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training day on the FAFA

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1 training day on the FAFA
Joint EU/UN training day on the FAFA How to make the relationship work Modified on 27/04/2013: file "2014 FAFA Training _with R2+R3 changes_ " Brussels, 4 April 2014

2 SUMMARY IMDA How to present a proposal How to prepare the SCA
Introduction Why the partnership EU Legal framework IMDA How to present a proposal How to prepare the SCA How to implement an EU-funded project Verification Ten recommendations

3 1 INTRODUCTORY REMARKS

4 EU’s commitment to multilateralism
Two EU Communications: The European Union and the United Nations: The choice of Multilateralism (2003) Communication on Building an effective partnership with the United Nations in the fields of Development and Humanitarian Affairs (2001) with key aims: Strengthen policy dialogue Match with EU objectives and deliver concrete solutions to global challenges EU’s commitment to multilateralism as a central strand of EU external action

5 Overall Policy Framework – EU perspective
EU Policies: The European Consensus on Development: Eradication of poverty; sustained development; pursuit of MDGs Country level assistance, based on country programming and principle of partner country ownership of development strategies New Development Policy: « An Agenda for Change » with focus on: Human rights, democracy and good governance, Inclusive and sustainable growth for human development; accompanied by: differentiated approach, coordinated EU action and improved coherence European Consensus on Humanitarian Aid:

6 Overall Policy Framework – EU perspective
Global agenda: MDGs/Post 2015 Agenda EU actively engaged in the post-2015 discussion (HLP, Special event MDGs) and involved in the Rio+20 processes (SDGs, HLPF, Financing strategy expert group) EU contribution to the Millennium Development Goals Two related communications Convergence MDG/SDG: 'A decent life for all: ending poverty and giving the world a sustainable future' Financing for Development: 'Beyond 2015: towards a comprehensive and integrated approach to financing poverty eradication and sustainable development‘ ec.europa.eu/europeaid/what/development-policies/financing_for_development/documents/financing_for_dev_2013_communication_en.pdf Aid effectiveness: From Paris to Accra to Busan

7 EU-UN strategic partnerships
Nine Strategic Partnership Agreements (SPAs) signed (UNDP, WHO, FAO, ILO, WFP, UNHCR,UNWOMEN, UNESCO, IFAD) Convention with UNRWA Trend towards more informal arrangements - Senior Official Meetings

8 2 WHY THE PARTNERSHIP?

9 Setting the context The EU today is:
The European Union (EU) is an economic and political union of 28 Member States all of whom are also Members of the United Nations Leading provider of aid for development and humanitarian action (around 60% of ODA) Influential stakeholder in helping to shape and support the UN policy agenda Highly committed to multilateralism, and shares common values and principles with the UN

10 Financial contributions from the Commission as a percentage of total income/revenue of UN entity [for year 2013] *UNDP: data for 2012

11 Countries where EU and UN have cooperated in 2012
More than 110 countries; regional projects not included Source: UN Office in Brussels, 2013 EU-UN Partnership Report

12 “Image” of the UN in the EC
Not as good as it could be… Poor reporting, slow, “tricky”, costly, heavy administrative procedures, no visibility, talks a lot but does not always walk the talk Does not always share the same priorities or agenda

13 “Image” of the UN in the EC
But... Close to beneficiary governments Neutral partner with capacity to deliver, also in politically sensitive situations Comparative advantage, specific strengths & technical knowledge / expertise (see: strategic partnership agreements) Ability to mobilize and manage significant financial resources (e.g. multi-donor set ups), added value Long experience and convenor for donor coordination

14 “Image” of the EC by the UN
Not as good as it could be… Bureaucratic, concerned with visibility, tendency to micro-manage, high maintenance, cumbersome, no big picture approach

15 “Image” of the EC by the UN
But... Same values and common objectives aid effectiveness, country-ownership, reliance on comparative advantages, transparency Serious and reliable partner Financial means (The UN represented circa 12% in the 2012 portfolio of the EC’s EuropeAid Cooperation Office alone)

16 Independent evaluation (commissioned by EC - 2008)
Findings: EU could act through UN in difficult context (crisis situations), thanks to UN having specific mandates, offering global solutions to global problems) EU benefit from UN’s: multi-donor interventions privileged policy dialogue with governments, expertise & experience in the field, extended presence, neutrality & legitimacy of the UN system, donor coordination

17 Independent evaluation (commissioned by EC - 2008)
Findings: UN could benefit from the partnership with the EU: deliver mandate, increase impact thanks to substantial resources, reach critical mass for interventions, improve policy convergence at country level

18 The UN as seen by the EU funding-wise
The EU/UN partnership is extremely important At Commission level, some 40% of the volume of legal commitments with International Organisations of the approved EC budget for 2012 (EDF not included) went to UN entities The Commission accounts for +/- 6% of UN funding The Commission + EU Member States are major partners for the UN, accounting for +/- 50% of UN funding

19 The UN as seen by the EU – one option among many
The Commission identifies the most appropriate partners to achieve the desired result – need to justify the choice and explore alternatives. Budget/sector support (centralised management) and indirect management Delegation to a public or private body Multilateral channels – international organisations such as UN, World Bank, regional development banks, etc. Other entities such as NGOs and other Non-State Actors

20 What does the EU want from the UN?
Delivery Results Added value Accountability Transparency Visibility Good quality reports

21 REQUIREMENTS & PROGRAMMING
3 LEGAL FRAMEWORK: EU REQUIREMENTS & PROGRAMMING

22 Summary Legal basis: Financing (funding) instruments, Financing Decision Procedures UN/EC Agreements: Framework agreement & contribution-specific agreements (standard contribution agreement, indirect management delegation agreement, grant contract, procurement contracts...)

