financial & contractual procedures of edf v6 slide share pcm

Financial and Contractual Procedures of 10th EDFFamiliarization Session

Financial and Contractual Procedures of 10th EDF

Source of Information

Source Info. Availablehttp://ec.europa.eu EC main website for any

info related to EDF, EC Contract and more

http://ec.europa.eu/europeaid/prag/document.do?locale=en

Practical Guide and all its annexes

http://ec.europa.eu/europeaid/work/procedures/index_en.htm

Europe Aid procedure and documents

http://ec.europa.eu/


Short BackgroundThe European Development Fund (EDF) was created in 1958 to provide aid to certain developing countries/territories that have historical links with certain EU countries.It falls within the broader framework of development cooperation with African, Caribbean and Pacific (ACP) countries. The EDF is not funded from the EU's general budget, but rather from direct contributions from EU countries, the amounts of which are agreed in negotiations.The EDF is generally renewed every 5 years (next renewal in 2013), with a new EDF financial regulation.

As the EDF is not included in the EU budget, it is not subject to the principle of annuality (one-year validity). Moreover, since it is a fund there are no time limits for implementing projects (although normally this will not take more than 10 years). These funds are the main source of EU development aid for the African, Caribbean and Pacific (ACP) countries and the overseas territories (3% of the annual EU budget in 2008-13).Each EDF is directly financed by the EU countries, has its own financial regulation, and is managed outside the framework of the EU's general budget.


Short Background (cntd…)



Brief History:Treaty of Rome(1957)The Yaoundé Agreements 1&2 (1957, 1969)The Lomé Conventions 1-5 (1975, 1980, 1985,

1990,1995)The Cotonou Agreement (2000)(signed in June 2000 by

78 ACP countries and the EU-15)

The Cotonou Agreement (2005) (Ammended inLuxumburg in 2005 by 78 ACP and 25 EC countries, OUAGADOUGOU June 2010)

Cotonou agreement fundamental principles:PartnershipParticipationDialogue and mutual obligationsDifferentiation and regionalization

Source: http://en.wikipedia.org/wiki/File:ACP_EPA_Groups.svg



ACP Countries


10 EDF

The 10th EDF has a budget of €22 682 million:€21 966 million to the ACP countries (97% of the total),€286 million to the OCTs (1% of the total),€430 million to the Commission as support expenditure for programming and implementation of the EDF (2% of the total).In particular, the amount for the ACP countries is divided as follows:€17 766 million to the national and regional indicative programmes (81% of the total),€2 700 million to intra-ACP and intra-regional cooperation (12% of the total),€1 500 million to Investment Facilities (7% of the total).


Institutions ACP-EC

ACP•Council of Ministers•Committee of ambassadors•General Secretariat

EC•Council of Ministers•European Commission•European Parliament•Court of Auditors•European Investment Bank


Relevant Institutions with in the EC

ECDG Development, Development cooperation with ACP states and OCTs (DG Dev. EuropeAid Cooperation Office (AIDCO) (Overseas Countries & Territories)DG Budget(treasury and accounting) (EU BUDG)DG External Relations (DG Relex)ECHO, Humanitarian Aid Office.Delegation Offices (HoDs)


Introducing major concepts in EDFFinancial and contractual procedures

Step Document Responsibility NotePrograming Indicative resource

allocationCommission in Brussels

Based on Country Support Strategy

Preparation of CSS NAO, CommissionPreparation of Indicative Programme

NAO, Commission ACP State or Regions draws up draft NIP/RIP

Identification Identification of projects

NAO CSP, PRSP etc.

