Financial Accountabilities and Audit Mission Mozambique10-12 October 2007Mission Debrief & Report 12 October 2007
Financial Accountabilities and Audit MissionMaputo 10-12 OctoberMission MembersDarshak Shah (UNDP)Jens Wandel (UNDP)Subhash Gupta (UNFPA)Detlef Palm (UNICEF)Thomas Hansson (WFP)Rino Imponenti (FAO)Robert Tibagwa (UNHCR)Cheikh N’Diaye (UNESCO)Ashok Nigam (UNDGO)
Deliverables • Based on the review of the ‘Operational Plan’ and other available documents, provide recommendations for the financial and programmatic accountability framework/s, including audit and risk assessment framework/s that should be established, maintained and/or reinforced for the four Ones • Advise on ways in which UNCT can further align it’s systems and procedures with that of Government and other development partners – financial, audit, and risk assessment, planning and programme accountability frameworks of the UN, financial transaction mechanisms and modalities in a growing budget support environment • Review the UNCT TOR and Core Management Principles, and provide recommendations on accountabilities and responsibilities that need to be refined and amended. • Review and advise on the appropriate financial management, accountability and audit provisions that should provide the basis for the One Fund. • Guide UNCT on the key milestones that should be set for implementation of the financial and programmatic accountability frameworks in the Mozambican context. • Advise UNCT on feasibility of adoption and application of HACT • Review and comment on the criteria developed for the allocation of resources from the One Fund • Advise UNCT on capacity constraints, challenge and change management issues that need to be overcome • Respond to Operations Managemen Team (OMT) questions on Financial Issues and Impediments to Delivering as One – done with the OMT.
Financial accountability and audit mission Summation: • With a recent UNDAF under implementation for a three year period, country team has undertaken a very practical approach to identify and capitalize on the synergies of working together • One Programme has the advantage of: • being an uncomplicated approach • bridging current modalities on the road to the UN working in a more coherent manner in the larger framework covering all of its operations at the next UNDAF stage • Joint Programmes (JPs) in the ‘One Programme’ follow a simple modality in terms of fund allocation and disbursement
Financial and accountability frameworks Observations: • UNDAF consisted of 3 pillars (Human Capital, HIV/AIDs/ Governance), additional pillar added on Economic Development to respond to Government priorities. UNDAF identified 8 areas of UN comparative advantage • One Programme - further prioritization within the UNDAF to identify opportunities for the UN to work together on joint programmes (JPs) (2-3 agencies) covering 4 of the comparative advantages: • Policy and advocacy, • normative and technical, • capacity development, • civil society partnerships • Process led to identification of 11 JPs with budget of $113m (25% of UNDAF) and unfunded gap of $51m (Total UNDAF gap $245m) • Funding gap based on cost of activities minus ‘core’ and ‘non-core’ (pledged)
Financial and accountability frameworks Observations (contd.): • UN support consists of the ‘One Programme’ + ‘Remaining UNDAF programmes’ (which may also have some JPs) • JPs in One Programme – follow ‘pass-through’ modality; JPs in ‘Remaining UNDAF Programme’ can follow any of the modalities as in the JP Guidelines • ‘One Programme’ • Convening agency for each JP • Participating/ implementing agency for JP activities • Implementing partners • ‘One UN Fund’ – Administrative Agent -AA fee (1%) Participating UN Agency - PUN (7%)
Financial and accountability frameworks Observations (Contd.) • Steering Committee on UN Reform (draft proposal to be endorsed by GoM) • Government, UN (Co-Chairs); donors not in Steering Committee - reference group • Steering Committee oversees the implementation of only the ‘One Programme’ • Programmatic and financial accountability rests with the participating agencies • Clarification is required about the management arrangements in the One Programme (see recommendations) • Streamlining of administrative and financial procedures to support One Programme (see recommendations) • Possible implications for operations costs at country level as a result of an increase in resources from the One UN Fund • One Programme to be launched in October – meaning Governance structure is accepted by Govt; 11 JPs formally acknowledged as One Programme; funding can be received and disbursed. Clarification needed on the implications for the Annual Work Plan (AWPs) already agreed with partners for 2007
UNDAF Implementation - Mozambique UNCT Steering Committee PMT OMT Pillar Pillar Pillar Pillar Participating Agency AWP IPs Outcome Leader Participating Agency AWP IPs Outcome Leader Participating Agency AWP IPs Outcome Leader Participating Agency IPs Convening Agency JP/AWP Participating Agency IPs Participating Agency IPs
UNDAF UNCT Steering Committee PMT OMT Pillar Pillar Pillar Pillar Participating Agency AWP IPs Outcome Leader Participating Agency AWP IPs Outcome Leader Participating Agency AWP IPs Outcome Leader Participating Agency IPs JP/AWP Participating Agency IPs Participating Agency IPs
One Programme - Mozambique UNCT Steering Committee PMT OMT Participating Agency IPs Convening Agency JP/AWP Participating Agency IPs Participating Agency IPs
Financial and accountability frameworks/ core management principles - Recommendations An entity is accountable • For something… • Function • Compliance (e.g. rules, code of conduct) • Activities • Results • To someone • the appointing authority