23 I. Legal Basis i. Financial Regulation & Rules of Application
ii. Basic Acts: ( ) Geographical coverage Pre-accession: (IPA allocation: € 11,7 bn) Neighbourhood (ENPI: € 15,4 bn) Development (DCI: € 19,6 bn and 11th EDF: € 31,5 bn) General (thematic) coverage Human Rights (EIDHR) Stability (ISP) Nuclear Safety (INSC) Partnership (PI) Humanitarian Aid iii. Financing Decisions = Annual Action Plan

24 I. Legal Basis EU programming process
DEVCO HQ: Programming D: Identification & design  Action fiches D: Evaluation HQ : Quality support, coherence of approaches HQ: Annual Action Programme Financing Decision D: Implementation HQ: Internal control systems

25 SCA Contracts until 2012 Grants Grants Head- quarters Delegations
Decentralised Joint (International Organisations) Centralised Indirect Direct Head- quarters Delegations Shared (Member States) (Beneficiary Countries) Grants Grants SCA

26 SCA Contracts in 2013 Grant contract Procurement Headquarters
Decentralised Joint (International Organisations) Centralised Indirect Direct Headquarters Delegations Shared (Member States) (Beneficiary Countries) Grant contract Procurement SCA

27 Management Modes 2014 DIRECT INDIRECT SHARED Headquarters Delegations
Decentralised Joint (International Organisations) Centralised Indirect Direct Headquarters Delegations Shared (Member States) (Beneficiary Countries)

28 Management Modes 2014 DIRECT INDIRECT SHARED Headquarters Delegations
Decentralised Joint (International Organisations) Centralised Indirect Direct Headquarters Delegations Shared (Member States) (Beneficiary Countries) Grants Procurement IMDA

29 EU Programming process
Any ‘intervention’ needs to be covered by a decision of the College (called also: Financing Decision) => an Annual Action Programme (AAP) The Financing Decision (AAP) contains details on the action to be implemented, such as budget, calendar, main objectives, etc. also: how will the EU implement the action (« method of implementation » or « management mode » - this can’t be changed later) The Commission may decide to entrust the management and implementation of certain funds directly to a UN entity – under specific conditions Central Finance and Contracts Unit

30 II. Procedures “EU management modalities”
How does UN and EC cooperate in 2014? Joint Management: for 2013 funds the Standard Contribution Agreement (SCA) can be used with the UN until August 2014; Indirect Management: for 2014 funds and “the delegation of budget implementation tasks” 3. Award of grants: (use with caution => Grant Contract) calls for proposals for grants (where IOs eligible) direct award of a grant (e.g. de jure/de facto monopoly, a specific mandate, exclusive competence in the field of activity or geographical area). Problem: does not allow a partnership relation NB! For DG ECHO funds, no “Grant Contract” but ECHO-IMDA Central Finance and Contracts Unit

31 III. UN/EC Agreements SCA (standard contribution agreement)
Framework agreement Financial and Administrative Framework Agreement (FAFA) Applies to funds and programmes listed in FAFA: And UN specialised agencies listed here: Applies to contributions by all Commission services (DGs) but not all types of funds (e.g. FAFA does not apply to RTD FP and ENV LIFE) 2) contribution-specific agreements: SCA (standard contribution agreement) IMDA indirect management delegation agreement; GRANT CONTRACT Central Finance and Contracts Unit

32 III. UN/EC Agreements Joint EC – UN Reporting Guidelines (revised December 2010) Common terms of reference for Verification Missions (April 2009) Joint Visibility Guidelines for EC-UN actions in the field (April 2008) SCA Template for the UN’s Multi Donor Trust Funds (MDTF) and Joint Programmes (JP) All available here: Central Finance and Contracts Unit

33 III. UN/EC Agreements Composition
SCA: Special Conditions & Annexes: Annex 1: “Description of the Action” Annex 2: General Conditions (standard per type of contract) Annex 3: “Budget for the Action” Annex 4: Financial Identification Form (bank account) Annex 5: Standard Request for payment (template to request payments) For IMDA: Special Conditions & Annexes like for the SCA above + 2 new Annexes: Annex 6: Communication and Visibility Plan Annex 7: Management Declaration template SCA & IMDA templates: Grant Contract: Special Conditions & Annexes 1-3 like for the SCA above Annex 4: Contract-award procedures Annex 5: Standard request for payment and financial identification form – like above Annex 6: Model narrative and financial [Annex 7: ToRs for an expenditure verification] – does not apply to UN [Annex 8: Model financial guarantee] – does not apply to UN [Annex 9: Standard template for Transfer of Asset Ownership] – does not apply to UN GRANT CONTRACT templates: Central Finance and Contracts Unit

34 4 IMDA

35 IMDA specific: IMDA: Indirect Management Delegation Agreement
A single template replacing the Contribution Agreement and Delegation Agreement. Specificities of both IOs and National Agencies taken into consideration (UN: to some extent) in the template. IMDA applies only for budget implementation tasks (tendering, contracting, paying); not for services (for ex: EU tenders / « technical assistance ») not for grants (for ex: EU calls for proposals) Budget implementation tasks BIT: "Implementation of procurement and grant award procedures, and awarding, signing and executing the resulting procurement and grant contracts, notably accepting deliverables carrying out payments and recovering the funds unduly paid"

36 IMDA specific: Who can be your Sub-delegatees:
1. National or international (e.g. UN) public law body 2. Body governed by private law with a public service mission 3. Non-profit organisation with appropriate operational capacity to the extent that they provide adequate financial guarantees NB: Sub-delegatees CANNOT further sub- delegate Controls: Ex-ante and ex-post controls. (see Art. 2.7 GC IMDA) Central Finance and Contracts Unit

37 IMDA specific: Art. 3 – Sub-delegation
Nature of the sub-delegated entity. Possibility to sub-delegate to private entities without public service mission if they are non-profit and possess appropriate operational and financial capacities Ex-ante assessment of the sub-delegatee by the Organisation or (if approved in the Pillar assessment by the EC) ex-ante controls of budget implementation tasks and imposing rules to sub-delegatees which guarantee equivalent provisions to the ones in Art. 1.3 of General Conditions Necessary ex-post controls are in place to ensure sound financial management No further sub-delegations (3rd degree). Special cases within Beneficiary Country Tasks delegated to sub-delegatees consist in budget implementation tasks Central Finance and Contracts Unit

