fiscal accountability plan sda moldova.pdf4.2 chart of accounts ... (gom) and a model for effective...

SDA-Moldova Fiscal Accountability Plan 1

Sustainable Development Account Moldova

(SDA-MOLDOVA)

FISCAL ACCOUNTABILITY PLAN

December 2015


Table of Contents 1. General ......................................................................................................... 5

1.1 Goals, Principles, and Development of the FAP ................................................... 5 1.2 Authorized Parties ................................................................................................... 7

2. SDA Moldova Budget .................................................................................. 9

2.1 Overview .................................................................................................................. 9 2.2 Budget Classification Structure ............................................................................. 9 2.3 Modifying Financial Plan ...................................................................................... 10

3. Management of the Bank Accounts ......................................................... 10

3.1 Local Bank Accounts ............................................................................................ 10 3.2 Authorized Parties ................................................................................................. 10

4. Accounting ................................................................................................. 11

4.1 Responsibilities ..................................................................................................... 11 4.2 Chart of Accounts ................................................................................................. 11 4.3 Accounting System ............................................................................................... 11 4.4 Automated Accounting System ........................................................................... 12 4.5 Commingling of Funds ......................................................................................... 12 4.6. Currency Conversion ........................................................................................... 12

5. Procurement Process ............................................................................... 13

5.1 Procurement Plan .................................................................................................. 13 5.2 Pre-Procurement Approvals ................................................................................. 13 5.3 Procurement Activities ......................................................................................... 13 5.4 Contract Administration Activities ...................................................................... 14 5.5 Small Purchases Related to Administrative Expenses ...................................... 14

6. Invoice and Payment Approval Process ................................................. 15

6.1 General Description of Vendor’s Invoice ............................................................ 15 6.2 Invoice Processing ................................................................................................ 16 6.3 Responsibilities for Invoice Control and Halting / Rejection............................. 17 6.4 General Payment Provisions ................................................................................ 18 6.5 Payments through Bank Accounts ...................................................................... 19 6.6 Bank Guarantees ................................................................................................... 19

7. Taxes .......................................................................................................... 19

7.1 General Provisions ................................................................................................ 19 7.2 Specific Tax Regulation ........................................................................................ 19 7.3 Tax Refund ............................................................................................................. 20

8. Personnel and Payroll ............................................................................... 20

8.1 General Provisions ................................................................................................ 20 8.2 Timesheet .............................................................................................................. 21 8.3 Payroll Calculation ................................................................................................ 21


8.4 Temporary Disability – Social Leave ................................................................... 21 8.5 Annual Leave ......................................................................................................... 22 8.6 Annual bonus and Other Benefits and Compensations .................................... 22 8.7 Salary Deductions ................................................................................................. 24 8.8 Verification and Performance of Monthly Payments .......................................... 24

9. Asset Management .................................................................................... 24

9.1 General Provisions ................................................................................................ 24 9.2 Purchase and Maintaining of Fixed Assets Register ......................................... 24 9.3 Inter-office Transfer of Fixed Assets ................................................................... 25 9.4 Capitalization and Depreciation of Fixed Assets ................................................ 25 9.5 Disposal of Fixed Assets ...................................................................................... 25 9.6 Inventory of Fixed Assets ..................................................................................... 26

10. Travel and Vehicle Use ............................................................................. 26

10.1 Travel .................................................................................................................... 26 10.2 Vehicle Use .......................................................................................................... 29

11. Public Relations, Outreach, Meetings and Official Events Costs ......... 30

12. Petty Cash .................................................................................................. 31

13. Reporting ................................................................................................... 31

13.1 Responsibilities ................................................................................................... 31

13.2 Reports ................................................................................................................. 31

14. Audit ........................................................................................................... 32

14.1 Procuring Auditors .............................................................................................. 32

14.2 Types of Audits and Reviews ............................................................................. 32

14.3 Audit Reports and Findings ............................................................................... 32

14.4 Reporting on misuse of SDA-Moldova’s Funds or Assets .............................. 32

15. Review of the Fiscal Accountability Plan ................................................ 33


ABBREVIATIONS

AAS Automated Accounting System BCS Budget Classification Structure DAF Director Administration and Finance DED Deputy Executive Director EC Executive Committee ED Executive Director FAP Fiscal Accountability Plan IE Implementing Entity/ies MCC Millennium Challenge Corporation (USA) MDL Moldovan Lei PIU Project Implementation Unit PP Procurement Plan PPG Program Procurement Guidelines PPM HVA Post-Harvest Credit Facility Policies and Procedures Manual ProcC Procurement Consultant SICF Supplier Invoice Control and Follow-Up Form SC Steering Committee USD U.S. Dollars


SUSTAINABLE DEVELOPMENT ACCOUNT MOLDOVA

FISCAL ACCOUNTABILITY PLAN

1. General

1.1 Goals, Principles, and Development of the FAP

Goals

This Fiscal Accountability Plan (“FAP”) shall serve as the basic policy document guiding all financial processes and procedures undertaken under the grant received from the Millennium Challenge Corporation (“MCC”) and other donors. This policy was developed in accordance with MCC requirements and will be updated based on requirements of other donors (if needed). The present FAP:

• Provides a framework for the management of the financial structures of the entity;

• Defines financial management policies and procedures;

• Serves as a policy document for program financial management practices;

• Establishes a cooperation based on verification of documentation between the parties;

• Ensures that the arrangements, conditions and documentation under the donors agreements are all complied with.

Based on the objectives and policy defined, the FAP seeks to provide users with reference tools for the principles and procedures to be followed in:

• Implementing activities financed by MCC and/or other financial institutions;

• Keeping the financial and accounting records;

• Reporting to MCC and other financial institutions;

• Processing invoices and paying bonuses and salaries to the staff;

• Managing entity assets and vendor tax exemption process;

• Documenting travel and vehicle use, etc.

Principles

Internal accounting controls establish policies and procedures related to the safeguarding of assets and reliability of financial records. An effective internal control system includes the checks and balances required for the appropriate authorization and recording of transactions and ensures that access to assets is limited to authorized personnel. Each transaction should be divided into tasks which are completed in a sequential order by different individuals in order to increase the chance of detecting unintentional errors and of detecting and preventing fraud. Four basic tests – completeness, validity, accuracy and maintenance – are to be consistently applied to all transactions.

Applicability

The FAP applies to all activities financed by MCC and/or other financial institutions and implemented by SDA-Moldova.


As with any living document and with practical implementation of policies and procedures, the FAP is subject to modification driven by practical need, changes in the local legislation, as well as donors’ policies and procedures. Any issues arising during implementation must be noted in writing for review by the Director Administration and Finance (DAF). Amendments to the basic documents of the implemented Projects may also result in changes to the processes and procedures contemplated in the FAP. The person proposing a modification shall:

• Describe inconsistencies between the procedure and actual implementation;

• List the stages for review following signed amendments to the basic documents of the Program;

• Suggest alternatives, with reference to the basic arrangements, to procedures used in similar projects operating in the same field, and legal practice in the field;

• Forward the proposed modification to the Executive Director (ED). The Executive Director, Director Administration and Finance and Legal Advisor, shall:

• Approve the new procedures;

• Update the FAP and circulate the new procedures to all entities involved if any.

All new procedures and regulations in the FAP are put into force by a memorandum from the DAF after the approval by ED and Executive Committee (EC).