Add to TORs of UNCT • Appoint the convening agency • On the recommendation of the participating agencies • Competencies and capacities • Performance Review of Convening Agency • Based on feedback from participating agencies • Against TORs/accountabilities of the convening agency • Including audit information • Decide on allocations from the One Fund • Based on allocation criteria (between JPs) • Based on recommendations by convening agency (to participating agencies) within JPs • Review and adjust design of Joint Programmes • Based on evaluations, reports from convening agencies • Lessons learned • changing programme environment
TORs of the Pillar Headseffective coordination of the UNDAF pillar • Coordinate the planning and periodic review of the UNDAF outcomes • Arrange for annual review and planning with government • Coordinate the representation of the UN in the review of the pillars of the PARPA • Report to UNCT on progress towards outcomes • Based on evidence from indicators of the M&E framework • Prepare annual strategic issue papers • For the RC, prepare annual reports to Government on the UN contribution to national development • Based on feedback from UNCT
TORs of the Convening Agency the UNCT appoints the CA to effectively manage the JP • Coordinate the planning and periodic review of the implementation of the AWP • Convene, information flow, timely signature, evaluations, etc • Coordinate representation with government counterparts on common issues • Ensure the Quality of the AWP • Results-based, logic, risk assessment, scheduling • Monitor the schedule of implementation • Follow up with participating agencies • Using the M&E framework • Report to UNCT • on progress and performance issues of participating agencies or implementing partners on the Joint Programme • Using the M&E framework • Recommend allocations from the One Fund to the UNCT • based on progress and performance • In consultation with participating agencies
Financial and accountability frameworks Recommendations: • AWPs would be developed for each JP in One Programme which should include both non-core (pledged) and One UN Fund with separate funding identification to ensure separate financial reporting • Inclusion of audit clause in MoU (see below) • Capacity assessment – part of overall change management exercise • MoU – reporting – need to clarify if Article IV 1. a & b 2 months or 3 months and 3 m or 4months. To be clarified for consistency with other pilots
Financial management and audit – One Fund Include audit clause in MoU (for consistency with other countries – Rwanda and Tanzania) • “The Administrative Agent and Participating UN organizations will be audited in accordance with their own Financial Rules and Regulations. The Internal Audit Services of all UN organizations will prepare summaries of their internal audit reports and share those with the UNCT and Administrative Agent”;
Suggestions for the Allocation Criteria – One UN Fund Observations • The 29 June Draft “Delivering as One Proposed Allocation Criteria for the One Fund” outline robust readiness criteria for selecting the JP “ready” for launch. Furthermore, the balance in the fund will be distributed to the ready JP on a pro-rata basis. • Subsequent criteria include Performance-based Additional Allocations with satisfactory/unsatisfactory as the two grades to be determined by Convening Agency (working with the Group) • Within the Joint Programme, plans are to use pro-rata basis.
Suggestions for the Allocation Criteria – One UN Fund • To ensure successful first launch: • Secure core and pledges for the ready JP. • Calculate minimum funding requirements for the potentially under-funded JPs and use the pro-rata formula to calculate minimum opening capitalization level for the One UN Fund. This is to be communicated through the Convening Agency to the UN CMT. • Similarly, within the JP the Convening Agency needs to propose allocation to participating agencies based on performance criteria, sequencing and programme interdependencies. If consensus can not been reached the final allocation within the individual JP will be determined by the CMT based on a recommendation by the Convening Agency • Consider amending the performance criteria, so that projects can receive funds from a subsequent One UN Fund tranche upon 70% reported expenditure of the previous tranche.
Suggestions for 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 non-core/ pledged funds since the One UN Funds are additional to them. Annual review by Convening Agency (within the Group) 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 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 • For unsuccessful proposal - should be evaluated and results should be used in the future allocation criteria • For allocation within the Joint Programme Convening Agency (working within the group)- specific criteria would apply • Each agency should confirm availability of their non-core/pledged funds before there is an allocation from the ‘One UN Fund’ • 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 JPs by the Convening Agency (working with its group).
Financial and accountability frameworks Key milestones • Finalize ToRs, MoUs, LoAs – HQs follow up • Mobilize resources for the One UN Fund • Mobilize resources for change management • Finalize change management strategy, including training needs • Operationalize monitoring mechanisms • Finalize Code of Conduct • Finalize criteria for One Fund allocation • Implement JPs • Follow-up on HACT and procurement impediments • Set timelines for all above
Introduction – Risk Management • The risk statements are derived from: • Dialogue 10 – 12 October with UN country team in Mozambique • Questionnaire answers • Scope is focused on risk resulting from One UN Programme, Fund and related instruments.