38 IMDA specific: Art. 4 – Information and Reporting
New formulation for Reporting contents and obligations Every report must be accompanied by a Management Declaration, unless article 4.4 of the Special Conditions foresees an annual submission If Organisation is an International Organisation an Audit Opinion (independent audit body or internal audit or control body) must be submitted within 6 months from submitting each report, unless article 4.4 of the Special Conditions foresees an annual submission Central Finance and Contracts Unit

39 HOW TO PRESENT A PROPOSAL?
5 HOW TO PRESENT A PROPOSAL?

40 Project proposal - format
SCA & IMDA: there is no set template to follow (exception: Grants/calls for proposals and DG ECHO funds templates are provided/mandatory) The EC will need: a description of activities, expected results, (SMART) indicators to measure progress and budget of the “Action”. These will form basis for future Annex 1 “Description of the Action” (incl. e.g. logframe/RRF) and Annex 3 “Budget” of the EU-UN Agreement Central Finance and Contracts Unit

41 Project proposal – some pecularities
Keep in mind: GRANTS: If EDF => return of interest (MDA included); Max for sub-grant: 60,000 € or no limit if “basic purpose” is to re-grant (except for EDF: limit 10,000 € / entity) SCA & IMDA: - If not MDA (i.e. 100%-EU-funded or parallel co-financing):“all individual contracts must be signed within 3 years from entry into force of the SCA” “costs incurred” – as per IPSAS “actual expenses”= equipment delivered, services rendered, etc. Reporting of expenditure for next pre-financing: -- SCA & IMDA: “actual expenses” + “commitments”; -- Grant Contract: only “actual expenses” Central Finance and Contracts Unit

42 Project proposal – some pecularities
Keep in mind: GRANTS: EU contribution always as “% of eligible costs” SCA: EU contribution might be “% of eligible costs” (if budget fully secured) IMDA: no percentage!! Different reporting requirements depending on contract (more requirements for IMDA and Grant Contract; Different pre-financing schemes: SCA (80-95%/fixed per annum), IMDA (80-100%/ fixed per annum), Grant (80-95%, but 5-10% of the overall retained as final payment, interim payments: moving target) Enhanced controls (IMDA & Grant Contract): suspension, information on controls carried out on partners Central Finance and Contracts Unit

43 Project proposal – some advice
Before you start drafting... Read the General (and Special) Conditions which define standard administrative, financial and managerial conditions for the contract under which you will operate (NB: derogations for IOs under grants): Contract templates for SCA & IMDA are available here: – Annexes to Companion C4a Contribution Agreement - Special Conditions C4b Contribution Agreement: General Conditions (annex II) C4c Contribution Agreement: Financial identification form (annex IV) C4d Contribution Agreement - Payment request (annex V) C4e Template for One UN, Multi Partner Trust Funds (MPTF) and Joint Programming (JP) C8a IMDA - Special conditions C8b IMDA - General conditions C8c IMDA - Financial Identification Form C8d IMDA - Request for Payment C8e IMDA - Management Declaration GRANTS: – Annexes to PRAG NB!!! ANNEX E3h11: standard derogations for international organisations

44 Project proposal - content
Keep in mind: existing national priorities & policy frameworks country programmes & strategies EC’s & UN’s programming cycles, formal requirements (e.g. clearance, project documents, AAP) technical constraints (e.g. duration of the EC’s AAP -financing decision) Standard obligations and requirements for every EU-UN agreement (FAFA, General Conditions of the IMDA, SCA, Grant Contract)

45 Project proposal - content
Adopt a reasonable and realistic approach (better to deliver more than expected than otherwise) Avoid UN jargon, explain acronyms Be clear & consistent in explaining the “what, whys, therefore how” of the intended Action / expected results Essential: show coherence of the Action with all stakeholders’ priorities, objectives, etc. Already at the design stage think of how you will monitor it and report upon results (reporting continues to be a weak point in EC’s assessments of UN) Present clearly the link between expected deliverables/outputs and inputs/means necessary to arrive at the former Central Finance and Contracts Unit

46 Project proposal - content
Indicators – be SMART (Specific, Measurable, Achievable, Relevant, Time-bound) – you will need to report according to what you set Timeline: you will need a workplan Explain the division of labour among actors: IMDA: Sub-Delegatees Explain through what mechanisms you will monitor the implementation (e.g. standard requirements set in the UN Project documents, field visits, etc.) Explain the managerial set up (Project Board/Steering Committee, technical committees, etc); Identify the risks, mitigation measures and assumptions and show how these have been accommodated into the design of the Action Central Finance and Contracts Unit

47 Project proposal - content
Make the added value (for the EU when working through the UN) apparent in your project proposal (keep in mind, you’re not the only one...) Visibility (discuss already at early stage): IMDA – annex 6 Evaluation (what do you foresee? Discuss in advance as to avoid duplication of efforts) Exit strategy / Sustainability UN: do not hesitate to mention that there are and what they are the standard policies, rules and procedures in place in your organisation Central Finance and Contracts Unit

48 Couple of words on audit…
All UN activities are « covered » by the UN auditing system (external and internal) The UN auditors decide on their own programme based on risks assessment and there should be no commitment to undertake audits or share audit reports in project proposals The EC may not audit a UN project New: the EC may have access to executive summaries of internal audit reports or internal reports from some UN agencies *Verifications are not audits and they take place in a specifically defined framework (FAFA, General Conditions, Common EC-UN Terms of Reference for Verification Missions) Central Finance and Contracts Unit

49 Project proposal – Budget What format?
SCA & IMDA: The UN normally presents the Budget of the Action on ‘its own’ template/format. “The budget structure (Annex 3 of the Contribution Agreement) should reflect the one normally used by the Organisation in its own accounting system.  It is possible, even if not advisable, to impose models which do not reflect this structure (for instance, Annex III of the EC Grant Contract may not necessarily match).” EC’s Frequently Asked Questions about IOs (FAQ. 22) EC’s FAQs: GRANTS: when the UN submits a proposal under a call for proposal, it must use the format of the Budget for the action included in the documentation set for that call for proposal. Central Finance and Contracts Unit

