DANISH EMERGENCY RELIEF FUND ADMINISTRATIVE AND FINANCIAL GUIDE FOR GRANT MANAGEMENT

Transcription

1 DANISH EMERGENCY RELIEF FUND ADMINISTRATIVE AND FINANCIAL GUIDE FOR GRANT MANAGEMENT VERSION 1.0. APRIL 2017 Contents 1. VALIDITY OF THE GUIDE HOW SHOULD THE GUIDE BE USED? WHO IS RESPONSIBLE FOR THE GRANT? AFTER FUNDING HAS BEEN GRANTED... 3 Contracts... 3 Cooperation agreements... 3 Disbursements... 3 Bank account(s)... 4 Financial management... 4 Implementation within 7 days GRANT ADMINISTRATION... 5 Adjustments... 5 Budget lines, spending and revisions... 5 Spending of contingency (budget margin)... 6 Administration in Denmark REPORTING... 7 Mid-term review... 7 Peer review: exchange of experiences... 7 Final report AUDIT REQUIREMENTS AND FINAL ACCOUNT... 8 For grants below DKK 200, For grants above DKK 200, Deadline and general specification for final account REPORTING OF PROBLEMS AND IRREGULARITIES Annex A: Anti-Corruption Code of Conduct, Definitions & Mitigation

2 1. VALIDITY OF THE GUIDE This Administrative and Financial Guide is valid for pre-qualification attained since 1 April 2017 and grants approved for funding by the Danish Emergency Relief Fund (DERF) since the launch of the DERF 1 May Notice: The guide may continuously be updated in response to any changes in the rules and regulations, or if anything in the text of the guide turns out to be unclear. The governing body of the Danish organisation is responsible for checking whether the rules and regulations have been changed. You may always obtain the latest version of this guide at the DERF website; 2. HOW SHOULD THE GUIDE BE USED? Recipients of the DERF grants commit themselves to meeting a series of requirements as regards the way in which the grant is to be managed. In this guide, you may read about: Grant recipients obligations concerning accounting, monitoring and reporting; and, How to administer the grant in practice. It is important that you read this guide carefully and pay attention to whether you are complying with the rules throughout the course of the intervention. If you fail to administer the grant correctly, you may in the worst case be obliged to pay back the funds you were granted. If, at a later stage, you wish to seek financial support from CISU for another intervention, the application will be assessed in view of your track record, i.e. how you have managed and reported on previous undertakings. 3. WHO IS RESPONSIBLE FOR THE GRANT? It is important to note that the Danish organisation is awarded the grant on the basis of having a strong localized presence in the crisis affected area, most often through its partnership with a local organisation. It is furthermore important to note that the Danish organisation is awarded the grant on the basis of being in a position where it can contribute towards strengthening local capacities. It is therefore of key concern to the DERF that the grant is implemented in a manner which furthers these principles. The grant from the DERF is awarded to the Danish organisation featuring as the lead applicant, thereby being the grant-holder. The governing body of the Danish organisation is fully responsible for the funds being managed according to the rules and in accordance with the basis on which they have been granted. This entails the following obligations, among others: The money must be spent on the purposes described in the application. Steps should be taken to prevent corruption and misuse of funds. Financial procedures need to inspire confidence, including proper internal controls as well as bookkeeping and accounting in keeping with sound practices in this field. This means that both the intervention and the applicant organisation as a whole must be subject to external auditing. No entity which is party to the grant can be listed by the UN or EU as a terrorist organisation. These lists can be found at It is the responsibility of the Danish lead organization to ensure this. Significant problems and irregularities in the intervention must be reported as soon as possible. Mid-term review, final report and audited accounts for the intervention must be submitted on time. 2

