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MCA-Moldova Fiscal Accountability Plan

Millennium Challenge Account Moldova

(MCA-MOLDOVA)

FISCAL ACCOUNTABILITY PLAN

October 2012

MCA-Moldova Fiscal Accountability Plan 2

The Millennium Challenge Corporation (MCC) and the Government of Moldova have entered into a compact for Millennium Challenge Account (MCA-MOLDOVA) assistance to help facilitate poverty reduction through economic growth in Moldova in the amount of US$ 262 000 000 (MCC Funding). The Compact specified that MCA-Moldova shall adopt a fiscal accountability plan that identifies the principles, mechanisms and procedures to ensure appropriate accountability for the use of MCC Funding provided under the Compact.



MILLENNIUM CHALLENGE ACCOUNT- MOLDOVA

Table of Contents

1. General ......................................................................................................... 7

1.1 Goals, Principles, and Development of the FAP ................................................... 7

1.2 Authorized Parties ................................................................................................. 11

1.3 Procurement Agent ............................................................................................... 15

1.4 Fiscal Agent ........................................................................................................... 16

2. Multi-year Financial Plan and Detailed Financial Plans .......................... 17

2.1 Overview ................................................................................................................. 17

2.2 Budget Classification Structure ........................................................................... 18

2.3 Modifying Financial Plan ....................................................................................... 19

3. Opening and Management of MCA Bank Accounts ................................ 20

3.1 Local Bank Accounts (Permitted Accounts) ....................................................... 20

3.2 Common Payment System ................................................................................... 21

3.3 Authorized Parties ................................................................................................. 21

4. Accounting ................................................................................................. 22

4.1 Responsibilities ..................................................................................................... 22

4.2 Chart of Accounts .................................................................................................. 22

4.3 Accounting System ............................................................................................... 22

4.4 Automated Accounting System ............................................................................ 23

4.5 Access & Backup ................................................................................................... 23

5. Cash Management ..................................................................................... 24

5.1 Responsibilities ...................................................................................................... 24

5.2 Commingling of Funds .......................................................................................... 25

5.3 Currency Conversion ............................................................................................. 25

5.4 Working Capital ...................................................................................................... 25

5.5 Expiration of Spending Authority at the End of Period....................................... 26

5.6 Reinstatement of Limited Spending Authority .................................................... 26

5.7 Disbursements ....................................................................................................... 27

6. Procurement Process ................................................................................ 28

6.1 Procurement Plan .................................................................................................. 28

6.2 Pre-Procurement Approvals ................................................................................. 28

6.3 Procurement Activities .......................................................................................... 28

6.4 Contract Administration Activities ....................................................................... 29

6.5 Small Purchases .................................................................................................... 29

6.6 Purchases Related to Administrative Expenses ....... Error! Bookmark not defined.


7. Invoice and Payment Approval Process .................................................. 32

7.1 General Description of Vendor’s Invoice ............................................................. 32

7.2 Cycle of Invoice Processing ................................................................................. 32

7.3 Responsibilities for Invoice Control and Halting / Rejection ............................. 35

7.4 Invoice Booking ..................................................................................................... 36

7.5 General Payment Provisions ................................................................................ 37

7.6 Spending Authority of the Funds ......................................................................... 38

7.7 Payments through Permitted Accounts .............................................................. 38

7.8 Direct Payment through Common Payment System .......................................... 39

7.9 Payments Related to Access to Agricultural Finance Activity .......................... 39

7.10 Eligibility Verification and 30-Day Tracking System ......................................... 39

7.11 Common Payment System Codes ...................................................................... 40

7.12 Ceiling Allocation through CPS .......................................................................... 40

7.13 Local Bank Account Balances ............................................................................ 41

7.14 Interest on Accounts ........................................................................................... 41

8. Taxes........................................................................................................... 42

8.1 General Provisions ................................................................................................ 42

8.2 Specific Tax Regulation ........................................................................................ 42

8.3 Tax Refund ............................................................................................................. 43

9. Personnel and Payroll ............................................................................... 44

9.1 General Provisions ................................................................................................ 44

9.2 Timesheet ............................................................................................................... 44

9.3 Payroll Calculation ................................................................................................ 44

9.4 Temporary Disability – Social Leave .................................................................... 45

9.5 Annual Leave ......................................................................................................... 45

9.6 Welfare and Other Benefits and Compensations ................................................ 46

9.7 Salary Deductions ................................................................................................. 48

9.8 Verification and Performance of Monthly Payments .......................................... 49

10. Asset Management .................................................................................... 49

10.1 General Provisions .............................................................................................. 49

10.2 Purchase and Maintaining of Fixed Assets Register ........................................ 49

10.3 Interoffice Transfer of Fixed Assets ................................................................... 50

10.4 Asset Handover and Usage Policy for IEs ......................................................... 50

10.5 Capitalization and Depreciation of Fixed Assets .............................................. 50

10.6 Disposal of Fixed Assets .................................................................................... 51

10.7 Inventory of Fixed Assets ................................................................................... 51

10.8 End of Compact Control of Assets .................................................................... 52

10.9 Small Value Assets .............................................................................................. 52


11. Travel and Vehicle Use .............................................................................. 53

11.1 Travel .................................................................................................................... 53

11.2 Vehicle Use........................................................................................................... 55

12. Public Outreach Funds and Representation Costs ................................ 56

13. Petty Cash .................................................................................................. 57

14. Reporting .................................................................................................... 58

14.1 Responsibilities ................................................................................................... 58

14.2 Reports ................................................................................................................. 58

14.3 Schedule, Destination, and Publication of Reports .......................................... 60

14.4 Retention of Records .......................................................................................... 64

15. Audits & Reporting on Misuse of MCA-Moldova Funds or Assets........ 64

15.1 Audit Plans ........................................................................................................... 64

15.2 Procuring Auditors .............................................................................................. 64

15.3 Types of Audits and Reviews ............................................................................. 65

15.4 Audit Reports and Findings ................................................................................ 65

15.5 Steps in the Financial Audit Process ................................................................. 65

15.6 Reporting on misuse of MCA-Moldova’s Funds or Assets .............................. 66

16. Internal Control Procedures ..................................................................... 67

17. Review of the Fiscal Accountability Plan ................................................ 68

Annex I: Chart of Accounts ........................................................................................ 69

Annex II: Signature Regulation ................................................................................... 73

Annex III: MCA-Moldova Common Payment System (CPS) Codes ......................... 75


ABBREVIATIONS

AAS Automated Accounting System BCS Budget Classification Structure CIF Compact Implementation Funding CPS Common Payment System DAF Director Administration and Finance of MCA-Moldova DED Deputy Executive Director of MCA-Moldova DFP Detailed Financial Plan DR Disbursement Request DRCD Deputy Resident Country Director of MCC (USA) EC Executive Committee ED Executive Director of MCA-Moldova FA Fiscal Agent FAA Fiscal Agent Agreement FAM Fiscal Agent Manager FBO Finance & Budget Officer FAP Fiscal Accountability Plan FSP Financial Service Provider (USA) GOL Government On-Line (USA) HRO Human Resources Officer of MCA-Moldova IE Implementing Entity/ies ITS International Treasury Services MCA Millennium Challenge Account-Moldova MCC Millennium Challenge Corporation (USA) MDL Moldovan Lei NBC National Business Center (USA) PA Procurement Agent PAA Procurement Agent Agreement PAM Procurement Agent Manager of PA PD Project Director PIA Program Implementation Agreement PIM Project Implementing Manager PIU Project Implementation Unit of MCA-Moldova POF Public Outreach Funds PP Procurement Plan PPG – Program Procurement Guidelines PPM HVA Post-Harvest Credit Facility Policies and Procedures Manual PRF Payment Request Form ProcD Procurement Director of MCA-Moldova ProcO Procurement Officer PRN Procurement Requisition Notice QFR Quarterly Financial Report/Reporting RCD Resident Country Director (MCC-USA) SICF Supplier Invoice Control and Follow-Up Form SPS Secure Payment System SProcS Senior Procurement Specialist of PA SC Steering Committee STLVA Short Term Low Value Assets US$ U.S. Dollars WC Working Capital


MILLENNIUM CHALLENGE ACCOUNT-MOLDOVA


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 Millennium Challenge Account – Moldova (“MCA-Moldova”) grant received from the Millennium Challenge Corporation (“MCC”). This policy was developed in accordance with the Compact Implementation Funding Agreement (the Compact), Program Implementation Agreement (“PIA”), the Fiscal Agent Agreement (“FAA”), the Procurement Agent Agreement (“PAA”) and other Compact- related documents and requires approval by MCC. This policy applies regardless of the nature of the MCC grant, which may include grants made under 609(g) authority, pursuant to Compact (also known as Compact Implementation Funding (“CIF”), or the grant provided by the Compact.

The present FAP:

Supports MCA-Moldova in its efforts to achieve the goals of the Compact;

Translates the spirit of the statements of the Compact into regulations;

Provides a framework for the management of the financial structures of MCA-Moldova;

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 central entities of MCA-Moldova and third parties operating in support of MCA-Moldova within the scope of the Compact Program;

Ensures that the arrangements, conditions and documentation under the Compact, supplementary agreements and the MCC Cost Principles are all complied with.

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

Implementing activities financed by MCC;

Keeping the financial and accounting records.

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. All transactions must adhere to the Cost Principles for Government Affiliates Involved in MCC Compact Implementation as outlined on the MCC website.

Applicability

The FAP applies to all activities financed by MCC and implemented by MCA-Moldova.

Every entity operating under MCA-Moldova (the management of MCA-Moldova, the Fiscal Agent, the Procurement Agent, the “Implementing Entities”, and the MCA-Moldova’s contractors) must follow and consistently apply the FAP requirements and procedures.

No action should be taken by any of the stakeholders of MCA-Moldova that is contrary to the requirements or prohibitions in the Compact or other supplementary agreements thereto.

Capitalized terms used but not defined herein shall have the meaning given to them in the Fiscal Agent Agreement and the Procurement Agent Agreement.

As with any living document and with practical implementation of policies and procedures, the FAP will likely be subject to modification. Any issues arising during implementation must be noted in writing for review by the DAF. Amendments to the basic documents of the Program (Compact and supplementary agreements) may also result in changes to the processes and procedures contemplated in the FAP.

To ensure that the terms of the Compact and the supplementary agreements are complied with, all proposed modifications should be made in writing and should be reviewed by the appropriate authorized personnel of MCA-Moldova. The entity/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;

Submit the proposed modification to the entity directly above it in the MCA-Moldova hierarchy;

Suggest alternatives, with reference to the basic arrangements (Compact, supplementary agreements and other complementary normative acts), 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 (ED), Deputy Executive Director (DED), Director Administration and Finance (DAF), Legal Advisor, Fiscal Agent (FA), and Procurement Agent (PA) shall:


Review the suggested modifications and comment on them in the light of the basic documents (Compact, supplementary agreements, legislation);

If they agree, submit the changes to MCC for non-objection; and if MCC provides non-objection,

Approve the new procedures;

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

This review procedure shall be scheduled in such a fashion to meet the semiannual review and approval of the FAP timeline.

All new procedures and regulations in the FAP are put into force by a memorandum from the DAF after the approval by MCC and MCA-Moldova Executive Committee (“EC”).

Program Overview and Budget The five year, US$ 262 million Millennium Challenge Account – Moldova Program (CIF and Compact) aims to increase investment and private sector activity in Moldova. The Program Goal and Objectives are expected to have a substantial impact on increasing economic growth and reduce poverty in the country.

The Program is a series of strategic investments designed to improve core physical and institutional infrastructure and increase investment and private sector activity. The Program comprises two Projects: “Road Rehabilitation Project” and “Transition to High Value Agriculture Project”.

Road Rehabilitation Project. The primary objectives of the Road Rehabilitation Project are to increase the income of the local population through reduced costs of transport, and reduced costs of goods and service; to reduce losses to the national economy resulting from the deteriorated condition of the roads and reduce the number of road accidents through improved traffic conditions.

Rooted in the National Development Strategy and the Land Transport Infrastructure Strategy (2008-2017), the Road Rehabilitation Project was developed with the assistance of external partners in the road sector (World Bank, European Bank for Reconstruction and Development, European Investment Bank, European Commission, and MCC, collectively the “Joint Group”). The strategy recommends the rehabilitation of the major trans-national axis that crosses Moldova from north to south.

The Road Rehabilitation Project will improve part of the M2 road (“M2”), which is an arterial highway from the Moldovan capital, Chisinau, through the city of Soroca, to the Ukrainian border and beyond to Kyiv, the Ukrainian capital. This route contains significant traffic flows, serves as a significant link between Moldova and Ukraine for private, passenger, and commercial traffic, and has been prioritized by the Government for rehabilitation.

The Road Rehabilitation Project consists of the following:

(i) M2 Road Activity.

MCC Funding will be used to rehabilitate and upgrade a 93 km portion of the M2, beginning near Sarateni at the southern end and ending at the junction with the R7


road west to Drochia (the “Drochia junction”) at the northern end (the “M2 Road Activity”). MCC Funding will also be used to replace or upgrade associated structures within this segment of the M2, such as bridges, drainage systems and culverts, to improve road maintenance and safety. The M2’s improvement is expected to reduce vehicle operating costs, reduce travel time, change maintenance costs, cause an increase in the value of goods moved and cause an increase in frequent travel. Specifically, MCC Funding will support:

(1) Construction costs: These costs include, without limitation, pavement rehabilitation and strengthening, embankment construction, road safety improvements, replacement or upgrading of associated structures, such as bridges, drainage systems and culverts, and any activity associated with the environmental management plan developed with respect to the Activity.