50 Project proposal – Budget
Scope: the one of the Action (i.e. If multi-donor, then the overall budget of the action should form Annex 3) Currency: in Euro Budgeting – as set by UN’s governing rules and regulations e.g. Staff costs – “actual salaries plus social security charges and other remuneration-related costs” (SCA: Art GCs; IMDA: Art. 18) DSA / per diem – the ones applicable to UN (FAQ 48) Procurement – as set by governing rules and regulations Central Finance and Contracts Unit

51 Project proposal – Budget
Format: the one used by EC (mandatory for Grants) (i.e. inputs-based) Scope: the one of the Action Budgeting methods – always as per UN rules and regulations (staff costs, procurement, travel, DSA, etc.) Currency – Euro Contingency reserve – allowed but discouraged (specific prior authorisation required) Central Finance and Contracts Unit

52 Project proposal – Budget
Visibility: if it requires financial resources, don’t forget to budget for it Distinction between eligible direct/ implementation costs and indirect / remuneration costs of the action. (The latter are set as not to exceed 7% of the value of the direct costs) NB! “Indirect costs are eligible provided that they do not include costs assigned to another heading of the budget of this Agreement” (SCA: Art GC;) NB!! The cost of staff assigned to the Action is not a contribution in kind and may be considered as co-financing in the Budget for the Action when paid by the Organisation or its partners. (SCA: Subject to 14.1 GC, 14.6 GC; IMDA: 18.7) Central Finance and Contracts Unit

53 Project proposal – Budget
What else to keep in mind: The financial report (progress and final) = the same level of details that the Budget / Annex 3 had (hence ensure you’re able to deliver on this) Payment of EC instalments – figures established based on the indicative costs for each of the 12-month periods of the Action. UN to advance from other sources what is not pre-financed by the EU Unilateral change: 15% SCA & IMDA; 25% Grant Central Finance and Contracts Unit

54 HOW TO PREPARE THE CONTRACT?
6 HOW TO PREPARE THE CONTRACT?

55 Contract templates for SCA & IMDA are available here: – Annexes to Companion C4a Contribution Agreement - Special Conditions C4b Contribution Agreement: General Conditions (annex II) C4c Contribution Agreement: Financial identification form (annex IV) C4d Contribution Agreement - Payment request (annex V) C4e Template for One UN, Multi Partner Trust Funds (MPTF) and Joint Programming (JP) C8a IMDA - Special conditions C8b IMDA - General conditions C8c IMDA - Financial Identification Form C8d IMDA - Request for Payment C8e IMDA - Management Declaration GRANTS: – Annexes to PRAG Central Finance and Contracts Unit

56 SCA: Special Conditions
Article 1: Purpose Article 1(1) – Title Article 1(2) – Reference to FAFA for the UN (IMDA: Art.1.6) Article 1(3) - standard Article 1(4) whether Joint Management Article 1(5) whether Multi-donor action Multi-donor action → At least EU + another donor (e.g. the UN implementing the action) and no earmarking of funds IMDA: in addition: applicable rules for procurement & grants; Sub-Delegatees identified Central Finance and Contracts Unit

57 SCA: Special Conditions
Article 2: Entry into force, Implementation and Execution Periods, Contracting Article 2(2) & 2(3): Implementation Period Article 2(1) & 2(4): Execution Period Article 2(5): « Contracting » Period (NB: restrictions for non-MDA) See: FAQ 54 IMDA & Grant: same content, different order Central Finance and Contracts Unit

58 SCA: Special Conditions
Implementation Period: Option between the day following the last signature of the agreement the first day of the month following the date of payment of the first pre-financing (IMDA: not mentioned) a later date A date preceding the signature of the contract but not preceding the date of the Organisation's request for a contribution (if possible) Central Finance and Contracts Unit

59 SCA: Special Conditions
Article 3: Financing of the Action Article 3(1): Total cost of the Action Article 3(2): EU contribution Article 3(3): indirect/remuneration costs Article 3(4): use of interest on pre-financing If needed also: [3(x):– determining subgranting scheme [3(x): determing whether taxes,duties,charges eligible IMDA: contingency reserve (when set out in the budget) The Contracting Authority undertakes to finance a maximum of EUR….equivalent to….% of the estimated total eligible cost For a Multi-Donor Action, the % is not always known when signing the contract (if not all funds are secured yet, there shouldn’t be a reference to a percentage (!!) in Art. 3.2 SCA Central Finance and Contracts Unit

60 SCA: Special Conditions
Article 4: Reporting and payments Article 1(1): standard Article 4(2): establishes the payable amounts IMDA & SCA: there should be as many advance payments as there are commencing 12-month periods + 1 final payment): see FAQ 39 & 40 Article 4(3): exchange rate IMDA: Article 4(4): defining arrangements for management declaration & audit/control statements Central Finance and Contracts Unit

61 SCA: Special Conditions
Article 5. Addresses IMDA: also OLAF focal point Article 6. Annexes & prevalence Article 7. Other specific conditions applying to the Action (Art. 7 SC) if needed to supplement/derogate from the General Conditions Grant: LIST OF STANDARD DEROGATIONS FOR IOs. Central Finance and Contracts Unit

62 HOW TO IMPLEMENT AN EU FUNDED PROJECT?
7 HOW TO IMPLEMENT AN EU FUNDED PROJECT?

63 SCA & IMDA & GRANT: Legal hierarchy:
In case of discrepancy Special Conditions (prevail over General Conditions) General Conditions (Annex 2) (prevail over other Annexes) Other Annexes (therefore useful to review provisions of General Conditions before embarking upon Annex 1 & 3) Central Finance and Contracts Unit

64 READ THE CONTRACT ONCE AGAIN
Some advice... !! PLEASE !! READ THE CONTRACT ONCE AGAIN Central Finance and Contracts Unit