3 4. AFTER FUNDING HAS BEEN GRANTED Contracts After a DERF grant has been approved, CISU s a signed contract to the Danish organisation. The contract sets out the requirements and conditions to be met as described in this guide. The Danish organisation must sign the contract and return it to CISU before implementation of the intervention commences. When CISU has received the signed contract, the first disbursement of funds is made to the designated account of the Danish organisation, as per the disbursement request submitted with the signed contract by the Danish organisation. Cooperation agreements A condition for qualifying for DERF grants is the documented existence by the Danish organisation of localized presence and capacity in the crisis area either through partnerships with local organisations or through own presence. If the grant is given to cooperation between two or more different legal entities it is a condition for receiving the grant that a cooperation agreement specific to the particular grant be drawn up between the partners. The Danish applicant organisation must submit a copy of a signed cooperation agreement to CISU. This procedure must be completed no later than before the second installment can be disbursed. It is a requirement that the partnership agreement for the grant includes the following paragraph: No offer, payment, consideration or benefit of any kind, which could be regarded as an illegal or corrupt practice, shall be made - neither directly nor indirectly - as an inducement or reward in relation to tendering, award of the contract, or execution of the contract. Any such practice will be grounds for the immediate cancellation of this contract and for such additional action, civil and/or criminal, as may be appropriate. At the discretion of the CISU and the Danish Ministry of Foreign Affairs, a further consequence of any such practice can be the definite exclusion from any tendering for projects, funded by the CISU or Danish Ministry of Foreign Affairs. The cooperation agreement must incorporate risk management and safety measures as described in the Risk Management & Safety Measures Manual. Even though the Danish organisation is regarded as the grant holder/lead, any changes in the choice of partners must be approved by CISU, before entering into new/changed partnerships for the approved grant/project. Disbursements At the DERF website, there is a form for disbursement requests. This must be filled out, signed and submitted whenever requesting disbursement of funds from the awarded grant in accordance with the disbursement plan approved as part of the application. The first request for disbursement of funds should be submitted by the Danish applicant organisation to CISU alongside the signed contract. This is to enable fast tracking the initial disbursement of funds. Kindly note that changes in the approved disbursement schedule is to be agreed upon with CISU. The maximum for each disbursement is 50% of the grant. The initial disbursement will take place when the signed contract has been returned to CISU and a disbursement request has been filled out, signed and submitted to CISU. The disbursement of funds shall be undertaken within maximum two (2) work days after the submission of an a disbursement request For subsequent disbursement requests there are no set deadlines for submission and they may be presented at any time of the year. For these, the normal processing time is a maximum five (5) working days. If the disbursement request is submitted immediately before a Danish public holiday, the processing time might be delayed. 3

4 Bank account(s) The funds from the DERF must be deposited in a special bank account, separate from the organisation s own funds in Denmark. However, if an organisation is receiving several Danida and or CISU grants, the same bank account may be used for all of them, under the condition that the organisation s financial management system can differentiate between the funds for different projects and from different donors. When setting up the separate bank account in Denmark, the account holder must enter into a written agreement with the bank that unspent funds deposited belongs to CISU, and that the bank is not entitled to set off this amount against the organisation s possible debt to the bank. As an example, the agreement with the bank may say: As previously agreed, it is hereby confirmed that the bank will not set off deposits in the aforementioned account against any type of credit balance. The bank renounces this right based on the premise that the account balance consists of funds disbursed by CISU or of interest accrued on such funds 1. The requirement of a separate bank account for the local partners in the crisis areas is waived for the DERF grant holders, in order to minimize the red tape for the implementation/start up of intervention. However, this is under the condition that the organisation s financial management system can differentiate between the funds for different projects and from different donors and that the bank is not entitled to set off this amount against the organisation s possible debt to the bank. Interest earnings accrued must be entered separately as income and paid back at the end of the intervention to CISU. Accordingly, interest earnings cannot be spent on activities. Interest costs in Denmark can be covered by the budget margin, while other bank costs must be covered by the Administration contribution in Denmark. Due to the Act on Measures to Prevent Money Laundering and Financing of Terrorism, the Danish Financial Supervisory Authority (DFSA) has several rules and regulations for the Danish Financial Institutions to adhere to. Therefore, the Danish banks have a set of Due Diligence procedures that they have to undertake with regards to their customers. The Due Diligence procedures include assessment of the customers organisation, statues, governing body, to/from which countries they transfer money to. Due to these Due Diligence procedures, the Danish grant-holders might be met with a cumbersome process, when opening a new account with their existing bank or as a new customer, which could jeopardize the start date of the granted intervention. Thus, it is highly recommended that the Danish organisation informs the bank when applying for a DERF grant, and other externally funded interventions, where transfers to/from other countries are involved. The information process could be either in writing or combined with a meeting, to ensure that the bank understands the purpose of the organisation and the related transfers. The documentation to the bank could be the following; The registration of the organisation (i.e. legal status), the statues, the governing body, the administrative and financial management procedures (including segregation of duties, access to the bank accounts, approval rights), the projects (i.e. the objectives, the partners), countries to/from which transfers take place, the partners outside Denmark, upcoming applications etc. The more the grant-holders have informed the bank of its projects and transfers, the easier it is for the bank to undertake the Due Diligence procedures, and thus assist the grant-holder in having the needed accounts and access to transfers. Financial management With regards to the financial management, some requirements are for both the Danish organisation and the 1 In Danish: I henhold til aftale skal vi hermed bekræfte, at banken ikke vil modregne i eventuelt indestående på ovennævnte konto. Modregningsafkaldet er givet under forudsætning af, at indeståendet på kontoen udgør midler, som er indbetalt af CISU eller udgør renter af sådanne midler. 4