Risk Management - Recap • The risk management framework could be organized around: • Programme Planning and Budgeting • Revenue management • Implementation • Reporting • Other • Examples of risks are outlined in this presentation • UNFPA has recently implemented a risk assessment tool and this expertice could be leveraged by the CMT.
Fragmentation between remaining UNDAF and One UN Programme Lack of balance in attention to UNDAF & individual agency programmes while moving the One UN Programme rapidly forward. [ADDITIONAL RISKS IDENTIFIED BY UN CMT] The Pillar Heads coordinates UNDAF (and also One UN Programme as part of UNDAF) Move One UN Programme into the implementation phase, so that the team can return to overall programme management Risk example - Planning and Budgeting Risk Description Mitigation/Control
Risk that core / pledge will not roll over and therefore lost to the funding framework – UNFPA example. Applying “pro-rata” approach – there is a risk and some of the Joint Programmes are underfunded at the onset and can’t “get off the ground”. [ADDITIONAL RISKS IDENTIFIED BY UN CMT] Look to harmonize towards funds roll over, so the integrity of the budgetary framework is intact.. This is a corporate issue. Secure core and pledges for the ready JP. Calculate minimum funding requirements for the potentially under-funded JPs and use the pro-rata formula to calculate min. opening capitalization level for the One UN Fund. Risk example - Revenue Management Risk Description Mitigation/Control
There is a risk that the convening agency is under resourced to perform its new role. Different levels of delegated authority may create a risk that agencies in working together will not be effective and responsive to partner needs. [ADDITIONAL RISKS IDENTIFIED BY UN CMT] Programme Management Team (PMT) should help the convening agency Risk example - Implementation Risk Description Mitigation/Control
Financial Reports may not be issued following the same structure, code & calendar across the UN.This may create a risk that the AA and the Convening Agency can not report timely and accurately to the Steering Committees and donors. [ADDITIONAL RISKS IDENTIFIED BY UN CMT] Agency disclose which funds are associated with each category (core & pledged). Make reporting consistent Reporting calendar is recognized in agreement with Conveening and Participating Agency DevInfo is used to reflect aggregate expenditure data. Risk example - Reporting Risk Description Mitigation/Control
The risk of current top level cabinet support to the One UN does not translate into broad based governmental ownership. Danger of fatigue and burn out of individual key staff members There are different perceptions and levels of acceptance among people and the different agencies of One UN. This creates a risk of behavior that may undermine the vision of coordinated action. [ADDITIONAL RISKS IDENTIFIED BY UN CMT] Bring the One UN Programme to the Cabinet. Get results and closure on the MOUs, LOAs and the One UN Programme Risks example - Others Risk Description Mitigation/Control
Monitoring - DevInfo Observation • DevInfo is foreseen in the One UN Programme to play a central role in the Programmatic M & E. It is encouraging to see that the UNDAF Frame is being replicated in Devinfo in preparation for substantive monitoring of the UNDAF and the One UN Programme. Recommendation • The CMT should continue the efforts to set up the UNDAF M & E Framework in DevInfo. This will need a discussion between agencies and their HQ on how this can be facilitated. • The CMT should consider with support from DGO to: • Finalize the Framework function in DevInfo • Decide at which level the agencies should report – i) Pillar level, ii) Outcome level and iii) output level based on a proposal from the M & E Group. Should be decided based on how the Steering Committee will use the information balanced with the cost of collecting the information but may also be determined by the level at which results are gathered. • Associate, where possible, participating agency expenditures with the UNDAF Framework. • The M & E capacity of CMT should be reviewed with a view to increasingly adopt the use of DevInfo as a tool in Programme monitoring and Communication.
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 Country Progamme Action Plans (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 FB 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 ExCom Agencies • HACT Q&A and network an available resource
Code of Conduct • Draft Code of Conduct contains many key elements • Suggest look at Code of Conduct for Rwanda • Development of Dispute Resolution Mechanism important – this is being developed by UNDGO with the UNDG members.
Change Management Observations • The capacity 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 vision and the associated; i) governance arrangements, business processes (new and current) and (iii) staff skills. The capacity assessment should be viewed through that framework. • The capacity assessment should be linked to the 4 pillars and the associated 11 joint programmes of the One UN Programme. • Other processes running in parallel will need to ensure effective running of the governance setup and the associated business processes.
Change Management Observations • Country level ownership and leadership are key elements of a successful process. Therefore, the CMT should chose the timing of the capacity assessment exercise with a view to the management requirements of a follow up process. • Response from the CMT to the findings need to draw on both programmatic and organizational response and draw on expertise available throughout the UN system at both the corporate level, regional level and local level. • 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 negatively. •  Also called the capacity assessment.
Common premises Common premises • Agencies should review the Feasibility Study and agree on next steps in light of the Government response. • Funding options; explore with WG Common Premises and Agency HQs a feasible option within the legal framework
Thanks to UN Country Team Mozambique