1. June 27, 2014 1 Preparation of Project Account & Trimester IPR

2. Project Account & Trimester IPR - Definition June 27, 2014 2 The Project Account & Trimester IPR (Implementation Progress Report also known Financial Monitoring Report i.e. FMR) are the financial statements prepared for the project funded jointly by the GON and the donor agency (e.g. WB, ADB) showing sources and application of Fund and status of Designated Bank Account or the Special Account or Imprest Account.

3. Project Account & Trimester IPR – Why Needed June 27, 2014 3 The project account and trimester IPR are prepared based on the accounting records and information to show up-to-date financial status of the project that is sources and application or uses of funds. The project account and trimester IPR show the sources of funds from which funds have been received to fund the expenditures presented either based on category or component or project activities.

4. Project Account & Trimester IPR– Format June 27, 2014 4 The project account and trimester IPR are prepared using horizontal or vertical format. In SOE based Project Accounts, horizontal format are normally used. In report based Project Accounts, Trimesterly Financial Monitoring Reports (Third Trimester FMR) presented in vertical format is certified as the Project Account.

5. Project Account & Trimester IPR June 27, 2014 5 The current year amount and up-to-date cumulative amount of the project account and year to date cumulative amount and up-to-date cumulative amount of third trimester report should be same. Opening and closing cash balance of GON fund should not be shown in the project account as there will not be closing balanced in case of Treasury Single Account (TSA).

6. Project Account - Period June 27, 2014 6 The project Account covers the period of Nepalese fiscal year i.e. Shrawan 1 to Ashadh end (mid July to mid July) The project account should show cumulative amount up to previous year, current fiscal year and cumulative up to current year in the source and application or uses of fund. The amounts of the cumulative amount up to previous year, current fiscal year and cumulative up to current year should tally with the amounts of the respective notes.

7. Trimester IPR - Period June 27, 2014 7 The trimester IPR covers the period of four months of Nepalese fiscal year i.e. Shrawan 1 to Kartik end, Marg 1 to Falgun end and Chaitra 1 to Ashadh end The trimester IPR should show cumulative amount up to previous trimester, current trimester and cumulative up to current trimester in the source and application or uses of fund. The amounts of the cumulative amount up to previous trimester, current trimester and cumulative up to current trimester should tally with the amounts of the respective notes.

8. Sources of Funds June 27, 2014 8 Sources of Funds Include the fund received from the following sources: Project Account & Trimester IPR:- GON fund, GON reimbursable fund; Donor agency Fund (e.g. World Bank, ADB), Outstanding replenishment, Users’ Contribution; Designated Bank Account:- Designated bank account initial deposit, and Foreign exchange gain or loss.

9. Application of Funds June 27, 2014 9 Application of Funds include: Fund used for expenditures incurred for the project under each category or component or project activities as per funding agreement with the Donor Agency, Bank balance in Designated Bank Account, and Amount of outstanding replenishment, if any Usually the category of expenditures used to be the following: Civil Works, Goods, Consultant Services and Training, Incremental Operating Cost,

10. Government Fund June 27, 2014 10  The government fund is the fund disbursed for expenses incurred from government source by the government.  The details of GON fund should be given in the Note showing amount of approved budget, budget released, expenditures incurred, and budget balance.  The GON fund for the current year/trimester should tally with the expenditure of the current year/trimester of GON Source.

11. Government Fund – How to check June 27, 2014 11 The GON fund for the current year/trimester should tally with: The total expenditure of the current year/trimester of GON Source of recurrent and capital budget as per expenditure statement. The expenditure of the financial report submitted to the DTCO and verified with the FCGO.

12. GON Reimbursable Fund June 27, 2014 12 The GON reimbursable fund is the fund provided by the GON for expenditures to be funded from Donor agency source. The expenditures to be funded from donor agency source are incurred first from the GON reimbursable fund and it is reimbursed later on by donor agency. The details of GON Reimbursable fund should be given in Note.

13. GON Reimbursable Fund – How to calculate June 27, 2014 13 The GON reimbursable fund is the net amount of the following: Budget released/expenditures incurred by GON for reimbursable fund, Less: Reimbursed from designated bank A/C to GON Treasury, Less: Direct reimbursement from donor agency to GON Treasury. Budget released by GON for reimbursable fund should tally with the expenditure statement.

14. GON Reimbursable Fund – How to Check June 27, 2014 14  Reimbursed from designated bank A/C should tally with the amount transferred to the GON treasury from designated bank A/C.  Disbursement from designated account should be total of amounts replenished by the donor agency to the designated bank A/C, outstanding replenisable or amount yet to be replenished less amount replenished for direct payment.  Direct reimbursement from donor agency should tally with the donor agency disbursement statement.

15. GON Reimbursable Fund June 27, 2014 15 The GON Reimbursable fund will decrease by the amount reimbursed directly to GON and transferred to GON Treasury from the Designated Bank A/C. The reconciliation statement of reimbursable fund as per FCGO record and Project Account should be prepared and attached with the Project Account.