5 local organisation, while others are only for one of the organisations. It is mandatory on all partnership organisations to maintain a safe and reliable accounting system. It must be ensured that financial procedures inspire confidence and that sound internal controls are in place. The partnership organisations accounting must be kept up-to-date, documented by vouchers, and must otherwise observe good practices of bookkeeping and accounting. The Danish organisation must keep accounting records in compliance with the requirements of the Danish Bookkeeping Act (Bogføringsloven), and all partnership organisations must keep all files for five (5) years after completing the intervention. Furthermore, CISU s financial standards specify the obligations of the Danish organisation and its partner organisation(s) in relation to financial management and how to meet the individual requirements. It is obligatory on the Danish organisation to inform the partner organisation(s) about the financial standards and to follow up in case of shortcomings. The CISU financial standards are in three (3) versions according to the size of the grant: Below DKK 200,000; above DKK 200,000; and above DKK 1 million. It is the total budget amount administered by each of the partner organisations which determines the standard that the partner must comply with. The financial standards are available on CISU s and DERF website. For specific audit requirements, please see section 7. Implementation within 7 days Within 7 (seven) days after having received the initial disbursement of funds from the DERF, implementation of the intervention in the crisis affected locality must start. 5. GRANT ADMINISTRATION Adjustments It is encouraged that adjustments are made as is required to reflect contextual changes, and these adjustments may be undertaken without seeking prior approval from CISU. Any adjustments made must be reported upon in subsequent reports of the intervention. In the following instances, it is however a requirement that approval from CISU is granted prior to implementing adjustments: Extensions of the intervention beyond the approved grant period. Extension may be obtained by filling in and submitting the form Request for no cost extension and/or budget revision which is available on the DERF s website. Please note that the total intervention period cannot exceed 12 month and the request must be submitted before the approved intervention period expires. Adjustments in the intervention at the level of objectives, partnership or target group(s). Adjustment of objectives, partnership and/or target group can be requested by filling in and submitting the form Request for adjustments of objectives, partnership and/or target group which is available on the DERF s website. Specific budget adjustments - see section below. Budget lines, spending and revisions Basically, the intervention must be implemented within the framework of the budget approved 2. However, 5

6 reallocation between the budget s main items may take place without prior notification of CISU, provided that the modifications: do not exceed 10% of the lowest budget entry being raised or lowered, do not affect the budget for salaries and personnel related costs in the partner countries do not affect the budget for risk management and safety measures, do not move funds from activities to administration costs, i.e. changes the division between the two categories do not increase the budgeted amount for audit, in DK or local presence are justified in the subsequent mid-way review or final report. Thus, if the needed changes will exceed the 10% rule or concerns one of the expense categories above, you need the approval of CISU before you can change the budget. This may be obtained by filling in and submitting the form Request for change of project period and/or budget which is available on the DERF website. Please note that the request must be submitted before the approved intervention period expires, and in due time for the CISU grant management to consider and decide on the request. Spending of contingency (budget margin) In the budget, an amount has been allocated as the item of contingency. At least 6% and at most 10% of budget items must been set aside for this. You may transfer funds from the contingency to one or several of the other main budget items, if the need arises. For instance, the contingency could cover increases in prices, salaries and personnel related expenses and exchange rates. The transfer from the contingency need not be approved by CISU. However, you do need a written authorization from CISU, based on a request submitted, if: You want to spend the contingency on expanding or reformulating the intervention. You want to spend the contingency on salaries costs, staff benefits or auditing. Notice: All allocations of the contingency must be notified and justified in the final accounts. The allocation and spending of the contingency must always be in pursuit of the intervention s overall objective. Administration in Denmark The budget reserves up to 5% of the subtotal of project costs as a contribution towards administration in Denmark. This administration fee must always be calculated as a percentage of actual use of the grant. Accordingly, if you spend less than the amount budgeted, there will be a smaller amount available for administration in Denmark. The administration fee should cover the Danish organisation s general additional administrative expenditure in connection with the grant. The boundary between general administrative costs and direct project/intervention spending may appear less than clear-cut, but the following types of expenses within the organisation can only be covered by the administration fee: Office maintenance (rent, cleaning, office materials, transport, electricity and water, assistant personnel and other common operational costs). Staffing of head office (and field office, if any) carrying out normal administrative procedures, including: the preparation of applications and other proposals, 6