(2) Non-construction costs: These costs include, without limitation, studies, construction supervision, environmental and social mitigation (including resettlement), and other project management costs and technical assistance to be incurred in connection with the M2 Road Activity.

(ii) Supplemental Feasibility Study ESIA and Design

MCC Funding will also be used for a feasibility study environmental and social impact assessment for the road segment from Arionesti to the border crossing in Otaci, detailed design work, a resettlement action plan and an updated environmental and social impact assessment for the entire road section from the Drochia junction to the border crossing in Otaci.

Transition to High Value Agriculture Project The primary objectives of the Transition to High Value Agriculture (THVA) Project are to increase rural economies by stimulating growth to high-value agriculture (HVA) production and marketing; devolve operations and maintenance of irrigation infrastructure from a central-planning era institution to water users; and catalyze future investment in HVA production by establishing a successful model and conducive institutional and policy environment for irrigated agriculture. Through rehabilitation of irrigation infrastructure, transfer of its operation and management to water user associations (WUA) that can provide greater reliability and sustainability of water services, and increased access to finance, training and markets, farmers will be able to engage in more intensive and diversified agriculture, particularly in the high value fruits and vegetable sector. Agriculture, a mains tray of the rural population and especially the rural poor, suffers from low productivity and innovation, contributing to high rate of poverty.

The THVA Project is a set of four reinforcing and integrated activities that, when implemented together will address what are recognized by both donors and domestic stakeholders to be the fundamental constraints to development of the sector. The activities are:

Rehabilitation of Centralized Irrigation Systems (CIS);

Irrigation Sector Reform (ISR);

Access to Agricultural Finance (AAF);

Growing HVA sales. From the financial standpoint, the budget of MCA-Moldova Program is divided into four projects / activities:


Description Total (US$)

Including:

CIF Compact 609(g)

Road Rehabilitation 132,840,000 132,840,000

Transition to High Value Agriculture 101,773,402 13,276 101,760,126

Monitoring and Evaluation 3,538,930 3,538,930

Program Management and Oversight

27,037,668 23,847,668 3,190,000

TOTAL 265,190,000 13,276 261,986,724 3,190,000

1.2 Authorized Parties

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

An independent FA selected through an international competitive bidding process, has been engaged to provide fiscal management services.

The procurement service will be provided by an independent PA selected through international competitive bidding.


Institutional arrangements for implementing the Compact Program

Millennium Challenge Corporation

Government of the

Republic of Moldova

Millennium Challenge Account

Moldova

MCC

Resident Country

Procurement Agent -

External

Road Rehabilitation Project – entity of implementation

Road State Administration

Services and work

suppliers

Services and work suppliers

1) CIS Consultant, 2) Action Plan

and Relocation Consultant, 3)

Constructors, 4) Supervisors

Fiscal Agent

External

CONTRACTOR Implementation

(Project Manager for ISR and CIS)

Credit Line Directo-

rate (Access to

Agricultural Finance)

USAID

(Growing HVA

Sales Activity)

Participating

Financial

Institutions

Service providers

Consulting

companies

Transition to High Value

Agriculture Project – entity of

implementation for ISR and CIS

Common Payment

System (CPS)

US Treasury


MCA-Moldova

The Millennium Challenge Account-Moldova (abbreviated as “MCA-Moldova”) is a public institution empowered to coordinate the processes for developing and implementing programs and projects funded by the Millennium Challenge Corporation by other donors.

MCA-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 Program;

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 MCA-Moldova Bylaws;

c) the Consultative Group, which recommends and submits general proposals regarding the implementation of the Projects. Such recommendations and proposals are sent to the Steering Committee through its representatives on the Steering Committee;

d) the Management Unit, which represents the executive body of the MCA-Moldova and is responsible for the daily management of the Projects.

The Management Unit is comprised of the following key personnel: Executive Director, Deputy Executive Director, Road Rehabilitation Project Director, Transition to High Value Agriculture Director, Centralized Irrigation System Rehabilitation Activity Director, Director of Administration and Finance, Communications and Documentation Director, Procurement Director, Monitoring and Evaluation Director, Legal Advisor, Environment and Social Assessment Director, and Social and Gender Officer.

The Management Unit is overseen by the Executive Director of MCA-Moldova, who is assisted by a Deputy Executive Director.

The principal individuals authorized to act on procurement and financial management matters on behalf of MCA-Moldova are as follows:

The Procurement Director (“ProcD”) shall serve as the primary official within MCA-Moldova responsible for Procurement and compliance with the Program Procurement Guidelines. In the absence of the ProcD, the Procurement Officer (“ProcO”) of MCA-Moldova is the primary official responsible for MCA-Moldova procurement activities;

The Director of Administration and Finance of MCA-Moldova shall serve as the primary official within MCA-Moldova responsible for financial management and compliance with this Fiscal Accountability Plan and the Agreements mentioned herein. In the absence of the DAF, the Finance & Budget Officer (“FBO”) is the primary official responsible for MCA-Moldova financial and administration activities.

MCA-Moldova is organized as follows:


Legal Department

Monitoring and

Evaluation Department Social and Environment

Department

Procurement

Department

Communication and

Documentation Department

Transition to High Value

Agriculture Project

Office Service

Department

Road Rehabilitation

Project

Financial and

Administration

Department

MCA Moldova staff

Fixed term MCA Moldova consultants

Departments directly subordinated to

Deputy ED 1


ED


Deputy ED 2

Subordination relations

Coordination relations


1.3 Procurement Agent

The Procurement Agent shall act on behalf of MCA-Moldova to manage the acquisition of a broad range of goods, works and services required for the implementation of the Compact Program. In this capacity, the Procurement Agent shall diligently oversee, discharge and perform all services necessary to achieve the optimum value for the monies expended by MCA-Moldova, while ensuring that all procurement activity is conducted in compliance with the terms of the Program Procurement Guidelines in the Compact and applicable Supplemental Agreements.

The principal individual authorized to act on behalf of the external Procurement Agent on all matters related to exercising the Agent functions according to the Procurement Agent Agreement and in compliance with this Fiscal Accountability Plan and the Agreements mentioned herein is the Procurement Agent Manager (“PAM”) or nominee in his/her absence.

The organizational structure of the external Procurement Agent is as follows:

Basic guidelines and approval procedures for the procurement of goods, services, and works by any supplier/provider are covered in the Program Implementation Agreement.


In all procurement matters requiring action by MCA-Moldova, the Procurement Agent shall take the required actions related to administering all procurements funded by the grant in a manner consistent with the PIA, in particular the MCC Program Procurement Guidelines. No procurement action shall be finalized or contract signed until it is determined to have complied with the applicable requirements (if any) for approval by the Steering Committee of MCA-Moldova and/or MCC, as may be required by the PIA, the Fiscal Agent Agreement, Procurement Agent Agreement and Program Procurement Guidelines.

1.4 Fiscal Agent

The FA shall act on behalf of MCA-Moldova to provide a broad range of financial management services that are requested by MCA-Moldova to implement the activities funded under the 609(g) Agreement and the Compact with MCC Funding. In this capacity, the FA shall diligently oversee, discharge and perform all services necessary to ensure that all financial management activities are conducted in strict compliance with the principles, rules and procedures set out in the 609(g) Agreement, the Compact and any Supplemental Agreements as defined in the Compact.

The phases of financial management, including budgeting, accounting and reporting to MCC shall be conducted in compliance with International Financial Reporting Standards (“IFRS”) and to Moldovan Authorities in compliance with the Public Accounting Framework. The standard to be applied is the modified cash-based reporting and accounting.

The principal individuals authorized to act on behalf of the FA on all matters related to exercising the agency’s functions according to the Fiscal Agent Agreement and in compliance with this Fiscal Accountability Plan and the agreements mentioned herein are:

Fiscal Agent Manager;

Senior Financial Management Specialist;

Senior Accounting Specialist..

The FA’s internal structure is as follows:


2. Multi-year Financial Plan and Detailed Financial Plans

2.1 Overview

The Multi-year Financial Plan’s (MYFP) budget structure is set out in Annex II, Exhibit A of the Compact. The Detailed Financial Plan (DFP) reflects the funding that MCA-Moldova expects to commit and the disbursement of funds it expects to make, forecasted by quarters of the Compact term. The DFP breaks down both commitments and cash requirements to the Task level (note that approval of the Quarterly Disbursement Request submission by MCC is only at the Activity level, the rest is merely supporting information), in accordance with the Work Plans, on a rolling quarterly basis for the upcoming quarters of the Compact.

For the purposes of the DFPs and the Disbursement Requests (DR), the quarters shall begin on the first day of January, April, July, and October The first quarter shall start on the date of Entry into Force. The first DR shall cover the same period as the first quarter (disbursement may occur earlier under a 609g agreement and CIF).

MCA-Moldova, with the assistance of the FA, shall prepare detailed budgets on a rolling quarterly basis for all future reporting periods through the Compact Term.

Detailed budgets shall be prepared to cover approved work plan activities. MCA-Moldova Project Directors (PD) 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 will be responsible to the ED for the development of DFPs. As part of this responsibility, the DAF will coordinate with the technical units involved, the Procurement Agent, the FA, the relevant staff members within MCA-Moldova responsible for the project/administration expenditures, PDs, and others, to develop realistic plans. The DAF will submit the DFPs to the Executive Committee for approval. After EC approval, the DFPs will be submitted to MCC for approval. Once MCC approves, the DFPs will be formally transmitted to the FA for entry into the AAS.

According to the MCA-Moldova bylaws, annual budgets developed based on DFPs shall be submitted to the Steering Committee for approval. After approval by the Steering Committee, annual budgets shall be submitted to the Ministry of Finance and other governmental bodies as required.

DFPs will be managed by the ED and DAF with assistance by the FA. The FA will be responsible for all budget record keeping and budget reports to MCC and to the Ministry of Finance. The FA will also be responsible for providing accurate and timely information to MCA-Moldova’s management to assist them in making budget management decisions.

2.2 Budget Classification Structure

The budget classification shall follow the line item structure of the MYFP as set out in Annex II of the Compact. The budget classification structure shall be expanded so that the Projects are broken down by Activities, each Activity divided into Sub-Activities, and each Sub-Activity further divided into Tasks as the lowest level of detail. An accounting code with XX numerical digits shall be reserved for each Project, Activity, Sub-Activity, and Task. The Program Management and Oversight line shall include costs related to Program Administration (MCA-Moldova), the FA, the PA , and Audits and any other costs associated with the administration of the Program.

The DFPs 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)

Example for Road Rehabilitation Works of the Road Rehabilitation Project:

Level A: 1. Road Rehabilitation Project

Level B: 1.1. M2 Sarateni – Drochia Junction

Level C: 1.1.1 Construction Works

Level D: 1.1.1.1 Road Rehabilitation Works

The individual codes are to be defined in consultation between MCC, MCA-Moldova, FA, and PA and amended from time to time as the program requires. Changes in


code structure as well as existing codes require prior mutual agreement by MCA-Moldova and the FA. The coding is to be formalized and approved by the DAF in writing and made available to all parties involved. The code table remains in effect until such time as new written instructions are issued.

The Compact budget only prescribes the level of financial detail down to the Activity Level (Level B). Because of this, any proposed changes between Activities (Level B) or higher must be approved by MCC.

2.3 Modifying Financial Plan

Approval Thresholds

Budget adjustments shall be made in accordance with activities included in MYFP (Annex II Exhibit A) of the Compact.

Reallocation of Funds

During the life of the Compact, 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 MCC approval.

MCC’s practice is that excess funds remain in a project budget until a majority of Compact projects are under contract and there is limited possibility that other Compact components will require additional funding.

Regular requests for adjustments to the budgets at the project level and the activity level (Level A and B) shall be approved as part of the quarterly MCC Disbursement Requests subject to approval of the EC and MCC. Special adjustments at the project and activity levels may be made within a quarter through an Out-of-Cycle Disbursement Request subject to approval by the EC and MCC. A reallocation of funds shall be documented in Schedule A of the Quarterly Financial Reports (“QFR”). Any changes across or within Level C or below, shall require only the approval of MCA-Moldova.

Any reallocation of funds contained in the QFR 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.

A justification for the record is required for all reallocation of funds regardless of whether such reallocation requires MCC approval:

A detailed description of an emerging project requirement, identified to receive a budget increase, must include: information about the planned timing of the funding requirement, an explanation why the requirement was not anticipated; what level of decision-making authority has agreed to the value of this new requirement, and all alternative funding levels options.

A detailed analysis of how all costs associated with the requirement were calculated; any anticipated procurement activity associated with this requirement; specific critical timelines related to this new requirement; and the priority of the need for this activity recognized by MCA-Moldova management.


The Project Director must explain where the needed funds will come from and confirm that the reallocation of funds will not jeopardize or put at risk the remaining activities of the project/activity from which the funds will be taken. .

Revaluation of Non-US$ Commitments

Where contracts are registered for payments in non-US$ currency, the FA must review non-US$ 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-US$ commitments shall be revalued as follows:

- Closed (Paid) Commitments shall be revalued by the FA on a monthly basis according to the payments using the commercial exchange rate of the last conversion, as per the provisions of section 5.3 of Fiscal Accountability Plan.

- Future (Projected) Commitments shall be revalued by FA 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. Opening and Management of MCA Bank Accounts

MCA-Moldova uses the MCC Common Payments System (“CPS”) to make disbursements from the US Treasury. Within CPS, there a two payment processes within the Compact: (i) local banks to receive monthly disbursements from MCC via a CPS Payment Request Form (“PRF”) listing the Permitted Account as the recipient account, and the local bank then makes payments to the vendors. (ii) a CPS payment request with instructions to credit a vendor’s account directly.

