1. The new aid modalities PART IV. PRATICAL ASPECTS
LAF seminar
Controlling - June 2009

2. INTRODUCTION PART III. ROLE of the LAF PART IV. PRATICAL ASPECTS
PART I. GENERAL
1.1. Context
1.2. Position Paper
1.3 Sharing experiences
1.4. Content
PART II. RISK MANAGEMENT & MODALITIES
2.1. Risk management
2.2. Framework for the definition of the modalities
2.3. Case study
PART III. ROLE of the LAF
PART IV. PRATICAL ASPECTS
4.1. Implementation agreement tool
4.2. Approval of the disbursements
4.3. Financial staff
4.4. Managing FIT and BTC Financial reporting
4.5. Management of Audits

3. PART IV. PRATICAL ASPECTS
4.1. Tool for the implementation agreement and monitoring
Objectives
Content
Monitoring
Process
4.2. Approval of disbursements
4.3. Financial staff
4.4. Managing FIT and BTC Financial reporting
4.5. Management of audits

4. 4.1. IMPLEMENTATION AGREEMENT: Financial aspects - objective
By the end of the training, the participants will be able to identify when and how implementation agreements have to be drawn up and monitored

5. 4.1. IMPLEMENTATION AGREEMENT: Financial aspects - introduction
If BTC’s project aid plans to have part of the activities and therefore of the budget delegated to the partner
an implementation agreements will be drawn up with the partner in order to put down the obligations of each party
(Mind: sometimes, the TFF can be enough)

6. 4.1. IMPLEMENTATION AGREEMENT: Financial aspects - introduction=
Conditions
that the partners have to meet to access to funds
Mutual commitment

7. 4.1. IMPLEMENTATION AGREEMENT: Financial aspects - objectives
Have sufficient financial information to ensure the good management of Belgian funds in the context of delegated activities
Ensure that the partner respects the agreements made
Master the financial risks
Enable BTC to commit the funds in a reasonably secure way
Organise the financial management with the partner

8. 4.1. IMPLEMENTATION AGREEMENT: Financial aspects - content
 Document that enables to provide certain financial aspects that have to be included in the implementation agreement
The financial aspects of the agreements will always be validated by Controlling

9. 4.1. IMPLEMENTATION AGREEMENT: Financial aspects - content
Preliminary conditions
Amount of the financial contribution
Duration of the agreement
Budget
Financing
Reporting
Audit
Closure
Annexe: Implementation agreement: Recommendations relating to financial aspects

10. 4.1. IMPLEMENTATION AGREEMENT: Financial aspects - monitoring
Monitoring table for agreements =
Inventory the agreements by project
Annexe: Follow-up table for Implementation agreements

11. 4.1. IMPLEMENTATION AGREEMENT: Financial aspects - process

12. 4.2. APPROVAL OF DISBURSEMENTS
PART IV. Practical Aspects
4.1. Tool for the implementation agreement and monitoring
4.2. Approval of disbursements
4.3. Financial staff
4.4. Managing FIT and BTC Financial reporting
4.5. Management of audits

13. 4.2. APPROVAL OF DISBURSEMENTS - objective
By the end of the training the participants will be able to monitor the conditions of the agreements/TFF and justifiy the disbursement of instalments to the partner

14. 4.2. APPROVAL OF DISBURSEMENTS - Checklist
Checklist approval of disbursements =
Ensure that the financial conditions of the implementation agreements have been respected and that the disbursement can be made.
Annexe: Checklist Approval of disbursements

15. 4.2. APPROVAL OF DISBURSEMENTS - process

16. 4.2. APPROVAL OF DISBURSEMENTS - archives
     

17. 4.3. FINANCIAL STAFF 4.3. Financial staff PART IV. Practical Aspects
4.1. Tool for the implementation agreement and monitoring
4.2. Approval of disbursements
4.3. Financial staff
4.4. Managing FIT and BTC Financial reporting
4.5. Management of audits

