Programme Estimates in the 10 th EDF Decentralised

Programme Estimates in the 10 th EDF Decentralised Operations Freetown, 1 -3 September 2010 Francis Wellens 1

Programme Estimates in the 10 th EDF Decentralised Operations Content of this workshop 1. 2. 3. 4. 5. 6. Reminder: where it originates Definitions: "Decentralised Operations" ; "Programme Estimate“; “roles of the main players” Programme estimates in the Cycle of Operations Drawing up and approving a programme estimate Financial implementation of the imprest component of the budget of a PE Closure of a programme estimate and audits 2

Programme Estimates in the 10 th EDF Decentralised Operations 1. Where it originates n European Commission n Undertakes the financial execution of operations carried out with EDF resources n has decentralised its functions Appoints authorising officer by delegation (who designates authorising officers by sub-delegation) 3

Programme Estimates in the 10 th EDF Decentralised Operations 1. Where it originates n European Commission Head of Delegation (authorising officer by sub-delegation) • represents the Commission in all its activities in the ACP State • appointed by the Commission • to be approved by ACP State 4

Programme Estimates in the 10 th EDF Decentralised Operations 1. Where it originates National Authorising Officer • Appointed by ACP State • Represents the ACP State in all EDF financed operations • Can appoint Deputy NAO • Can delegate functions for implementation 5

Programme Estimates in the 10 th EDF Decentralised Operations 1. Where it originates n Implementing Agencies Appointed through the financing agreement • Responsible for the implementation of the project • Supervise and monitor the project • Are in direct relation with the NAO-Office 6

Programme Estimates in the 10 th EDF Decentralised Operations 1. Where it originates Communication – lines of command – transfer of responsibilities Government of Sierra Leone Commission of the European Union NAO Ho. D NAO-Office EC Delegation Technical sections Finance and Contract Section Implementing Agencies Projects 7

Programme Estimates in the 10 th EDF Decentralised Operations 1. Where it originates Legal Framework and documentation The revised Cotonou Partership Agreement The Financial Regulation of the 10 th EDF The Practical Guide for PEs 10 th EDF 8

Programme Estimates in the 10 th EDF Decentralised Operations 1. Where it originates Delegation of powers by the NAO if a project is implemented via « Decentralised Operations » , the NAO with the EC Delegation can delegate a part of their powers concerning: n implementation of contracts n financial execution n supervision 9

Programme Estimates in the 10 th EDF Decentralised Operations 1. Where it originates Delegation of powers by the NAO TO : n to public departments of the ACP State(s) concerned Direct Decentralised Operations n to public or by private bodies with a public-service mission and that have first concluded a delegation agreement with the NAO Public indirect decentralised operations n to private bodies that are legally distinct from the ACP State(s) concerned and that have a service contract with the NAO Private indirect decentralised operations 10

Programme Estimates in the 10 th EDF Decentralised Operations 2. Definitions: Delegation of powers by the NAO Decentralised operations Indirect Direct Programme Estimate Public Private Delegation Agreement Service contract Programme Estimate 11

Programme Estimates in the 10 th EDF Decentralised Operations 2. Definitions: Programme Estimate is : - - a document designed to implement (in principle) one year of a project or programme covered by a financing agreement in decentralised operations. the official document for the delegation of powers by the NAO Only one? 12

Programme Estimates in the 10 th EDF Decentralised Operations 2. Definitions: Programme Estimate Covers: n a work programme n a budget estimate n a financing plan n technical and administrative implementing arrangements A financing plan can include EDF funds n n specific commitments imprest commitment other funds n national funds own resources other donors 13

Programme Estimates in the 10 th EDF Decentralised Operations 2. Definitions: EDF funds can include specific commitments amounts 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) 14

Programme Estimates in the 10 th EDF Decentralised Operations 2. Definitions: Imprest commitment The 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: Ø the imprest administrator and Ø 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. 15

Programme Estimates in the 10 th EDF Decentralised Operations 2. Definitions: other funds National funds usually finances recurrent costs which will continue after completion of the project, e. g the recurrent salaries, rent of offices etc. Own resources generated by the project include any interest on bank account(s), asset sales, services invoiced to third parties, the beneficiaries’ contributions, Must be accounted for Advance > € 250 K : 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 16

Programme Estimates in the 10 th EDF Decentralised Operations 2. Definitions: Imprest commitment: implementation arrangements: Defined in the TAP: Technical and Administrative Provisions n Describing procedures and conditions for implementation and financing of the activities foreseen n Part of the Action Fiche n Annexed to the financing agreement 17

Programme Estimates in the 10 th EDF Decentralised Operations 2. Definitions: Imprest commitment: 18

Programme Estimates in the 10 th EDF Decentralised Operations 2. Definitions: Imprest commitment: 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 Operational PEs • Normal 12 months, up to 18 acceptable • To implement programme • Not achieved activities can be transferred to next (with budget in full) 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 19