Program Overview and Budget

The purpose for use of SDA funds is to implement the following activities: • Effective Public Implementation Capacity and Model. Serve as an

implementation capacity for the Government of the Republic of Moldova (GOM) and a model for effective management of public funds to other GOM implementing institutions and agencies, and support to GOM Institutions involved in MCC required M&E review and reporting.

• Irrigation Infrastructure Expansion. Invest and promote co-investment by GOM, donor and private sector to expand number of hectares under efficient irrigation systems by rehabilitating additional irrigation modules/schemes, applying acceptable technical, environmental and social standards. The interventions are expected to be undertaken in areas originally included in the Compact Project. In this respect preliminary and detailed designs are available to be used in consideration of any investment in these areas.

• Sustainability of Water Resources. Invest and promote co-investment by GOM, donor and private sector in advancing and replicating water resource management “best practices” tested and refined during Compact implementation including:

o further advancement of water user associations/federation to effectively operate and maintain irrigation systems; and


o advancement and application of river basin management plans in the Lower Prut and other regions of Moldova; and

• Access to Finance. Further improve access to financing for THVA value chain through effective coordination of lines of credit/programs and reform efforts of key legislation that will have a positive impact on access to finance for THVA stakeholders.

1.2 Authorized Parties

The Government of the Republic of Moldova has created a legal entity, to manage and oversee the implementation of the Programs. As the Accountable Entity, SDA-Moldova has the responsibilities and authority to oversee the Programs, allocate resources, approve expenditures and procurements and account for the Program’s results.

SDA-Moldova

The Sustainable Development Account Moldova (abbreviated as “SDA-Moldova”) is a public institution empowered to coordinate the processes for developing and implementing programs and projects funded by the Millennium Challenge Corporation and by other financial institutions. SDA-Moldova has the following bodies:

a) the Steering Committee, which is the supreme management and supervisory body. The Steering Committee is independent and makes final decisions regarding fundamental issues related to the Projects;

b) the Executive Committee, which is an independent decision-making body with the authority to make final decisions regarding a limited number of issues, as set forth in the entity Bylaws;

c) the Management Unit, which represents the executive body of the SDA-Moldova and is responsible for the daily management of the Projects. The Management Unit is comprised of the following personnel: Executive Director, Support to AM and WUA Activity Lead, Infrastructure Investment Lead, Financial Activity Lead, Director of Administration and Finance, Legal Advisor, and Environment and Social Expert. The Management Unit is overseen by the Executive Director of SDA-Moldova. The principal individual authorized to act on financial management matters on behalf of SDA-Moldova is as follows:

• The Director of Administration and Finance (DAF) of SDA-Moldova shall serve as the primary official within SDA-Moldova responsible for financial management and compliance with this Fiscal Accountability Plan and the Agreements mentioned herein.

SDA-Moldova is organized as follows:


2. SDA Moldova Budget

2.1 Overview

Detailed budgets shall be prepared to cover approved work plan activities. SDA-Moldova activity leads shall be responsible for the development and timely submission of Work Plans. Detailed budgets shall include the costs of the contract(s) and other incidental costs and include a schedule of projected cash requirements to fund these costs. In addition, all contracts shall include a schedule of cash payments required to meet contract obligations, as well as clear references to specific tasks as the lowest level of detail, in accordance with the Budget Classification Structure provided in Section 2.2. The DAF is responsible for the development of the budgets. As part of this responsibility, the DAF shall coordinate with the technical units involved, the relevant staff members within SDA-Moldova responsible for the project/administration expenditures, and others, to develop realistic plans. The DAF shall submit the budgets to the Steering Committee for approval. The budgets should be submitted to donors for approval. Once approved, the budget shall be formally registered into the AAS. After approval by the Steering Committee and donors, annual budgets shall be submitted to the Ministry of Finance and other governmental bodies if is required.

2.2 Budget Classification Structure

The budget classification structure shall be expanded so that the Projects are broken down by Activities (in case the entity will implement more than one Project simultaneously), each Activity divided into Sub-Activities, and each Sub-Activity further divided into Tasks as the lowest level of detail. An accounting code with XXXX numerical digits shall be reserved for each Project, Activity, Sub-Activity, and Task. The Program Management line shall include costs related to Program Administration, and any other costs associated with the administration of the Program. The Budgets are broken down into four (4) levels of detail based on the following budget classification structure and all financial transactions shall be recorded according to the budget classification structure:

A – B – C – D A: Project Code (X. - one digit code) B: Activity Code (X.X - two digit code) C: Sub-activity Code (X.X.X – three digit code) D: Task Code (X.X.X.X – four digit code)

The individual codes are to be defined and amended from time to time as the program requires.


2.3 Modifying Financial Plan

Reallocation of Funds

During the life of the Projects, funding associated with a particular activity may be determined excessive for a variety of reasons such as amended contract costs or reduction in the scope of work, etc. This excess funding identified may be deemed available for reallocation into a different activity or project, subject to donors’ approval. Any reallocation of funds must be accompanied by an explanation of the unfunded requirement, a cost analysis, and an explanation of the impact on the project/activity from where the funds are coming, and the reasons why the reallocation of funds across project/activity lines is necessary. Reallocations between levels C and D described above do not require a donor or SC approval.

Revaluation of Non-USD Commitments

Where contracts are denominated in non-USD currency, the entity must review non-USD commitments to ensure that budget limits are not exceeded. Should an excess over budget occur, the DAF and ED must be alerted and an appropriate budget allocation be requested to cover the excess. The non-USD commitments shall be revalued as follows:

- Closed (Paid) Commitments shall be revalued by the financial team on a monthly basis according to the payments using the official exchange rate established by National Bank of Moldova on the day of payment.

- Future (Projected) Commitments shall be revalued on a monthly basis. The revaluation shall be performed based on the exchange rates published by the National Bank of Moldova on the last business day of the month.

3. Management of the Bank Accounts

3.1 Local Bank Accounts

The Bank Agreement, between SDA-Moldova, and the local bank outlines the procedures and obligations with regard to Bank Accounts. SDA-Moldova shall provide the donor in writing the designated account number and shall inform the donor in writing about any modifications to such Bank Accounts not later than ten (10) business days after such modifications. SDA Moldova will keep the Bank Accounts opened at a local bank selected in a competitive process to manage Compact program funds. At least one account shall be kept in local currency, one in USD and one in Euro. These accounts shall be used to manage any project payments.

3.2 Authorized Parties

The financial team shall ensure that two signatories are available at any given time to access Projects funds. The financial team shall perform the reconciliation of bank statements with the accounting records no later than fourteen (14) calendar days


after the end of an accounting period. Discrepancies shall be corrected within no more than ten (10) calendar days. The two officials with signatory authority for bank accounts payments are as follows: A. First signatories:

Executive Director or Legal Advisor B. Second signatories:

Finance and Administration Director

4. Accounting

4.1 Responsibilities

SDA-Moldova is responsible for Project Implementation and is the sole authority for authorizing expenditures. The financial team is responsible for execution of payments, all accounting functions and documentation compliance. The entity shall keep the original documents that support expenditures, obligations, and payments. SDA-Moldova’s Activities Leads shall estimate on a rolling quarterly basis both the level of commitments and the cash requirements needed to liquidate those commitments and to meet other expenses where prior commitments are not made, such as payroll expenses, and submit such estimates to the DAF. The Activities Leads shall consider the time required for procurement, contract execution, and supplier/vendor delivery when projecting cash requirements for the subject quarter or for future periods. The Activities Leads, in coordination with the DAF and other team members, should develop and provide the relevant information that is necessary for the development of the budgets.

