Updated PU/DR Guidelines
and Annual Funding
Decision
LFA Finance Training
October – November 2013
Content
1. Case study
2. Principles on most frequent issues
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Reporting of cumulative expenditure
Reporting of cumulative expenditure after phase 2
New forecast template
Definition of commitment
Restatement of financial information reported previously
Change in currency
3. Other recurrent issues
Principles on most frequent issues
• Reporting of cumulative expenditure
– Grant consolidations:
• If grant consolidation occurs during Phase 1 or Phase 2 between two existing grants,
PU/DRs prepared under the consolidated grant should cumulate all financial
information reported from the start date of the continuing grant
• PU/DRs prepared under the RCC program term should not cumulate previously
reported Phase 1 and Phase 2 financial information
• If grant consolidation happens during the RCC phase or with a newly approved
grant, it is sufficient to consolidate the budget and expenditure data from the
beginning of the RCC term
– SSF:
• PR should report any remaining expenditures related to liabilities assumed by the
constituent grants and which has not been reported in the last PU/DR of the
constituent grant
• Cumulation of budgets and expenditures should start from zero from the SSF start
date.
Principles on most frequent issues
• Accounting for cumulative budget after phase 2
General case
Total grant amount = phase 1 + (phase 2 – phase 1 unused funds)
= phase 1 – phase 1 unused funds + phase 2
Known for both
PU/DR and EFR.
Add commitment if
any
=
phase 1 expenditure
+ phase 2
From phase 2
budget
So at Q10, the cumulative budget will be phase 1 expenditure (+ commitment)+ Q9 budget+
Q10 budget
Extension
Costed extension: cumulative budget = phase 1 + costed extension budget
No cost extension: cumulative budget = phase 1 budget
Principles on most frequent issues
• New forecast template
Program Implementation Period
Calendar Period
include expenses that have been
delayed from the previous periods,
and for which the cash outflows will
occur in this disbursement period
(A) Approved PR Budget*
QX1
QX2
xx/xx/xx - yy/yy/yy
xx/xx/xx - yy/yy/yy2
4,900,661
(B) Contractual Commitments
159,913
(C ) Cash outflows carried over to this Disbursement Period
875,982
(D) Advanced from future budget periods
1,386,869
cannot exceed total cumulative
and projected savings
(E) Projected Overspending
6,394
(F) Projected Savings and Cancelled Activities (please insert as negative amounts)
(G) Cash outflows pushed to future budget periods (please insert as negative amounts)
(H) Cash outflows paid for in prior periods (please insert as negative amounts)
SUBTOTAL Forecast of PR Outflows
-81,380
-73,000
-990,000
“Advanced from
future periods” in
the past disbursement periods
-796,452
4,075,118
Same principles for PR and SRs
1,313,869
Principles on most frequent issues
• Definition of commitment
– Short-term liabilities for which a payment will be made
within 30-60 days of the reporting date.
– The amount to be paid is certain and is based either on an
invoice received from a supplier, acceptance of goods and
services that have been delivered, or a signed contract
(only in cases of prepayments or advances against a
contract).
– Grant agreements signed with sub-recipients should
not be treated as commitments.
Principles on most frequent issues
• Restatement of financial information reported
previously
• In certain cases, past expenditure and budget information reported in
one or several previous PU/DR(s) may need to be updated to correct
any material errors.
•
Adjustments made in the subsequent PU/DR to correct the reported
cumulative and actual cash outflow and budget amounts may require
updating current cash balances.
• Following such adjustments, the PR should issue an official letter
to the Global Fund indicating the correct cumulative and actual
cash outflow and budget amounts, as well as a description of the
adjustments and reasons for these adjustments
Principles on most frequent issues
•
Change in currency
• In case of currency change at Grant Renewal, the budget,
expenditures and ending cash balance reported up to the date
of the currency change (as per the grant agreement) will need to
be converted into the new grant currency.
• For this one-time conversion, the appropriate exchange rates
should be a two-year Phase 1 average exchange rate for
cumulative budgets and actual expenditures, and the average
spot exchange rate on the date of reporting cash balances. If
the PR has information systems able to convert using actual
rates, this is also acceptable for the purposes of reporting to the
Global Fund.
Other Reccurent issues:
Programmatic and CPs: .
– LFA validates programmatic results that are not in line
with the PF
– LFA does not verify the source of documents for the
reported results
– LFA includes results not from GF funding
– CPs list inconsistent with Annex A
– CPs’ status inconsistent with rationale
– Lack of verification of CPs or comments do not address
the conditions' requirements
Other Reccurent issues
LFA_Total PR Cash Outflow_3A
(E.g.)
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Budget figures inadequate
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Lack of proper explanation on variances
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LFA does not realise the PR is reporting accruals
–
GF disbursements to third parties not considered
by the LFA in the expenditures and cash balance
report.
–
PR’s payments on behalf of SRs treated as PR’s
expenditures instead of disbursements to SRs
Other Reccurent issues
LFA_Total PR Cash Outflow_3A (E.g.)
– Inconsistency between descriptive and quantitative
information in the report. E.g. the LFA detected a wrong
expenditure, but reported maintained the same PR
amount in the cell
– Inconsistent
cumulative
explanations, etc)
information
– Procurement’s section not reported,
inconsistent information provided
(amounts,
verified
or
Other Reccurent issues
LFA_Cash Reconciliation_5A (E.g)
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Inconsistent information on cash balance
inconsistent with previous report
GF disbursements to third parties not
considered by the LFA in the expenditures
and cash balance report.
Exchange rates and variances not analyzed
SRs. Cash balances not verified and/or
considered in the disbursement
recommendation.
Cash in transit not reported
Other Reccurent issues
LFA_Disbursement Recommend_5B(E.g)
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Programmatic results achieved with a given
expenditures level not considered in forecast.
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Recommending expenditures for overachieved
activities
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PR’s capacity, grant’s rating, or external factors,
no being take in consideration
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Not providing due consideration to audit matters
in PUDR disbursement recommendations.
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Inadequate forecast’s period