65 Some advice... The EU-UN CONTRACT is a legally binding instrument
UN is the sole responsible and accountable party vis-a-vis the EU, also for the parts of the action which are implemented by 3rd parties (implementing partners, contractors) Ensure hence that your contractual arrangements with 3rd parties are adequate for you (UN) to deliver upon your commitments vis-a-vis the EU Central Finance and Contracts Unit

66 Some advice... At the beginning of the Action
Take time to ensure that all partners/stakeholders know their tasks and roles, including the involvement of EU counterparts Think how information would be shared (including informal flows), ownership secured, managerial set up put in place – have EU counterparts part of the solution Clarify / fine-tune the workplan and visibility Central Finance and Contracts Unit

67 Some advice... Your ‘allies’:
General Conditions (Annex 2 to the EU-UN agreements) – know them by heart!! SCA & IMDA: Grant: For SCA: Frequently Asked Questions: Grant Contract Manual Central Finance and Contracts Unit

68 SCA: General Conditions (Annex 2)
Article 1 General Obligations Action is carried out in accordance with the Description of the Action set as Annex 1 (legally binding document) The Organisation shall report on the indicators of achievement set out in Annex 1 Sub-contracting is possible but…IO sole accountable (no transfer of responsibility) Partners (already identified in Annex I) IMDA: Art. 1 – definitions: e.g. budget implementation tasks, Sub-Delegation, but similar responsibilities imposed under IMDA GC 2 Central Finance and Contracts Unit

69 SCA: General Conditions (Annex 2)
Article 2 Reporting Why is it (so) important ? Contractual obligation Criticism from CoA  / Parliament on the quality of reporting and DEVCO commitment Competitive environment with the need for all actors to be able to demonstrate value for money / concrete achievements. Full information on the implementation of the action SCA & IMDA: No set format/template, but the structure of reports should match Annex I (narrative report) and Annex III (financial report) with the same level of details; templates provided for Grants Central Finance and Contracts Unit

70 SCA: General Conditions (Annex 2)
Article 2.4 (narrative report shall include at least:) Summary and context of the Action Activities carried out during the reporting period (i.e. directly related to the Action description and activities foreseen in the Agreement) Difficulties encountered and measures taken to overcome problems Changes introduced in implementation Achievements/results by using the indicators included in this Agreement Work plan for the following period including objectives and indicators of achievement. IMDA (Art. 4) – all the above plus: Information on the implementation of the Visibility and Communication Plan (Annex VI) and any additional measures taken to identify the EU as source of financing; A summary of any controls carried out and available final audit reports in line with the Organisation’s policy on disclosure of such controls and audit reports. Where errors and weaknesses were identified, analysis of their nature and extend as well as information on corrective measures should also be provided; Control measures carried out on Sub-delegatees. In case weaknesses are detected, information on their nature and extent as well as corrective measures adopted; Central Finance and Contracts Unit

71 SCA: General Conditions (Annex 2)
Article 2.1, 2.3, 2.7 (financial report) - « All Action » (i.e. scope of the budget) Eligible expenses (effectively spent+ legally committed: SCA/Art. 2.3 & 15.1; IMDA/4.7 ) note: to indicate what is “expense”/IPSAS and how much is “legally committed” in Euro & holding currency (SCA: Art. 2.7 GC, Art. 4.3 SC for additional arrangements) Same structure (i.e. wording, set-up) as it was in Annex 3. Changes: see Art. 9 GRANTS : EU template mandatory/ in EUR/ only expenses are counted for the installments’ release / final report – limited “commitments” e.g. last tranche of guarantee to a contractor) Central Finance and Contracts Unit

72 SCA: General Conditions (Annex 2)
Article 2 Reporting Same language as the Contract. Any report:  always narrative & financial Progress (N/F) Report: with each request for payment and minimum once a year Final report (N/F) (6 months following the end of the implementation period): should cover the Action /implementation period + visibility + products + information on assets Your duty of information – “any event likely to hamper or delay the implementation of the Action” (SCA/2.11) Central Finance and Contracts Unit

73 SCA: General Conditions (Annex 2)
Article SCA/GC: 2.6 & 2.9 Respect the deadlines! If the Organisation fails to supply a final report [...] and fails to furnish an acceptable written explanation of the reasons why [...] the Contracting Authority may refuse to pay any outstanding amount and recover any amounts unduly paid. where [the IO] fails to present a progress report [...], the IO shall inform the Contracting Authority of the reasons why it is unable to do so, and shall provide a summary of the state of progress of the Action. If the Organisation fails to comply with this obligation, the Contracting Authority may terminate the Agreement […], refuse to pay any outstanding amount and recover any amounts unduly paid. SAME for IMDA & GRANT Central Finance and Contracts Unit

74 EC-UN Reporting Guidelines
Available: Applies Commission wide, with some exceptions for humanitarian aid UN and Commission have disseminated these guidelines to the field Good reports begin with a well prepared Description of the Action, a coherent and clear presentation of the Budget and the definition of appropriate indicators Central Finance and Contracts Unit

75 Reporting // TIPS BE ON TIME BE PRECISE & TO THE POINT
BE CONSISTENT (WITHIN AND WITH ANNEX 1 & 3) REPORT TO ALLOW FOR COMPARISON WITH WHAT WAS AGREED IN THE AGREEMENT DON’T FORGET TO REPORT ON VISIBILITY (!!) Central Finance and Contracts Unit

76 SCA: General Conditions (Annex 2)
Article 3 Liability International Organisation: have sole responsibility for complying with any legal obligation incumbent on it and deriving from this Action Article 4 Conflict of interest International Organisation to take all necessary precautions to avoid conflicts of interest, inform EC if there is such… Article 5 Confidentiality Parties undertake to preserve the confidentiality of any document, information or other material directly related to the Agreement and duly classified as confidential, until at least five years after the end date of the contribution agremeent Central Finance and Contracts Unit

77 SCA: General Conditions (Annex 2)
Article 6 Visibility (& Transparency) Foreseen in the FAFA and a contractual obligation under all EU Contracts Joint EC-UN Visibility Guidelines: « the objective of visibility activities is the communication of the positive results of the EU-UN partnership ». -> raise awareness of the purpose and impact of the UN EU cooperation -> identify EU support for the Action and its deliverables GRANT: « a visiblity & communication plan to be submitted for EC approval » Central Finance and Contracts Unit