3.1 Local Bank Accounts (Permitted Accounts)

The Bank Agreement, between MCA-Moldova, the FA and the local bank outlines the procedures and obligations with regard to Permitted Accounts.

MCA-Moldova shall provide to MCC in writing the designated account number and wire transfer instructions for the Permitted Account no later than ten (10) calendar days prior to the initial MCC Disbursement. If any Permitted Account information changes during the Compact Term, MCA-Moldova shall inform MCC in writing about any modifications to such Permitted Accounts not later than ten (10) calendar days prior to the next MCC Disbursement.

Permitted Accounts shall be opened at a local bank selected in a competitive process to manage MCA-Moldova program funds. One account shall be a local currency denominated account (“Local Account”) for 609g and Compact Funds to manage local currency payments. A US$ denominated account (“Special Account”) for 609g and Compact Funds shall be used to manage any US$ payments.

No further bank accounts in the name of MCA-Moldova may be held unless explicitly approved by MCC. Funds should remain in the Special Account and transferred to the Local account as needed. The account balance held in the Permitted Accounts shall not exceed an amount agreed on between MCA-Moldova and MCC as appropriate to cover a maximum of thirty calendar days of small local payments in local currency, such as travel advances, small purchases, payroll and petty cash.


If, in case of suspension, termination or expiration of the Bank Agreement, the bank receives any payments (including interest payment), refund or any other transfer of funds into any Permitted Account, the bank shall immediately notify MCA-Moldova, the Fiscal Agent and MCC and remit any such payment, refund, or other transfer of Funds to a United States Government account or successor account bank account, as designated by MCC.

3.2 Common Payment System

The CPS refers to any system used by MCC to process payments in US$ (or any other currency) directly to vendors for goods, works, and services received. MCC is currently utilizing the International Treasury Services (“ITS”) as the CPS provider for non US$ payments and the Secure Payment System (“SPS”) for US$ payments.

3.3 Authorized Parties

The two FA officials with signatory authority for CPS payments and primary responsibility for the accounts are as follows:

1. Fiscal Agent Manager; 2. Senior Financial Management Specialist.

The alternate signatory shall be:

1. FA Project Director 2. Senior Accounting Specialist

All Payment Request Forms (PRF) shall be prepared by FA and signed by the DAF of MCA-Moldova. In his/her absence it shall be signed by the FBO.

The FA shall ensure that two signatories are available at any given time to meet the MCA-Moldova’s local checking account needs. The FA, by a person other than the bank primary and secondary signatories, 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 FA officials with signatory authority for permitted accounts payments are as follows:

A. First signatories:

Fiscal Agent Manager or FA Project Director

B. Second signatories:

Senior Accounting Specialist or Senior Financial Management Specialist


4. Accounting

4.1 Responsibilities

MCA-Moldova is responsible for Program Implementation and is the sole authority for authorizing expenditures. MCA-Moldova is responsible for submission of all documents required in connection with payments, as outlined in this FAP.

The FA is responsible for execution of payments, all accounting functions and documentation compliance. The FA shall keep the original documents that support expenditures, obligations, and payments. After an audit has been approved by the OIG, the FA must transfer documents to MCA-Moldova within 30 days.

4.2 Chart of Accounts

The FA and MCA-Moldova have jointly established a single Chart of Accounts, approved by MCC, which shall be used for the duration of the Program. The full Chart of Accounts can be found in Annex I. Any changes to the Chart of Accounts are to be submitted to MCC for approval as a part of the FAP approval process.

4.3 Accounting System

The FA maintains an accounting system capable of generating all financial reports for presentation to MCC and local authorities. The FA produces auditable financial statements for audits of MCA- Moldova. Financial transactions shall be recorded on a modified cash basis. This means that the FA will prepare the semi-annual auditable Fund Accountability Statement (“FAS”) 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 and interest, which is returned to the US Treasury quarterly);

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 from MCC funds. For reporting purposes to MCC, 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).

6. Other notes and disclosures needed, as applicable.

Totals for the schedules shall be footnoted on the FAS at each six-month auditable period.

The accounting system also includes a budget and commitment section. The budget used in the system is the MCC approved budget and the commitments are approved contracts signed by MCA-Moldova, both in total volume and divided into individual


payments according to payment plan. This method allows providing up-to-date information on the unused, remaining budget, which is calculated by deducting commitments from the budget. Reports of unused, remaining budget are produced by the system.

4.4 Automated Accounting System

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

Records commitments to obligate budgeted funds;

Records receipts and payments, and assets and liabilities;

Generates reports as requested and ad hoc reports in the format specified by MCA-Moldova;

Produces financial reports for MCA-Moldova on the financial management of the Program;

Produces financial reports to MCC as specified;

Ensures data security;

Provides on-line user-friendly access to MCA-Moldova and MCC.

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

4.5 Access & Backup

Only FA staff has access rights to the automated accounting system for the purposes of data entry and data modification, on an as needed basis. MCA-Moldova (ED, DED, DAF and MCA-Moldova’s Finance Staff) and MCC personnel, RCD, Deputy Resident Country Director (“DRCD”)(if requested), shall have read-only rights. Other MCA-Moldova staff, including Project Directors and outsiders such as auditors, will be given limited access upon the formal written approval by either MCA-Moldova or MCC (Friendly users).

The system is password protected; sharing passwords with any other individual (including other permitted users) is not allowed.

The FA has established a data backup system and developed a Disaster Recovery Plan. The current data backup system for the FA Automated Accounting System features a number of backups and redundancy features. It is described in detail in the Disaster Recovery Plan. The AAS developer (Unisimsoft) provides maintenance services and technical support to the FA.


5. Cash Management

MCA-Moldova payments are made via CPS (mainly) or the permitted accounts. The payment procedures are described in detail in Chapter 7.

As a general rule:

1. MCA-Moldova shall provide the FA with all documentation and information needed for the FA to prepare CPS Payment Request Forms;

2. The FA shall prepare the Payment Request Form (either a Non-US Bank Payment or a US Bank Payment) incorporating all details necessary for delivery of the payment to the final beneficiary.

The Payment Request Form will be signed both by the DAF of MCA-Moldova and the FA authorized parties, which will be uploaded into the MCC Secure FTP system. Upon effective payment confirmation (CPS report), the FA will record it as an in-kind disbursement and corresponding payment.


Fiscal Agent

The FA shall monitor the amount of funding available in each Permitted Bank Account and the amount of funding budgeted for Program and Project Activities during the current and subsequent Quarterly Disbursement Periods, or more frequently if needed to ensure sufficient and appropriate level of available cash. The FA shall instruct the bank as stipulated in the Bank Agreement to transfer from the Special Account and convert into local currency the amounts needed for payments that shall be made from the Local Account, based on the current exchange rate between local currency and the US$ in accordance with the provisions of the Bank Agreement.

The FA shall provide certification to MCA-Moldova regarding the status of funds in the Permitted Accounts monthly or ad-hoc. Budget and cash requirement projections are made in US$.

Project Directors

MCA-Moldova’s Project Directors shall estimate on a rolling quarterly basis for the Compact period 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 PDs shall consider the time required for procurement, contract execution, and supplier/provider delivery when estimating when cash payments shall be required.

The PDs, in coordination with the ProcD, PA, DAF and FA, should develop and provide the relevant information that is necessary for the development of the DFPs and Data Call Reports.

MCA-Moldova

MCA-Moldova, with the assistance of the FA and based on the information provided by the PDs, shall prepare a consolidated DFP and an estimate of the amount of cash needed for the next quarter..

MCA-Moldova shall consider:


Cash estimates for the next quarter as detailed in the DFPs submitted by the PDs and Implementing Entities;

The amounts unspent and estimated to remain unspent at the end of the current quarter.

The calculation of required cash made by MCA-Moldova in the DFP Cash of the Quarterly Financial Reports is part of the DR package. This amount represents the approved spending authority for the next period.

The primary method to assure appropriate cash allowance shall be the confirmation that at the time a commitment is registered, there is either sufficient cash allowance to make the payment through the Common Payment System, or that the cash payment shall fall into a subsequent quarter, and that the commitment was included in DFP Commitment of the most recent QFR.

5.2 Commingling of Funds

Funds provided by MCC must not be commingled with funds from any other source, except as explicitly authorized by MCC.

5.3 Currency Conversion

Currency conversions shall be tracked and managed by the FA consistent with the Compact, any Supplemental Agreements, including the Fiscal Agent Agreement, the Bank Agreement, or other agreements between MCC and MCA-Moldova.

For non-US$ payment transactions handled via the CPS, the conversion rate of the CPS must be used by posting the payment entries with the official rate or making the necessary adjustment for each individual transaction. Differences to the cost entry are to be charged to a foreign exchange-gains/loss analytical code using the same budget codes as the underlying transaction.

For any other US$ to local currency conversion, daily foreign exchange-rates are shall be applied, based on the daily exchange rates published by the National Bank of Moldova (www.bnm.md) reduced by 0.02 MDL/US$ in accordance with the Bank Agreement provisions. Conversion rates shall be entered into the FA’s automated accounting system based on bank account statements.

The US$ equivalent of payments performed in local currency and the balances of all non-US$ cash and bank accounts shall be booked using the commercial exchange rate of the last conversion. Any exchange rate gains/losses identified in the local account(s) shall be booked as “Other Expenses” (Task code: 4.1.2.9) of the budget classification structure. The FA shall document by printing and filing the official exchange rates published by the National Bank of Moldova.

5.4 Working Capital

MCC will authorize a Working Capital allocation of US$ 500,000 for Compact funding and US$ 100,000 for 609(g) and CIF funding. At its discretion, MCC may elect to provide additional working capital for a given period, the amount of which will be detailed in the Disbursement Response Letter. Approval of a DR automatically creates the Working Capital allocation for a given period; no special action is necessary on the part of MCA-Moldova. The Working Capital allocation is valid during the given quarterly approval period and for thirty (30) additional days after its end.

http://www.bnm.md/


Working Capital may be used only for expenditures that were approved by MCC in the most recent DFP, but for which inadequate funds were budgeted or whose timing for payment is later than originally anticipated. Working Capital may not be used for expenditures for which Conditions Precedent to disbursement were not met, and the expense to be paid with the Working Capital may not be included in the DFP of the next period.

Requests to use Working Capital are to be submitted to MCC’s Financial Service Provider (“FSP”) on a Payment Request Form using the following procedure: the FA submits a standard Payment Request Form and includes the designation (“WC”) at the beginning of the entry in the “Invoice number” column. The FA shall state the reason for the request in column 12, “Additional Information.” With this information, MCC’s FSP will deduct the requested amounts from the current approved Working Capital spending authority.

5.5 Expiration of Spending Authority at the End of Period

MCA-Moldova’s authority to submit via the FA, Payment Requests, to the FSP for expenditures included in an approved DR shall expire on the last day of the month following the quarter covered by such DR, except as noted in Section 5.6, “Reinstatement of Limited Spending Authority”.

If a new DR is not approved by the first day of the next quarter, MCA-Moldova will not have the authority to submit requests for payment to FSP for any expenditures relating to the approved DR for the previous period, except as provided in section 7.1.2 and section 7.1.4 of the CPS manual (both of which provide for an additional 30 days). At the end of that 30-day period, FSP must halt payments until MCC approves a new DR Package and/or FSP receives notification from MCC’s Department of Finance that they may continue making payments.

5.6 Reinstatement of Limited Spending Authority

After the expiration of spending authority at the end of the period described above and in section 7.1.3 of the CPS Manual, in exceptional circumstances, MCC may authorize a temporary reinstatement of spending authority to cover specific payments that exceed the usual Working Capital amounts of US$ 500,000 for Compact funding or US$ 100,000 for 609(g) and CIF funding, or when Working Capital is otherwise not available. The total amount of the reinstated spending authority may only be as high as the unused spending authority from the prior period, and is only available during the first thirty (30) days after the close of that period or until the date of the next DR submitted to MCC, whichever is earlier.

The reinstated spending authority may be used only for expenditures that were approved by MCC in the most recent DFP, but for which inadequate funds had been budgeted or where payments were made later than originally anticipated. The reinstated spending authority may not be used for expenditures for which Conditions Precedent to disbursement were not met, and the expense to be paid with the reinstated spending authority may not be included in the DFP of the next period.

Requests to use such funds are to be submitted to FSP using the following procedure: The FA shall submit a special payment request form authorized by the usual signatories and the MCC RCD. The FA should state the reason for the request in column 12, “Additional Information.”


5.7 Disbursements

All DRs shall be executed in accordance with the Compact, including Section 2.3 thereof, any other Supplemental Agreements, and the required authorizations as defined in this Fiscal Accountability Plan. DRs shall outline the cash needs over the next quarter broken down by each month of the quarter.

DRs shall be made in conjunction with the submission of the Quarterly Financial Reports (QFR), or more frequently if allowed by MCC. They shall be submitted to MCC twenty (20) calendar days prior to the end of each quarter.

See www.mcc.gov/countrytools/compact/implementation.php for DR instructions and forms.

Once the DR is approved by MCC, MCC shall inform the FSP of the amount approved by MCC for quarterly spending authority for the Disbursement Period. The FSP will then accept PRF’s up to the cash requirement amount listed on the approved QFR.

Cash transfers to the Local Accounts are recorded by the FA, and based on monitoring of the balances in correlation with the DFPs, the FA initiates account replenishment. The FA shall update the accounting system based on the revised DFP.

MCA-Moldova, with the assistance of the FA, shall estimate the amount of cash needed for the next quarter. When preparing the MCC Disbursement Request, MCA-Moldova shall consider:

(i) Cash estimates of the next quarter of the detailed budgets submitted by the IEs;

(ii) The amounts unspent and estimated to remain unspent at the end of the current quarter;

(iii) The amount of Accrued Interest earnings anticipated for the next quarter. The calculation of required cash shall be made by MCA-Moldova in appropriate sections of the MCC Disbursement Requests.