Preparation of Identification Sheet

HoD

Appraisal Sheet Commission.Formulation Joint Formulation NAO, HoD of (the

EU Delegation)Draft Financing Proposal

HoD By way of a consultancy on a framework contract

Draft FA and TAP (Technical Administrative Procedures)

HoD By way of a consultancy on a framework contract

Financing Appraisal of Projects

Commission

Creation of Global Financing Commitment

Commission

Financing Decision CommissionAdoption of Global Financing Commitment

Commission

Signing of Financing Agreement

NAO, Commission


Introducing major concepts in EDF (Cntd…)

Main Actor DescriptionNational Authorizing Officer (NAO)

Appointed By ACP StateRepresents the State in all Operations

Chief Authorising Officer (CAO) Appointed by the CommissionResponsible for the management of EDF resources

Head of Delegation Appointed by the commissionTo be approved by the ACP stateRepresents the commission in all its activities in the ACP State


Main Actors

Cotonou ACP-EC partnership agreement and the amended Overseas Association Decision.

EC-OCT Group Decision

General Regulations General Conditions

Internal Agreement - EDF 10

Financial Regulation -EDF 10Regulations OCT

Group

User Guide to to Financial procedures

Practical Guide toContractual Procedures

Practical Guide to Direct Labour Operations

& Programme Estimates

Other User Guides


Legal Framework and Manuals


Accounting

Online Accounting System (CRIS):All financial transactions are recorded on centralized Online Accounting SystemIntegrated Accounting and Financial Transactions.

Stage Responsible RoleImplementation NAO/RAO Issue tenders, receives tenders, presides over opening and evaluation of

tenders, signs contracts, clears and authorizes expenditurePrepares tender Dossiers (international Tenders) approves proposals for award of contract, takes care of publications of international tendersCommits, clears and authorizes expenditures

HoD Approves Tender Dossiers Assists in tenders, approves proposals for award of contracts

Accounting Officer (comm.)

Execution of payments, collection of revenue and recovery of receivable amounts.Keeps accounts, prepares financial statements. Responsible for treasury management

Paying agent National financial institution (ACP) Agreed up on ACP and ECPayment in local currency

Paying agent effects the payments

Monitoring and evaluation

Comm.NAO/RAO

Joint monitoring and evaluationPreparation and implementation by comm. And ACP General SecretariatReporting to ACP-EC Development Finance cooperation Committee.


Implementation


Most Basic Documents

PRAG This Guide provides users with the comprehensive information necessary to undertake procurement or grant procedures from the very first steps to the award, signature and implementation of contracts. The annexes cover both the award phase and the execution of contracts. The Guide outlines the contracting procedures to be used in centralized management (centralized and indirect centralised2) and decentralized management with ex-ante approval or with ex-post controls by the European Commission. Found at: http://ec.europa.eu/europeaid/prag/document.doPRAG is updated continuously. It might even be updated in the middle of an ongoing financing agreement. Hence users must always refer to the Europa website for latest releasesThere are instances for which this Guide does not apply: eg. humanitarian aid operations or emergency operations carried out by ECHO.

http://ec.europa.eu/europeaid/prag/document.do

Financial RegulationsThis Regulation lays down the rules for the establishment and the implementation of the general budget of the European Union and the presentation and auditing of the accounts.

Rules and proceduresAnnexesList of Annexes Available at: http://ec.europa.eu/europeaid/prag/document.do?chapterId=8.&id=41

Practical Guide for Direct Labor OperationsThe PRAG for Direct Labor Operations provides the procedures and implementation modalities to be followed by on implementing direct labor operations where there is a decentralized management in place.


Most Basic Documents (cntd…)

http://ec.europa.eu/europeaid/prag/document.do?chapterId=8.&id=41

http://ec.europa.eu/europeaid/prag/document.do?chapterId=8.&id=41


Most Basic Documents (cntd…)

Financing Agreement/ TAP•Financing agreement is the final implementable project that follows the financing decision.•The financing agreement includes an annex: Technical and Administrative Procedures document. •The FA outlines the project financing procedures, implementation modalities to be followed, applicable legal framework, indicative allocation of funds by component and sub-component, Indicative implementation time framework, monitoring and evaluation arrangements and more.•The FA is based on a log frame approach. •The FA indicates the management mode for a given project.