78 SCA: General Conditions (Annex 2)
Article 6 Visibility - in practice Budget for visibility must be foreseen in the Annex 3 Visibility Plan / Strategy (Inception phase) « Mr./Ms. Visibility »: person in charge to deliver this activity Don’t forget about: Disclaimers on publications, logos on assets & deliverables (where relevant – Art. 6.1) Don’t forget to report on visibility, whenever possible illustrated with press cuttings, audio-visual transcripts, etc. (SCA: at least in the final report but encouraged earlier, IMDA & GRANT: all progress + final reports) Central Finance and Contracts Unit

79 SCA: General Conditions (Annex 2)
Article 6 …and Transparency in practice Transparency: publication of « beneficiaries of funds » (contractors, grant recipients) under an EU-(co-)funded Action: - Contractual obligation for the IO & its implementing partners - on annual basis -for contracts >100,000 US$ => NEW : 15,000 EUR (for 2013 SCA) - title of contract / project, name and nationality of the beneficiaries For Multi-Donor Actions - list of names only (UN respective policies apply) IMDA: 15,000 EUR (procurement) + ALL GRANT RECIPIENTS (not scholarships) GRANT: >€ 60 000 contracts (works, supplies, services) amount, the award procedure followed and the name of the contractor. Central Finance and Contracts Unit

80 SCA: General Conditions (Annex 2)
Article 7 Ownership/use of results and equipment Ownership, title and industrial and intellectual property rights in the results of the Action [...] vest in the Organisation […]. EC has the right to use free of charge and as it sees fit all documents deriving from the Action provided it does not breach existing industrial and intellectual property rights End use of assets: all assets paid for by the EU should be transferred to local authorities or partners (excluding commercial contractors) or to the final recipients of the Action by the end of the Action. The documentary proof of those transfers shall be kept for verification. EXCEPTION: MDA – assets kept until the end of the overall operation IMDA: assets: like SCA (NB: “right to use free of charge all results of the action”) GRANT: obligation to transfer (unless Special Conditions set otherwise) Central Finance and Contracts Unit

81 SCA: General Conditions (Annex 2)
Article 8 Evaluation (and Monitoring) EU’s right to command ROMs and/or evaluations on any action it funds Operational principles: Collaborative manner Planned ahead Procedural matters agreed by both parties Draft of the report provided for comments Also covered in FAFA (Art. 1) and FAQ n°46 GRANT: derogation on access to non-public documents! Central Finance and Contracts Unit

82 SCA: General Conditions (Annex 2)
Article 9 Amendments to be requested 1 month before it is intended to enter into force (including request for extension of the agreement). « basic purpose of the action » & key elements set out in Special Conditions Budget/Annex 3: for reallocations between items inside the same heading, there is no limit (100% modification including deleting items or inserting new ones) FAQ 25 Transfer between budget headings: = < 15% authorised : only inform in writing >15% AMENDMENT to be REQUESTED a priori FAQs n°24 =>27 IMDA: like SCA GRANT: 25% between budget headings Central Finance and Contracts Unit

83 SCA: General Conditions (Annex 2)
Article 10 Contracting Contracting arrangements, including principles for award of grants, need to be specified in Annex 1. If not known when the Agreement is established, they should be presented to the EC as soon as availalbe. NB! Strenghtened provisions against misuse from 2013 Changes – the EC to be informed with ‘as much prior notice as possible’ (See FAQ n°23) Procurement : UN rules and procedures apply – Note that Art. 10 mentions i) general principles and ii) exclusion cases. Time limitation for non-MDA: 3 years from signature Central Finance and Contracts Unit

84 General Conditions (Annex 2)
IMDA: Contracting (GC 14) Time limitation for non-MDA: 3 years from signature Obligation to inform EU on bancrupt/corrupt/involved in criminal organisation/money laundering….. Central Exclusion Database – template to use GRANT: Annex 4 & GC Art. 10 Similar to SCA: Obligation to inform EU on bancrupt/corrupt/involved in criminal organisation/money laundering….. Central Finance and Contracts Unit

85 SCA: General Conditions (Annex 2)
Article 11 Suspension and Force majeure SCA « The implemetation period of this agreement is automatically extended by an amount of time equivalent to the duration of the suspension » NB: Duty of information (2.11) – suspension requires a formal communication between UN and EU SCA & IMDA & GRANT: Important: discuss the running costs during suspension Central Finance and Contracts Unit

86 General Conditions (Annex 2)
IMDA: Suspension (GC 15): by the EC: of payments: « concerns about the report » (if eligible, if there were errors, if agreement breached…) by the EC: of the Agreement (if « violation of HR or change of EU policy ») by the Organisation: of implementation (Force Majeure) notify in writing Resumption: following a written notification by the Commission GRANT: Suspension - Similar to IMDA: by the EC: of payments: (Art GC)« concerns about the report » (if eligible, if there were errors, if agreement breached…) by the EC: of the implementation (Art. 11 GC) by the Organisation/Coordinator: of implementation or of a co-Beneficiary (Art. 11 GC) Central Finance and Contracts Unit

87 SCA: General Conditions (Annex 2)
Article 12 Termination of the Agreement «  the purposes of this Agreement can no longer be effectively or appropriately carried out  » Organisation fails to comply with the contractual provisions Organisation entitled to be reimbursed « eligible costs incurred & commitments entered into before notification on termination » IMDA (Art. 16 GC)– Similar to SCA GRANT (Art. 12 GC) – reasons: like SCA & IMDA, entitlements different: “shall be entitled to payment only for the part of the Action carried out, excluding costs relating to current commitments that are due to be executed after termination. In the event of termination according to art 12.1 (force majeure), the Contracting Authority may agree to reimburse the unavoidable residual expenditures incurred during the notice period, provided Article 12.7, first paragraph (in the derogations!!), has been properly executed.” Central Finance and Contracts Unit