18. 4.3. FINANCIAL STAFF - Objectives
By the end of the training the participants will be able to explain the particularities of financial staff in the context of the new modalities

19. 1. Financial Staff Case 1
A part of the activities is implemented by the partner using their system. To compensate the increase in workload financial staff can be recruited.
Question 1 : Will the budget line be in Regie, Cogestion or NEX? And why? Who will sign the contract?
Question 2 : What will be the tasks of the financial staff?
Question 3 : How would you organize the recruitment process?
Explorative
After citing these questions : separate group into smaller groups of 4 persons
Let them brainstorm about their role in projects with new implementation modalities (30)
Let them write it down on cards.
List all the answers on the wall and go through them briefly (15)

20. 2. Financial Staff Case 2
A part of the activities of the project consists of improving the financial management of the partner institution. For these capacity building activities a person will be recruited for 2 years?
Question 1 : Will the budgetline be in Regie, Cogestion or NEX? And why?
Question 2 : Will this person also prepare the financial reports?
Explorative
After citing these questions : separate group into smaller groups of 4 persons
Let them brainstorm about their role in projects with new implementation modalities (30)
Let them write it down on cards.
List all the answers on the wall and go through them briefly (15)

21. 3. Attention points Make sure that authority lines are clear
Be clear about responsibilities and task
Try to avoid a mixture of control and operational activities
Try to avoid a mixture of support and operational activities
Try to avoid a mixture of control and support activities
If national responsibility -> partner staff and NO BTC-staff
Explorative
After citing these questions : separate group into smaller groups of 4 persons
Let them brainstorm about their role in projects with new implementation modalities (30)
Let them write it down on cards.
List all the answers on the wall and go through them briefly (15)

22. 3. Attention points Risk measures Participate in recruitment process
Force partner to recruit additional staff
Ask auditor to verify to what extent the financial staff masters the financial processes
Foresee capacity building activities in budget
Explorative
After citing these questions : separate group into smaller groups of 4 persons
Let them brainstorm about their role in projects with new implementation modalities (30)
Let them write it down on cards.
List all the answers on the wall and go through them briefly (15)

23. 4.4. Managing FIT and BTC Financial reporting
PART IV. Practical Aspects
4.1. Tool for the implementation agreement and monitoring
4.2. Approval of disbursements
4.3. Financial staff
4.4. Managing FIT and BTC Financial reporting
4.5. Management of audits

24. 4.4. Managing FIT and BTC Financial reporting - Objectives
By the end of the training the participants will be able to explain the consequences of the new modalities on the management of FIT and the BTC -reporting

25. 4.4. Managing FIT and BTC Financial reporting - Content
Financial mode in Budget
Budget
Financial planning
Cash call
Transfer to partner account
Accounting
Who manages FIT

26. 1. Financial mode in Budget
Regie : expenses are paid via Regie account (= only BTC signature)
Cogest : expenses are paid via Cogestion account (= joint signature)
NEX : expenses are paid via account managed by partner (= only partner signature) (not via main account cogestion)
That is the ONLY meaning of Regie / Cogestion / NEX in the budget
NEX does not exist yet in FIT : use COGEST
Explorative
After citing these questions : separate group into smaller groups of 4 persons
Let them brainstorm about their role in projects with new implementation modalities (30)
Let them write it down on cards.
List all the answers on the wall and go through them briefly (15)

27. 2. Budget Budget in the DTF = Budget of partner
Budget in FIT = 1 budgetline by partner institution / account on which transfers are registered
Alternative : result by partner institution / account is split up in a few budget lines + budgetline for transfer (keep track of last budget version)
FIT is not longer a tool for budget follow-up -> tool from partner
Budget structure will be defined during formulation
Explorative
After citing these questions : separate group into smaller groups of 4 persons
Let them brainstorm about their role in projects with new implementation modalities (30)
Let them write it down on cards.
List all the answers on the wall and go through them briefly (15)