Implementation methods/Management Modes

Direct centralised management. The European Commission is the Contracting Authority and takes decisions for the beneficiary country so, in such cases, references in this Guide to the ‘Contracting Authority’ in fact refer to the European Commission, acting on behalf of and for the account of the beneficiary country.

Indirect centralised management. The European Commission delegates certain budget implementation tasks to a national body, which thus becomes the Contracting Authority. This national body is usually a development agency (or equivalent) of an EU Member State. In most cases, the national body’s rules and procedures are used, so this Guide does not apply, but if the delegated entity awards grants financed by the EU General Budget, the Guide does apply, with the exception of the obligation to publish calls for proposals on the Europeaid website.



Decentralised management: - Ex-ante decentralised management. Decisions on the procurement and award of contracts are taken by the beneficiary country, which acts as the Contracting Authority, following the prior approval of the European Commission. -Ex-post decentralised management: decisions provided for in the Financing Agreement are taken by the beneficiary country, which acts as the Contracting Authority without prior approval by the European Commission-Others: Joint Management

- Shared Management




Implementation methods ... (cntd.)

References Regarding Implementation Methods or Management Modes• Special Conditions• Annex 1: General Conditions• Annex 2: Technical and Administrative Provisions• Standard template documentsWhen implementing an EDF project, there is nothing that is written freely. There is a template, for every thing that is done: Financing Agreement, Programme Estimates, Adendums, Ridders all have templates.


Important Rules: D+3 Each legal commitment in the form of Financing Agreement is preceded by a financial commitment.Each Global Financial commitment is adopted after the financing decision and before the financing agreementFunds are de-comitted in case the Financing Agreement is not signed with in 31/12 of year N+1.

Date + 3 Years RuleThis is an important rule, Contracts are to be concluded with in 3 years after the adoption of the global financial commitment. The period for the conclusion of contracts and grant agreements by entities entrusted, under indirect management, with implementing external actions should be limited to three years following the signature of the delegation agreement, unless specific exceptional and external circumstances exist.

(Articles 74(2) and 79 of the 10th EDF Financial Regulation)

http://ec.europa.eu/europeaid/work/procedures/legislation/financial_regulation/index_en.htm

http://ec.europa.eu/europeaid/work/procedures/legislation/financial_regul

Exceptions to ‘date + 3 rule’

• Audit and evaluation contracts• Contracts within other contracts and contracts from the direct labour of programme• Contingencies.


Important Rules: D+3 (cntd…)


Important Rules: Operational Period

Period of execution starts on the date on which the last parties signed the FA Final date for execution stated in special conditionsPeriod of execution covers two phases

Financial Regulations 10th EDF Chapter 6 Section 3: Article 73-76(centralized), 77-83 (decentralized)


Important Rules: Operational Period

Operational Implementation:• Starts on date of entry into force of the FA• Ends at the latest 24 months before the end of period of execution• Costs of principal activities are eligible only if incurred during this period.Financial Regulations 10th EDF Chapter 6 Section 3: Article 73-76(centralized), 77-83 (decentralized)


Important Rules: Closure Period

• Starts on the date of end of Operational period• Ends at least 24 months after this date• Eligible costs are related to audits evaluations and technical and financial closure activities.

Financial Regulations 10th EDF Chapter 6 Section 3: Article 73-76(centralized), 77-83 (decentralized)


Important Rules: Modifications

• Increase or decrease of committed amount (at the rate of <10% of the FA can be done as a minor modification to FA to be approved by HoD, any thing beyond would constitute a rider to be approved by Comm.)

• Extension of period of execution. • Internal budget adjustments


Important Rules: Contingencies

Use of contingencies is not a modification of the FA, hence requires no addendumAmount of contingency can not exceed 10% (As a rule, plan for use of contingency should be in place when PE are prepared, to enable use of these funds at the end of the project if these funds remain untouched)Conditions for use of the contingencies:

Internal budget adjustments are not possibleNAO submitted a formal request justifying why the use of

contingencies is requiredPrior approval of the NAO is required


Important Rules: De-commitment

The termination of a project and the decommitment of the funds committed in accordance with Articles 78 and 79 shall be carried out by the ACP State … after conclusion of the legal commitments entered into and after the related payments and collections have been recorded in the EDF accounts.

