Financial Accountabilities and AuditMission Rwanda4-8 October 2007Mission Debrief & Report 8 October 2007
Financial Accountabilities and Audit MissionKigali 4 – 8 October, 2007Mission MembersDarshak Shah (UNDP)Jens Wandel (UNDP)Subhash Gupta (UNFPA)Detlef Palm (UNICEF)Thomas Hansson (WFP)Rino Imponenti (FAO)Roland Cisse (ILO)Robert Tibagwa (UNHCR)Cheikh N’Diaye (UNESCO)Ashok Nigam (UNDGO)
Deliverables • Verification of financial and programmatic accountability framework as described in the Common Operational Document (COD) – the One Programme – and the Code of Conduct between the UNCT - and recommendations , if any • Define audit mechanisms for the One Fund and how this is linked to the agency specific audit mechanisms, including outline how the UN audit framework integrates with the national systems within the framework of the Paris Declaration, for example in relation to HACT • HACT - possibility of application by other UN agencies (non-ExCom) • Verification of the reporting lines as described in the COD and in the Code of Conduct, with recommendations, if any • Criteria for the allocations of the ‘One UN Fund’ – clarifications or recommendations, if any • Key risks in the implementation of the COD, in particular financial and capacity • Respond to any other questions on programmatic and financial accountability raised by the UNCT or OMT
Financial accountability and audit mission Summation: • Country team has undertaken a commendable process and arrived at a very good UNDAF and COD • Opportunity of designing a One Programme immediately following the process of a recently developed UNDAF has allowed the team to innovate on how the entire UNDAF can be operationalized into a One Programme – unique opportunity, unique approach amongst the pilots • Rwanda approach brings the UN together within a coherent planning and operationalization system through the setting up of Theme Groups with their individual UN Policy Advisors drawn from the UN agencies for coordinating policy dialogue, implementation and a common operational Results Framework. • Current version of COD, Code of Conduct (CoC), MoU (Memorandum of Understanding – Participating UN Agencies and Administrative Agent), ToRs and other documents are in final stages for the necessary approval of Government – mission encourages operationalization but provides some observations and recommendations
Rwanda - Before One UN Common Country Assessment (CCA) UNDAF no common planning, management and , enforcement mechanisms and no necessary alignment with the UNDAF and National priorities Parallel with Country processes CPDs, CPAPs and similar documents CPDs, CPAPs and similar documents CPDs, CPAPs and similar documents … AWP AWP AWP …
Rwanda - Since One UN Fully aligned with national priorities EDPRS UNDAF focused on 5 strategic results Common Planning and Control Processes and Results Based Management System that links M&E with resource allocation Incentive for Common Planning and Management System One Programme – Common Operational Document One Fund – Resource mobilization through RC
UNDAF Result 1: Governance UNDAF Result 2A: HIV UNDAF Result 2B: Health/Nutrition UNDAF Result 3: Education UNDAF Result 4: Environment UNDAF Result 5: Soc.Prot./Growth Responsible UN Agencies Activities UNDAF Outcomes Responsible UN Agencies Activities Responsible UN Agencies Activities UNDAF Outcomes UNDAF Outcomes Management: Ensuring Coherence Vision 2020/ MDGs
UNDAF Theme Group 1 UNDAF Theme Group 2A UNDAF Theme Group 2B UNDAF Theme Group 3 UNDAF Theme Group 4 UNDAF Theme Group 5 Responsible UN Agencies Responsible UN Agencies Implementing Partners Responsible UN Agencies Implementing Partners Implementing Partners Management: Ensuring Coherence Oversees, provides guidance, ensure alignment with Vision 2020 and the /EDPRS Steering Committee UNCT Decides and allocates resources Monitor, plan, evaluate, report, peer-review inputs from responsible agencies Coordinate activities, gather data, etc. Carry out activities