6. Procurement Process

6.1 Procurement Plan

Procurements for goods, works, and services shall only be made if they are included in the MCC approved Procurement Plan (“PP”), prepared every six months by the PA in coordination with MCA-Moldova’s ProcD in collaboration with Project Directors.

However, procurements for MCA administrative purposes with an estimated cost of up to US$ 25,000 may be initiated without such procurements being included in the PP.

Before the PP is presented to MCC for approval, it must be reviewed by the Procurement Director in consultation with the DAF and the FA to ensure that commitments foreseen in the PP are available in the budget. A copy of the approved PP shall be forwarded to the FA for inclusion into the Automated Accounting and Budgeting System.

Even though a procurement action is listed in the procurement plan, the PA must receive a notification or authorization from the ED or nominee to start a particular procurement process.

6.2 Pre-Procurement Approvals

Procurement activities required for MCA-Moldova’s administrative needs can be carried out either by MCA-Moldova itself or delegated to the PA.

For the procurement activities to be carried out by the PA, the relevant IE and/or PIM 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 IE and/or PIM shall submit the PRN with a cost estimate of the requested goods, works and services to the PD for onward presentation to the ProcD.

The ProcD shall review the PRN to determine if it complies with the approved Procurement Plan. If it does, the ProcD shall countersign the PRN and submit it to the DAF. If, however, the PRN does not comply with the Procurement Plan, the ProcD shall notify the IE, through the PD, and initiation of the procurement is stopped until the needed corrections are made and approved by the ProcD.

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 DFP and approves the procurement. The DAF shall submit the approved PRN to the ProcD who shall seek final authorization from the ED or nominee prior to submission to the PA at which time the procurement process is initiated.

The original of the approved PRN shall be kept in the procurement records with the PA.

This procedure will need to be updated upon receipt of the Procurement Operations Manual.

6.3 Procurement Activities

The Procurement Agent shall undertake procurements in accordance with the MCC Program Procurement Guidelines (http://www.mcc.gov/mcc/bm.doc/mcc-

http://www.mcc.gov/mcc/bm.doc/mcc-guidelines-programprocurement.pdf


guidelines-programprocurement.pdf), the Procurement Operations Manual and the Procurement Agent Agreement.

The following procurement activities will require involvement of the FA in close collaboration with the PA:

Evaluation of proposals/bids. The FA 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 PA and FA shall advise and assist MCA-Moldova in the contract negotiation process.

The PA and the FA 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 and the FA to be named as the invoice recipient. 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 PA shall inform the ProcD. The ProcD in consultation with the PD and the DAF, shall review the cost estimates, and either (i) notify the PA to cancel the procurement, and initiate a new procurement with reduced scope as necessary, or (ii) increase its funding in accordance with Section 2.3 of this FAP, taking into account that contract payment terms should coincide with quarterly disbursement planning. If budget allocations are not planned, the ED and the PA shall be notified by the FA and the procurement is suspended.

Availability of funds. Immediately before the contract is submitted to MCA-Moldova/MCC for clearance, the ProcD shall submit the contract to the FA through the DAF for confirmation that the funds to be committed are still available in the budget.

The ED, or if so delegated, the DED shall have the sole authority to sign the contracts with the supplier/provider, contractor, 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 (see also Annex II).

6.4 Contract Administration Activities

The FA shall retain the original contract, with a copy retained by the PA, MCA-Moldova, The FA shall enter the amount of the commitment into the appropriate ledger of the accounting system.

The PA shall coordinate and cooperate with the PD 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.

6.5 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. In the case of contracts for the provision of goods, works and services with an aggregate contract value of up to US$ 2,000, the ED may delegate contract signing responsibility to the DED.

http://www.mcc.gov/mcc/bm.doc/mcc-guidelines-programprocurement.pdf


The purchase of goods, small works and consulting/non-consulting services for required for MCA-Moldova administrative needs shall be initiated by the Office Manager.

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 MCA 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 MCA-Moldova office needs.

In order to initiate a small purchase, a Requisition Note shall be drawn up, containing a description and quantity of the items to be purchased (exception Direct Contracting).

The original approved Requisition Notice (RN) is kept by the Office Manager.

For all items below $500, direct contracting (sole source) can be used.

For all items above $500, MCA-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 MCA-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 MCA-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 MCA-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.

The justifications for the use of a single source shall be documented in the MCA-Moldova files prior to initiating the purchase.

In all procedures above US$500, MCA-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 MCA-Moldova’s Office Manager.

Subsequent to the award decision, the Office Manager shall submit the evaluation report to Legal Advisor, who will draw up the contract with the vendor.

Before making payment to the contractor, supplier or consultant of the goods, works or services, the FA shall verify against the Excluded Parties list that the payee is eligible to receive MCC Funding.

Purchases for administrative expenses are not considered procurement activities and, therefore, are not subject to MCC Program Procurement Guidelines application.

Purchases for administrative expenses are not required to be included in the MCA-Moldova’s Procurement Plan.

6.7 Procurement-Related Expenses The following procurement-related expenses shall not be deemed part of the contractor’s fees and such expenses of the external Procurement Agent shall be reimbursed by MCA-Moldova directly and separate from the fees; provided, however, that MCA-Moldova has previously approved such expenses to be incurred (including the amount of such expenses):

(a) advertising of procurement announcements, general procurement notices, contract awards and other procurement-related notices;

(b) the cost of printing and delivering bidding documents to prospective bidders; and

(c) fees for technical experts participating in bid or proposal review panels.


7. Invoice and Payment Approval Process

7.1 General Description of Vendor’s Invoice

All supplies must be supported by a proper invoice submitted by a vendor. Invoices shall be submitted in original as described in the contract, to the relevant Project Director of MCA-Moldova upon or after the delivery of the goods or services, all relevant supporting documents being duly attached. As an exception, the invoice can be sent by fax or as email attachment, in PDF format before submission of the original, however, the original must be submitted within thirty (30) days. .

The Project Director stamps the invoice as “Received on…” and verifies that all mandatory invoice details are provided per provisions of the section “General Description of Vendor’s Invoice” of the Vendor Invoice Procedure (see Procedure Manual). Incomplete invoices shall be returned by the Project Director to the vendor for completion/correction and re-submission.

Upon the receipt of the invoice the PD 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.

7.2 Invoice Processing

The Compact and its subsequent agreements require that only valid invoices will be paid. The SICF is designed specifically for verification and certification purposes. The SICF requires signatures from all appropriate stakeholders. A. Small Purchases A purchase is defined as a small purchase if:

The purchase amount does not exceed the threshold of US$2,000

The nature of the purchase shall be for goods

The payment shall be performed through permitted accounts

The following steps are required to process an invoice related to small purchases:

Step 1. Vendor issues and submits the invoice to MCA-Moldova.

Step 2. The appropriate person at MCA-Moldova certifies that there is consistency between the invoiced goods and the ones received/to be received. He/she issues a SCIF and completes the relevant information/confirmation in the form. When the items are purchased based on a Contract, the documents are forwarded to the ProcD (Step 3) otherwise to the DAF (Step 4).

Step 3. The ProcD certifies that the documents are in compliance with the Contract provisions, and forwards the documents to the DAF.

Step 4. The DAF reviews and forwards the invoice to the ED/DED for final approval and payment authorization.

Step 5. The DAF sends the approved invoice with relevant supporting documents to the FA for payment.


Step 6. The FA performs its verification of the invoice with relevant supporting documents and if the invoice and the supporting documentation is acceptable, issues a payment order.

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. MCA-Moldova has 56 calendar days to process and pay this invoice, the time 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 Project Implementation Manager (PIM), if works relate to the THVA Project, or to the RRP PD, if the works relate to the RR Project.

Step 3. (Applies only for THVA-related works) The PIM reviews the IPC, provides comments (if any) and delivers the six (6) copies to the THVA PD of MCA-Moldova.

Step 4. The PD reviews and certifies the IPC. The PD 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 PD issues a SICF and completes the relevant information, then forwards it along with the IPC and the supporting documents for further processing to the ProcD.

Step 5. The ProcD certifies that the invoice properly references the relevant contract number, invoiced goods/works/services are in compliance with the Procurement Plan, and the required contract conditions are met, and forwards the documents to the Legal Advisor.

Step 6. 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 7. The DAF reviews and forwards the signed SICF and attachments to the DED in charge of the respective project/department for prior approval of payment.

Step 8. The DED forwards the signed SICF and attachments to the ED for final approval and payment authorization.

Step 9. The DAF sends the approved IPC and SICF to the FA for payment.

Step 10. The FA 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, the FA initiates a Payment Request Form, which is countersigned by the DAF, and then uploaded by two FA personnel into the NBC for direct payment to the vendor.


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 PD.

Step 2. The PD reviews and certifies the invoice and supporting documents. The PD issues a SICF and completes the required information in it, and forwards it along with invoice and the supporting documents to the ProcD for further processing.

Step 3. The ProcD certifies that the invoice properly references the relevant contract number, invoiced goods/works/services are in compliance with the Procurement Plan, and the required contract conditions are met, and forwards the documents to the Legal Advisor.

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

Step 5. The DAF reviews and forwards the SICF and attachments to the DED in charge of the respective project/department for prior approval of payment. If invoices relate to departments subordinated directly to the ED, the DAF forwards the payment documents directly to the ED for final approval and payment authorization.

Step 6. The DED forwards the signed SICF and attachments to the ED for final approval and payment authorization.

Step 7. The DAF sends the approved invoice, SICF and supporting documents to the FA for payment.

Step 8. The FA performs its verification of the SICF and technical review of the invoice and attachments. If the documents are acceptable, the FA initiates a Payment Request Form that is countersigned by the DAF and uploaded into NBC for direct payment to the vendor. In the case of payments through the permitted accounts, the FA issues a payment order.

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.

Small Purchases

Responsible person 2 working days Procurement Director 2 calendar days (if applicable) DAF 3 working days Fiscal Agent 3 working days

Total days of processing 10 working days

Civil Works (FIDIC Applicable Contracts)

Project Director 4 calendar days


Procurement Director 2 calendar days Legal Advisor 1 calendar day DAF 7 calendar days Fiscal Agent 7 calendar days

Total days of processing 21 calendar days

Goods, Works (Non-FIDIC Applicable Contracts) and Services

Project Director 9 working days Procurement Director 2 working days Legal Advisor 2 calendar day DAF 4 working days Fiscal Agent 7 working days

Total days of processing 24 working days

E. Other Invoice Supporting Documents

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

7.3 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. All invoices must be approved by MCA-Moldova’s ED/DED, before being submitted to the FA for payment.

The PD, ProcD, Legal Advisor (if such be the case), DAF and FA shall perform their verification of invoice and supporting documents in accordance with the section “Responsibilities for Invoice Control and Halting / Rejection” of the Vendor Invoice Procedure (see Procedure Manual).

The FA shall enter a valid invoice into the 30-Day Tracking System, on the day of receipt from DAF of the duly approved documentation.

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, processing can be halted or the invoice rejected by any stakeholder of the invoice control processing.

Reasons for halting of the 30-day payment period:

When the goods/services were not received/performed by the time the invoice was recorded as received, the invoice receipt date shall be amended accordingly in the 30 Day Tracking System, a note shall be added next to the stamped date, and proper documentations shall be attached to the invoice.

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 MCA-Moldova in writing (email is acceptable). 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 "clock starts ticking again" when all elements are rectified to make the invoice valid. A copy is sent to the DAF, to the FA and to the ProcD.

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

The FA shall record the day of halting, and when invoice processing is resumed, note in the Tracking System with a brief description about the reasons for the halting and resumption.

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.

The supplier is identified as being on one of the black lists.

The decision to reject an invoice should be made within 9 days after such determination to reject is made. The supplier shall be notified within 13 days after the rejection. Any rejection shall be communicated to the responsible PD 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.

An invoice is valid unless it is REJECTED by the any of the stakeholders of the SICF verification process. If an invoice is rejected, the 30 day payment deadline stops and does not begin until another invoice is issued and the reason for rejection of the initial invoice has been corrected.

The relevant PD 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.

7.4 Invoice Booking

Invoices are processed by the FA on a daily basis in the order in which they are received from the DAF, after being duly approved by the ED. Upon receipt, the invoice is booked into AAS by the FA’s accountant, which is automatically registered into the 30-Day Tracking System.

Once the invoice is booked into 30-Day Tracking System, the AAS is capable to generate several reports including the 30-Day Prompt Payment Report, the List of Suppliers with Deliveries Exceeding 20,000 US Dollars and the List of Invoices not paid within 30 Days.

If MCA-Moldova has any issue with a vendor, the DAF shall inform in advance, the FA of the issues to be resolved with a particular vendor.


7.5 General Payment Provisions

All invoices approved and certified in accordance with MCA-Moldova Policies outlined in this FAP are received by the FA for payment. Payments can be transacted using MCA-Moldova’s Permitted Accounts or CPS Direct Payments. The payment mechanism shall be determined by the DAF. In order to manage MCC program funds, MCA-Moldova, C.B. Moldova-Agroindbank S.A. and FA jointly signed a Bank Agreement, dated September 7th, 2010 based on which, the following accounts were opened:

Special U.S. Dollar Accounts (U.S. Dollar Account)

Special Moldovan Lei Accounts (Local Account)

Special Euro Account

The Bank Agreement outlines the procedure and obligations of the parties related to the management of the bank accounts.