4.2 Chart of Accounts

For reporting purposes to the local authorities, The SDA will use the chart of accounts established by the Ministry of Finance.

4.3 Accounting System

The entity maintains an accounting system capable of generating all financial reports for presentation to donors and local authorities. Financial transactions shall be recorded on a cash basis. This means that the entity shall prepare the reports on a Cash Basis (recording revenues when received and expenses when paid), and supplemental schedules as follows:

1. Receipts (funds, interest and others) (Revenues are recognized at the date of receipt, rather than when earned. Revenues consist of Program Funding received from MCC or other donors and interest);

2. Accounts Payable and Receivable (Payable balances include amounts billed and accepted as liability for Program activities for which no payments have been made; receivable balances include amounts paid to providers of services and goods for Program activities in excess of fiscal invoices received from suppliers);

3. Expenses (expenses are recognized when paid, rather than incurred) ;


4. Commodities (Represent fixed assets and intangible assets purchased using donors funds. For reporting purposes to donors, their cost is expensed at the date they are purchased, for the purpose of reporting to the MoF, (commodities are depreciated using straight-line depreciation method);

5. Cash (cash include amounts held in bank accounts as well as cash in hand). The accounting system also includes a budget section. The budget used in the system is the approved budget which in total volume is divided into Projects, Activities, Sub-Activities and Tasks. This method allows providing up-to-date information on the unused, remaining budget, which is calculated by deducting expenses from the budget. Reports of unused, remaining budget are produced by the system.

4.4 Automated Accounting System

The entity shall maintain an Automated Accounting System using Oracle/Universal Accounting software, which:

• Records receipts and payments, and assets and liabilities; • Generates reports as requested and ad hoc reports in the format specified

by SDA-Moldova; • Produces financial reports for the management; • Produces financial reports to donors as specified; • Ensures data security;

The proposed program is an integrated information system for automated financial management and accounting.

4.5 Commingling of Funds

Funds provided by one donor must not be commingled with funds from any other source/donor, except as explicitly authorized by the Project agreements.

4.6. Currency Conversion

Currency conversions shall be tracked and managed by the financial team consistent with the projects agreements, the Bank Agreement, or other agreements between donors and SDA-Moldova. For any USD/Euro to local currency conversion and vice versa, daily foreign exchange-rates shall be applied, based on the daily exchange rates published by the National Bank of Moldova (www.bnm.md) reduced or increased by 0.02 MDL/USD&EURO in accordance with the Bank Agreement provisions. Conversion rates shall be entered into the automated accounting system based on bank account statements. The USD equivalent of payments performed in local currency and the balances of all non-USD cash and bank accounts shall be booked using the exchange rates published by the National Bank of Moldova. Any exchange rate gains/losses identified in the local account(s) shall be booked as “Other Expenses” of the budget classification structure.

http://www.bnm.md/


5. Procurement Process

5.1 Procurement Plan

Procurements for goods, works, and services shall only be made if they are included in the approved Procurement Plan (“PP”), prepared every six months (if necessary) by the procurement consultant in collaboration with activity leads. However, procurements for SDA administrative purposes with an estimated cost of up to USD 25,000 may be initiated without such procurements being included in the PP. Before the PP is presented for approval, it must be reviewed by the DAF - to ensure that commitments foreseen in the PP are available in the budget.

5.2 Pre-Procurement Approvals

For the procurement activities, the relevant SDA staff member shall initiate a procurement request by filling out a Procurement Requisition Note (”PRN”) that specifies the description and the quantity of the goods, works, or services to be procured. The technical staff member shall submit the PRN with a cost estimate of the requested goods, works and services to the Procurement consultant. The Procurement consultant shall review the PRN to determine if it complies with the approved Procurement Plan. If it does, the Procurement consultant shall countersign the PRN and submit it to the DAF. If, however, the PRN does not comply with the Procurement Plan, shall notify the activity lead, and initiation of the procurement is stopped until the needed corrections are made and approved. The DAF shall review the PRN to ensure that funds are available for the planned procurement. If funds are available for the Procurement, the DAF certifies that the request complies with the Budget and approves the procurement. The DAF shall submit the approved PRN to final authorization by the ED or nominee. The original of the approved PRN shall be kept in the procurement records.

5.3 Procurement Activities

The Procurement Consultant shall undertake procurements in accordance with the MCC Program Procurement Guidelines and, the Procurement Operations Manual. The following procurement activities will require involvement of the financial team in close collaboration with the PC:

• Evaluation of proposals/bids. The financial team shall provide support/assistance in verifying the completeness of the financial information submitted by the consultant/bidder and evaluate the financial capabilities of the bidders.

• Contract negotiations. The financial team shall advise and assist SDA-Moldova in the contract negotiation process. The financial team shall ensure that contracts stipulate payment via bank transfers only. All contracts must include a detailed payment schedule, with payment terms not to exceed 30 days after receipt of a valid invoice. The consultant/contractor shall also be instructed to submit their invoice only after receipt of and together with the goods/works/service acceptance note.

• Cost overrides. If the procurement results in an award recommendation that significantly exceeds the amount of funds originally planned for it and budget


allocations are not sufficient to cover the amount to be contracted, the PC shall inform the DAF, shall review the cost estimates, and either (i) notify all parties about cancelation of the procurement, and initiate a new procurement with reduced scope as necessary, or (ii) increase its funding in accordance with this FAP. If budget allocations are not planned, the ED shall be notified and the procurement is suspended.

The ED shall have the sole authority to sign the contracts with the supplier/provider, contractor, or consultant; however, in the absence of one of them, a procedure shall be established in writing stipulating who will sign on behalf of an absent signatory.

5.4 Contract Administration Activities

The financial team shall enter the amount of the contract into the appropriate ledger of the accounting system. The financial team shall coordinate and cooperate with the activity leads in order to ensure that the goods have been received and the works and services have been provided in accordance with the terms of the contract.

5.5 Small Purchases Related to Administrative Expenses

The ED has the sole authority to sign contracts with the supplier/provider; however, in his/her absence, appropriate delegation of authority may be made. The purchase of goods, small works and consulting/non-consulting services for SDA-Moldova administrative needs shall be initiated by the relevant staff member. A simplified purchase procedure shall be used for administrative expenses, which refer, inter alia, to the following list of items: • Meeting and logistics arrangements • Utilities • Subscriptions • Cleaners, maintenance, office support, water/tea/coffee etc. • Short term experts in running the SDA administration • Advertisements • Public outreach events • Airline tickets • Postal and courier expense, including all procurement correspondence • Any other purchase of small value, as per the thresholds stated below, which is

required for the SDA-Moldova office needs. In order to initiate a small purchase, a Requisition/Briefing Note shall be drawn up, containing a description and quantity of the items to be purchased (exception Direct Contracting). The original approved Requisition/Briefing Notice is kept by the Procurement consultant/DAF as applicable. For all items below $500, direct contracting (sole source) can be used. For all items above $500, SDA-Moldova shall ensure that the requests for quotations are open, fair, and competitive, and a simplified shopping procedure shall be followed by soliciting three quotations, where practical, by directly calling for brand


names and/or for items with generic description of requirements. Standard service and warranty clauses will be included in the purchase request, if applicable. It is prudent that SDA-Moldova announces all intents to purchase on its website, so that a potential supplier may approach with an offer. However, it is acceptable for the SDA-Moldova to directly invite three suppliers to provide quotation for all purchases worth above $2,000 per contract. A single quotation is requested from a sole source without competition, in case:

A. sufficient proof is provided in SDA-Moldova files that a previous attempt to obtain competitive quotations resulted in less than three quotations;

B. where quotations are not likely to be comparable (for example, airline tickets for different routing) etc.:

C. other circumstances stipulated in POM or MCC Program Procurement Guidelines.

The justifications for the use of a single source shall be documented in the SDA-Moldova files prior to initiating the purchase. In all procedures above $500 SDA-Moldova shall ensure that prices were checked for reasonableness. Such a determination can be made by comparing the current quote with prices for similar goods purchased recently and/or with the estimate made prior to the purchase. Price comparison and decision to award shall be documented in an evaluation report. All evaluation reports shall be kept on file by SDA-Moldova’s Procurement Consultant. Subsequent to the award decision, the Procurement Consultant shall submit the evaluation report to Legal Advisor, who will draw up the contract with the vendor (if it is appropriate).