IMPORTANTWHEN IMPLEMENTING A PROJECT UNDER EDF PROCEDURES, THE MAIN THING IS TO LEARN HOW THE EDF PROCEDURES ARE ORGNIZED, HOW TO READ THEM AND HOW TO USE THEM IN DAY TO DAY IMPLEMENTATION OF PROJECTS.

MEMORIZING THE PROCEDURES DOES NOT HELP.

EDF DOCUMENTS ARE LIVING DOCUMENTS.

NEW VERSIONS COME OUT QUITE OFTEN.

LEARN TO REFER TO LATEST DOCUMENTS BEFORE FINALIZING ANY GIVEN DOCUMENT (Tender document, Report, Addendum, Programme Estimat…).

Start the Learning Process:Step 1. Learn the Background to your given project. Your CSS (Country Support Strategy), your PRSP (Poverty Reduction Strategy Paper), any other consultancy report, or other agreements between your NAO (National Authorizing Officer) and EC Delegation to your country.Step 2. Learn your Financing Agreement and TAP in detail (most important: the applicable Special Conditions):Reading the PE with out understanding the PRAG can be difficult, but any ways do it. This will give you an idea of how to use the important documents mentioned in earlier section (the PRAG, Financial Regulations, Cotonoue Agreement, PRAG for Programme Estimates, and related annexes and templates).Step 3. Familiarize yourself with ALL pertinent EDF Documents inter alia:Cotonou Agreement (Pertinent to EDF 10 latest version)General Regulations (Pertinent to EDF 10 latest version)PRAG Contract Procedures (Pertinent to EDF 10 latest version)Financial Regulations (Pertinent to EDF 10 latest version)Guide for Financial Regulations ((Pertinent to EDF 10 latest version)PRAG for PEs (Pertinent to EDF 10 latest version)

Introduction to PRAG

Practical Guideline

BIRD’S EYE VIEW: FINANCING AGREEMENT

IN THIS SECTION INSERT THE APPLICABLE FINANCING AGREEMENT DO NOT GO IN DETAIL OF WHAT THE FINANCING AGREEMENT SAYSJUST SCAN THROUGH THE HEADINGS AND INDICATE WHAT THINGS THE FINANCING AGREEMENT CONTAINS.

A bird’s eye view of applicable Financing Agreement (FA)

BUDGET or EDF??Depending on the conditions the EC puts forward, your project can be categorized as:

Budget or EDF.

DO NOT BE CONFUSED:Projects Under Budget have their own General Regulations (Pertinent to EDF 10 latest version)Special Conditions and General ConditionsFinancial Regulations (Pertinent to EDF 10 latest version)In the PRAGs (both for contracts and Finance) Budget and EDF are treated separately often Budget coming first, then followed by things

applicable to EDF.HENCE:

MAKE SURE YOU USE WHAT IS APPLICABLE TO YOUR PROJECT.

YOUR FINANCING AGREEMENT DEFINES WHETHER YOUR PROJECT IS UNDER BUDGET OR EDF.

FINANCING AGREEMENT

FINANCING AGREEMENT

Financing Agreement is Based on a Logical Frame Work Approach.

The Logical Framework Approach is the main tool used for project design during the Identification and Formulation phases of the project cycle. Using the LFA during Identification helps to ensure that projectideas are relevant, while during Formulation it helps to ensure feasibility and sustainability.

Logical Frame Work:

FINANCING AGREEMENTLogical Frame Work:

GO THROUGH APPLICAPLE LOGICAL FRAME WORK FOR THE PROJECT FROM THE APPLICABLE FINANCING AGREEMENT

Brief look at the Applicable Logical Framework.

FINANCING AGREEMENTLogical Frame Work:

Learn your Logical Frame work Very Well.

Why?It gives Birth to your Project

Organization: components, sub components

It gives birth to you subsequent Implementation Plan, budget etc.