Payments from the Special and Local Accounts will only be authorized through a written payment instruction duly signed by two Designated Signatories of the FA 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.

The authorized signatories of the FA for the payment instructions are:

First Signatory

Fiscal Agent Manager

FA Project Director (as alternate)

Second Signatory

Senior Accounting Specialist

Senior Financial Management Specialist (as alternate)

To ensure sufficient available cash, the FA shall monitor the amount of funding budgeted for the Program and Project activities during the current Disbursement Period. At the beginning of every month, the FA shall prepare a Request for Funds for the Permitted Accounts.

For fund requests the FA shall use the NON-US Bank Payment Request Form. These funds will be transferred to the designated Permitted Accounts and shall be used for the following purposes:

one month payroll

one month of travel advances

one month of petty cash needs for re-disbursements to local vendors for the different small purchases

The CPS Direct Payment is a payment system that uses the U.S. Department of Treasury’s, International Treasure System (ITS) and Secure Payment System (SPS). All U.S. Bank payments are processed through SPS and all non U.S. Bank payments, through ITS. For CPS Payments, the FA’s authorized signatories who shall sign and upload Payment Request Forms are:

Fiscal Agent Manager

Senior Financial Management Specialist

Senior Accounting Specialist (as alternate)


The CPS payment process is initiated by preparing a Payment Request Form. There are two different types of Payment Request Forms that may be submitted:

Non-US Bank Payment Request Form (for ITS payments)

US Bank Payment Request Form (for SPS payments)

The FA shall ensure that two authorized signatories are always available to process these payments.

7.6 Spending Authority of the Funds

The cash request for the quarter is included in the Disbursement Request Package which shall be submitted to MCC no later than 20 days prior to the commencement of each disbursement period. The MCC Department of Administration and Finance checks, certifies and approves the funds requested for the upcoming disbursement period. If MCC approves the request, MCC shall send a Disbursement Letter to MCA-Moldova detailing the amount of funds approved for the upcoming period. MCA-Moldova shall forward a copy of this letter to the FA.

The FA shall submit payment request forms only relating to the expenditures included in an approved Disbursement Request (line 5 of the Disbursement Request). The FA’s authority for submitting payments expires on the last day of the quarter covered by such Disbursement Request. If a new Disbursement Request is not approved by the first day of the next quarter, the FA will not have the authority to submit payment requests to the Financial Service Provider for any expenditures relating to the approved Disbursement Request for the previous quarter, except the following:

Payments from the Working Capital allocation The Working Capital allocation is valid during the given quarterly approved period and for an additional 30 days after the end of the related quarter. This allocation may be used for expenditures that were approved by MCC in the most recent DFP, but for which the budgeted funds were inadequate or time for payment is later than originally projected.

Reinstatement of Limited Spending Authority

In exceptional circumstances MCC may authorize a temporary reinstatement of the Spending Authority during the first 30 days following the end of the period or until the start date of the next Disbursement Request submitted to MCC, whichever is earlier.

7.7 Payments through Permitted Accounts

This system allows for the funds to be requested for deposit into the Permitted Accounts, and to be allocated to the appropriate Project/Activity. Once an invoice has been approved and certified, the FA shall prepare a bank payment order based on the approved set of documentation. Bank payment orders may be done in MDL or in US Dollars. Bank payment orders must conform with the Regulation of Transfer of Credit approved by the National Bank of Moldova No. 373 dated December 15th, 2005.

Bank payment orders shall be signed by the authorized signatories of the FA and submitted to the bank, which will transfer the funds to the beneficiary. When the transfer is completed, the bank shall send the FA a confirmation of payment. Both payment order and payment confirmation shall be duly attached to the invoice.


As soon as payment confirmation is received, the FA shall stamp the invoice as “PAID” to prevent reuse.

7.8 Direct Payment through Common Payment System

This system allows for payments in US Dollars or MDL, directly from the MCC Secure FTP System, to vendors for goods, works, and services received. The FA shall complete an appropriate Payment Request Form (PRF).

There are two Payment Request Forms – for U.S. Banks or non U.S. Banks. The Payment Request Form shall be signed by MCA-Moldova’ DAF and by the authorized FA signatories. The completed and signed Payment Request Form shall be uploaded into ITS-NBC System by each of the signatories of the FA, who will receive a Successful File Delivery Notification if the upload was completed, providing a number for the Payment Request Form. The FA shall receive from ITS-NBC weekly and monthly payment reports.

From the time of upload, payments to the beneficiary bank account are usually made within 5-7 days.

For internal control and payment security, the FA signatories sign the Payment Request Form immediately before uploading it into ITS-NBC System.

All invoices and Payment Request Forms shall be cancelled by a stamp “PAID” to prevent reuse.

7.9 Payments Related to Access to Agricultural Finance Activity

Disbursements for the Access to Agricultural Finance Activity will be made through MCA-Moldova’s Permitted Accounts in US$, MDL or EUR, which were opened specifically for this activity, in accordance with the provisions of the PPM of MCA-Moldova.

7.10 Eligibility Verification

Every six months, by January 15 and July 15, the FA shall conduct an Eligibility Verification of all MCA active vendors that have contracts with MCA-Moldova as of January 1 and July 1, in accordance with the Program Procurement Guidelines (PPG). Vendors listed on any of the following websites shall be recognized as ineligible for doing business with MCA-Moldova.

World Bank Debarred List: http://web.worldbank.org/WBSITE/EXTERNAL/ WWWBSITE/EXTERNAL/EXTABOUTUS/ ORGANIZATION/ORGUNITS/EXTDOII/O content MDK:21182440~menuPK:2452528~pagePK:64168445~ piPK64168309~the SitePK:588921.00html

Excluded Parties List System: http://www.sam.gov/

US Treasury, SDN: http://www.treas.gov/offices/enforcement/ofac/sdn/

US Commerce, Denied Persons List: http://www.bis.doc.gov/dpl/default.shtm

US Commerce, Entity List http://www.bis.doc.gov/entities/default.htm

US State Department, DTC: http://www.pmddtc.state.gov/debar059.htm

US State Department, Terrorist Exclusion List (TEL)

http://www.state.gov/s/ct/list/

http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/ORGANIZATION/ORGUNITS/EXTDOII/0,,contentMDK:21182440~menuPK:2452528~pagePK:64168445~piPK:64168309~theSitePK:588921,00.html

http://www.treas.gov/offices/enforcement/ofac/sdn/

http://www.bis.doc.gov/dpl/default.shtm

http://www.bis.doc.gov/entities/default.htm

http://www.pmddtc.state.gov/debar059.htm

http://www.state.gov/s/ct/list/


The FA will keep a record of this eligibility verification for each vendor, per the requirements of the PPG.

7.11 Common Payment System Codes

The CPS is designed to adhere to the approved and formal MCC process incorporated in the Quarterly Financial Reports (QFR). The QFR process details the major Compact Program’s past and expected expenditures by each major Project and Activity. CPS will mirror image the Compact’s MYFP’s major Project and Activity levels with an Oracle Code assigned to each program/project level. The FA is responsible for aligning the Chart of Accounts which depict these summary level programs or project budget lines and note the Oracle Code assigned by NBC. In addition, NBC provides a Moldova Code which will remain constant for the duration of the Compact. Both of these, the Moldova Code and the Oracle Code by major Project and Activity budget line need to be included into each payment request. As identified on the ‘Payment Request Form’, these Oracle Codes must be identified for each payment request. These codes enable MCC to compare and update on a real time basis each payment against the major project area. Each payment using this Oracle Code becomes the historical payment information embedded in the MCC reports and will be used to respond to any official internal or external call for financial reporting. Accuracy in posting of payments and use of the correct Oracle Code is therefore paramount (see Annex III).

7.12 Ceiling Allocation through CPS

As each QFR is approved, the ceiling amount by major Project and Activity will be tracked as ‘Not to Exceed’ Budget Authority. This Budget Authority for each program/project will expire at the end of 90 days or on the first day of the month of the new quarter. There is an emergency ceiling in the amount of US$ 500,000, similar to Working Capital and available only for those valid invoices that are submitted to MCA-Moldova after the quarterly Budget Authority has expired, yet the services or goods were approved through the prior QFR process and delivered within the period. A typical example of this are: salaries, rents, utility payments.

Where payments for goods or services, which were approved in the QFR, but are delayed in delivery and/or the presentation of invoice falls into the next quarterly time frame, a one-time ‘Special Payment Request Form’ shall be completed if the payment of this invoice falls above the working capital threshold of US$ 500,000. Although the form for the ‘Special Payment Request Form’ is distinct from other Payment Request Forms to alert NBC of their use, the invoice approval process is the same. However, MCC must approve the use of each ‘Special Payment Request Form’ and the signature of the MCC Resident Country Director or delegated alternate is required. This form 1) increases the spending allowance that was zeroed out at the end of the prior period to an amount equal to the approved payment request, but no greater than the amount of the approved QFR for that project and activity in the previously approved QFR, and 2) initiates the payment process to the beneficiary as would a standard Payment Request Form.


7.13 Local Bank Account Balances

CPS performs payment delivery within five to seven business days. Therefore, there is no value to retaining cash reserves in the local bank account. The amount residing in the local accounts should be at an appropriate level and should only support MCA-Moldova’s immediate cash needs (one month salaries, travel and other small expenses). At this time, the MCC will not mandate a local currency amount to be held in this Permitted Account; however, MCC will monitor on a monthly basis the existing values in these accounts. If the values grow excessive, MCC will provide further guidance as to the allowable amount to be retained in this account.

7.14 Interest on Accounts

The selected bank will pay interest on funds held in the Special Account and in the Permitted Account in consistence with Bank Agreement, unless otherwise agreed in writing by the Parties and MCC. Interest will be calculated daily and credited to the Special Account at least on a monthly basis.

FA will instruct the selected bank to remit Accrued Interest earned on the funds received in the Special Account or any other Permitted Account (s) to a designated by MCC US Government account within 10 working days after each quarter end, provided that the cumulative amount of accrued interest exceeds 500 USD.

The US$ equivalent of the remitted interest amount earned on funds held in the Local Account(s) shall be calculated based on the daily exchange rates published by the National Bank of Moldova on the payment date

Whenever the bank is instructed to transfer interest back to the US Treasury, MCC, MCA-Moldova, and NBC shall be notified as specified in the relevant instructions.

A notification of each interest transfer shall be sent to the address below:

Name Organization Email

EXT Interest Remittance mailbox

NBC Billings and Collections; MCC Division of Finance; MCC DCI Fiscal Accountability; US Dept of Treasury

[email protected]

mailto:[email protected]


8. Taxes

8.1 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, MCC funds are exempted from taxes imposed under laws in effect in the territory of Moldova.

It is MCA-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 provision of the Compact and the Government decision will MCA-Moldova/other beneficiaries will pay and then request reimbursement.

The FA 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 of this Section 2.8 the FA must notify MCA-Moldova and MCC 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.

8.2 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 Program”;

(b) Vendors providing construction services (“Construction Vendor”) to MCA-Moldova or any other vendors making large-scale procurements of petroleum products (at list 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 will 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 “Compact Program” 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 MCA-Moldova, issued on official letterhead, indicating the name of the project and the name of beneficiary of the exemption.


8.3 Tax Refund

When an invoice is paid with tax by MCA-Moldova or its Vendors, the tax refund shall follow the regular refund procedure of the State Tax Inspectorate. The FA 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

MCA-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.


9. Personnel and Payroll


MCA-Moldova staff shall be employed through Individual Employment Agreements (IEAs) in accordance with the Labor Code of the Republic of Moldova. IEAs with the key staff shall be subject to prior approval by MCC and any action regarding employment or termination of employment of key staff must be approved by MCC in advance.

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 MCA-Moldova through Service Contracts, in compliance with the Civil Code of the Republic of Moldova.

The remuneration is calculated by MCA-Moldova according to the IEA or Service Contract for the work performed or services provided. The salary scales for each position shall be coordinated with MCC and approved by the MCA-Moldova Steering Committee.

MCA-Moldova staff shall not be entitled to any overtime payments.

9.2 Timesheet

The MCA-Moldova employees shall work a 40-hour workweek (8 hours per day) except on days off and public holidays On the day before a holiday, a reduced work schedule of 7 hours shall apply. Working time shall be exclusively used for the work in support of MCA-Moldova. Employees shall not exercise any other profession or engage in any outside employment during official working hours.

All employees shall be required to fill in the monthly Timesheet. The timesheet signed by each employee shall be submitted for authorization to his/her direct supervisor (PD, DAF etc.), and then to the Human Resources and Administrative Officer (HRAO) no later than three working days before the end of each month. The HRAO 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. If satisfied, the HRAO shall sign the timesheet and forward it for approval to the Executive Director.

Once approved, the DAF shall send the timesheet, along with other supporting documents (orders for paid leaves, orders for unpaid leaves, sickness certificates etc.) to the FA. If changes occur from the time of timesheet approval to the end of the month, corrections shall be made in the following month.

9.3 Payroll Calculation

The FA shall calculate the salaries for each MCA 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 FA shall calculate the salaries 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 MCA-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 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 US$ 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.

9.4 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 permitted a sick leave on recommendations by an authorized medical doctor. The sick leave is effective upon the written approval of the ED or his/her designee.

The amount of the allowance shall be based on the average monthly income for the last six (6) 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 MCA-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 HRAO and checked by the FA.

9.5 Annual Leave

Every MCA-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 will be processed and authorized by the employee’s direct supervisor (PD, DAF etc.). The application shall be confirmed by the DAF and approved by the ED. On the day the employee returns from leave, he/she will notify his/her direct supervisor by e-mail, copying the HRAO.

Annual leave payments shall be made based on the Order of the MCA-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.


