TO EXECUTE PROJECTS
Tenders:• Contracts for pecuniary interest• Concluded in writing• For the purposes of:
• Execution of works• supply of movable and immovable assets• Provision of services
Works, Supplies and Services contracts are governed by the General Regulations applicable to EDF-10. But the PRAG gives easy to follow Guidelines on how to execute the contracts.
EXECUTION OF PROJECTSWAYS TO EXECUTE PROJECTS
Direct Labour Operations:• NAO delegates powers to execute a project or part there of to:
• a public department = direct labour• a third party orgnization legaly distint from the ACP State concerned = externalized direct labour (always on a service contract)
Refer: Cotonou Agreement Annex IV Article 24Financial Regulations10: Title VI Chapter 4 Article 100-102
EXECUTION OF PROJECTSWAYS TO EXECUTE PROJECTS
Direct Labour Operations (cntd…)• Programme estimate
(Annual indicative implementation programme, material & non- material requirements and cost estimates)• Managed by an imprest administrator and imprest accounting officer working on behalf of the NAO on a limited threshold.Refer: Cotonou Agreement Annex IV Article 24
Financial Regulations10: Title VI Chapter 4 Article 100-102
Programme Estimate
Reference: http://ec.europa.eu/europeaid/work/procedures/financing/work_programmes/index_en.htm
Based on:Practical guide to procedures for programme estimates –
project approach (version 4.1)
Objective:The objective of this session is to learn how to USE the applicable EDF documents to design a programme estimate and to highlight cautions areas where problems might arise.
As the name indicates the PE PRAG is a guide. It is a document that should be refered to at every step of the process of preparing the PE.
Moreover, the implementer should always check for the latest PE PRAG from the Europa website: (http://ec.europa.eu/europeaid/work/procedures/financing/work_programmes)
Out of Scope:Explain every thing with in the Practical Guide for PE.
SCOPE SETTING
Programme EstimatesDecentralised OperationsThe Financing Agreement indicates whether a project has a Centralized or Decentralized Approach or combination of both with limited delegation of power to NAO for Progremme Estimates.
Main Actors: NAOImprest AdministratorTmprest accounting OfficerThird Party Organizations (Public, Semi-public, Private)Project Steering Committee(its membership and formation is defined in the FA)Head of Delegation (HoD).The Steering Committee.
Programme EstimatesThe Imprest Officers:
Imprest Officers:Imprest Administrator
Substitute Imprest AdministratorImprest Accounting Officer
Substitute Imprest Accounting Officer
IMPORTANT: Remember there should not be any subordination among the two officers. Meaning they should be individuals on the same hirarchy. They are co-signators for the imprest account.
If need be they can have Substitutes. But the substitutes become active in justified situations only. Refer GPE:
Though they are they are co-signators the Two officers should work in coordination to make efficient implementation.
Appointed By the NAOApproved by the HoDResponsibilities•draws up the PE (technical and operational parts)•submits the PE with the IAO•commits expenditure foreseen for the imprest component of the budget of the PE•authorises corresponding payments
Programme EstimatesThe Imprest Officers: Imprest Adminstrator
Appointed By the NAOApproved by the HoD
Imprest accounting officer
•draws up the PE (financial part) in cooperation with the IA)• submits the PE with the IA•verifies the correct application of contract•verifies and implements payments and recoveries linked to the Imprest component of the budget of the PE.