It gives birth to your monitoring and evaluation strategy

Your project is weighed against the OVIs and targets set in your Log Frame

FINANCING AGREEMENTNature of Financing – Implementation Modalities:

1.Tenders2.Direct Labor

Operations3.Grants4.Budgetary Support,

Sectoral Support etc.

}Projects

EXECUTION OF PROJECTS

EXECUTION OF PROJECTSWAYS TO EXECUTE PROJECTS

Once project is defined, and implementation plans and financing details provided, execution of project naturally comes down to:

Tenders:WorksSupplies Services

Direct Labour OperationsGrants


Tenders:• Contracts for pecuniary interest• Concluded in writing• For the purposes of:

• Execution of works• supply of movable and immovable assets• Provision of services

Works, Supplies and Services contracts are governed by the General Regulations applicable to EDF-10. But the PRAG gives easy to follow Guidelines on how to execute the contracts.


Direct Labour Operations:• NAO delegates powers to execute a project or part there of to:

• a public department = direct labour• a third party orgnization legaly distint from the ACP State concerned = externalized direct labour (always on a service contract)

Refer: Cotonou Agreement Annex IV Article 24Financial Regulations10: Title VI Chapter 4 Article 100-102


Direct Labour Operations (cntd…)• Programme estimate

(Annual indicative implementation programme, material & non- material requirements and cost estimates)• Managed by an imprest administrator and imprest accounting officer working on behalf of the NAO on a limited threshold.Refer: Cotonou Agreement Annex IV Article 24

Financial Regulations10: Title VI Chapter 4 Article 100-102

Programme Estimate

Reference: http://ec.europa.eu/europeaid/work/procedures/financing/work_programmes/index_en.htm

Based on:Practical guide to procedures for programme estimates –

project approach (version 4.1)

Objective:The objective of this session is to learn how to USE the applicable EDF documents to design a programme estimate and to highlight cautions areas where problems might arise.

As the name indicates the PE PRAG is a guide. It is a document that should be refered to at every step of the process of preparing the PE.

Moreover, the implementer should always check for the latest PE PRAG from the Europa website: (http://ec.europa.eu/europeaid/work/procedures/financing/work_programmes)

Out of Scope:Explain every thing with in the Practical Guide for PE.

SCOPE SETTING

Programme EstimatesDecentralised OperationsThe Financing Agreement indicates whether a project has a Centralized or Decentralized Approach or combination of both with limited delegation of power to NAO for Progremme Estimates.

Main Actors: NAOImprest AdministratorTmprest accounting OfficerThird Party Organizations (Public, Semi-public, Private)Project Steering Committee(its membership and formation is defined in the FA)Head of Delegation (HoD).The Steering Committee.

Programme EstimatesThe Imprest Officers:

Imprest Officers:Imprest Administrator

Substitute Imprest AdministratorImprest Accounting Officer

Substitute Imprest Accounting Officer

IMPORTANT: Remember there should not be any subordination among the two officers. Meaning they should be individuals on the same hirarchy. They are co-signators for the imprest account.

If need be they can have Substitutes. But the substitutes become active in justified situations only. Refer GPE:

Though they are they are co-signators the Two officers should work in coordination to make efficient implementation.

Appointed By the NAOApproved by the HoDResponsibilities•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

Programme EstimatesThe Imprest Officers: Imprest Adminstrator

Appointed By the NAOApproved by the HoD

Imprest accounting officer

•draws up the PE (financial part) in cooperation with the IA)• submits the PE with the IA•verifies the correct application of contract•verifies and implements payments and recoveries linked to the Imprest component of the budget of the PE.

