Development of integrated project and financial management tools

Development of integrated project and financial management tools in conformity with the 2003 FPA The BUDGET In collaboration with

Budget The Budget: ü Is based on three types of different formats ü Presents significant differences with respect to the former FPA (a new conception) ü The concept of lumpsum disappears (except for indirect costs and the Reserve) ü Is sub-divided into Titles, Chapters, Articles and Elements

Budget: 3 types of formats Budget for Financial Request and Interim/pre final Financial Report Budget summary (by the EC) Budget for Final Financial Report Does not have details Unit, Quantity and Unit price Contains only items for Titles and Chapters Contains details Unit, Quantity and Unit price

Budget Initial request and Interim Final request

Budget FORMAT FOR ECHO BUDGET PHASES FIRST PHASE: FINANCIAL REQUEST SECOND PHASE: INTERIM /PRE FINAL REPORT Budget Breakdown Interim Financial Report Budget Summary and Financial Plan Pre-final Narrative Report (> 6 months, except Primary Emergency and Emergency) THIRD PHASE: FINAL REPORT 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 Title 0. 1. “Goods and services delivered to the beneficiaries” Title 0. 2. “Supporting costs” INDIRECT COSTS Title 0. 3. “Indirect costs” RESERVE Title 0. 4. “Contingency reserve – pro memoria”

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 STRUCTURE DEFINITION LEVEL CODE EXAMPLE DESCRIPTION NOTES The 2 digit budget is divided into 4 titles: 01. and 02. Direct costs 03. Indirect costs 04. Reserve 2 DIGITS 01. […] Goods and services delivered to the beneficiaries […] CHAPTER 4 DIGITS 01. 01 […] Food security […] The 4 digit budget is divided into 22 chapters referring to title 1 (13) and 2 (9) ARTICLE 6 DIGITS 01. 01 […] Basic Food Security […] The number of articles referring to each chapter is varied Corn Flour Vegetable oil […] The nomenclature of the budget proposed by ECHO does not exceed 6 digits. The detail level corresponding to 8 digits is not coded, and is free (mandatory for the presentation of the final financial report) TITLE ELEMENTS 8 DIGITS 01. 01. 02 […]

Budget Eligible Costs, NEW The new conception gives eligibility to cost previously non-eligible: üCosts of offices on location (rent and office consumable & supplies) üPersonnel in headquarters (directly connected with operations) üPersonnel in HQ for feasability studies (to concord with ECHO), monitoring and evaluations üCosts for awareness 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: ü Costs calculated in forfait (except Indirect costs and Reserve)

Practical application of the budget

SUMMARY Applications ANNEX II 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

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? Modifications that do not affect a basic element of the operation: • modification of activities and means without changing results and specific objectives • Variation within one title of the budget • Variation in the budget between titles I and II up to 15% of • • total amount of Direct costs change of contractual arrangements regarding procurement procedures (art. 11. 1 of General Conditions) changes of address

Applications ANNEX II A. Unilateral modification of budget by NGO notifying ECHO What type of procedure to follow ? Ø 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. Ø 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 (change of region, data concerning the 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 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) 3. The approval is given by the Head of the Geographical Unit (Information of ECHO 6) The amendment is composed of: • the letter of Request • the letter of approval listing the approved modifications • Modified annexes I and/or II (If applicable)

EXAMPLE “Budget flexibility and amendment” Initial budget Unilateral modifications in budget notifying ECHO

EXAMPLE “Budget flexibility and amendment” Unilateral modification of budget by NGO notifying ECHO Exchange of correspondence with approval by ECHO

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

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 DOCUMENTS WHEN Budget Breakdown Presentation of project proposal Interim Financial Report (+inventory) At least one month before the end of implementation period, unless otherwise specified in the Grant Agreement Final Financial Report Within 6 weeks of end of implementation period, unless otherwise specified in the Grant Agreement

Applications ANNEX II B. Projects with duration > 6 months MANDATORY DOCUMENTS WHEN Budget Breakdown Presentation of project proposal Interim Financial Report Usually halfway through project implementation period (date specified in Pre-Final Narrative Report (+inventory) 1 month before the end of project implementation period Final Financial Report Within 3 months of the end of project implementation period the Grant Agreement)

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

Applica. TIONS 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 DOCUMENTS BUDGET DEFINITION Budget Breakdown 4 Digits Interim Financial Report 6 Digits Final Financial Report 8 Digits

Applications ANNEX II B. Other projects with duration < or > 6 months MANDATORY DOCUMENTS BUDGET DEFINITION Budget Breakdown 6 Digits Interim Financial Report 6 Digits Final Financial Report 8 Digits

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