Programme EstimatesThe Imprest Officers: Imprest Accounting Officer
Communication – lines of command – transfer of responsibilities
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NAO
NAO-Office (Sub delegated Entities)
Government ACP State
Technical sections( Procurement, M&E, Operations)Finance and Contract Section
Commission of the European Union(Brussels Office)
HoD
EC Delegation
Technical sections
Finance and Contract Section
Implementing AgenciesProjects
Programme EstimatesDecentralised Operations
Programme Estimate Covers: Indicative Implementation Planwork programme Indicative budget estimate Indicative financing plan technical and administrative implementing arrangements (TAP)
A financing plan can includeEDF funds specific commitments imprest commitment
other funds national funds own resources other donors
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Programme EstimatesDecentralised Operations
EDF funds can include
specific commitmentsamounts for contracts and grants related to the implementation of the PE activities that are awarded and managed by the NAO and / or the Commission (values above the max threshold)Imprest commitment
amount of financing to cover all the expenditure needed to carry out the planned work programme mentioned in the PE implemented by the imprest administrator and accounting officer (within the limits of the powers delegated by the NAO)
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Programme EstimatesDecentralised Operations
Imprest commitmentThe imprest component of the budget of the programme estimate is implemented, in accordance with the principle of effective separation of the authorisation and payment functions, by:
the imprest administrator and
the imprest accounting officer,
For special reasons it is possible to set up separate components with their own programme estimates for their implementation with own imprest administrators and imprest accounting officers coordinated by the central ones
The creation of “subimprests” is not authorised.56
Programme EstimatesDecentralized Operations
Programme EstimatesDecentralized Operations
National fundsAny contribution by an ACP state for the pursuit of the functions of a project being financed as one project.
Own resources generated by the projectinclude any interest on bank account(s), asset sales, services invoiced to third parties, the beneficiaries’ contributions, Must be accounted forAdvance > € 250K : interest yielded on bank account(s) is the property of the European Union.interest cannot be considered as own resources, should be deducted
Funds from these different sources:• into separate bank accounts and • under no circumstances should they be invested or put
on term accounts
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Duration of Programme Estimates and Type
Type of PE Max Duration(Months)
Closure Period(6 Months)
Start Up PE 6 After
Operational PE(s) 12 After*
Final Operaitonal PE 18 During**
* The closure period overlaps with the implementation period of the subsequent PE.** Though it is indicated that the Final PE has 18 months of operational period, it should be noted that, the effective implantation period is only 12 months the 6 months are reserved for closure. The reason why this is kept as such is because the Final PE does not have a subsequent PE to cover costs. Hence it is subsumed in the period of the final PE.
Programme EstimatesDuration and Types of PEs
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Start-up PE• Work programme and budget estimate to prepare operational
PE No. 1
• duration: maximum 6 months
• small amount: for preparatory activities
• Can receive an advance up to 100 % of the budget
• Subject to audit
Operational PEs
• Normal 12 months, up to 18 acceptable
• To implement programme
• Not achieved activities can be de-committed and transferred to
next PE.
Programme EstimatesDuration and Types of PEs
Final PE
• Max 18 months and includes closure period
• Closure period may be inside closure period of
financing agreement
PEs follow on from each other without any overlapping of dates however this is not to mean preparation to sub-sequest PEs can not be started with in the period of the PE being implemented. That should actually be the norm for effective implementation. Each PE (apart from the final PE should include some budget to prepare to the sub-sequent PEs.)
Programme EstimatesDuration and Types of PEs
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Content
1. A cover page
2. a work programme;
3. a budget;
4. a financing plan;
5. the technical and administrative implementing arrangements.
Programme EstimatesDrawing up the PE.
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1. The Cover Page• Identification of the programme
estimate in relation to country, global financial commitment, ministry, sequence of PEs, …
• Amount of PE and of imprest component of the budget
• PE number and duration
Programme EstimatesDrawing up the PE: Content
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2. The work programme;• summary of previous activities and results
previous PEs
• objectives ⇒ results ⇒ activities
detailed activities for the duration of the PE
required resources
• provisional timetable for implementation (should
be linked to procurement plan, budget implementation,
staff scheduling etc)
Programme EstimatesDrawing up the PE: Content
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3. The budget
• Budget based on the PE ’s detailed activities in accordance with
the TAP
• Limit of Components can not be exeeded.
• Cost of Specific commitment is also included in the budget ,
however are indicated in their respective comumns in the detail
budget table.
• Costed with as much detail as possible
• provisional timetable for financial implementation
Authorised expenditure:
• service, works, supply, grants cf thresholds• Office operating costs: salaries, rent, tel, electricity etc• Scholarship costs • Bank charges
Programme EstimatesDrawing up the PE: Content
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4. The financing plan
• Recapitulates all the sources of funds,
• Sets out in detail the interventions to be
financed by each.