9.6 Annual bonus and Other Benefits and Compensations

MCA Moldova employees may be entitled to receive bonuses, benefits and compensations based on internal MCA Moldova policies and regulations, and Moldovan labor legislation as follows:

Annual bonuses.

Current MCA-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. Bonus payments to employees is subject of MCC prior approval. With the condition of availability of funds, MCA Moldova Executive Director will issue an order which will 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. Starting with the first working day of September, each year, MCA Moldova will evaluate performance of its employees. In order to have more transparence and impartiality during the evaluation, the performance evaluation will be done in 3 (three) steps:

• Self-evaluation,

• Direct supervisor 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 ratings in the three sections of the Performance Evaluation Form. The base for bonuses calculation is the Compact Year – September 1 to August 31.

Eligibility

MCA-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.

Method of calculation of the bonus for period September 2010 - August 2012

From September 2010 to August 2012, MCA-Moldova has successfully implemented all activities under the work plan for the reporting period. During the reporting period MCA-Moldova has shown a positive image in the media, has maintained a permanent consultation with the civil society – all that has positioned us as an entity with a good reputation and professional team that has worked assiduously since the creation of MCA-Moldova until now. Since the foundation of MCA-Moldova there were no frauds, embezzlements, conflicts, or incidents both within the team and in relationships with contractors and partners of the Program. The above is demonstrated also by the audit report for the mentioned period. There were no labor disputes, court litigations, immoral or defamatory actions, or any other discriminatory actions on grounds of gender, age, race or religion. The recorded performance is the joint effort of MCA-Moldova employees and was made possible by additional efforts which substantially exceeded employees’ contractual requirements and consisted of unpaid overtime and weekend work.

Based on the above and taking into consideration the fact that since the establishment of the institution, MCA-Moldova’s employees have not receive any bonuses for this period, the bonus will be determined up to 15% of annual gross salary of each employee entitled to such bonus.

Eligibility

Current MCA-Moldova full time employees, who have been employed for 9 (nine) months and more, shall be eligible to a year-end bonus. The bonus for such employees will be determined proportionally to the number of months of employment.

MCA-Moldova employees whose performance evaluation was rated as “unsatisfactory contributor” and “satisfactory contributor” are not eligible for a year-end performance bonus.

Step 1. (based on the performance evaluation)


Combination of at least “Valuable contributor” under one chapter and “Good contributor” under one chapter obtained in the evaluation form entitles the employee to a 15% of annual gross salary bonus.

The combination of “Good contributor” mark under two chapters from the evaluation form entitles the employees to a 12% of annual gross salary bonus.

The combination of “Good contributor” mark under one chapter and “satisfactory contributor” mark under one chapter from the evaluation form entitles the employees to a 9% of annual gross salary bonus.

Step 2. (based on duration of the employment)

Employees whose duration of the employment is 18 (eighteen) months and more are entitled to a 100% of a bonus calculated at the previous step. For employees whose duration of the employment is less than 18 months the bonus amount determined based on the performance evaluation will be decreased proportionally to the number of months of employment

Compact closeout benefits. The employee’s Compact closeout benefits, if any, shall be determined based on the MCA Moldova Compact Closeout plan and approved by MCC.

Other benefits and compensations. MCA 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 MCA-Moldova. The Order shall indicate the period and the reason for payments, and shall be accompanied by all required supporting documents.

9.7 Salary Deductions

The following deductions shall be made from the monthly salaries: personal income tax and other payments made by the MCA-Moldova on behalf of the employee and others (un-cleared advance, any loss or damages caused by the employee to MCA-Moldova through negligence, alimony and others).

Salary deductions shall only be made according to the relevant supporting documents: MCA-Moldova 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.


9.8 Verification and Performance of Monthly Payments

Before making payments, the FA shall confirm on the availability of funds in the MCA-Moldova budget approved by MCC. The FA shall also check on 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 FA shall issue pay notifications to the employees, indicating gross salary, deductions and net salary paid for the corresponding month.

10. Asset Management


The Program assets shall only be used in furtherance of the Compact objectives and shall not be made available for the personal benefit of any MCA-Moldova employee or consultant.

Within the Compact, and due to the importance of their follow up, fixed assets have the following characteristics:

(a) Properties acquired with MCC Grant funds that are controlled by MCA-Moldova;

(b) Their estimated useful life exceeds one (1) year. Their value exceeds the limits established by the Moldovan legislation and for any equipment that is below the limits established by that legislation but which are particularly susceptible to loss or theft;

(c) They will be transferred to the Moldovan authorities when the program will be closed.

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.

Assets with a value of less than the limit established by Moldovan legislation for fixed assets or with useful life less than one (1) year are defined as “Small Value Assets” (small tools) and are thus not maintained in the fixed asset register.

MCA-Moldova shall provide insurance to cover its equipment, furniture and vehicles from; (a) fire and explosion, (2) natural accidents, (3) energy risks, (4) local and foreign staff travel, and (5) theft (including external, employee and vendors related). Those fixed assets shall be insured through a Moldovan insurance agency for full replacement value adjusted to the actual market value. Money received from fixed assets insurance will be used to replace the assets with the same use and function. Compact funds shall be available for minor repairs and normal maintenance due to regular and normal usage.

10.2 Purchase and Maintaining of Fixed Assets Register

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


shall train MCA-Moldova staff on how to inventory, maintain and manage fixed assets.

The MCA-Moldova Office Manager shall ensure that all fixed assets purchased by MCA-Moldova are labeled with a unique identification code and shall transmit this code together with the supporting documentation, through the DAF, to the FA, who will register them into the Fixed Assets Register.

The Fixed Asset Register shall be integrated into the Automated Accounting System and maintained by the FA. The FA shall keep all records of the fixed assets, including files and supporting documents

The procedures to be followed by MCA-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).

10.3 Inter-office Transfer of Fixed Assets

Fixed assets that are assigned to an employee may be re-assigned to another employee. The MCA-Moldova Office Manager shall prepare a Memo on Fixed Asset Transfer 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 Memo shall be approved by the DAF and then submitted to the FA, who shall record the transfer in the corresponding Fixed Asset Card.

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 DAF, and then completed by both delivering and receiving employee.

In cases of inter-project transfers, a duly numbered and dated Internal Transfer Voucher shall be issued by the DAF, and then completed by both delivering and receiving employee.

The originals will be kept by the FA, while copies will be kept by the delivering responsible employee and Office Manager.

10.4 Asset Handover and Usage Policy for IEs

MCA-Moldova shall purchase assets, register them, and then transfer them over to the IEs for use. The purpose of this policy is to ensure that there are uniform procedures for handing over of all MCA-Moldova assets to IEs and there is a proper usage and maintenance of those assets in accordance with MCC guidelines.

Fixed assets shall be handed over to IEs for operational purposes only, while the title to the fixed assets will remain with MCA-Moldova. Upon receipt of the assets, the IEs will take the responsibility for the effective, efficient, economical and transparent use of all assets to accomplish the goals of the program.

Support and training shall be provided by the FA as requested by MCA-Moldova.

10.5 Capitalization and Depreciation of Fixed Assets

Because MCA-Moldova uses modified cash based accounting fixed assets will not be capitalized in the General Ledger, nor will they be depreciated. Fixed Assets will 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.

10.6 Disposal of Fixed Assets

When a fixed asset is damaged or becomes obsolete, the Office Manager, 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 Office Manager, 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 and submitted to the FA 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 FA shall make the appropriate entry in the AAS based on the approved form and remove the asset from the Fixed Asset Register. One copy of the Fixed Asset Disposal Form shall be kept by Office Manager and one copy by the employee responsible for the use of the said fixed asset.

10.7 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 (at least 5 persons) 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 Fixed Asset Register provided by the FA. 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 FA. This memo shall be approved in advance by the DAF or ED. A copy shall be forwarded to the FA, who shall record the necessary adjustments resulting from the inventory taking.


10.8 End of Compact Control of Assets

Any fixed assets remaining at the end of the Compact period are the responsibility of MCA-Moldova. If these assets are utilized by an IE, MCA-Moldova, in coordination with MCC, will draft handover documents for the IEs, with specific instructions on accountability and maintenance of such assets consistent with the Compact directives.

At Compact closure, MCA-Moldova has several options regarding the disposition of Program Assets. MCA-Moldova shall apply the following criteria by order of importance when evaluating the method of disposition of Program Assets:

• Can the Program Asset be used to sustain the goals and objectives of the Compact;

• What is the value and remaining useful life of the Program Asset;

• What disposition method makes the most sense.

For each category of Program Asset in a given Project, MCA-Moldova will include its preferred disposition method in the Program Closure Plan. MCC may request a different disposition method prior to approving the Program Closure Plan. If MCC and MCA-Moldova are not able to agree on an appropriate disposition method, MCC may, at its expense, have title to such Program Assets transferred to MCC if such Program Assets are in a deliverable state.

In disposing of Program Assets, the accountable entity shall take all reasonable steps to safeguard or delete sensitive information.

10.9 Short Term Low Value Assets

Short Term Low Value Assets (“STLVA”) are assets that meet the following criteria: (a) their unit price is lower than the ceiling provided by the legislation of the Republic of Moldova, irrespective of their period of service, or (b) their estimated useful life is less than one (1) year, irrespective of their unit price.

Management of Short Term Low Value Assets

The management of STLVA shall be based on primary documents: tax invoices and invoices (for non-taxable supplies). The LTSVA shall be received / accepted by the designated person and accounted for by the FA.

STLVA’s with a unit price not exceeding 50% of the applicable ceiling shall be expensed once they are put into service, provided that they are consumed in a single operation cycle. STLVA’s with a unit price exceeding 50% of the applicable ceiling shall be 100% depreciated when put into service. Once obsolete, the STLVA shall be written off on a Write-Off Form / Disposal Form of Small Tools.

The write-off procedure shall be initiated by the MCA-Moldova Office Manager, who shall complete a Note indicating the name of assets to be written off, the quantity and the reasons for the write-off. The decision to write off an asset shall be taken by the members of the committee responsible for asset management.

Each time a Write-Off Form is completed, the DAF shall submit a copy of the Note and the Write-Off Form to the FA, who shall make the appropriate accounting entries no later than by the last day of the month in which the asset was written off.


Inventory Short Term Low Value

STLVA’s inventory taking shall be the responsibility of an Inventory Committee, the membership of which shall be defined in accordance with the Inventory Order issued by MCA-Moldova. Missing STLVAs shall be accounted for in accordance with decisions made by the MCA-Moldova Inventory Committee.

11. Travel and Vehicle Use

11.1 Travel

Travel by MCA-Moldova staff and consultants of the Implementing Entities (collectively called MCA-Moldova Traveler) shall only take place in furtherance of Compact 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 MCA-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 will issue a Travel Order indicating the purpose, destination and period of the travel, as well as the amount of travel advances. This Travel Order shall be forwarded to the Human Resources and Administrative Officer (HRAO), who will make appropriate travel arrangements in accordance with the Government Decision no. 836 of June 24th, 2001 as amended. The HRAO shall also check whether the travel days have been included in the timesheet of the employee.

DAF shall send a copy of the Travel Order and of the Travel Authorization Request to the FA, indicating the name of the traveler and the amounts of advances to be paid.

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 US$ 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 FA will make the corresponding entries into the AAS.

Travel advances must be cleared before another travel advance is authorized; under no circumstances, the FA will 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. 836 of June 24th, 2002 as amended.

Within five (5) calendar days after returning from travel, the MCA-Moldova traveler must complete and submit to his/her superior a Travel Advance Settlement Form. This form shall be completed in the currency of the advance will include expenses incurred in foreign currency (if such were incurred)) and recalculated in the currency of the advance. The exchange rates applied shall be indicated in the receipts provided by the exchange offices and attached to the Travel Advance Settlement Form, along with other supporting documents for the incurred expenses.

The Travel Advance Settlement Form and its supporting documents shall be reviewed by the FBO, endorsed by the DAF and approved by the ED. Once approved by ED, the DAF shall submit the package to the FA to be processed.

The FA shall review the Travel Advance Settlement Form and ensure that it is adequately completed and that all supporting documents are attached. If this is the case, the FA will settle the advance amount of the traveler. The amount of the advance not covered by supporting documents shall be refunded in national currency or in the currency of the advance at the official rate of NBM on the day of refund.

If the traveler did not receive an advance, he/she shall claim the travel related expenses in the national currency, and payment will be made into the account of the traveler at the exchange rates indicated in the exchange office receipts. Otherwise, the expenses will be recalculated based on the official exchange rate of the National Bank of Moldova on the day preceding the travel departure.

Cancellation of Travel

If approved and funded travel is cancelled, all allowances received shall be refunded to the FA 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

MCA-Moldova travelers shall be entitled to payment of Daily Subsistence Allowance (DSAs) as follows:

for local travel, the DSAs established by the Government Decision no. 10 of January 5th, 2012 as amended shall apply;

for foreign travel, except for USA, the US State Department rates posted on the website www.state.gov shall apply;

for travel to the USA the rates as published on the website www.gsa.gov shall apply.

For departure and return days, the MCA-Moldova travelers’ DSAs shall be paid at fifty per cent (50%) of the applicable rates to cover en route expenses.

http://www.state.gov/

http://www.gsa.gov/


Lodging Costs

MCA-Moldova travelers shall be entitled to recover lodging costs upon presentation of the supporting documents. MCA-Moldova shall not refund the cost of deluxe hotel rooms. When accommodation is paid for by external sources, MCA-Moldova travelers shall not be compensated for this expense.

Transportation Costs

Transportation costs shall be reimbursed based on the following supporting documents

Air – boarding pass, flight ticket;

Rail – ticket (receipt);

Motor (taxi, bus, tram, tube) – ticket (receipt).