28. 2. Budget
Explorative
After citing these questions : separate group into smaller groups of 4 persons
Let them brainstorm about their role in projects with new implementation modalities (30)
Let them write it down on cards.
List all the answers on the wall and go through them briefly (15)

29. 3. Financial planning
Planning BTC each Q1 – For partner this can be a different rythm
BTC planning is based on reports of partner
BTC planning is done by representation
Budget in FIT = 1 budgetline by partner institution / account on which the planned transfers are registered
Financial planning in FIT has to be documented with reports of partner
Explorative
After citing these questions : separate group into smaller groups of 4 persons
Let them brainstorm about their role in projects with new implementation modalities (30)
Let them write it down on cards.
List all the answers on the wall and go through them briefly (15)

30. 4. Cash call
The call for cash is no longer based on the cash call template from BTC but is an official request from partner to transfer funds based on implementation convention / DTF
This request is always necessary also for first transfer
No cash call to register in FIT
Explorative
After citing these questions : separate group into smaller groups of 4 persons
Let them brainstorm about their role in projects with new implementation modalities (30)
Let them write it down on cards.
List all the answers on the wall and go through them briefly (15)

31. 4. Cash call
What if budget COGEST AND NEX with direct transfer to partner?
Create cash call cogestion with main account cogestion and indicate which amount which has to be transfered to partner account and joint cash request from partner
Register the two transfers seperately
Explorative
After citing these questions : separate group into smaller groups of 4 persons
Let them brainstorm about their role in projects with new implementation modalities (30)
Let them write it down on cards.
List all the answers on the wall and go through them briefly (15)

32. 5. Transfer to partner account
From HQ
Create account in FIT (P, EUR, Cogest (in the future NEX))= partner account
Select this account as main account
Register transfer HQ (580010)
Immediately register expense with same amount ( financial contribution)
Explorative
After citing these questions : separate group into smaller groups of 4 persons
Let them brainstorm about their role in projects with new implementation modalities (30)
Let them write it down on cards.
List all the answers on the wall and go through them briefly (15)

33. 5. Transfer to partner account
From Cogestion account
Register transfer as expense : financial contribution
Explorative
After citing these questions : separate group into smaller groups of 4 persons
Let them brainstorm about their role in projects with new implementation modalities (30)
Let them write it down on cards.
List all the answers on the wall and go through them briefly (15)

34. 6. Accounting Accounting is done in partner system
In BTC accounting only transfer to partner account
Explorative
After citing these questions : separate group into smaller groups of 4 persons
Let them brainstorm about their role in projects with new implementation modalities (30)
Let them write it down on cards.
List all the answers on the wall and go through them briefly (15)

35. 7. Who manages FIT? If only NEX : representation
If only Regie and NEX : representation
If Cogestion and NEX : project management unit with clear instructions for NEX from representation
-> clear separation of responsabilities
Explorative
After citing these questions : separate group into smaller groups of 4 persons
Let them brainstorm about their role in projects with new implementation modalities (30)
Let them write it down on cards.
List all the answers on the wall and go through them briefly (15)

36. 4.5. Management of audits PART IV. Practical Aspects
4.1. Tool for the implementation agreement and monitoring
4.2. Approval of disbursements
4.3. Financial staff
4.4. Managing FIT and BTC Financial reporting
4.5. Management of audits

37. 4.5. Management of audits -Objectives
By the end of the training the participants will be able to explain the particularities of audits in the context of the new modalities

38. 4.5. Management of audits - Content
From ex-ante control to ex-post control
National system for audit
What is audited?
When is audit done?
Joint audits
What if the conclusions of the audit are negative?
Action plan and monitoring
8. Tools

39. 1. From ex-ante control to ex-post control
Audit = Key instrument for BTC !!!
Partner Implements
BTC controls
Explorative
After citing these questions : separate group into smaller groups of 4 persons
Let them brainstorm about their role in projects with new implementation modalities (30)
Let them write it down on cards.
List all the answers on the wall and go through them briefly (15)