• Justification of the availability of funds should
be given
Programme EstimatesDrawing up the PE: Content
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5. Technical and administrative
implementing arrangements.
Derived from TAP annexed to the financing
agreement
detail all rules regarding the imprest
component of the budget of thePE
management structure
procedures to operate
Such as:
Programme EstimatesDrawing up the PE: Content
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5. Technical and administrative implementing arrangements.
• the names of the IA and IAO as well as of their substitutes;• the period covered by the programme estimate;• The bank account(s) details• the amount of the advance allocation• provisions on submission of the supporting documents
related to expenditure incurred;• procedures and thresholds for the award of contracts and
grants;• cash disbursement procedures;• rules on the currency of payments;• staff management rules• the content and timing of reports;• provisions on closure of the imprest component• provisions for internal and external controls;• tax and customs arrangements.
Programme EstimatesDrawing up the PE: Content
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Approval and signature circuit of the programme estimate
Programme EstimatesDrawing up the PE: After Finishing the Dragt PE:
Actors
IA + IAO Steering Committe
e
IA +IAO NAO EC Del.
Role DraftingVerfication
and strategic guidance
FinalizingAnd
Signing
Verifies Approves
Signs
EndorsesSigns
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Some tips and thoughts about the preparation of PE• Amendments to proposed programme estimates
Take same time as whole circuit PE preparation: in depth analyse + meetings
• Opening of the “programme estimate” or “project” bank account(s) and deposit of signatures: LEF and FIF Preferably in advance
• Time-limits for approving programme estimates: Takes time but max 4 month in advance planning
• Use of the contingency reserve max 10%. With authorisation, when reallocation is impossible, no rider needed
• Budget reallocation (internal adjustment): without change of budget structure, needs authorisation based on full
justification and showing previous reallocations, no rided needed.
• Amendments to the PESame circuit as PE, no retro-activity no extension more than 6 months
Programme Estimates
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Sequences in the financial implementation
Advance (To be set at PE in consultation witht he HoD).
Commitment of expenditure
Payments
Replenishment(s) (should be made in advance, cash flow
should be planned in advance taking consideration of
upcoming payments)
Commitment of expenditure
Payments
Closure
Financial DealingsProgramme Estimates
71
1: The Advance PaymentConditions
• opening of an EDF “programme estimate” bank account
• signatures of IA and IAO deposited FiF and LEF submitted and registered
• PE signed by IA + IAO + NAO• PE endorsed by HoD• Request for payment of the advance payment
drawn up and signed by IA and IAO• private indirect DO: financial guarantee
submitted and handed to EC-DEL
Financial Dealings: Sequence in payments Programme Estimates
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1: The Advanc Payment
The Circuit
Financial Dealings: Sequence in payments Programme Estimates
Actors
IA & IAO NAOEC Del.
EC Del. Sections
HoD
RoleDraft
&Sign Request
VerificationPayment
Order
Technical Verification
Sign Payment
order
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2. Commitment of expenditureFurther conditions• Payments unforseen in the PE are always
ineligible• No retroactive payments are allowed• incurred during the period covered by the
PE• Payments commited in a PE should be
finalized max with in three months of the ending date of the given PE.
Financial Dealings: Sequence in payments Programme Estimates
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3. Payment (Practical tips)Recommended: by cheque or bank transferCash should be avoided (responsibility of cash money) Only small amounts of administrative expenditure Or only if other means of payment are not possible
Financial Dealings: Sequence in payments Programme Estimates
76
3. Payments
Each payment needs supporting documentsa payment file has to be made for each payment in order to check that:
There exists an allocated amount to the
specific payment
expenditure was committed validly
expenditure was correctly validated
expenditure was correctly paid and
discharged
Financial Dealings: Sequence in payments Programme Estimates
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3. Replenishment
Principles
Based on Replenishment request
Total payment can’t exceed allowed
advance
Follow same circuit as advance payment
Financial Dealings: Sequence in payments Programme Estimates
78
Replenishment request(s) has(have) to be drawn up in accordance with cash flow situation which will in particular depend on the amount of the advance/pre-financing paid.