6. Invoice and Payment Approval Process

6.1 General Description of Vendor’s Invoice

All supplies must be supported by a proper invoice submitted by a vendor. Invoices shall be submitted as described in the contract, to the relevant Activity Lead of SDA-Moldova upon or after the delivery of the goods or services, all relevant supporting documents being duly attached. The Activity Lead verifies that all mandatory invoice details are provided. Incomplete invoices shall be returned to the vendor for completion/correction and re-submission. Upon the receipt of the invoice the Activity Lead attaches the Supplier Invoice Control and Follow-up Form (SICF) to the invoice; this form will be reviewed and if all information is correct, signed by each stakeholder in the invoice approval process. All prepayments made based on Pro-Forma Invoices, without any supporting documents, shall be reviewed in the same manner by all appropriate stakeholders.


6.2 Invoice Processing

The SICF is designed specifically for verification and certification purposes. The SICF requires signatures from all appropriate stakeholders.

B. Civil Works (FIDIC Applicable Contracts) The following general steps are required for processing of documents:

Step 1. The Contractor/Vendor creates an Interim Payment Statement (IPS) as per progress of work completed and sends six (6) original copies and all supporting documents to the Engineer. SDA-Moldova has 56 calendar days to process and pay this invoice starting from the date the IPS is submitted to the Engineer.

Step 2. The Engineer reviews the IPS based on Execution Drawings and Construction Drawings and makes any needed adjustments to the IPS. Based on the adjusted/approved IPS, the Engineer issues an Interim Payment Certificate (IPC) in six (6) original copies, and delivers them to the Activity Lead.

Step 3. The Activity Lead reviews and certifies the IPC. The Activity Lead cannot modify or reject the IPC; she/he can only review it to confirm with the Engineer expectations for subsequent measurement, evaluation, and certification in the future IPCs. The Activity Lead issues a SICF and completes the relevant information, then forwards it along with the IPC and the supporting documents for further processing to the Legal Advisor.

Step 4. The Legal Advisor confirms the validity of the contract, compliance with the terms of the contract, and the availability of Performance Security, Advance Payment Guaranty and Insurances as required per the Contract provisions, and forwards the signed SICF and attachments to the DAF.

Step 5. The DAF reviews and forwards the signed SICF and attachments to the ED for approval and payment authorization.

Step 6. The financial team member performs its verification of the SICF and the technical review of the attachments. If the supporting documentation is acceptable and the SICF is completed correctly, will be issued a Payment Request Order.

C. Goods, Works (Non-FIDIC Applicable Contracts) and Services The following general steps are required to process an invoice:

Step 1. The Vendor submits an invoice with supporting documents to the Activity Lead.

Step 2. The Activity Lead reviews and certifies the invoice and supporting documents. The Activity Lead issues a SICF and completes the required information in it, and forwards it along with invoice and the supporting documents to the Legal Advisor.

Step 3. The Legal Advisor confirms that the required contract conditions are met, the availability of Performance Security, Advance Payment Guaranty and Insurances as required per the Contract provisions (if


applicable), and forwards the signed SCIF and attachments to the DAF.

Step 4. The DAF reviews and forwards the SICF and attachments to the ED for final approval and payment authorization.

Step 5. The financial team member performs its verification of the SICF and technical review of the invoice and attachments. If the documents are acceptable, a Payment Order will be issued.

.

D. Timelines for Invoice Processing

There are different deadlines for small purchases, civil works, and goods/works/services. For Civil Works, timing for processing shall be done in accordance with FIDIC 1999 Red Book and shall be defined in calendar days. For all other types of purchases, the deadlines are expressed in working days.

Civil Works (FIDIC Applicable Contracts) Activity Lead 4 calendar days Legal Advisor 1 calendar day DAF 1 calendar day ED 1 calendar day Financial team 4 calendar days Total days of processing 11 calendar days

Goods, Works (Non-FIDIC Applicable Contracts) and Services Activity Lead 4 working days Legal Advisor 1 working day DAF 1 working day ED 1 working day Financial team 4 working days Total days of processing 11 working days

E. Other Invoice Supporting Documents For travel related payments, a Travel Order shall be attached to the Invoice or other related documents.

6.3 Responsibilities for Invoice Control and Halting / Rejection

A. Responsibilities of each stakeholder

Each stakeholder in the invoice review process shall review invoices in accordance with their responsibilities. B. Halting / Rejection of the Invoice


If the invoice does not meet all requirements described above, or if any discrepancies are found during the review, the invoice processing can be halted or rejected by any stakeholder of the invoice control processing. Reasons for halting of the invoice:

• When the goods/services were not received/performed by the time the invoice was recorded as received,

• When there is an issue with an invoice, but it is expected that it can be resolved without rejecting the invoice (minor issues), the invoice is halted pending resolve of the issue.

• Halting starts from the day when the vendor is notified by SDA-Moldova. The reason for the halting as well as a proposed solution shall be noted in the SICF; the following sentence or any equivalent phrase, shall be included in the SICF: "the payment period is halted from this date; this halting will cease when all elements will be obtained to make the invoice valid".

• The invoice and related documents shall be kept at SDA-Moldova during the halting period.

An invoice can also be rejected if: • The goods, works or services were not received / performed by the time the

invoice was recorded as received. • The goods, works or services do not meet the standards, specifications or

deliverables specified in the contracting documents. If the decision to reject an invoice is made, the supplier shall be notified. Any rejection shall be communicated to the responsible Activity Lead by the stakeholder rejecting the invoice, in order to allow him/her to notify the vendor regarding the reasons for the rejection and along with a proposed solution. The relevant Activity Lead shall keep a file of rejected invoices, with documentation regarding the date and reason for the rejection, as well as the date of submission of a rectified invoice.

6.4 General Payment Provisions

All invoices approved and certified in accordance with SDA-Moldova Policies outlined in this FAP shall be paid. Payments can be transacted using SDA-Moldova’s bank accounts. The payment mechanism shall be determined by the DAF. In order to manage program funds, SDA-Moldova and C.B. Moldova-Agroindbank S.A. signed a Bank Agreement, dated September 7th, 2010 based on which, the following accounts were opened:

• U.S. Dollar Accounts • Moldovan Lei Accounts • Euro Account

The Bank Agreement outlines the procedure and obligations of the parties related to the management of the bank accounts. Payments from the Bank Accounts will only be authorized through a written payment instruction duly signed by two Designated Signatories of the SDA and in the form approved by the Bank Agreement - the Payment Order. All transfer instructions can be delivered to the Bank using Internet Banking System in accordance with the Contract.


6.5 Payments through Bank Accounts

Bank payment orders shall be signed by the authorized signatories of the entity and submitted to the bank, which will transfer the funds to the beneficiary. When the transfer is completed, the bank shall send to the entity a confirmation of the payment (bank statement).