88 SCA: General Conditions (Annex 2)
Article 13 Settlement of disputes (& applicable law) “Parties to endeavour to settle amicably any dispute or complaint relating to the interpretation, application or fulfilment of this Agreement, including its existence, validity or termination.” FAQ 51 – dispute settlement mechanism Similar for: IMDA – Art. 17 GC GRANT – derogations/Art. 7 special conditions + Art. 13 GC Central Finance and Contracts Unit

89 SCA: General Conditions (Annex 2)
Article 14 Eligible costs 2 types of eligible costs: SCA & GRANT: direct and indirect (IMDA: implementation & remuneration, Art. 18 GC) Direct costs eligible if (« eligibility criteria » 14.1): necessary for the Action incurred during the implementation period (IPSAS) recorded in Organisation’s account, identifiable and backed by supporting evidence Eligible = be part of the budget proposal See FAQs 28 to 32 Central Finance and Contracts Unit

90 SCA: General Conditions (Annex 2)
Article 14 Eligible costs Eligible: DSA = Per diem: UN DSA rates apply “In particular eligible are”: see non exhaustive list in 14.2 (proportion of field office costs that corresponds to the Action, salaries, equipment, travel, etc.) IMDA – Art. 18 Non Eligible: Currency exchange losses, taxes (unless non-recoverable), in-kind contributions (except for staff costs – provided 14.6 and 14.1 respected) See FAQs 28 to 32 Central Finance and Contracts Unit

91 SCA: General Conditions (Annex 2)
Article 14 Eligible costs Eligible indirect costs not exceeding 7 % of …total eligible direct/implementation costs (e.g. UNDP’s Executive Board’s decisions: (2007= 7%; 2012= « 8% but previous arrangements honoured », so still 7% for EU) Multi-donor Action: not higher or lower than for other comparable contributions See FAQs n°33 to 37 Central Finance and Contracts Unit

92 SCA: General Conditions (Annex 2)
Article 15 Payments Prefinancing: % of EU’s contribution to a given year’s budget (« at any time a maximum of only 20% of the budget for the current period can be retained by the Commission”. The SCA does not foresee that a percentage of the total programme budget be retained by the Commission. The level of pre-financing should not be used to avoid potential over-payments. “) FAQ 39 Request for payment – template to use 45 days following the date of receipt by EU, if no news, the report is deemed approved *Late payment interest … (Art. 15.3) Central Finance and Contracts Unit

93 General Conditions (Annex 2)
IMDA: Article 4.2 SC & 19 GC Payments Prefinancing: % of EU’s contribution to a given year’s budget As many pre-financing payments as commencing years of implementation GRANT: Article 4.1 SC & 15 GC Payments 1st Prefinancing: % of EU’s contribution to year 1 budget Every next pre-financing: % of EU’s contribution to year n+ budget, but 5-10% of the EU’s overall contribution always retained as final payment Additional restrictions for multi-annual grants > 5 mln EUR Actual amounts for interim payments not known upfront (negotiations each time) Treshold for release: 70% of immediately preceeding (+100% any previous) and only costs incurred (commitments not recognised) Central Finance and Contracts Unit

94 SCA: General Conditions (Annex 2)
Article 16 Accounts and financial checks Accounts and finance managed as set by governing UN rules and regulations Art. 16.2 “A copy of the audited financial statements shall be submitted to the European Commission by the Organisation.” This refers to the financial statements of the IO in its entirety which are publicly available and shared with the EC outside the scope of an individual Contribution Agreement (see FAQ 45) Central Finance and Contracts Unit

95 General Conditions (Annex 2)
IMDA: Article 4.4 SC & 22 GC Accounts, checks, verifications Audit report of the Organisation as a whole – annually (Art. 4.4 SC) Checks/inspections/investigations = verifications: as per EC-UN ToRs on verifications Documents to be available: 5 years following the « end date » GRANT: Article 7 SC derogations: replacing 16 GC => Accounts, checks = verifications Aligned with SCA & IMDA Central Finance and Contracts Unit

96 SCA: General Conditions (Annex 2)
Article 17 – Final amount of financing by EU “shall be limited to the amount required to balance income and expenditure for the Action and that it may not in any circumstances result in a surplus for the Organisation.” Maximum amount = set in Article 3(2) Special Conditions. Note the method when there is %!!! Don’t wait until the end of the Action to change it if inacurate NB! Right of refusal: EC can reject expenditure that is deemed ineligible so please, when in doubt, consult with EU Delegation or UNDP Brussels Central Finance and Contracts Unit

97 General Conditions (Annex 2)
IMDA: Article 20 – Final amount of financing by EU “shall be limited to the amount required to balance income, donor contributions and eligible costs.” Maximum amount = set in Article 3(1) Special Conditions, no % « Notional approach » & « priority of consumption » GRANT: Article 17 - Final amount of the grant “may not exceed the maximum ceiling (Art 3.2 Special Conditions) either in terms of the absolute value or the percentage stated therein.” If the eligible costs of the Action at the end of the Action are less than the estimated eligible costs as referred to in Article 3.1 SC, the grant shall be limited to the amount obtained by applying the percentage laid down in Article 3.2 SC to the eligible costs of the Action approved by the Contracting Authority. So: Maximum amount = always based on % so don’t wait too long to adjust it (Addendum) if cicumstances/funding change Central Finance and Contracts Unit

98 SCA: General Conditions (Annex 2)
Article 18 – Recovery Where the amount pre-financed exceeds the amount of eligible costs attributable to EU contribution Eventual ineligible costs – to be reimbursed to the EU Timeline: 45 days following the issuance of a debit note If deadline not met – late payment interest are due !! The recovery procedure (including offsetting) - the EC-UN Guidelines available here: SCA: FAQ 43 – and “return of the actual amount on the account” (for SCA signed in recent years) Central Finance and Contracts Unit