Documents requested for a replenchment1. Cover pageThe cover page must carry the following information:• the title of the project or programme;• the accounting number of the corresponding globalfinancial/budgetary commitment and individualfinancial/budgetary commitment;• the title or number of the programme estimate;• the number of the record80;• the period covered by the record;• the total amount of justified expenditure in the period coveredby the record.
Financial Dealings: ReplenishmentProgramme Estimates
After verification: Dcuments must be dated and signed by the IA and the IAO
A non exhaustive sample doc for replenishment
(Annex 9 to PE-PRAG)Please Refer…
Financial Dealings: ReplenishmentProgramme Estimates
Reference: Practical Guide for Programme Estimates EDF 10 Section 4.1.3
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Min. documents requested for a Record of Expenditure
2. Budgetary monitoring documents including at least• a summary table of the monitoring of the budget consumption of the the
programme estimate;• detailed tables of the monitoring of budget consumption by heading and
by item;• the analytical balance sheet.
3. Financial monitoring documents• summary table plus detailed tables of expenditure• reconciliation of the bank balance• list of ongoing contracts• statement of the monitoring of the advances/prefinancing• statement of the monitoring of the fin. Guarantee• inventory of investments and capital goods
Financial Dealings: ReplenishmentProgramme Estimates
81
4. Detailled supporting documents including at least
The supporting documents should include the followinginformation at least:
• bank statements for the period covered;• the bank ledger;• the cash ledger;• petty cash statement;• the contracts signed by the imprest administrator;• the payment files.
Min. documents requested for a Record of Expenditure
Financial Dealings: ReplenishmentProgramme Estimates
Financial Dealings: Replenishment
Programme Estimates
Important Notes on Replenishment supporting documents
•Supporting documents should facilitate an exhaustive verification of the regularity and relevance of expenditure incurred.•The Head of Delegation has to decide, in particular on the basis of the availability and the reliability of local financial audit expertise, how to perform the verification of the supporting documents. In case it is not going to be effected by the Delegation, it will have to be performed by an external•auditor.•Only when the verification is performed by the Delegation or at the request of the relevant representative of the beneficiary country(ies) and/or the Head of Delegation, the originals (copies are not admissible) of supporting documents must be attached to the records of expenditure.
Financial Dealings: Replenishment
Programme Estimates
Important Notes on Replenishment supporting documents (cntd…)
•Expenditure for which a cheque has been written but not yet debited from the “programme estimate” bank account or, where appropriate, from the “project” bank account cannot•be considered as expenditure incurred and eligible to financing by the EDF/Budget.•The advances/pre-financing paid cannot be considered as expenditure incurred and eligible to financing by the EDF/Budget87, except for advances/pre-financing paid for the performance of contracts conformable to the model contracts included in the annexes of the practical guide to contract procedures for EU external actions.
A list of examples of supporting documents, grouped by type of expenditure, to be included
in the paymentAnnex 10 to PE-PRAG
(please refer)
85
Condition for closure:
• all expenditure must have been justified
• initial allocation completely cleared
• rejected expenditure refunded
• request for closure sent to NAO and HoD
• “programme estimate” or “project” bank
account closed
Financial Dealings: ClosureProgramme Estimates
86
Request for clusure Not later than 3 months after the period covered by the PE
States the final balance to be refunded or recovered
Closure to be finalised not later than 6 months after the
implementation period of the PE
if closure is not done within the time-limit:• HoD has the obligation to withhold approval of next PE
(N+2)• If necessary: suspension of decentralised operations with the
ACP State(s) concerned
Financial Dealings: ClosureProgramme Estimates
Financial Dealings: ClosureProgramme Estimates
In the event of failure to reimburse ineligible expenditure or failure to close financially the imprest component of the budget of the programme estimate at the latest 6 months after the end of the period covered (N) by it, the Head of Delegation has the obligation to withhold approval of the succeeding programme estimate (N+2) until the accounts are in order.
Ineligible Payments
Com
ms
NA
O a
nd
HoD
Duri
ng
Im
ple
menta
tion