16. Donor Agency Fund June 27, 2014 16 Fund disbursed by the donor agency will be equal to the amount of direct payment, reimbursement to the GON and replenishment in the Designated Bank Account in case of normal disbursement and direct payment and amounts documented in case of report based disbursement. Donor agency Fund will increase by the amount reimbursed directly to GON and replenished to the Designated Bank A/C by the donor agency and direct payment to the suppliers.

17. Donor Agency Fund June 27, 2014 17 The details of donor agency disbursement should be given in Note showing the following in case of normal disbursement: Direct payment, Direct reimbursement, Replenishment to the Designated Bank A/C, The amounts disbursed in NRs., US$ and SDR or currency of agreement, The amounts disbursed under each category.

18. Donor Agency Fund June 27, 2014 18 In case of report based disbursement, the amount disbursed by the donor agency will be amount documented out of amount transferred to the GON Treasury from the Designated Bank Account and direct payment if any. Donor agency fund will increase by the amount documented by the donor agency.

19. Donor Agency Fund - How to check June 27, 2014 19 Normal Disbursement: – The donor agency fund should tally with the total amount of direct payment, direct reimbursement to the GON treasury and replenishment to the designated bank A/C. – The donor agency fund should tally with the disbursement made by the donor agency as per donor agency disbursement statement in US$ and SDR or currency of agreement and loan or grant register.

20. Donor Agency Fund - How to check June 27, 2014 20 Report Based Disbursement: – The donor agency fund should be the amount documented out of amount transferred to the GON Treasury from the Designated Bank Account and direct payment, if any. – The donor agency fund in US$ and SDR or currency of agreement should tally with the amount documented by the donor agency.

21. Expenditures June 27, 2014 21 The expenditures incurred for the project from all sources are required to be shown in the Project Account under each category or component or activities as specified in the Agreement entered with the donor agency. The project expenses include the expenses incurred from the following sources: a) GON Source b) Donor Agency Source c) Contribution made by the users in cash or kind

22. Expenditures - Statements June 27, 2014 22 The statement of expenditures showing budget items, approved budget, budget release, expenses and budget balance by funding source i.e. GON and donor agency should be prepared. The project having field offices should prepare statements of expenses showing budget items, amount of budget release, expenses and balance budget of each office.

23. Expenditures - Statements June 27, 2014 23 The consolidated statement of expenses under each budget items of all offices. The statement of expenditures showing expenses under each category or component or activities as specified in the funding agreement and funding source.

24. Expenditures – How to check June 27, 2014 24 The total expenditures of the current year/trimester should tally with each other of the following statements: Consolidated statement of expenses under each budget items of all offices, Statement of expenses under each budget items of each office of all offices, Statement of expenses category wise or component or project activities as specified in the funding agreement and funding source, Statement of expenses showing budget items and category or component or project activities as specified in the funding agreement.

25. Expenditures – How to check June 27, 2014 25 The total of expenditures shown in all statements of expenditures should tally with the total project expenses of the current year/trimester. The total expenditures of the current year/trimester should tally with the statement of expenditures reported to the FCGO.

26. Users’ Contribution June 27, 2014 26 The users’ contribution is the contributions made by the users as per funding agreement and the agreement entered with the users. The users’ contribution may be in Cash or kind. The actual expenses incurred out of cash contribution and contribution in kind should be shown under users’ contribution in the Sources of Fund of the Project Account & Trimester IPR. The actual expenses incurred out of cash contribution and contribution in kind should be grouped under respective expenses in the statement of expenses.

27. Users’ Contribution – How to check June 27, 2014 27 The expenses incurred out of cash contribution should be verified with the total cash contribution received, details of expenses incurred from the users’ cash contribution and balance of cash contribution. Kind contribution should be checked with the details of the work done as per measurement book and the quantity, rate and amount of the agreement entered with the Users’ Committee. The Project Coordination Office or Unit should obtain the statement of users’ contribution from the field offices and attach the statement with the Project Account/trimester IPR showing the names of Users’ Committee, activities done, and amount of contribution.

28. Designated Bank Account - Initial Deposit June 27, 2014 28 Initial deposit received from donor agency should be shown in ‘Sources Side’ during the project period in normal disbursement. The initial deposit amount will not change during the project period unless recovery is made from designated account. In case of report based disbursement of World Bank, two trimester cash requirement as per annual work program and approved budget is considered as the initial deposit and it will fluctuate based on advance provided and amounts documented.

29. Designated Bank Account – Bank Balance June 27, 2014 29 The bank balance in designated bank account should be shown in the ‘Application Side’ in the normal disbursement. The bank balance should tally with the balance of the bank statement. The bank statement must be attached with the Project Account & Trimester IPR to verify correctness of the bank balance.