Financial and accountability frameworks Observations: • One UN Programme (COD) covers almost the entire UNDAF ($350m of which unfunded is approx. $200m) – approach and philosophy • COD is articulated at the outcome, output, and activities level, with the detailed budgetary framework – will serve as the overall planning document for all agencies; no individual CPAP or Board approved funding allocation or ceilings document. • Everything that UN will do on development will be within the COD, emergency and sensitive humanitarian actions can be undertaken outside it. It should be clarified if the operational clauses (e.g. HACT provisions) of the COD would also be applicable for emergencies and sensitive humanitarian actions. • One programmatic and financial accountability framework will apply to the entire One Programme (COD)
Financial and accountability frameworks Observations (Contd.): • 5 Results areas of the UNDAF will provide support/ inputs to 8 of the 10 Government priorities in the Government Economic Development and Poverty Reduction Strategy (EDPRS). • The COD has followed an ‘inclusive’ approach - it may be perceived as being thinly spread in areas. The rationale of the Country Team has been that since all elements respond to Government priorities, each UN Agency has identified their comparative advantage and contribution. • There are 87 outputs in the COD with more than 600 activities covering the contribution of 22 UN Agencies. To the extent that not all of the COD may be funded, further prioritization would be addressed through the Governance framework, in particular the annual reviews in Theme Groups and the budget allocation process of the One UN Fund • ‘One UN Fund’ is available for financing the unfunded portion of the entire COD (‘One Programme’) which may be revised in light of what funds are received for core and vertical (non-core) funds.
Financial and accountability frameworks Observations (Contd.): • The concept of the ‘Core’ Funds being inclusive of (core and non-core/vertical funds) and ‘unfunded gap’ to be funded from the One UN Fund (Gap Funds) has merits in terms of sending a clear message to donors and partners that the Gap Funds should be additional and not a substitute for non-core/vertical funds. • Recognizing the manner in which UN Agencies are funded and accounted for: core, non-core, assessed contribution, and now the new modality of funds through the One UN Fund at the country level; processes and procedures to help countries to plan better need to be reviewed. • For example, in the event that previously forecast vertical funds are not received in time question will arise if that activity should be funded from the ‘One UN Fund” • In light of the scope of the One Programme covering the UNDAF, the RC Office to be strengthened with the appointment of a Senior Policy Advisor to coordinate planning, monitoring, implementation and reporting on the COD
Financial and accountability frameworks Observations (contd.): • One Programme (COD) by including the fund flow mechanism from the One UN Fund for Rwanda within the entire budgetary framework has been interpreted as a Joint Programme – interpretation goes beyond the UNDG Joint Programming (JP) Guidelines. May not be inconsistent but scope for some confusion. • COD allows for agencies to define further Joint Programmes within the Outputs of the Joint Programme (the COD) following the UNDG JP Guidelines. • One UN Fund for Rwanda will be administered in accordance with the Joint Programming Guidelines relating to the AA function with recovery of 1% fee. Implementing UN Agency can recover costs at 7%. • The Theme Groups will work within the governance structure responsible for: • Policy dialogue with government • Advising the UNCT on the allocation of One UN Fund within the particular Theme • Monitoring both programme and financial delivery • Programmatic Results
Financial and accountability frameworks Observations (contd.): • Each Theme Group will have its Annual Plan which will be a consolidation of each agency Work Plan in relation to that theme. This will be used for One Fund allocation within the theme and monitoring of progress. Each Agency will have its Annual Work Plan with its National Implementing Partner, as at present. • Strategic direction on the priorities (results areas, themes and priorities within it) is made by the Steering Committee – Chaired only by the Government but includes 4 UN Agencies (representing the UNCT) and 3 donors (representing all donors). • Based on the strategic direction, further prioritization of allocations from the One UN Fund and the allocation decision for disbursement within a Theme will be made by the UNCT (on advise from the Theme Groups) with the RC having ultimate decision.
