Project Financial Statements & Project Financial Statements & Quarterly ReportsQuarterly Reports

Dec 2010

IntroductionIntroduction

Project Accounting and Audit procedures should be based on best market

practice as per IFAD underlying guidelines. These provide accountability

and credibility as to use of funds

IFAD guidelines require all projects to maintain accounts & records

(separately or within a basket fund)

These accounts should be audited by an independent auditor on an

annual basis within a set timeframe (normally 6 months)

Where possible, national systems should be used

IFAD has a fiduciary role to ensure that its funds are used for the purpose for which intended

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Project Financial Statements (PFS)Project Financial Statements (PFS)

ObjectiveObjective

• To provide information about the financial position, performance and resource flows of a project

Basis of PreparationBasis of Preparation

• Prepared in accordance with:– International Financial Reporting Standards (IFRS) (www.ifrs.org)

– International Public Sector Accounting Standards (IPSAS) (accruals or cash basis) (www.ipsas.org)

– National standards, if minimum disclosures are provided

• These standards define what & how to report

• Cash (when money is actually spent/ received) or accruals (when legal commitment incurred irrespective of cash) basis, as long as consistently applied

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Minimum best practice disclosuresMinimum best practice disclosures

⇉ Expenditures – by category/component as per legal agreement,

preferably with comparison to budget

⇉ Inflows and Uses of funds – separate disclosure of inflows from

different sources

⇉ Notes to the Accounts – including accounting standards used,

details of bank balances, fixed assets, counterpart funding

⇉ Statement of WAs –in USD and/or SDR, annual and cumulative

⇉ Status of funds in SDR – cumulative

⇉ Special account statement & reconciliation

Project Financial Statements (PFS)Project Financial Statements (PFS)

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Financial Accounting & ReportingFinancial Accounting & Reporting

► Income & Expenditure Statement – by category/component as per legal agreement, plus resource flows, review actual costs versus budget

► Special account & Bank reconciliations – all accounts

► Fixed assets, Training plan, Withdrawal Applications - received/ claimed

Monthly accounting/ reportingMonthly accounting/ reporting

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Other tipsOther tips

► Consolidate data from districts with PMU

► Back up & Business continuity plans

► Adequate filing systems - legally, project records need to be maintained for 10 years post closing

Financial Accounting & ReportingFinancial Accounting & Reporting

► Discussion of Project Progress against AWPB - highlights/ learning tips

► Sources & Uses of Funds Statement

► Uses of Funds by Project Activities (supports the Sources/Uses of Funds)

► Physical Progress Report - physical outputs

► Physical Progress Report - status of large works and services

► Procurement Monitoring Report - narrative and tables

► IFAD has no prescribed formats for Quarterly Reports - World Bank FMR Formats are recommended

Quarterly reportingQuarterly reporting

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World Bank FMR Format

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Example of an education project with significant construction activities, equipment purchases & training. The Sources & Uses of Funds Statement includes a cash forecast for the next 6 months, to facilitate project planning & monitoring. Physical progress is monitored by units of output, where practical, & by contract/work progress for construction activities.

► Discussion of Project Progress

► Sources & Uses of Funds

► Uses of Funds by Project Activity

► Physical Progress Report

► Procurement Reports

► Procurement Monitoring Tables

Source: WB FMR Pages 17-24 (Annex A Sample)

Discussion of Project Progress

Sources and Uses of Funds

Uses of Funds by Project Activity

Physical Progress Report

Procurement Reports

Procurement Monitoring Tables

Sample Quarterly Reports Format (World Sample Quarterly Reports Format (World Bank)Bank)

• Project information and performance

• Statement of project management responsibilities

• Report of the independent auditor

• Statement of income & expenditures/ receipts & payments (by category)

• Statement of income & expenditures/ receipts & payments (by component)

• Balance sheet (if accruals basis)

• Statement of comparative budget & actual amount

• Statement of Special Account Activities & Reconciliation

• SOE – Withdrawal Application Statement – annual & cumulative

• Status of funds (in SDR)

• Notes to the Financial Statements

IFAD Project Financial Statements (PFS) Formats – IFAD Project Financial Statements (PFS) Formats – Annual reportingAnnual reporting

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PFS Formats

1. Basis of reporting

- In accordance with the underlying accounting principles of reference the notes to the financial statements of an entity should:

• Present any information about the basis of preparation of financial statements

• Provide additional information which is not presented on the face of financial statements

2. Significant Accounting Policies

- Basis of Preparation

- Cash Basis of Accounting

- Foreign Currency Transactions

PFS – Notes to the Financial StatementsPFS – Notes to the Financial Statements

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Suggested Minimum Disclosures:

3. Budget – basis of budget

4. Cash/Fund Balances

5. Direct Payments

6. Government Counterpart Funds

7. Other Donor Funds

8. Other Receipts

9. Non-current Assets (for disclosure purposes only)

10. Yearly Procurements

11. Allocation & Use of the Financing proceeds

12. Reconciliation of Funds Disbursed by IFAD & Funds Received by the Project

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PFS – Notes to the Financial StatementsPFS – Notes to the Financial Statements

Expenditure by components & categories per legal agreement

Expenditure by Financier

Ability to print Financial Statements according to Govt/IFAD/IPSAS accounting policy

Advances utilisation by Service Providers & staff duly aged to facilitate follow-up

Bank balances held by service providers

Commitments beyond actual billings/ invoices

Budgetary control information to ensure expenditures do not exceed set limits

Bank reconciliation using the system

Receivables in form of replenishment applications in transit & any refunds that may be due from Government

Withdrawal application form automatically produced by the system

Contract & Procurement plan monitoring

Accounting Software for IFAD Projects Accounting Software for IFAD Projects

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Capacity Analysis

Thank YouThank You