Programme Estimates in the 10 th EDF Decentralised Operations 2. Definitions : The roles of the actors Main players in “the game” - NAO - Imprest administrator - Imprest accounting officer - Third party organisation (public or private) - Project Steering Committee (if applicable) - Head of Delegation 20

Programme Estimates in the 10 th EDF Decentralised Operations 2. Definitions : The roles of the actors NAO: For Direct Decentralisation Appoints the Imprest administrator and the Imprest accounting officer For Public of Private Indirect Decentralisation: Accepts the nominations of the third party organisation 21

Programme Estimates in the 10 th EDF Decentralised Operations 2. Definitions: : The roles of the actors Imprest administrator and the Imprest accounting officer Must be able to exercise their tasks and duties independently Imprest administrator Imprest accounting officer • 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 • draws up the PE (financial part) in cooperation with the IA) • submits the PE with the IA • verifies the correct application of contract and grant award procedures • verifies and implements payments and recoveries linked to the Imprest component of the budget of the PE !!!!! Eventually financial responsibility remains with NAO !!!!! 22

Programme Estimates in the 10 th EDF Decentralised Operations 2. Definitions: : The roles of the actors Imprest administrator and the Imprest accounting officer In case of indirect decentralisation the delegation agreement and the service contract with the body concerned must clearly designate the two persons who will take on the duties of authorisation (imprest administrator) and payment (imprest accounting officer). !!!!! Eventually financial responsibility remains with NAO !!!!! 23

Programme Estimates in the 10 th EDF Decentralised Operations 2. Definitions: The roles of the actors The Steering Committee optional: see the TAP composed of main parties involved (NAO, Ho. D (observer), Implementing agency, . . . ) • • • Steers and coordinates the programm Verification and monitoring of the Pes and workplans Verifies, arbitrates etc. May not interfere in any case in the financial implementation of the programme estimates 24

Programme Estimates in the 10 th EDF Decentralised Operations 3. Programme Estimate in the Cycle of operations PIF Action Fiche TAP Financing Agreement D+3 rule Appointment IA and IAO Drafting TA Tender Drafting Start-Up PE Delegation Agreement Signing start-up PE Service contract Operational PE 1 25

Programme Estimates in the 10 th EDF Decentralised Operations 3. Programme Estimate in the Cycle of operations 26

Programme Estimates in the 10 th EDF Decentralised Operations 4. Drawing up and approving a programme estimate Content 1. A cover page 2. a work programme; 3. a budget; 4. a financing plan; 5. the technical and administrative implementing arrangements. 27

Programme Estimates in the 10 th EDF Decentralised Operations 4. Drawing up and approving a programme estimate Content 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 28

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Programme Estimates in the 10 th EDF Decentralised Operations 4. Drawing up and approving a programme estimate Content 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) 30

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Programme Estimates in the 10 th EDF Decentralised Operations 4. Drawing up and approving a programme estimate Content 3. The budget. • budget based on the PE ’s detailed activities in accordance with the TAP • is 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 Imprest and specific commitments should be separated. 34

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Programme Estimates in the 10 th EDF Decentralised Operations 4. Drawing up and approving a programme estimate Content 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 37

Programme Estimates in the 10 th EDF Decentralised Operations 4. Drawing up and approving a programme estimate Content 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 the. PE § management structure § procedures to operate Such as: 38

Programme Estimates in the 10 th EDF Decentralised Operations 4. Drawing up and approving a programme estimate Content 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. 39

Programme Estimates in the 10 th EDF Decentralised Operations 4. Drawing up and approving a programme estimate Approval and signature circuit of the programme estimate IA + IAO Drafting Steering com IA + IAO Verification Finalising + Signing NAO Approves Signs Ho. D Endorses Signs Commitments & Payments Posssible 40

Programme Estimates in the 10 th EDF Decentralised Operations 4. Drawing up and approving a programme estimate 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 PE Same circuit as PE, no retro-activity no extension more than 6 months 41

Programme Estimates in the 10 th EDF Decentralised Operations 5 Financial impl. of the imprest component of the budget of a PE Reminder: Main Players, how did they become IA and IAO: responsible for the implementation of the budget of the PE’s imprest component • direct decentralised operations: NAO appoints • Public indirect decentralised operations: The delegation agreement states • Private indirect decentralised operations: The service contract names 42

Programme Estimates in the 10 th EDF Decentralised Operations 5 Financial impl. of the imprest component of the budget of a PE Reminder: Main Players, their roles Imprest administrator Imprest accounting officer • Commits expenditure • verifies application of EDF contractual procedures • Signs contracts • verifies payment request (operational aspects) • verifies payment requests (contractual & financial aspects • co-signs payments with IAO • co-signs payments with the IA • prepares requests for replenishment/ closure 43

Programme Estimates in the 10 th EDF Decentralised Operations 5 Financial impl. of the imprest component of the budget of a PE Sequences in the financial implementation Ø Advance Ø Commitment of expenditure Ø Payments Ø Replenishment(s) Ø Commitment of expenditure Ø Payments Ø Closure 44