Financial and accountability frameworks Observations (contd.): • Expectation is that improved coordination amongst the UN Agencies should lead to a reduction in transaction cost for partners (donors and government). The Government should be better able to track what the entire UN system is contributing and be more certain of its areas of contribution through the UNDAF cycle. • Reassignment of RC • Implications for the UN system in terms of risks • Team dynamics • Team building • Trust • Implications for RC a.i. – increased work load, separation of functions (RC a.i. and Agency Rep)
Financial and accountability frameworks Observations (contd.): • The Rwanda Model should allow for greater programme coherence and coordination. By being more synergistic and avoiding duplication it should allow for seeing a a more effective programmatic impact. UNCT to indicate and forecast where the benefits will arise – qualitative and quantitative. • At the start, there may be some time bound additional costs to launch the One UN.
Financial and accountability frameworks Recommendations: • The ‘Key Activities’ in the COD should indicate for each what is the ‘core’, ‘non-core/ vertical funds’ and ‘to be mobilized from the One UN Fund’ separately. Each agency should have a consistent approach to what is included in each of these categories. Accuracy of the estimation of the ‘non-core/ vertical funds’ needs to be reviewed • The current COD (v 10) indicates a unfunded gap of approximately $300m (expected to be funded from the One UN Fund) which exceed the UNDAF unfunded gap by $100m. This increase is partly explained by better costing at the output & activity level in the COD but it poses a risk of the success of the One UN Fund in the event that this gap is not credible with the donors. • The COD is expected to be updated to accurately reflect the priorities and the figures should be validated by each Agency taking account of the latest review of the funds reflected in the Agency Country Programme Document (CPD) • The identification of the gap in the COD, should take account of the programme and operational implementation capacities of the agencies. This should not wait until the Annual Review stage, so that unrealistic expectations are raised in the COD
Financial and accountability frameworks Recommendations (Contd.): • The programmatic and financial accountability framework requires strengthening for example, accountabilities of the Responsible UN Agency and the Theme Group needs to be clarified – recommended changes have been input directly in track changes in the relevant documents and shared with the UNCT. The relevant heads of UNCT should chair the Theme Groups and the ultimate accountability of the decisions of the Theme Group rests with the Chair of the Group. • Re-assignment of RC – Additional support should be provided to R.C. a.i.
Financial and accountability frameworks Recommendations (Contd.) • For planning and financial accountability, the one budgetary framework should allow for harmonized reporting on the status of the vertical funds: • There should be separate financial reports for the vertical funds to the UN Agencies and One UN Funds. • The summary report developed by the Financial Policies WG of the UNDG Management Group should be used for the One UN Fund. • Audits of implementing partners, as required under HACT, are the responsibility of the UNCT, with support from the Internal Audit Services. In this regard, for joint programmes, the preparation of audit plans and commissioning the audits of the implementing partners would be coordinated between the Responsible Agencies.
Suggestions for the Allocation Criteria – One UN Fund • Match inflow with the outflow – Allocations can only be made once there is a reasonable assurance on the core and vertical funds since the One UN Funds are additional to them. Annual review by Theme Groups to match inflow with outflow. • Allow for certain funds (5% contingency) to be allocated by the RC who in consultation with the UNCT can use the funds to respond to Government requests for technical support and preparatory assistance, primarily on an accelerated basis where necessary • Need for agreement on overall level of this allocation • Overall threshold per proposal and per agency • Successful proposal costs - should be charged to the AWP and hence these funds will be available to fund future proposals, hence this will be like a revolving fund. • For unsuccessful proposal - should be evaluated and results should be used in the future allocation criteria • For allocation within the Theme Group Annex 17 criteria would apply • Each agency should confirm availability of their vertical funds before there is an allocation from the ‘One UN Fund’
Suggestions for the Allocation Criteria – One UN Fund • Pro rating of the One Fund - Initial allocation of the funds in the “One UN Fund” across the five UNDAF results areas can be made in proportion to the gap for the results areas (include in Annex 17, para 1) – (Result area gap X (Income/Total income expected))X100. • As subsequent funds are received from donors, they can be allocated to the theme groups using the same criteria on the adjusted gap at the time. • To ensure that there is coherent and effective delivery and uncertainty in funding is minimized donors should be encouraged to provide significant amount (50-75%) of the annual requirements early in the process. A threshold on the receipt of funds can be established before funds are allocated to the Theme Groups.