6.6 Bank Guarantees

The bank guarantee is a financial instrument issued by a bank ensuring that the liabilities of a customer will be met. In other words, if the customer (SDA-Moldova vendor) fails to settle an obligation stipulated by the executed construction contract, the bank will cover it. This procedure describes paper flow and responsibilities of parties involved related to bank guarantees that are needed for risk free implementation of construction contracts. If a bank guarantee is required from a contractor, the Activity Lead shall send a Bank Guarantee Note and originals of all documents relating to a particular bank guarantee to Legal Advisor. Bank Guarantees are required for:

• Bid security; • Advance payment; • Performance security; • Retention money claims.

7. Taxes

7.1 General Provisions

In accordance with the Compact, Section 2.8 and other relevant agreements, supplemented by the Decision of the Government of Moldova no. 949 dated October 12th 2010, which entered into force on October 22nd 2010, Compact and Post -Compact funds are exempted from taxes imposed under laws in effect in the territory of Moldova. It is SDA-Moldova’s policy to seek a tax exemption rather than making payments including taxes and requesting reimbursement afterwards from the Government/State Fiscal Inspectorate. Only in rare circumstances when taxes are paid contrary to the established provision and the Government decision, SDA-Moldova/other beneficiaries shall pay and then request reimbursement. The DAF shall maintain a system to track all tax exemptions; taxes assessed and paid, and tax reimbursements by the Government. If a tax has been levied and paid contrary to the requirements, the DAF must notify the donor of any failure by the Government to timely administer such tax exemptions or promptly reimburse such taxes, as detailed in the Tax Exemption Procedure of the Procedure Manual.

7.2 Specific Tax Regulation

(a) Tax exemption shall apply to:


• Accrued Interest; • Goods (except petroleum products) and services performed by individuals or

legal entities subject to taxation in the Republic of Moldova; • Imported Goods (except petroleum products); • Income received from providing of goods, works and services within the

Compact and Post Compact; (b) Vendors providing construction services (“Construction Vendor”) to SDA-Moldova or any other vendors making large-scale procurements of petroleum products (at least 1 metric ton for each procurement) to be used in connection with such construction projects, shall pay the VAT and excise duties at the point of purchase and shall request refund of these taxes. The decision to refund shall be taken by the State Tax Inspectorate within forty five (45) days in accordance with the Compact, Schedule E from the submittal of the request; (c) National legal person established in accordance with the law of the Republic of Moldova and national natural persons involved in project are not exempted from income tax, social insurance contributions and medical assistance mandatory insurance charges, but are subject to taxation in accordance with the legislation in force in the Republic of Moldova; (d) The exemption from taxes shall be granted based on an official letter from SDA-Moldova, issued on official letterhead, indicating the name of the project and the name of beneficiary of the exemption.

7.3 Tax Refund

When an invoice is paid with tax by SDA-Moldova or its Vendors, the tax refund shall follow the regular refund procedure of the State Tax Inspectorate. The financial team shall assist the beneficiaries of tax exemption in making their claim by completing a Tax Refund Letter, citing the relevant provision of the Compact Agreement. The claim shall be addressed to the State Tax Inspectorate stating the following:

• The period of refund • Details of Tax Invoices • Amount of Tax • SDA-Moldova or Vendor Bank Account

A tax reimbursement shall be considered overdue unless reimbursed within thirty (30) calendar days (except petroleum products) from the date of submittal of the request for refund.

8. Personnel and Payroll


SDA-Moldova staff shall be employed through Individual Employment Agreements (IEAs) in accordance with the Labor Code of the Republic of Moldova. The organizational chart shall be subject to prior approval by MCC and/or other donor and SDA-Moldova Steering Committee. The IEAs shall identify the person hired, the date of hire, the terms of hiring including duration, salary, benefits and any other rights and responsibilities under the IEAs, and shall be signed by the appropriate persons. Individual consultants shall provide services to SDA-Moldova through Service Contracts, in compliance with the Civil Code of the Republic of Moldova.


The remuneration is calculated by SDA-Moldova according to the IEA or Service Contract for the work performed or services provided. The salary scales and changes to salaries for each staff position shall be coordinated and approved by the donor and the SDA-Moldova Steering Committee. SDA-Moldova staff shall not be entitled to any overtime payments.

8.2 Timesheet

The SDA-Moldova full time employees shall work a 40-hour workweek (8 hours per day), except days off and public holidays. On the day before a public holiday, a reduced work schedule of 7 hours shall apply. Working time shall be exclusively used for the work in support of SDA-Moldova. All employees/consultants shall be required to fill in the monthly Timesheet. The timesheet signed by each employee/consultant shall be submitted for authorization to his/her direct supervisor no later than three working days before the end of each month. The financial team shall check the accuracy of the information reported (number of days worked, business trip days, sick leave days etc.) and to make sure that the timesheet is duly authorized by the employee’s direct supervisor, and forward them for approval to the Executive Director. If changes occur from the time of timesheet approval to the end of the month, corrections shall be made in the following month.

8.3 Payroll Calculation

The entity shall calculate the salaries for each SDA-Moldova staff member and the associated personnel income taxes, social insurance contributions and mandatory insurance charges for medical assistance based on the duly authorized and approved Timesheets, as well as other relevant supporting documents. The salaries shall be calculated by filling in the Payroll Ledger, which provides detailed information on gross salary calculations, associated deductions, as well as the amounts of net salary to be paid to each employee. Since the remuneration of SDA-Moldova employees is expressed in US dollars as per the Employment Agreements, the official exchange rates established by NBM on the day of calculation (which can be one of the last three working days of the month) shall apply to the calculation of the salaries and the applicable income tax, social insurance contributions and mandatory insurance charges for medical assistance. The Payroll Ledger shall be submitted for approval to the Executive Director and the DAF. Calculation of remunerations for non-staff local consultants shall be made according to the provisions of the Service Contracts and delivery-acceptance reports for services rendered. When payments are to be made in local currency, while the contract stipulates the amount to be paid in US dollars, the USD amount shall be converted into Moldovan Lei using the official exchange rate of the National Bank of Moldova on the day the remuneration is calculated.

8.4 Temporary Disability – Social Leave

Allowances for a temporary disability (sick or maternity leaves) shall be calculated in accordance with Moldovan legislation, based on a medical certificate. An employee


may be entitled to a sick leave based on recommendations by an authorized medical doctor. The amount of the allowance shall be based on the average monthly income for the last twelve (12) calendar months preceding the month in which such leave occurred, calculated in accordance with the relevant Moldovan regulations. This amount shall be used for calculating the attendant social insurance contributions. The average monthly income, used for the calculation of the sick allowance, cannot exceed the ceiling amount prescribed by the legislation in force. The allowance for temporary disability of SDA-Moldova staff shall be calculated and paid together with the next monthly salary, provided that a medical certificate is submitted. The data required for allowance calculation, such as work experience, disability period and other relevant data as required according to the medical certificate shall be completed by the relevant SDA-Moldova staff member.

8.5 Annual Leave

Every SDA-Moldova employee shall be entitled to 28 calendar days of paid leave during each leave cycle of the contract year. Annual Leave Applications shall be made in writing, and shall be processed and authorized by the employee’s direct supervisor. The application shall be approved by the ED. On the day the employee returns from leave, he/she will notify his/her direct supervisor. Annual leave payments shall be made based on the Order of the SDA-Moldova Executive Director. The order will specify the leave period. The amount to be paid shall be based on the average monthly income for the last three (3) months preceding the month of such leave.