99 THE VERIFICATION 8

100 Verification Foreseen in the FAFA (“verification clause”):
Financial transactions to be subject to UN rules and procedures. Copy of the UN audited statements to be submitted to the Commission (This refers to the financial statements of the organisation in its entirety…Share it! ) UN shall: keep financial and accounting documents concerning the activities financed by the EU; make available to the competent bodies of the EU all relevant financial information. EU may undertake checks, including on the spot = verification missions. Central Finance and Contracts Unit

101 Verification: Overarching principles
Recognition by Commission of primacy of UN oversight and control systems Recognition by UN of Commission’s need to obtain assurance that an adequate system of accountability is in place. Right of Commission to perform on-site “walk through” of these systems Right of Commission to request all relevant financial information (drawn from accounts and records) including verification of underlying documents Central Finance and Contracts Unit

102 Verification missions The terms of reference
Common terms of reference (ToR) for verification missions (2009) (http://ec.europa.eu/europeaid/work/procedures/financing/international_organisatio ns/other_documents_related_united_nations/document/ec- un_common_guidelines_on_verification_endorsed_by_7wg.doc) Apply to all verification missions to UN launched by the Commission. Verification = on-the-spot-check/inspection/control Specific ToR (specific for UN managed actions) to be used between the Commission and the verifiers also available: un_en.htm Central Finance and Contracts Unit

103 Verification missions Objectives
To acquire an understanding of, and to report on the adequacy of the system of accountability in place (accounting systems and procedures, control and procurement procedures, reporting, oversight/audit mechanism). To verify the use to which EU funds and contributions have been put. It must be noted that the objective of the verification is not to audit the UN entity. The Commission acknowledges the mandated primacy of UN oversight and control systems. Central Finance and Contracts Unit

104 Verification missions preparation
The EU/mission asks for : various financial documentation; summaries of audit reports, where available. UNICEF, UNDP, UNOPS, UNFPA, FAO, UNRWA, UN Secretariat and WFP can disclose internal audit reports to the Commission (in some cases reports available online. Ex: UNDP, UNICEF, UNOPS). The EU verification team agrees with the UN entity verified on: the date of the mission; the place (s) of visit; the planning; the processes identified for sampling. Central Finance and Contracts Unit

105 Verification: sampling
The verification mission may sample up to a maximum of 5 transactions per key process (procurement, recruitment including payroll, disbursements, budget management, logistics and reporting) per project. In case of problem occurring in the samples, the verification team is allowed to sample another 5 transactions in the same process. If one or more of these extra 5 transactions reveals any further problem, the verification team will not pursue sampling but will refer to the UN entity Controller. Central Finance and Contracts Unit

106 Verification: in practice
The verification team: Reviews systems, procedures and financial and management information. Conducts interviews, holds meetings with relevant stakeholders Walks through the system. Examines and verifies information and documents. Reconciles figures, analyses procedures. Accounting, auditing, internal control and procurement aspects are key verification areas... ...at all stages of the programme/project cycle (programming, implementation, closing). Central Finance and Contracts Unit

107 Verification: Confidentiality – Copies of documents
Subject to considerations of confidentiality, original documents shall be shown to the mission to facilitate the check process. For the most part, copies of such documents will not be taken by the mission. However, requests for copies of such documents will be considered by the UN entity on a case-by-case basis. The verification team will respect the established confidentiality policy of the UN entity. This policy must therefore be transmitted to the verification team by the entity in a timely manner. Central Finance and Contracts Unit

108 Verification: Confidentiality – The output
Checks performed on systems and financial information will result in a report of factual findings including a conclusion and where appropriate, recommendations. As verification missions are not audits, no audit opinion will be issued. The UN partner will be invited to comment on the report. Some findings on ineligible expenditures in the reports may trigger recovery orders issued by the Commission. Central Finance and Contracts Unit

109 Verification missions in practice in EuropeAid/DEVCO
Decided by geographical/thematic services in HQ or by EUDs EuropeAid provides the UN Controller with an indicative table of the missions planned (≠ ready to be performed) by the whole Commission. Launched by HQ or locally by EUDs. Verification missions are carried out by: Private companies contracted by the Commission EC officials Central Finance and Contracts Unit

110 Verification missions
Tips UN Provide all relevant material to the EU in due time Invite EU colleagues to visit the projects Tips EU Share as much information as possible with the verification team. Follow closely the verification mission to give/get as much information as possible to/from the contracted verifiers. Verify the project not long after it is closed. Time is key! Central Finance and Contracts Unit

111 Verification missions: Some peculiarities
The European Court of Auditors (ECA) performs annual audits of the Commission (and not of the UN) that can entail verification of UN expenditures for some EU funded projects. The ECA usually checks the regularity and legality of projects’ declared expenditures based on the terms of the related Contribution Agreements and by checking some supporting documents. The ToR on verification missions is a common UN/Commission tool. It does not apply for the ECA. The UN considers that if requests from ECA (to access information, etc.) lies within the limits framed by the ToRs, such requests can be accommodated as in line with the verification exercise. Central Finance and Contracts Unit

112 9 TEN RECOMMENDATIONS

113 10 recommendations: Be aware that in order to engage with UN, the EU must be convinced of the undertaking bringing added value (to the EU). Ensure that the partnership will deliver the expected results Make the UN comparative advantages apparent vis-a-vis other potential EU partners (NGOs, other IOs, etc.) Understand priorities, needs and technical constraints. Be open about that Involve the EU in your programming process Be aware that award of EU funds come with a package of conditions and requirements for which the UN is responsible and will be held accountable The EU is obliged to request their contribution gets visibility. Help them to deliver on this obligation Central Finance and Contracts Unit

114 10 recommendations: The government is your key partner and your relations with and within the country are the foundations for a success story with the EU Take time to ensure that the proposal is results-based, coherent, concise, precise about the deliverables. Your EU counterpart will need to convince his/her hierarchy about that (jargon, acronyms) Don’t wait until it’s too late to change / adapt / suspend your Contribution Agreement. Your EU counterpart should be part of the solution Don’t forget that, ultimately, your project will be assessed by the results delivered and the quality of the REPORTS. Central Finance and Contracts Unit

115 Thank you Any questions? Central Finance and Contracts Unit


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