30. Designated Bank Account – Outstanding Replenishable June 27, 2014 30 The amount transferred to the GON treasury account and direct payment from the designated account but the replenishment not yet received from the donor agency should be shown as ‘Outstanding Replenishable’ in ‘Sources Side’ in the sources and application of fund part and in ‘Application Side’ in the sources and application of Designated Account in normal disbursement. The outstanding replenishable amount of previous year/trimester received from donor agency in the current fiscal year/trimester should be adjusted from ‘Outstanding Replenishable’ and shown as deduction from ‘Outstanding Replenishable’ in the current year/trimester.

31. Memorandum of Designated Bank Account of Normal Disbursement Procedures June 27, 2014 31 The memorandum of designated bank account should be prepared showing the following in case of normal disbursement: Bank balance as at the year end Outstanding replenishment as at the previous year/trimester end Amount transferred to the GON treasury during the fiscal year/trimester

32. Memorandum of Designated Bank Account of Normal Disbursement Procedures June 27, 2014 32 Amount replenished by the donor agency during the fiscal year/trimester Outstanding replenishment as at the year/trimester end Amount recovered from initial Deposit Designated Account initial deposit Foreign exchange gain or loss

33. Designated Bank A/C Statement of Report Based Disbursement June 27, 2014 33 The designated account statement includes the following: Opening cash balance Add: Fund received from the donor agency Less: Amount transferred to GON Treasury Less: Payments to suppliers or others Add/ (Less): Foreign exchange gain/(Loss) Closing balance Closing advance balance

34. Designated Bank A/C Reconciliation Statement of Report Based Disbursement June 27, 2014 34 The reconciliation statement of Designated Bank Account should be prepared in NRs. and US$. The designated bank account reconciliation statement includes the following:

35. Designated Bank A/C Reconciliation Statement of Report Based Disbursement June 27, 2014 35 ParticularsAmount Opening cash balance Add: Fund received from the donor agency Total Cash Balance Less: Amount transferred to GON Treasury from Designated Account Less: Payments to suppliers or others from Designated Account Add/ (Less): Foreign exchange gain/(Loss) Closing Designated Account Balance at the year end Add: Fund claimed with donor agency but yet to be accounted Total Expected Balance

36. Exchange Gain/(Loss) for Normal Disbursement June 27, 2014 36 Exchange gain or loss should be shown in the ‘Sources Side’ in the Sources and Application of Designated Bank Account. The statement of exchange gain or loss showing adjustment made for exchange rate fluctuation and exchange gain or loss of each replenishment and recovery of initial advance should be prepared. Exchange gain or loss of replenishment is the difference of amounts in NRs. transferred to the GON treasury and direct payments and amounts in NRs. replenished by donor agency.

37. Exchange Gain/(Loss) For Report Based Disbursement June 27, 2014 37 The statement of exchange gain or loss showing adjustment made for exchange rate fluctuation and exchange gain or loss of advance Vs documented in NRs. should be prepared. Exchange gain or loss of advance Vs documented in NRs. is the difference between the amount transferred to the GON treasury and the amounts paid to the suppliers from the Designated bank account and the advance received from donor agency for the disbursement made from designated bank account.

38. Designated Bank A/C – How to check June 27, 2014 38 No change in initial deposit received from donor agency in case of normal disbursement till recovery. The designated bank balance should tally with the balance of the bank statement. The outstanding replenishable should tally with the disbursement from the designated account but the replenishment not yet received from the donor agency. The replenishable amount of previous year/trimester received from donor agency in the current fiscal year/trimester to be adjusted from ‘Outstanding Replenishable’ showing deduction in the current year/trimester.

39. Designated Bank A/C – How to check June 27, 2014 39 Check outstanding replenishment as at the year/trimester end with amount disbursed from designated bank account but not yet replenished by donor agency. Check fund claimed with donor agency but yet to be received and accounted. Check amount transferred to the GON treasury during the fiscal year/trimester with the designated bank account. Check amount replenished by the donor agency during the fiscal year/trimester with the designated bank account.

40. Designated Bank A/C – How to check June 27, 2014 40 Check amount documented by the donor agency. Check foreign exchange gain or loss with the statement of the foreign exchange gain or loss. Check reconciliation of the Memorandum of Designated Account. Check designated account reconciliation statement.

41. Closing Advance Balance June 27, 2014 41 Closing advance balance should be calculated by deducting expenditures documented from advance received from donor agency. Expenditures documented from advance means payments made to others and amounts transferred to GON treasury for expenses incurred from the designated bank account are adjusted from the advance by the donor agency. The expenditures documented should be calculated at the exchange rate of the advance received from donor agency. The closing advance balance must be equal to the advance calculated at the exchange rate of advance received of the foreign currency advance balance.

42. Closing Advance Balance – How to check June 27, 2014 42 Closing advance balance in US$ should tally with the advance received less disbursement made but yet to be documented by the donor agency and disbursement made from designated bank account but not yet reported to the donor agency. The closing advance balance must be equal to the closing advance in NRs. calculated at the exchange rate of closing advance balance received in the foreign currency.

43. June 27, 2014 43 Thank You