40. 1. From ex-ante control to ex-post control
Cogestion : Audit is requested by Steering Committee
NEX : Audit is done by BTC to verify correct use of Belgian public funds by partner (sub-constracted to audit firm)
Explorative
After citing these questions : separate group into smaller groups of 4 persons
Let them brainstorm about their role in projects with new implementation modalities (30)
Let them write it down on cards.
List all the answers on the wall and go through them briefly (15)

41. 2. National system for audit
Is important to keep this
But it is insufficient to guaranty a proper management and use of Belgian public funds
Quality of reports
Timing : frequency and delay
-> Audits by BTC
Explorative
After citing these questions : separate group into smaller groups of 4 persons
Let them brainstorm about their role in projects with new implementation modalities (30)
Let them write it down on cards.
List all the answers on the wall and go through them briefly (15)

42. 3. What is audited ?
Do the financial statements give a correct representation of the reality (financial audit) - Certification of financial reports
Are expenses related to budget / activities (eligibility of funds)?
Are funds used efficiently and economically?
Is the internal control system working properly? (system audit)
Remark : also in financial audit some internal control aspects are verified
Explorative
After citing these questions : separate group into smaller groups of 4 persons
Let them brainstorm about their role in projects with new implementation modalities (30)
Let them write it down on cards.
List all the answers on the wall and go through them briefly (15)

43. 3. What is audited ? Points 1 to 3 always Point 4 in specific cases :
Start-up
Change in modalities
Large budget
Many weaknesses found during assessment phase (formulation)
Do not over-audit partner institution !
Explorative
After citing these questions : separate group into smaller groups of 4 persons
Let them brainstorm about their role in projects with new implementation modalities (30)
Let them write it down on cards.
List all the answers on the wall and go through them briefly (15)

44. 4. When is audit done? Normally annually, sometimes each 6-months
Often required before new transfer to partner institution
Audit period has to be in coherence with timing of transfers
In case there is serious doubt on the correct use of funds
Explorative
After citing these questions : separate group into smaller groups of 4 persons
Let them brainstorm about their role in projects with new implementation modalities (30)
Let them write it down on cards.
List all the answers on the wall and go through them briefly (15)

45. 5. Joint audits Together with other donors
To reduce transactions costs and audit overload on partner institution
Not so easy to implement at project level
Explorative
After citing these questions : separate group into smaller groups of 4 persons
Let them brainstorm about their role in projects with new implementation modalities (30)
Let them write it down on cards.
List all the answers on the wall and go through them briefly (15)

46. 6. What if the conclusions of the audit are negative?
Case by case
Consequences will depend on audit report but also on the quality and commitment to action plan and also on diplomatic considerations
Possible Consequences
Reject of expenses
Change in modalities
Blocking of transfer until corrective measures have been taken …
Explorative
After citing these questions : separate group into smaller groups of 4 persons
Let them brainstorm about their role in projects with new implementation modalities (30)
Let them write it down on cards.
List all the answers on the wall and go through them briefly (15)

47. 7. Action plan and monitoring
After audit partner has to make action plan and report on it
Representation can provide support
Representation has to monitor actively action plan
Explorative
After citing these questions : separate group into smaller groups of 4 persons
Let them brainstorm about their role in projects with new implementation modalities (30)
Let them write it down on cards.
List all the answers on the wall and go through them briefly (15)

48. 8. Tools See module audit See implementation convention Explorative
After citing these questions : separate group into smaller groups of 4 persons
Let them brainstorm about their role in projects with new implementation modalities (30)
Let them write it down on cards.
List all the answers on the wall and go through them briefly (15)

49. PART V. CONCLUSION Subsequent steps for the Country Team...
Know the projects that apply new financial modalities
Describe and know the financial modalities of each project - diagram
Identify the financial risks
Monitor the current agreements
Create a permanent file
Etc.

50. thank you for your attention
QUESTIONS?
thank you for your attention