Programme EstimatesThe Imprest Officers: Imprest Accounting Officer

Communication – lines of command – transfer of responsibilities

53

NAO

NAO-Office (Sub delegated Entities)

Government ACP State

Technical sections( Procurement, M&E, Operations)Finance and Contract Section

Commission of the European Union(Brussels Office)

HoD

EC Delegation

Technical sections

Finance and Contract Section

Implementing AgenciesProjects

Programme EstimatesDecentralised Operations

Programme Estimate Covers: Indicative Implementation Planwork programme Indicative budget estimate Indicative financing plan technical and administrative implementing arrangements (TAP)

A financing plan can includeEDF funds specific commitments imprest commitment

other funds national funds own resources other donors

54


EDF funds can include

specific commitmentsamounts 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)

55


Imprest commitmentThe 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:

the imprest administrator and

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.56

Programme EstimatesDecentralized Operations

Programme EstimatesDecentralized Operations

National fundsAny contribution by an ACP state for the pursuit of the functions of a project being financed as one project.

Own resources generated by the projectinclude any interest on bank account(s), asset sales, services invoiced to third parties, the beneficiaries’ contributions, Must be accounted forAdvance > € 250K : 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

58

Duration of Programme Estimates and Type

Type of PE Max Duration(Months)

Closure Period(6 Months)

Start Up PE 6 After

Operational PE(s) 12 After*

Final Operaitonal PE 18 During**

* The closure period overlaps with the implementation period of the subsequent PE.** Though it is indicated that the Final PE has 18 months of operational period, it should be noted that, the effective implantation period is only 12 months the 6 months are reserved for closure. The reason why this is kept as such is because the Final PE does not have a subsequent PE to cover costs. Hence it is subsumed in the period of the final PE.

Programme EstimatesDuration and Types of PEs

59

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

• Subject to audit

Operational PEs

• Normal 12 months, up to 18 acceptable

• To implement programme

• Not achieved activities can be de-committed and transferred to

next PE.


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 however this is not to mean preparation to sub-sequest PEs can not be started with in the period of the PE being implemented. That should actually be the norm for effective implementation. Each PE (apart from the final PE should include some budget to prepare to the sub-sequent PEs.)


61

Content

1. A cover page

2. a work programme;

3. a budget;

4. a financing plan;

5. the technical and administrative implementing arrangements.

Programme EstimatesDrawing up the PE.

62

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

Programme EstimatesDrawing up the PE: Content

63

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)


64

3. The budget

• Budget based on the PE ’s detailed activities in accordance with

the TAP

• Limit of Components can not be exeeded.

• Cost of Specific commitment is also included in the budget ,

however are indicated in their respective comumns in the detail

budget table.

• 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


65

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


66

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 thePE

management structure

procedures to operate

Such as:


67

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.


68

Approval and signature circuit of the programme estimate

Programme EstimatesDrawing up the PE: After Finishing the Dragt PE:

Actors

IA + IAO Steering Committe

e

IA +IAO NAO EC Del.

Role DraftingVerfication

and strategic guidance

FinalizingAnd

Signing

Verifies Approves

Signs

EndorsesSigns

69

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 PESame circuit as PE, no retro-activity no extension more than 6 months

Programme Estimates

70

Sequences in the financial implementation

Advance (To be set at PE in consultation witht he HoD).

Commitment of expenditure

Payments

Replenishment(s) (should be made in advance, cash flow

should be planned in advance taking consideration of

upcoming payments)

Commitment of expenditure

Payments

Closure

Financial DealingsProgramme Estimates

71

1: The Advance PaymentConditions

• opening of an EDF “programme estimate” bank account

• signatures of IA and IAO deposited FiF and LEF submitted and registered

• PE signed by IA + IAO + NAO• PE endorsed by HoD• 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

Financial Dealings: Sequence in payments Programme Estimates

72

1: The Advanc Payment

The Circuit


Actors

IA & IAO NAOEC Del.

EC Del. Sections

HoD

RoleDraft

&Sign Request

VerificationPayment

Order

Technical Verification

Sign Payment

order

74

2. Commitment of expenditureFurther conditions• Payments unforseen in the PE are always

ineligible• No retroactive payments are allowed• incurred during the period covered by the

PE• Payments commited in a PE should be

finalized max with in three months of the ending date of the given PE.