8.6 Annual bonus and Other Benefits and Compensations

SDA Moldova employees may be entitled to receive bonuses, benefits and compensations based on internal SDA Moldova policies and regulations, and Moldovan labor legislation as follows: Annual bonuses Current SDA-Moldova full time employees, who have been employed for more than half of the past year, shall be eligible to a year-end bonus which is determined based on the results of the performance evaluation and duration of employment. With the condition of availability of funds, SDA Moldova Executive Director shall issue an order which shall contain the list of employees and calculated bonus size. Employees whose duration of the employment is less than 12 (twelve) months but more than 6 (six) months are eligible to a year-end performance bonus. The bonus for such employees will be determined proportionally to the number of months of employment. SDA Moldova will evaluate performance of its employees (only in cases where funds for bonuses are budgeted). In order to have more transparency and impartiality during the evaluation, the performance evaluation shall be done in 3 (three) steps: • Self-evaluation, • Direct supervisor’s evaluation, • Top management evaluation.


The performance of each employee will be evaluated using 4 (four) rates (marks): • Valuable contributor • Good contributor • Satisfactory contributor • Unsatisfactory contributor. The overall rating is calculated based on the grades in the three sections of the Performance Evaluation Form. Eligibility SDA-Moldova employees whose performance evaluation was rated as “unsatisfactory contributor” and “satisfactory contributor” are not eligible for a year-end performance bonus. Method of calculation Step 1. (based on the performance evaluation) Any combination of “Valuable contributor” and “Good contributor” marks obtained under all three chapters in the evaluation form entitles the employee to a one month gross salary bonus. The combination of “Good contributor” mark under two chapters and “satisfactory contributor” mark under one chapter from the evaluation form entitles the employees to a 75% of a month gross salary bonus. The combination of “Good contributor” mark under one chapter and “satisfactory contributor” mark under two chapters from the evaluation form entitles the employees to a 50% of a month gross salary bonus. Step 2. (based on duration of the employment) The annual bonus amount calculated based on the performance evaluation under the first step shall be also corrected based on the duration of the employment. Other benefits and compensations. SDA Moldova employees are entitled to receive other payments and compensations according to Moldovan labor legislation, providing that all necessary supporting documents are duly fulfilled and submitted. The amount to be paid for such payments shall be based on the average monthly income for the last three (3) months preceding the month of occurrence of reasons for such payments. Payment of bonuses, benefits and compensations. Payment of bonuses, benefits and compensations shall be based on the Order of the Executive Director of SDA-Moldova. The Order shall indicate the period and the reason for payments, and shall be accompanied by all required supporting documents.


8.7 Salary Deductions

The following deductions shall be made from the monthly salaries: personal income tax and other payments made by the SDA-Moldova on behalf of the employee and others (un-cleared advance, any loss or damages caused by the employee to the entity through negligence, alimony and others). Salary deductions shall only be made according to the relevant supporting documents: internal orders, enforcement orders, inventory memorandums etc. The personnel income tax deductions shall be made according to the application submitted by each employee and the applicable income tax rates. The deductions related to social insurance contributions and mandatory insurance charges for medical assistance shall be made according to the rates provided for in the Legislative Budget on Social Insurances for the corresponding year and the applicable ceiling.

8.8 Verification and Performance of Monthly Payments

Before making payments, the financial team shall confirm availability of funds in the approved budget. Also, shall be checked the compliance between the payroll ledger and the employment agreements in order to make sure that they are valid and the amount to be paid is correct. Salaries shall be paid by bank transfer to the employee’s bank account. Once the transfer is made, the payment notifications to the employees shall be issued, indicating gross salary, deductions and net salary paid for the corresponding month.

9. Asset Management


The assets shall only be used in furtherance of the Project objectives and shall not be made available for the personal benefit of any employee or consultant. The Project fixed assets have the following characteristics:

(a) Properties acquired with MCC or other donors funds that are controlled by SDA-Moldova;

(b) Their estimated useful life exceeds one (1) year.

When purchasing, assets should be recorded at cost. Cost includes all costs necessary to bring the asset to working condition for its intended use; not only its original purchase price but also cost of site preparation, delivery and handling, installation, related professional fees for architects and engineers, and the estimated cost of dismantling and removing the asset and restoring the site.

9.2 Purchase and Maintaining of Fixed Assets Register

Fixed assets shall be purchased according to MCC’s or other donor’s policy and guidelines. The fixed assets management, including receipt, labeling, assignments, transfers inventories and other related activities are the responsibility of the SDA-Moldova financial team.


The SDA-Moldova financial team shall ensure that all fixed assets purchased by SDA-Moldova are labeled with a unique identification code and shall register them into the Fixed Assets Register. The Fixed Asset Register shall be integrated into the Automated Accounting System and maintained by the financial team. The financial team shall keep all records of the fixed assets, including files and supporting documents. The procedures to be followed by SDA-Moldova related to fixed assets registration, marking and filing are described in the section “Purchase of Fixed Assets and Maintaining a Fixed Assets Register” of the Fixed Assets Procedure (see Procedure Manual).

9.3 Inter-office Transfer of Fixed Assets

Fixed assets that are assigned to an employee may be re-assigned to another employee. The SDA-Moldova staff member shall prepare a Fixed Assets Handover Note providing a description and the unique identification number of the fixed asset, and obtaining the signature of the employee who delivers the fixed asset and the employee who receives it. The signed Fixed Assets Handover Note shall be authorized by the DAF and approved by ED. In cases of transfers of fixed assets between projects, Minutes of Delivery - Acceptance / Movement of Fixed Asset (numbered and dated) shall be issued by the financial team and then completed by both delivering and receiving employee. The originals will be kept by financial team member.

9.4 Capitalization and Depreciation of Fixed Assets

Because SDA-Moldova uses modified cash based accounting fixed assets will not be capitalized in the General Ledger, nor will they be depreciated. Fixed Assets will be expensed at cost on the date they are purchased, but tracked in the Fixed Assets Register throughout their useful life. When a fixed asset is repaired, rebuilt or modernized by a third party, Minutes of Delivery - Acceptance of Repaired, Rebuilt and Modernized Fixed Assets shall be completed. For purposes of reporting to the Ministry of Finance, assets will be depreciated following the straight-line depreciation method.

9.5 Disposal of Fixed Assets

When a fixed asset is damaged or becomes obsolete, the relevant SDA staff member, in agreement with the DAF, shall complete a Fixed Assets Disposal Form. This form shall contain the unique identification number, description, the physical condition and reasons for disposal of the asset. The DAF, or whom he/she designates to act on his/her behalf, along with the IT consultant shall inspect the asset and sign the Fixed Asset Disposal Form if they believe an asset has no value. A short report detailing the key findings of the inspection shall be attached to the Fixed Asset Disposal Form. If a fixed asset is stolen, a memo to the ED, describing the circumstances under which an asset was stolen shall be drafted by the person to whom the fixed asset was assigned. An incident report shall be made to the police and/or insurance agency. All relevant documentation shall be kept on file. The original Fixed Asset Disposal Form shall be authorized by DAF, approved by the


ED. The form shall be supported with all duly attached related documents, such as the Police Report in case of theft or accident or the report on the reasons for displacement. The final destination of the remaining fixed asset shall be indicated: sale, storage for further use as spare parts etc. The financial team shall make the appropriate entry in the AAS based on the approved form and remove the asset from the Fixed Asset Register.