Mission observations for follow-up at HQ (no immediate impact on country processes) • In the event that the non-core (pledged) funds are not received in time, activities are funded from the “One UN Fund” but there is a subsequent receipt of the ‘pledged’ funds: • HQ or Country level agreements and commitments may need to be arrived at for the pledged funds to be ploughed back into the One UN Fund or other arrangements to be discussed • Instead of separate Annual Work Plans of each Participating UN Agency with the same National Partners, a single consolidated Annual Work Plan could be signed by all the UN Agencies with the one National Implementing Partner, in order to minimize costs for national implementing partners.
Mission observations for follow-up at HQ (no immediate impact on country processes) • Code of Conduct – should be looked at across the pilots to develop a recommended ‘best practice’ Code of Conduct • Oversight Framework at HQs level agreed for the MDTFs should be used to resolve conflict/ advise on issues of the One Fund. • Implications for agencies - approval process, reporting, and operational indicators • Executive Boards to be sensitized that in future there may no longer be separate CPAPs (ExCom) • Summarized common financial reporting format • Support cost – implications for agencies, in particular Specialized Agencies • Clarification of what is included in ‘direct’ and ‘indirect’ costs to be taken up by FP Network • AA fees • Inclusion/exclusion of donors on Steering Committee • Examine and assess the pre-One UN and post One UN roles of UNCT
Mission observations for follow-up at HQ (no immediate impact on country processes) • Recognizing the aid effectiveness imperative, consideration of medium term implications for organizational funding and cost recovery rates (e.g. basis for 7% rate) of increased donor funding through ‘One UN Fund’ possibly becoming a substitute for non-core funding through HQs • Donor agency interest in inclusion of clause in MoU and LoA regarding misuse of funds • Consider one central legal clearance of MoUs & LoAs
Audit framework Principles: • Single Audit Principle – one UN agency will not audit another UN agency. • Contribution agreements should not contain any specific audit requirements; neither in terms of time or scope. Internal Audit Services of the UN agencies select audit entities on the basis of their own risk assessment • There will not be a separate audit of the “One UN Fund”, but audits will cover country office operations of the agencies. Operations financed by the One Fund may be included in the audit scope of those audits. • For each completed audit of a participating UN organization, the IAS will prepare a summary and share it with the UNCT, and the administrative agent.
HACT • HACT in conformity with Paris Principles • Specialized Agencies accept principle of HACT. Will work with ExCom to operationalize in Mozambique. UNESCO informed Executive Board that it will be implementing in all 8 pilots. • Training opportunities for Specialized Agencies in HACT should be identified with the help of the ExCom Agencies • HACT Q&A and network an available resource
Code of Conduct • Well developed document – detailed comments provided in track changes • Re-visit ‘Code of Conduct’ (CoC) terminology - but substantive elements important for the ‘One UN’ • Current code of conduct: • First part forms a Code of Conduct • Matrix of Roles and Responsibilities should be an Annex to the Code of Conduct • Development of Dispute Resolution Mechanism important – this is being developed by UNDGO in consultation with UNDG members.
Capacity assessment – some reflections • The skills assessment could be viewed as a part of a broader set of initiatives under the heading of change management for both Government, donors and the UN Country Team. • The capacity of the UN to adjust itself to deliver on the UNDAF and the One UN Fund will be guided by the underlying vision and the governance, business processes and staff skills. The skills assessment should be viewed through that framework. • A key recommendation is that the functional review and skills assessment should be linked to the 5 main result areas of the COD and the associated theme-groups. With the COD providing the vision, the skills assessment is one part of a country led change management exercise. • How to respond to the findings of the functional review and skills assessment will probably be a mix of programmatic and organizational response and draw on expertise at the UN corporate level, regional level and local level. • Country level ownership and leadership are key elements of a successful process. Therefore, the UNCT should chose the timing of the skills assessment exercise with a view to the management requirements of a follow up process. • Communication around the purpose (programmatic) of the skills gap assessment should be carefully undertaken prior to and after the fact with a view not to affect staff morale.
Thanks to UN Country Team Rwanda