75

3. Payment (Practical tips)Recommended: by cheque or bank transferCash should be avoided (responsibility of cash money) Only small amounts of administrative expenditure Or only if other means of payment are not possible


76

3. Payments

Each payment needs supporting documentsa payment file has to be made for each payment in order to check that:

There exists an allocated amount to the

specific payment

expenditure was committed validly

expenditure was correctly validated

expenditure was correctly paid and

discharged


77

3. Replenishment

Principles

Based on Replenishment request

Total payment can’t exceed allowed

advance

Follow same circuit as advance payment


78

Replenishment request(s) has(have) to be drawn up in accordance with cash flow situation which will in particular depend on the amount of the advance/pre-financing paid.

Documents requested for a replenchment1. Cover pageThe cover page must carry the following information:• the title of the project or programme;• the accounting number of the corresponding globalfinancial/budgetary commitment and individualfinancial/budgetary commitment;• the title or number of the programme estimate;• the number of the record80;• the period covered by the record;• the total amount of justified expenditure in the period coveredby the record.

Financial Dealings: ReplenishmentProgramme Estimates

After verification: Dcuments must be dated and signed by the IA and the IAO

A non exhaustive sample doc for replenishment

(Annex 9 to PE-PRAG)Please Refer…


Reference: Practical Guide for Programme Estimates EDF 10 Section 4.1.3

80

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 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


81

4. Detailled supporting documents including at least

The supporting documents should include the followinginformation at least:

• bank statements for the period covered;• the bank ledger;• the cash ledger;• petty cash statement;• the contracts signed by the imprest administrator;• the payment files.

Min. documents requested for a Record of Expenditure


Financial Dealings: Replenishment

Programme Estimates

Important Notes on Replenishment supporting documents

•Supporting documents should facilitate an exhaustive verification of the regularity and relevance of expenditure incurred.•The Head of Delegation has to decide, in particular on the basis of the availability and the reliability of local financial audit expertise, how to perform the verification of the supporting documents. In case it is not going to be effected by the Delegation, it will have to be performed by an external•auditor.•Only when the verification is performed by the Delegation or at the request of the relevant representative of the beneficiary country(ies) and/or the Head of Delegation, the originals (copies are not admissible) of supporting documents must be attached to the records of expenditure.

Financial Dealings: Replenishment

Programme Estimates

Important Notes on Replenishment supporting documents (cntd…)

•Expenditure for which a cheque has been written but not yet debited from the “programme estimate” bank account or, where appropriate, from the “project” bank account cannot•be considered as expenditure incurred and eligible to financing by the EDF/Budget.•The advances/pre-financing paid cannot be considered as expenditure incurred and eligible to financing by the EDF/Budget87, except for advances/pre-financing paid for the performance of contracts conformable to the model contracts included in the annexes of the practical guide to contract procedures for EU external actions.

A list of examples of supporting documents, grouped by type of expenditure, to be included

in the paymentAnnex 10 to PE-PRAG

(please refer)

85

Condition for closure:

• all expenditure must have been justified

• initial allocation completely cleared

• rejected expenditure refunded

• request for closure sent to NAO and HoD

• “programme estimate” or “project” bank

account closed

Financial Dealings: ClosureProgramme Estimates

86

Request for clusure Not later than 3 months after the period covered by the PE

States the final balance to be refunded or recovered

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:• HoD has the obligation to withhold approval of next PE

(N+2)• If necessary: suspension of decentralised operations with the

ACP State(s) concerned



In the event of failure to reimburse ineligible expenditure or failure to close financially the imprest component of the budget of the programme estimate at the latest 6 months after the end of the period covered (N) by it, the Head of Delegation has the obligation to withhold approval of the succeeding programme estimate (N+2) until the accounts are in order.

Ineligible Payments

Com

ms

NA

O a

nd

HoD

Duri

ng

Im

ple

menta

tion

financial & contractual procedures of edf v6 slide share pcm

Documents

commission acp state

pacific acp countries

new edf financial regulation

ec countries

edf10 edf

acp states

certain eu countries

european development