9.6 Inventory of Fixed Assets

Regular inspection and physical counting of all assets shall take place, at a minimum annually, by at least two independent counters selected by the ED and the DAF. The ED shall sign an internal order designating the members of the committee and the timing of such inventory count. Upon the completion of the inventory taking, a reconciliation shall be immediately made with the list on file for the same location (cost center). Based on the variances identified, the statement should be updated to reconcile with the actual inventory count. The results of the count shall be checked against the SDA Moldova Fixed Asset Register. The members of the committee shall decide upon the variances identified by issuing a memo describing the results of the physical count and the reconciliation with the accounting records. In the case of a discrepancy, the memo shall state the reasons identified during the count and the appropriate adjustments to be made. Any proposed adjustments shall be clearly noted in the memo, which shall be kept by the financial team. This memo shall be approved in advance by the DAF or ED. Financial team shall record the necessary adjustments resulting from the inventory taking.

10. Travel and Vehicle Use

10.1 Travel

Travel by SDA-Moldova staff and consultants (collectively called SDA-Moldova Traveler) shall only take place in furtherance of Project objectives, and not for the personal benefit of any employee or individual. All travelers irrespective of rank must adhere to the following rules.

Travel Approval

A travel request shall be initiated by a SDA-Moldova traveler either following his/her superior’s instructions or on his/her own initiative by completing a Travel Authorization Request, which shall include all relevant travel related information (purpose, mode, period, names of travelers, cost etc.). The Travel Authorization Request shall be submitted for approval to the ED, after prior approval of traveler’s superior and authorization by the DAF, who certifies the availability of funds to cover the proposed travel costs. Upon approval, the ED shall issue a Travel Order indicating the purpose, destination and period of the travel, as well as the amount of travel advance. This Travel Order shall be forwarded to the designated SDA Moldova staff member, who shall make appropriate travel arrangements in accordance with the Government Decision no. 10


of January 5th, 2012 as amended. Also, designated member shall check whether the travel days have been included in the timesheet of the employee.

Travel Advances

For local travel, the travel advance shall be paid as indicated in the request (cash, transfer, as approved by DAF) in national currency only. For foreign travel, the advance shall be paid in USD, Euro or MDL. The advance provided shall be accounted for in national currency, as well as in the currency of payment, as per the NBM official rate on the day the advance is issued. The financial team shall make the corresponding entries into the AAS. Travel advances must be cleared before another travel advance is authorized; under no circumstances, the financial team shall issue any travel advance to the traveler who has an outstanding travel advance.

Accounting for Travel

Travel expenses reimbursed to travelers include:

• Fares (tickets, fuel) • Lodging / Hotel • Daily subsistence allowances (DSAs) / Per diems • Other related costs (vehicle maintenance, transit visas etc.)

All travel expenses, except for DSAs, shall be documented as provided for in the Government Decision no. 10 of January 5th, 2012. SDA-Moldova travelers, who receive a travel advance, must complete and submit to the SDA-Moldova DAF a Travel Settlement Form within five (5) calendar days after his/her return. This form must be completed by all travel advance holders, even if there are no invoices to be attached. No supporting documents are required for DSAs. The Travel Settlement Form shall be completed in the currency of the paid advance. The traveler should also present the costs incurred in foreign currency (if applicable) converted to currency of the paid advance. Whenever possible, the traveler should convert currency in the banks or currency exchange offices, and exchange rates applied during preparation of the Travel Advance Settlement Form should be taken from the currency exchange document/s provided by the bank/s or exchange office/s. All supporting documents (hotel bills, air tickets, boarding passes, insurances bills, visas etc.) travel costs, including the currency exchange document/s shall be attached to the Travel Advance Settlement Form. The Travel Settlement Form (with supporting documents attached) shall be checked by the financial team if the Form is completed and all needed supporting documents are attached. If expenses exceed the amount of the advance provided, the financial team shall transfer the difference to the account of the traveler. If the advance amount exceeds the expenses, the unused amount shall be either deducted from the traveler’s next salary or reimbursed by the travel in cash. The financial team shall receive the unused amount of the advance and deposit it into the bank account of SDA-Moldova. The amount of the advance not covered by supporting documents shall be refunded by the traveler in national currency at the official rate of NBM on the day of refund or in the currency of the advance. If the traveler does not receive an advance, he/she shall claim incurred travel expenses in national currency. The amount of reimbursement shall be calculated


using the exchange rate/s indicated in the receipt/s provided by the bank/s or exchange office/s. In case such documents are not available, reimbursement amount shall be calculated using official exchange rate of NBM on the day preceding the traveler’s departure. Approved travel costs for local trips shall be transferred to the bank account of the traveler or shall be paid in cash once per month.

Cancellation of Travel

If approved and funded travel is cancelled, all allowances received shall be paid back within five (5) days from the date of cancellation. Unused amounts shall be reimbursed in cash or deducted from the employee’s next salary.

Daily Subsistence Allowance

SDA-Moldova travelers shall be entitled to payment of Daily Subsistence Allowance (DSAs) as per the provisions established by the Government Decision no. 10 of January 5th, 2012. For departure and return days, the SDA-Moldova travelers’ DSAs shall be paid at 100% of the applicable rates to cover the route expenses.

Lodging Costs

SDA-Moldova travelers shall be entitled to recover lodging costs upon presentation of the supporting documents. SDA-Moldova shall not refund the cost of deluxe hotel rooms. When accommodation is paid by external sources, SDA-Moldova travelers shall not be compensated for this expense. For economy purposes, in some cases, SDA-Moldova travelers may share hotel room.

Transportation Costs

Transportation costs shall be reimbursed based on the following supporting documents

1. Air – boarding pass, flight ticket; 2. Rail – ticket (receipt); 3. Motor (taxi, bus, tram, tube) – ticket (receipt).

For air travels of the SDA Moldova Staff only economy-class accommodations are allowed. This provision also applies to the TEP members, BCT members and any other consultants whose travel shall be paid/reimbursed by SDA Moldova. If the traveler uses his/her personal car for business trips, SDA-Moldova shall only cover the cost of fuel for the mileage traveled. The traveler shall draft a note indicating the mileage traveled and the fuel consumption and submit it to the ED for approval. All the aforementioned documents shall be attached to the Travel Advance Settlement Form. SDA-Moldova shall refund the traveler’s expenses related to taxi service usage from the airport to the lodging place and back, based on supporting documents (receipts).


Miscellaneous Costs

Other travel-related costs such as internet connection, use of landlines or mobile phone services, visas and other incidental travel costs shall only be reimbursable when relevant supporting documents are provided by the traveler.

10.2 Vehicle Use

The SDA-Moldova staff shall use vehicles for official business. SDA-Moldova does not provide SDA-Moldova staff with transportation between their homes and the office. For the good management of the SDA-Moldova vehicles the following rules shall be observed:

1. All SDA-Moldova vehicles shall have log books which will have to be inspected by the relevant staff member once a month to ensure proper and consistent use of vehicles.

2. All SDA-Moldova vehicles shall be properly insured. 3. Drivers of SDA-Moldova vehicles shall have valid driving licenses. Local and

international traffic rules must be observed by all drivers (speed limits, use of safety belts, NO use of cell phones while driving, prohibition of alcoholic beverages consumption etc.).

4. All SDA-Moldova vehicles shall be parked at the approved car parking and shall immediately be parked after working hours.

5. SDA-Moldova vehicles shall not be used during public holidays and weekends except when authorized by the ED.

6. All SDA-Moldova vehicles shall be serviced and repaired at the authorized dealer/service center and fueled at the designated filling stations after obtaining relevant approval from ED.