For air travels of the MCA 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 MCA Moldova.

If the traveler uses his/her personal car for business trips, MCA-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.

MCA-Moldova shall refund the traveler’s expenses related to taxis 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.

11.2 Vehicle Use

The MCA-Moldova staff shall use vehicles for official business only and only when authorized by the ED/DED MCA-Moldova does not provide MCA-Moldova staff with transportation between their homes and the office. Only employees authorized in writing by the ED/DED shall be entitled to drive MCA-Moldova vehicles.

For the good management of the MCA-Moldova vehicles the following rules shall be observed:

All MCA-Moldova vehicles shall be insured and shall have log books, which will be inspected by the FBA once a month to ensure proper and consistent use of vehicles.

All drivers of MCA-Moldova vehicles shall have valid driving licenses.

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


All MCA-Moldova vehicles shall be serviced and repaired at the authorized dealer/service center and fuelled at the designated filling station after obtaining relevant approval from ED/DED.

All fuel requisitions (receipts) shall be submitted to the FBA who is responsible for monitoring mileage travelled by each vehicle, to ensure efficiency and safety and for the preventive maintenance activities for vehicles, based on log books. The FBA shall also be the custodian of all spare keys.

All accidents involving MCA-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.

Drivers must maintain the vehicles in good working condition to ensure the maximum degree of efficiency and safety.

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

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 MCA-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 MCA-Moldova Schedule of Consumption by Each Type of Vehicle, which shall be approved by the ED.

The FA shall account for and expense the fuel consumed based on the accurate and duly approved documents, as per the provisions of the section “Procedures to be Followed while Using the Fuel Cards System” of the Vehicle Use Procedure (see Procedure Manual).

12. Public Outreach Funds and Representation Costs

Public Outreach Funds and Representation Costs (“POF”) shall be incurred only in furtherance of the Compact goals and shall be used to host official receptions, lunches, dinners, and similar events, and to otherwise extend official courtesies to the stakeholders of MCA-Moldova.

Such events may include: official reception of delegations, organization of public and media events and high-level meetings in furtherance of the Compact, translation/interpretation services contracted by MCA-Moldova for such events, as well as other similar activities deemed necessary by the EC and in the best interest of MCA-Moldova’s Program Implementation. POF shall also include the costs of official protocol events, such as procurement of souvenirs for the official delegations travelling abroad and for those visiting the Republic of Moldova.

According to the MCC Guidebook, POF shall not be used to pay for the cost of meals and refreshments for MCA-Moldova employees in connection with regular working meetings, or for purely social events intended primarily for the entertainment or benefit of MCA-Moldova officials and employees, their families, or personal guests. Likewise, Compact funds may not be used to purchase alcoholic beverages.


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 Compact, are within amounts clearly budgeted for these purposes in the DFP, and are not prohibited by any other law, rule or regulation.

Expenditures for POF shall be in accordance with provisions in the FAP and MCC Cost Principles for Accountable Entities. However, for expenditures related to activities such as security, strategic information, etc. a memorandum certified by the ED must be provided.

The FA shall make payments and reimbursements related to POF in accordance with the FAP upon receiving an approved and documented request for payment as per provisions of the section “Documentation of Public Outreach Event Use” of the Public Outreach Funds and Representation Costs Procedure (see Procedure Manual).

13. Petty Cash

General

MCA-Moldova shall perform most of the payments via CPS or bank transfers. However, in specific cases it may be necessary for the MCA-Moldova to use cash for small, non-recurring expenses. MCA-Moldova shall establish a petty cash fund to serve this purpose, which will be held both in local currency and US Dollar denominations.

The cash transactions shall be carried out by the FA at its quarters. The person appointed by the FA as a Cashier (the Accountant) shall be responsible for the integrity of the petty cash fund, as defined per a Funds Accountability Contract. The cash shall be kept in a lockable strong box. Only the designated Cashier and the Senior Accountant Specialist (acting as Chief Accountant for the petty cash management purposes) shall have the access to the keys.

MCA-Moldova petty cash fund shall be replenished via transfers from bank accounts and from the unused advances refunded by the imprest holders. The use of forms related to petty cash transactions shall be in compliance with the provisions of the section “Use of the Petty Cash Forms” of the Petty Cash Procedure (see Procedure Manual).

Petty Cash Count and Reconciliation

In accordance with audit 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.

FA shall perform a reconciliation of the petty cash on hand to the cash recorded in the Automated Accounting System on a monthly basis. A report on the petty cash reconciliation shall be included in the monthly financial reports submitted by the FA to MCA-Moldova.


14. Reporting


The FA shall produce monthly, quarterly, annual reports, and ad-hoc reports for the use of MCA-Moldova, MCC and Ministry of Finance. MCA-Moldova, together with the FA, shall develop an internal procedure that specifies what financial or non-financial information shall be disclosed to the MCC, the Moldovan legislation and/or the general public. Quarterly Financial Reports may also be required for funding under 609g and Compact Implementation Funding.

The bank shall provide the following monthly reports to MCA-Moldova and the FA:

Cash balance of the Permitted Bank Account(s);

A transaction report.

The ITS shall provide access to the following daily and monthly reports to MCA-Moldova and the FA:

Payment Report;

Reject Report.

The MCC Financial Services Provider will provide the following reports to MCA-Moldova and the FA:

US Treasury Government On-Line (“GOL”) Report that details each ITS transaction payment settlement (on a monthly and weekly basis);

MCC accounting reports breaking down expenditures by Project/Activity upon request.

14.2 Reports

The FA shall provide the following reports to MCA-Moldova:

Monthly Reports

Cash Flow Statement;

Cash Flow Statement on AAF Activities;

Certification of reconciliation between MCA-Moldova accounting records and bank account statements (in MDL, EUR and US$);

Interest accrued on Local (MDL) and Special (US$ and EUR) Accounts;

Exchange rate summary;

Certification of reconciliation between MCA-Moldova accounting records and ITS and SPS;

Statement of commitments and payments versus MYFP;

Statement of commitments and payments versus QFP;

Statement of commitments by source of funding recorded during the month;

Commitments history statement;

Statement of payments by source of funding recorded during the month;

Payments history statement;

30 day invoice payment tracking record. Notes shall be provided for any deviations;

Travel imprest report;

Travel ledger;

Tax exemption report.


Quarterly Reports

Quarterly Financial Reports, including the status of funds report;

Commitments History Statement;

DFP;

Balance for the quarter;

Statement of Commitments and Payments vs. MYFP;

Cash Flow Statement;

Payment History Statement;

Performance Report detailing the tasks performed by the FA during the quarter (see Fiscal Agent Agreement);

Data Call Report to MCC (see Procedure Manual - # 14. Development of Quarterly Data Call Report).

Annual Reports

The Annual Performance Report is provided thirty (30) days after the end of the contract year.


14.3 Schedule, Destination, and Publication of Reports

Report Report

Responsibility Submission Date Report

Recipient

Publication

Monthly Reports

Cash Flow Statement Fiscal Agent 14 calendar days after

month-end MCA-Moldova No

Cash Flow Statement on AAF Activity Fiscal Agent 14 calendar days after


Bank Reconciliation Fiscal Agent 14 calendar days after


Interest Accrued on local and special accounts Fiscal Agent 14 calendar days after


Exchange rate summary Fiscal Agent 14 calendar days after


ITS and SPS Reconciliation Fiscal Agent 14 calendar days after


Commitments and payments versus MYFP Fiscal Agent 14 calendar days after


Commitments and payments versus QFP Fiscal Agent 14 calendar days after


Commitments by source or funding recorded during the month

Fiscal Agent 14 calendar days after


Commitments history Fiscal Agent 14 calendar days after


Payments by source or funding recorded during the month


month-end

MCA-Moldova & MCC

No

Payments history statement




30 day invoice payment tracking record Fiscal Agent 14 calendar days after


Travel imprest report Fiscal Agent 14 calendar days after


Travel ledger Fiscal Agent 14 calendar days after


Tax exemption report Fiscal Agent 14 calendar days after


Quarterly Reports

Quarterly Financial Reports

MCA-Moldova with FA

Assistance

14 calendar days before beginning of

next calendar quarter

MCA-Moldova SC & MCC

No

Commitments History Statement MCA-Moldova

with FA Assistance




No

Detailed Financial Plan

MCA-Moldova with FA

Assistance




No

Balance Fiscal Agent 14 calendar days after

quarter-end MCA-Moldova No

Statement of Commitments and Payments vs. MYFP Fiscal Agent 14 calendar days after


Cash Flow Statement Fiscal Agent 14 calendar days after


Payment History Statement Fiscal Agent 14 calendar days after


Performance Report Fiscal Agent 14 calendar days after


Data Call Report DAF, PDs / TDs and FA

6 calendar days after quarter-end

MCA-Moldova & MCC

No

Annual Reports


Annual Performance Report Fiscal Agent 30 calendar days after end of contract year

MCA-Moldova &MCC

No

Reports for Ministry of Finance and Local Authorities

Information regarding the cash balances of PIU from investment projects, grants and external credits located in accounts of commercial banks

Fiscal Agent 3 working days after

month-end

MCA-Moldova

& Ministry of Finance

No

Express Report regarding the receiving and using of foreign grants, credits and other sources for projects implementation, financed by external funds


month-end

MCA-Moldova


No

Information regarding the execution of budget expenditure of MCA-Moldova PIU’s Programs.


month-end

MCA-Moldova


No

Monthly report of Credit/Grant disbursement. Fiscal Agent 3 working days after

month-end

MCA-Moldova


No

Monthly report on labor Fiscal Agent 20 calendar days after

month-end

MCA-Moldova

& Statistical Department

No

Annual report on labor health and safety Fiscal Agent 30 calendar days after

year-end

MCA-Moldova


No

Annual report on professional development of staff Fiscal Agent 30 calendar days after

year-end

MCA-Moldova


No

Annual report on the number and the payroll Fiscal Agent 30 calendar days after

year-end

MCA-Moldova


No

Annual report on types of employees and personnel fluctuations


year-end

MCA-Moldova


No


Monthly withhold tax Fiscal Agent 25 calendar days after

month-end

MCA-Moldova

& State Tax Inspectorate

No

Quarterly medical insurance Fiscal Agent 25 calendar days after

quarter-end

MCA-Moldova


No

Annual information on payroll and withholding taxes Fiscal Agent 25 calendar days after

year-end

MCA-Moldova


No

Quarterly social fund Fiscal Agent 25 calendar days after

quarter-end

MCA-Moldova

& Social Fund No

Annual REV Fiscal Agent due before March 25th MCA-Moldova

& Social Fund No


Within the prescribed number of days after each fiscal period the financial reports for that period shall be published on MCA-Moldova’s website or otherwise made publicly available.

14.4 Retention of Records

The FA shall retain electronic and paper records pertaining to any activity of the FA conducted under the terms of the FA Agreement, including communication, contracts or financial transactions. After each annual audit the documentation (hard copies and copies of the electronic version of AAS to date) will be delivered by FA to MCA-Moldova for storage and archiving purposes. Records shall be retained by the FA for a period of five years following the termination date of the Compact or the FA Agreement to which it is a party, whichever is earlier. If the Fiscal Agent Agreement is terminated before the termination of the Compact, the FA shall retain copies of all records but shall transfer the originals of all records to the succeeding FA according to the Procedure established by MCA-Moldova.

15. Audits & Reporting on Misuse of MCA-Moldova Funds or Assets

MCA-Moldova shall ensure that authorized representatives of MCC, the Office of Inspector General for MCC, the U.S. Government Accountability Office, or any auditor contemplated in a Compact Document, are afforded (i) the opportunity to audit or inspect activities financed with MCC Funding, the utilization of goods and services financed by MCC Funding, and books, records and other documents relating to this Compact, and (ii) access to relevant employees and agents of the Government and any other entity receiving amounts of MCC Funding.

15.1 Audit Plans

MCA-Moldova, with the assistance of the FA, shall prepare an Audit Plan no later than sixty (60) calendar days before the end of each period to be audited. The Audit Plan shall designate the entities (MCA-Moldova and Covered Providers) to be audited, as outlined in the MCC Guidelines for Financial Audits Contracted by Foreign Recipients (MCC Audit Guidelines), as well as the timing of an audit.

Audits shall be conducted on a semi-annual basis for the periods ending 30 June and 31 December. The first audit shall cover the period from October 07, 2009 to December 31, 2011.

15.2 Procuring Auditors

MCA-Moldova shall use a competitive process to select an appropriate auditor from a list of auditors approved by the MCC Inspector General. The Statement of Work included in all bidding and contract documents shall conform to the Statement of Work provided in the Audit Guidelines.

After the initial audit, MCA-Moldova shall enter into an appropriate number of contracts with qualified auditors to conduct the subsequent audits identified in the Audit Plan.


15.3 Types of Audits and Reviews

The financial audit shall assure that the financial statements of the MCC program 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 MCA-Moldova, the FA, and all Project Director implementing the MCC program. This includes compliance with the Fiscal Agent and Procurement Agent Agreements, as appropriate.

MCA-Moldova shall conduct, or cause to be conducted, such performance reviews, data quality reviews, or program evaluations during the Compact Term in accordance with the Monitoring & Evaluation Plan or as otherwise agreed in writing by the Parties.

15.4 Audit Reports and Findings

MCA-Moldova shall furnish, or use its best efforts to cause to be furnished, to MCC an audit report in a form satisfactory to MCC for each audit required by Section 3.8 of the Compact, other than audits arranged for by MCC, no later than ninety (90) calendar days after the end of the period under audit, or such other time as may be agreed by the Parties.

