Monitoring and Evaluation in Humanitarian Aid Quality Procedures

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: Ø Total funding: ECHO funds 100% of the requested budget Ø Co-funding: ECHO co-funds the project with another donor

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 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 Budget Breakdown Budget Summary and Financial Plan SECOND PHASE: INTERIM REPORT Interim Financial Report THIRD PHASE: FINAL REPORT Pre-final Narrative Report (> 6 months, except Primary Emergency and 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 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 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: 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 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 ? 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 (location, beneficiaries, sustainability); D. To request a change of the bank account used by the HO.

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 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 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

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

within 63 weeks • Within monthsofofthe theend endofof the project implementation period, Unless otherwise specified by the Grant Agreement Phase I: Financial Request • Presentation of project proposal Phase Fase III: IV: Final Financial Report Phase III: Pre-Final Narrative Report TIMING Primary Other. Emergency projects , >Emergency 6 months , other < 6 months • 1 month before the end of project implementation period (only narrative + inventory) Phase II: Interim Financial Report • Normally at least 1 halfway month before through thethe end of the implementation project implementation 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

Contents Instruments: the “Trenino” 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: ü Supplying information (cfr. ECHO guidelines) ü Defining eligible expenses for each Chapter ü Define the vouchers for each article of expense

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