7. All fuel requisitions (receipts) shall be submitted to the financial team. 8. If vehicle develops mechanical problems, the driver shall take the vehicle to

the authorized dealer/service center for maintenance. In case that major repair is needed, the driver shall inform about the technical problem, the DAF. All receipts for expenses incurred must be submitted to the DAF.

9. The financial team will keep vehicle records and log books. 10. The SDA Moldova staff member will be responsible for monitoring the mileage

travelled by each vehicle, to ensure the maximum degree of efficiency and safety and for preventive maintenance.

11. All accidents involving SDA-Moldova vehicles shall be immediately reported by the person driving the vehicle to the Police and within twelve (12) hours of such an accident to the Insurance Company.

12. The drivers assigned to a vehicle shall take appropriate measures to ensure the security of other employees and the vehicle itself and shall ensure that all relevant documents and accessories (e.g. first-aid medical box, triangle reflectors, fire extinguisher, spanners etc.) are in the vehicle. Drivers must maintain the vehicles in good working condition to ensure the maximum degree of efficiency and safety.

13. It is strictly prohibited to carry fuel in SDA-Moldova vehicles other than in its tank and smoking in vehicles is strictly prohibited.

14. Fines incurred through improper parking, violation of traffic rules or if found guilty in a traffic case will be the responsibility of the employee who was driving the vehicle.


All SDA-Moldova vehicles must refuel at the designated fuel stations of the selected fuel supplier. For vehicles that are travelling outside the country, drivers will only be allowed to refuel at widely known brand fuel stations (e.g. Lukoil, Shell, BP, OMV, etc.) and obtain reimbursement of fuel cost, along with other travel expenses. The DAF shall be responsible for the development of the SDA-Moldova Schedule of Consumption by Each Type of Vehicle, which shall be approved by the ED.

11. Public Relations, Outreach, Meetings and Official Events Costs

Public Relations and Outreach means those activities dedicated to promoting or maintaining understanding and favorable relations with the community or public at large or any segment of the public, as well as maintaining a positive image of the Projects. The costs of items for distribution at public outreach events that promote the Accountable Entity (e.g., light refreshments, pens, hats, and t‐shirts marked with the SDA Moldova’s logo) are allowable when they are:

a. Of no material monetary or commercial resale value; b. Directly related to communicating the purposes, successes or outcomes

of the Projects; and c. Associated with an overall communication strategy that has been

approved by donors. Costs of holding official, Program-related meetings are allowable if more than 50% of the participants are non-Government Affiliate employees or officials. Reasonable breakfast, lunch, or dinner expenses to establish or maintain relationships of value for furtherance of the Projects are allowable only when hosted by an authorized, senior staff member of the SDA Moldova. The number of meetings and participants should be reasonable and cost-effective and aligned with the business objective. This standard requires that records be maintained which include the names, titles and affiliations of all participants, and the specific purpose of each meeting. The costs for official and ceremonial events are allowable when hosted by the Executive Director of the SDA Moldova and are meant to foster relations or promote the accomplishments of the SDA Moldova’s mission to external entities. Examples of official or ceremonial events include hosting rare visits of noted personages or groundbreaking ceremonies for a new project. Costs of thematic events such as commemorating International Women’s Day to highlight what a Project is doing to promote gender equality are also allowable. The costs for serving light refreshments and inviting stakeholders, beneficiaries, and donor community is allowed. Costs of alcoholic beverages are always unallowable. The use of these funds shall be monitored closely to ensure that expenditures made for official events are consistent with the policy objectives of the Projects, are within amounts clearly budgeted for these purposes, and are not prohibited by any other law, rule or regulation.


12. Petty Cash

General

SDA-Moldova shall perform most of the payments via bank transfers. However, in specific cases it may be necessary for the SDA-Moldova to use cash for small, non-recurring expenses. SDA-Moldova shall establish a petty cash fund to serve this purpose. The person appointed by the SDA as a Cashier (the Accountant) shall be responsible for the integrity of the petty cash fund. The cash shall be kept in a lockable strong box. Only the designated Cashier and the DAF shall have the access to the keys. SDA-Moldova petty cash fund shall be replenished via transfers from bank accounts and from the unused advances refunded by the holders.

Petty Cash Count and Reconciliation

In accordance with internal control principles, the petty cash funds shall be subjected to physical and unannounced examinations on a regular monthly basis to ensure their integrity. The physical examination of cash shall only be done provided that there is any cash on hand. Any discrepancy in the petty cash fund shall be immediately brought to the attention of the DAF. The financial team shall perform a reconciliation of the petty cash on hand to the cash recorded in the Automated Accounting System on a monthly basis.

13. Reporting

13.1 Responsibilities

The SDA-Moldova financial team shall produce monthly, quarterly, annual, and ad-hoc reports for the use of the donors and Ministry of Finance. SDA-Moldova shall develop an internal procedure that specifies what financial or non-financial information shall be disclosed to the donors, and/or the general public if needed.

13.2 Reports

The SDA-Moldova’s financial team shall prepare and present the following reports in accordance with the legislation in force in the Republic of Moldova and donor’s requirments:

Monthly Reports

• Certification of reconciliation between SDA-Moldova accounting records and bank account statements (in MDL, EUR and USD);

• Information regarding the cash balances of PIU in bank accounts (2PI G); • Monthly social fund report (BASS); • Monthly REV; • Monthly expenses report (2PI); • Monthly report on disbursements (1-3PI); • Monthly report on labor; • Monthly income tax report (IRV 14).


Quarterly Reports

• Balance for the quarter; • Quarterly medical insurance report; • Quarterly labor report.

Annual Reports

• Report on Movement of fixed assets; • Annual SDA Moldova budget; • Financial Plans; • Report on Movement of materials; • Annual report on labor health and safety; • Annual report on professional development of staff; • Annual report on the number of employees and the payroll data; • Annual report on types of employees and personnel fluctuations; • Annual information on payroll and withholding income taxes.

14. Audit

14.1 Procuring Auditors

SDA-Moldova shall use a competitive process to select an appropriate auditor. Statement of Work included in all bidding and contract documents shall conform to the Statement of Work provided in the Audit Guidelines.

14.2 Types of Audits and Reviews

The financial audit shall assure that the financial statements present fairly the financial position of the program and are in accordance with generally accepted accounting standards. The compliance audit shall assure that all financial management procedures and all accounting procedures are being followed appropriately by SDA-Moldova.

14.3 Audit Reports and Findings

Upon receipt of any findings by an auditor, the audit findings shall be discussed with SDA-Moldova’s Senior Management and modifications agreed upon to be made to the audit findings by the Auditor. Thereafter revised audit findings shall be submitted to SDA-Moldova. The ED shall prepare a written response and submit it to SDA-Moldova’s SC for approval. Timing of these actions shall be done to assure that the written response is provided to donor within thirty (30) calendar days of the finding.

14.4 Reporting on misuse of SDA-Moldova’s Funds or Assets

It shall be the policy of SDA-Moldova to use the HOTLINE as a mechanism to report instances of waste, fraud or abuse of SDA-Moldova’s funds or assets. Employees, contractors, consultants, and the public may report such instances via telephone, email, or mail.


15. Review of the Fiscal Accountability Plan

The Fiscal Accountability Plan is subject to modification driven by practical need, changes in the local legislation, as well as donors’ policies and procedures. All updates to the FAP shall be submitted to donors for approval within thirty (30) calendar days after the revision( if necessary).