Upon receipt of any findings by an auditor, the audit findings shall be discussed with MCA-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 MCA-Moldova. The ED shall prepare a written response and submit it to MCA-Moldova’s SC for approval, prior to submission to MCC. Timing of these actions shall be done to assure that the written response is provided to MCC within thirty (30) calendar days of the finding.

MCA-Moldova shall use its best efforts to ensure that Covered Providers take, where necessary, appropriate and timely corrective actions in response to audits; consider whether a Covered Provider’s audit necessitates adjustment of its own records: and, require each such Covered Provider to permit independent auditors to have access to its records and financial statements as necessary.

15.5 Steps in the Financial Audit Process

1. An Audit Plan is prepared by DAF, with assistance by the FA, and approved by MCC. The Audit Plan should be submitted to MCC within calendar 60 days before the next Audit period.

2. The first audit period will be October 07, 2009 to December 31, 2011

3. The procurement of the Auditor takes place or the Option Period on an existing audit contract is exercised. A firm must be on the approved auditor lists: http://www.usaid.gov/oig/public/mcc/resources/mcc_auditors_lists.htm.

4. The Financial Audit must be completed within 90 calendar days after the end of the audit period:

a. The Auditor has 3 deliverables: Planning Document, Draft Audit Report, and Final Audit Report. Each deliverable must be approved by the MCC Office of the Inspector General before payment;

b. The Auditor must conduct:


i. An Entrance Meeting with all responsible persons involved in the audit process;

ii. An Exit Interview after the completion of fieldwork to discuss its preliminary audit findings and allow the MCA-Moldova and the FA/PA to correct and clarify any misunderstandings that may have arisen during fieldwork, and to request formal, written comments for inclusion into the Draft Audit Report;

iii. An Exit Meeting to discuss the Draft Audit Report with the MCA-Moldova, FA and PA.

c. The Auditor submits the Draft Audit Report and then Final Audit Report to MCC Office of the Inspector General (“OIG”);

d. The Office of Inspector General will send the Approved Final Audit Report to MCA-Moldova ED. The letter usually states that the OIG wishes to receive a corrective action plan on the findings. The Final Audit Report is not approved until the OIG sends it to MCA-Moldova officially;;

e. MCC will work with the DAF to develop a corrective action plan;

f. A copy of the Final Audit Report and Corrective Action Plan shall be sent to MCA-Moldova Steering Committee.

g. The final audit report will be published on the MCA-Moldova website within 30 days of receipt of the final audit report.

15.6 Reporting on misuse of MCA-Moldova’s Funds or Assets

It shall be the policy of MCA-Moldova to use the USAID Office of Inspector General HOTLINE as a mechanism to report instances of waste, fraud or abuse of MCA-Moldova’s funds or assets. Employees, contractors, consultants, and the public may report such instances via telephone, email, or mail. For details see MCA-Moldova “Whistleblower Policy” (Procedure Manual).


16. Internal Control Procedures

MCA-Moldova shall adopt the following expanded internal control procedures with prior approval from MCC, to insure reliability of financial reporting, compliance with laws and regulations, and effectiveness and efficiency of operations. These internal control mechanisms shall include the following procedures:

Development of Quarterly Disbursement Request and Reporting Package

Commitments and Payments Control

CPS Reconciliation

Automated Accounting System Security

Vendor Invoice

Payment

Bank Guarantees

Taxes

Personnel and Payroll

Assets Management

Travel and Vehicle Use

Public Outreach Funds and Representation Costs

Petty Cash

Development of Quarterly Data Call Report

Whistleblower Policy

IT Security

AAF Activity

RAP

Newly developed procedures not mentioned above will be considered an integral part of the procedures list until the next modification of FAP.

17. Payments under Bid Challenge System

MCA-Moldova has adopted on October 25, 2010 the Bid Challenge System Rules, and it is made public being published on MCA-Moldova website. The bid challenge process was set up to allow bidders and contractors an opportunity to voice complaints about the tendering process and to provide specific inputs on correcting any possible inconsistencies. All applicable technical rules which should be applied for the BCT (Bid Challenge Tribunal) are described in the Bid Challenge System. The below paragraph describes in more detail regarding the payment for the services as well as reimbursement of the costs incurred by the BCT members. Professional fee/remuneration of the BCT member is determined based on the Received and Accepted Financial Proposal. The Procurement Agent must prepare a cost estimate before proposals are requested. This estimate can be developed using historical data, prior experience and any other sources. The proposed daily/hourly rate should be compared with Procurement Agent estimate. In case of major differences, the proposed daily/hourly rate should be negotiated with potential BCT members. Other costs such as Travel, transportation costs and accommodation should be reimbursed based on the scan copies of supporting documents/receipts. Travel shall be by the most direct traveled route. For air travels, only economy-class air


fares are allowed. For any exception to the above mentioned policies, MCA-Moldova will request for MCC approval. Daily Subsistence Allowance should be calculated based on US State Department rates posted on the website (www.state.gov). For reimbursement of other requested expenses, MCC’s ”Cost Principles for Governmental Affiliates involved in MCC Compact Implementation” will apply. Professional fee as well as other expenses of the Chairman of the BCT should be shared equally between both parties. Scanned copies of all supporting documents/receipts should be attached to the invoice. The professional fee, travel and other transportation costs and accommodation should be paid based on the invoice properly submitted (including bank details, Tax ID number, etc.). The invoice should be issued to MCA-Moldova within 30 days of the Final Decision of the Bid Challenge Tribunal, and will be paid within 30 days after receipt of acceptable invoice. The invoice should be supported by detailed daily breakdown of activities performed.

18. Review of the Fiscal Accountability Plan

The Fiscal Accountability Plan shall be revised on at least a semiannual basis and where necessary updated by mutual agreement between MCA-Moldova and the FA.

All updates to the FAP shall be submitted to MCC for approval within thirty (30) calendar days after the semi-annual revision. This policy applies regardless of the nature of the MCC Grant.

http://www.state.gov/


Annex I: Chart of Accounts


Annex I: Chart of Accounts

Chart of accounts – Accounts

Segment Description

Account Prjt Act Ss-Act 1 RECEIPTS

Funds from MCC

10 0 Acc. group Funds from MCC

100 0 0 Account Compact funding

101 0 0 Account CIF funding

102 0 0 Account 609 (g) grants

Interest earned

15 0 Acc. group Interest earned

151 0 0 Account Interest earned special account (US$)

152 0 0 Account Interest earned local account (MDL)

Accrued interest bank receivables

16 0 Acc. group Accrued interest bank receivables

161 0 0 Account Interest accrued US$ acc receivables

162 0 0 Account Interest accrued MDL acc receivables

Other Receipts

17 0 Acc. group Other Receipts

171 0 0 Account Disposal of fixed assets

172 0 0 Account Other items

2 COMPACT RECEIVABLES & PAYABLES

Compact receivables

20 0 Acc. group Compact receivables

200 1 0 Account Road Rehabilitation Project

200 2 0 Account Transition to High Value Agriculture (THVA) Project

200 3 0 Account Monitoring & Evaluation

200 4 0 Account Program Management and Oversight

Compact payables

21 0 Acc. group Compact payables



210 3 0 Account Monitoring & Evaluation

210 4 0 Account Program Management and Oversight

22 0 Acc. group Performance Guarantee



3 COMPACT EXPENSES

1 Road Rehabilitation Project

30 1.1. Acc. group M2 Sarateni-Drochia Junction

300 1.1. 1 Account Construction Works

300 1.1. 2 Account Construction Supervision


300 1.1. 3 Account Implementing Entity Support [SRA]

300 1.1. 4 Account Other Expenses

30 1.2. Acc. group M2 Drochia Junction - Otaci Studies

300 1.2. 1 Account Feasibility Study, ESIA & Detailed Design

300 1.2. 2 Account Resettlement Action Plan & Update to ESIA

2 Transition to High Value Agriculture Project

30 2.1. Acc. group Rehabilitation of CIS (CISRA)

300 2.1. 1 Account Detailed Design and Resettlement Action Plan Development

300 2.1. 2 Account Construction Works

300 2.1. 3 Account Construction Supervision

300 2.1. 4 Account Water Users‘ Association Start-up Support

300 2.1. 5 Account IE Support / PIM

300 2.1. 6 Account Resettlement Action Plan Implementation

30 2.2. Acc. group Irrigation Sector Reform [ISRA]

300 2.2. 1 Account Irrigation Sector Reform

30 2.3. Acc. group Access to Agricultural Finance [AAF]

300 2.3. 1 Account AAF Credit Fund

300 2.3. 2 Account Investment Development Services and Public Outreach

30 2.4. Acc. group Growing High Value Agriculture Sales [GHS]

300 2.4. 1 Account Growing High Value Agriculture Sales

3 Monitoring and Evaluation [M&E]

30 3.1. Acc. group Studies & Surveys

300 3.1. 1 Account CIS Farm Survey

300 3.1. 2 Account AAF Survey

300 3.1. 3 Account GHS (Value Chain) Survey

30 3.2. Acc. group Capacity Building

300 3.2. 1 Account MCA Staff

300 3.2. 2 Account IEs Support

300 3.2. 3 Account Database, Hardware, Software & Training (MIS)

30 3.3. Acc. group Data Quality Review

300 3.3. 1 Account External Review & Support Enhancement

30 3.4. Acc. group Evaluation

300 3.4. 1 Account Mid-Term Evaluations

300 3.4. 2 Account Final Project Evaluations

300 3.4. 3 Account SPS Assessment

30 3.5. Acc. group Public Outreach for M&E

300 3.5. 1 Account Public Outreach for M&E

4 Program Management and Oversight

30 4.1. Acc. group MCA-Moldova

300 4.1. 1 Account Personnel Salaries and Benefits

300 4.1. 2 Account Administrative Expenses

300 4.1. 3 Account Transportation/Travel Expenses

300 4.1. 4 Account Office Furniture, Equipment & Capital Expenses

300 4.1. 5 Account Outreach & Communications


300 4.1. 6 Account Training & Capacity Building

300 4.1. 7 Account Bank Fees

300 4.1. 8 Account Miscellaneous Administrative Expenses

30 4.2. Acc. group Fiscal Agent and Procurement Agent

300 4.2. 1 Account Fiscal Agent

300 4.2. 2 Account Procurement Agent

30 4.3. Acc. group Audit

300 4.3. 1 Account Audit

4 BANK ACCOUNTS

Special account US$

41 0 Acc. group Special account US$

410 0 XXX Account Special account US$

Local account MDL

42 0 Acc. group Local account MDL

420 0 XXX Account Local account MDL

Accrued interest

43 0 Acc. group Accrued interest transferred to the treasury

431 0 XXX Account Interest transferred to US treasury - special acc $

432 0 XXX Account Interest transferred to US treasury - local acc MDL

5 TRAVEL ADVANCE & PETTY CASH

Travel advance

51 0 Acc. group Travel advance

510 0 XXX account Travel advance

Petty Cash advance

52 0 Acc. group Petty Cash

520 1 XXX Account Petty cash MCA-Moldova


Annex II: Signature Regulation


Annex II: Signature regulation

MCC EC/SC ED DED DAF ProcD PD

Notes 1 2 3 3 3 3+4

Budgets above the sub-activity level X X X A X

Budgets at the sub-activity level and below

X A X

Short-term approval of invoices exceeding budget

X A X X

QFR, Disbursement Requests & Procurement Plan

X X/X X A

Hiring and Removal of Key Personnel X X X A

Staff Bonus Payments X X A X

Contracts over US$ 25,000 X A A

Contracts at or under US$ 25,000 X A A

Contracts at or under US$ 2,000 X X A

Personnel Actions related to Directors and above

X X X

Personnel Actions related to staff below Directors

X A X X

Petty Cash Transactions X A X

Purchase Requests over US$ 25,000 X A X X A

Purchase Requests under or at US$ 25,000

X A X X A

Delivery – Acceptance Report for Goods, Works and Services/

X A A A A

Disposal of Fixed Assets X A X A

Travel regulation A

Approval of invoices X A X X X

Travel Advances X A X A

Vehicle use X X A A

X = required approval A = Alternate Approval: Individual can approve if one MCA-Moldova staff Required Approver (marked with X) is not available (i.e. the Alternate may not approve for MCC or the SC)

Notes:

1) MCA-Moldova SC may utilize a fast-track process to provide its approval.

2) Project Directors may only sign for actions in areas for which they are responsible.


Annex III: MCA-Moldova Common Payment System (CPS) Codes


Annex III: MCA-Moldova Common Payment System (CPS) Codes

MCA-Moldova COMMON PAYMENT SYSTEM (CPS) CODES

MCC Funding Source

Compact Implementation Funding (CIF) CIF

Compact Compact

Project Name

Project I - Road Rehabilitation ROAD REHAB

Activity Name

1.1. M2 Sarateni – Drochia Junction 0327

1.2. Drochia Junction – Otaci Studies 0328

Project Name

Project II – Transition to High Value Agriculture (THVA) HVA

Activity Name

2.1. Rehabilitation of Centralized Irrigation Systems (CIS) 0329

2.2. Irrigation Sector Reform (ISR) 0330

2.3. Access to Agricultural Finance (AAF) 0331

2.4. Growing High Value Agriculture Sales (GHS) 0332

Project Name

Monitoring and Evaluation (M&E) MON & EVAL

Activity Name

3.1. Monitoring and Evaluation 0016

Project Name

Program Management and Oversight PGM ADMIN

Activity Name

4.1. Program Administration (MCA-Moldova) 0017

4.2. Fiscal Agent and Procurement Agent 0059

4.3. Audit 0031

For Local Accounts use NA for Project Name

For Local Accounts use NA for Activity Name