Harmonized Approach to Cash Transfers HACT to Implementing

Harmonized Approach to Cash Transfers (HACT) to Implementing Partners 1

Why HACT? Call from member-states (TCPR): • Reduce transaction costs Call from donors (Rome and Paris): • Simplify policies and procedures; • Progressively align with national systems National ownership, grounded in strengthened capacity and increased use of national systems 2

HACT: key provisions • One for all and significantly simplified set of procedures : on requesting/disbursement/reporting on funds (FACE) and audit • Risk Management vs. System of Controls 3

Risk Management vs. System of Controls Step 1. Upfront assessment of risks (at 2 levels) Step 2. Leveraging identified risks through: – – Choice of an appropriate cash transfer modality and procedures; Scope and frequency of assurance activities 4

Key elements/tools of HACT • Macro and Micro Assessments • Assurance Activities • Funding Authorization and Certificate of Expenditure (FACE) 5

Macro Assessment • A review of the national public financial management system • Based on existing assessments • No formal risk rating; no conditionality • Government - part of the process • Once per cycle 6

Objectives: • Management Objective: – Background for cooperation modalities selection – Info on SAI • Development Objective – Opportunities for capacity development 7

Micro Assessment • Assessment of the adequacy of the implementing partner’s financial management systems and practices and internal controls; • Once per programming cycle done by a PA firm; • Threshold: US$ 100, 000 collectively from UN Agencies per year 8

Objectives: • Development objective: – areas for capacity development of IP • Management objective: – most suitable CTM – frequency and scope of assurance !!! Risk rating, but no “pass or fail” 9

Assurance is… – Determination whether funds were used for the purposes intended – Checking accuracy of partner’s reporting on the use of funds to ensure expenditure is true and fair 10

Key Principles • Scope and Frequency of assurance activities depend on the risk and amount of cash transfers • Invest more in assurance activities for weaker partners 11

Assurance Activities – Once in a cycle audits – Periodic On-site reviews • Spot checks • Special audits to address specific weaknesses – Programmatic assurance • Field monitoring • Annual reviews 12

What’s FACE? • One unified form: certification, request, invoice, report • Requires no supporting documentation (e. g. invoices, contracts attached, etc. ) • Same format by all Ex. Com Agencies, all partners • Cash disbursed, but not utilized reprogrammed 13

Why Funding Authorization and Certificate of Expenditure (FACE)? • To lower complexity and amount of procedures for IPs • To save time and effort for Partners and UN Agencies staff • Allow more time for focus on programmatic issues 14

How does it all come together? • Links between HACT and the UN’s Country Programming Process… What to do – When to do it 15

More info… www. undg. org 16