Programme Estimates in the 10 th EDF Decentralised Operations 5 Financial impl. of the imprest component of the budget of a PE Sequences in the financial implementation 1: The Advance Payment Conditions • • • opening of an EDF “programme estimate” bank account signatures of IA and IAO deposited Fi. F and LEF submitted and registered PE signed by IA + IAO + NAO PE endorsed by Ho. D 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 45

Programme Estimates in the 10 th EDF Decentralised Operations 5 Financial impl. of the imprest component of the budget of a PE Sequences in the financial implementation 1: The Advance Payment The Circuit IA + IAO Drafting+ Signing request for initial advance NAO Ho. D EC Delegation Verification Payment order Scrutinizes Signs payment order 46

Programme Estimates in the 10 th EDF Decentralised Operations 5 Financial impl. of the imprest component of the budget of a PE 2. Commitment of expenditure Authorised • service contracts < Thshold • supply contracts ≤ Thshold • works contracts < Thshold • grant contracts ≤ Thshold • staff costs • Administrative expenditure • expenditure related to scolarship holders and trainees • expenses linked to the financial guarantee Disallowed • service contracts: audit, evaluation, framework contract • salaries of seconded civil servants expenditure and • Salaries of staff covered by service contract 47

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Programme Estimates in the 10 th EDF Decentralised Operations 5 Financial impl. of the imprest component of the budget of a PE 2. Commitment of expenditure Further conditions • • • expenditure must be foreseen in the imprest component of the budget of the PE incurred during the period covered by the PE to be paid until max. three months thereafter! 49

Programme Estimates in the 10 th EDF Decentralised Operations 5 Financial impl. of the imprest component of the budget of a PE 3. Payment Recommended: by cheque or bank transfer Cash should be avoided (responsibility of cash money) Only small amounts of administrative expenditure Or only if other means of payment are not possible Imprest Administrator operational verification Imprest Accounting Officer authorisation Financial and Contractual verification Cosignature Payment Account keeping 50

Programme Estimates in the 10 th EDF Decentralised Operations 5 Financial impl. of the imprest component of the budget of a PE 3. Payment Each payment needs supporting documents a payment file has to be made for each payment in order to check that: ü expenditure was committed validly ü expenditure was correctly validated ü expenditure was correctly paid and discharged 51

Programme Estimates in the 10 th EDF Decentralised Operations 5 Financial impl. of the imprest component of the budget of a PE 3. Replenishment Plan your cash flow to avoid cash flow problems Principles - Based on Replenishment request - Total payment can’t exceed allowed advance - Follow same circuit as advance payment IA + IAO NAO EC Delegation Drafting+ Signing request for initial advance Verification Scrutinizes Ho. D Signs payment order 52

Programme Estimates in the 10 th EDF Decentralised Operations 5 Financial impl. of the imprest component of the budget of a PE 3. Replenishment Documents requested for a replenchment • Replenishment request • Record of expenditure • Statement justifying the initial allocation • Record of own resources and of their use • Estimate of cash requirements After verification: documents must be dated and signed by the IA and the IAO 53

Programme Estimates in the 10 th EDF Decentralised Operations 5 Financial impl. of the imprest component of the budget of a PE 3. Replenishment • Minimum documents requested for a Record of Expenditure 1. Cover page, containing at least • the title of the project or programme, the accounting numbers • the title or number of the programme estimate; • the period covered by the record; • the total amount of justified expenditure in the period covered by the record. 54

Programme Estimates in the 10 th EDF Decentralised Operations 5 Financial impl. of the imprest component of the budget of a PE 3. Replenishment 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 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 55

Programme Estimates in the 10 th EDF Decentralised Operations 5 Financial impl. of the imprest component of the budget of a PE 3. Replenishment Min. documents requested for a Record of Expenditure 4. Detailled supporting documents including at least • • • bank statements for the period the bank ledger; the cash ledger; petty cash statement; the contracts signed by the imprest administrator the payment files Payment not paid (cheque or transfer) at the date of accounting is not an expenditure as such. Advance payment to date is not an expenditure as such exception can be made for advances/initial payment in “EU procurement”. Well justified expenditure reporting can lead to replenishment and/or to advance clearing. 56

Programme Estimates in the 10 th EDF Decentralised Operations 6: Closure of a programme estimate and audits Conditions for closure • all expenditure must have been justified • initial allocation completely cleared • rejected expenditure refunded • request for closure sent to NAO and Ho. D • “programme estimate” or “project” bank account closed 57

Programme Estimates in the 10 th EDF Decentralised Operations 6: Closure of a programme estimate and audits Request for closure v Not later than 3 months after the period covered by the PE v States the final balance to be refunded or recovered v 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: • • Ho. D has the obligation to withhold approval of next PE (N+2) If necessary: suspension of decentralised operations with the ACP State(s) concerned 58