7 costs of travel that does not form part of activity-specific monitoring, recruitment and selection of personnel unrelated to any specific project, meeting activity, contacts with CISU and the Danish Ministry of Foreign Affairs, reporting assignments, general budgeting and accounting tasks, The organisational leadership s involvement in the development cooperation (leadership refers to members of the various governing bodies). Notice: The Danish organisation is NOT required to submit accounts related to expenditure of the administration fee. 6. REPORTING Mid-term review For interventions of longer duration than six months, a mid-term review is to be undertaken providing an opportunity to reflect contextual changes. The mid-term review must account for the following in relation to implementation so far: Contextual change Monitoring and learning Risk and safety management Financial supervision Progress towards objectives and indicators Progress in implementation Budget modifications, if any Future budget modifications, if any Based on the account on the implementation so far a detailed strategy and implantation plan for the remaining period shall be included in the mid-term review. The format to be used for the mid-term review can be obtained at DERF website. The deadline for the mid-term review will be half way through the implementation period. The exact date will be defined in the specified in the contract with CISU. The signed mid-term review must be ed to CISU. Peer review: exchange of experiences All grant holders are obliged to attend mandatory peer review sessions organized by CISU as to facilitate and ensure exchange of experiences and thereby support the generation of learning and development of new approaches to humanitarian actions. The date for the review workshop will be specified in the contract with CISU. 7

8 Final report After the intervention has ended, you must submit a final report setting out how the intervention has been implemented and how it has fulfilled the objectives set out in the application. The final report must adhere to a particular format, which is available on the DERF website. The final report is ed to CISU in a signed version. The final report must be submitted within one month of the end date of the intervention. 7. AUDIT REQUIREMENTS AND FINAL ACCOUNT For grants below DKK 200,000 Auditor and audit requirements The final grant accounts must be audited by an auditor appointed by CISU in keeping with CISU s audit instruction manual for grants below DKK 200,000. The contact information for CISU s auditor is published on the DERF website. If the Danish organisation wish to have the grant accounts audited by their own auditor, if he/she can fulfill the requirements described above, the fee paid to the auditor appointed by CISU can be directed to the Danish organisation, to cover the audit expenses. However, the fee rate agreed upon between CISU and the appointed auditor is the maximum audit expenses, and thus, the Danish organisation must cover any expenses and fees above the rate. The rate is published on the DERF website. Final account The accounts for grants below DKK 200,000 must be prepared by the Danish organisation and audited by an external auditor, appointed by CISU or the auditor of the Danish organisation. The account material for the auditor must contain: A specification of grants received towards the agreed intervention, both from the DERF and other financial contributors, including the organisation(s) itself. An easy-to-read presentation of expenses incurred. The income statement (i.e. a table that compares the budget with actual spending) must use the latest approved budget figures, i.e. the revised budget. Certified copies or scanned versions of all expenses occurred in the partner countries, with voucher number, original amount and currency, as well as the expense description in stated in English (.e.g. written note on the original voucher in the local language). If the local partner has an accounting system, the report covering the grant expenses must be submitted, to reconcile the vouchers. If a local audit has taken place, and the grant expenses can be explicitly explained, the audit report together with a report from the accounting system can replace the certified copies/scanned versions of the expenses. Furthermore, bank statements and petty cash reconciliations must be submitted. Due to the local rules and regulations, the local partner cannot be asked to submit original vouchers to Denmark or other places outside the country. The Danish organisation can choose to submit the original vouchers or certified copies to the auditor. However, it is the responsibility of the Danish organisation to ensure that original vouchers are 8

9 submitted and returned in an orderly manner. The Danish organisation must also submit a report from the accounting system, as well as bank statements, reconciliations etc. A management report, which is integrated in the audited account report, describing the grant and the intervention in brief, i.e. changes in the budget etc. as well as a brief overview of the results of the intervention. It is the responsibility of the Danish organisation to gather all the above information and documentation, and submit the complete package to the appointed auditor. Furthermore, it is the responsibility of the Danish organisation to agree the dates and deadlines with regards to the audit, in order to fulfill the CISU deadlines. The contact for the appointed auditor is on the DERF website, as well as the agreed fee, which the Danish organisation can choose to direct towards their own auditor for further details, please refer to section 7. It is the responsibility of the Danish organisation to ensure that all the accounts details are in accordance with the book keeping, that the notes are filled out, and that the authorized signatory will sign the final version of the audited accounts for the grant. The auditor must audit the grant accounts according to the CISU audit instructions, including the good public audit, and thus include an auditor s report to the grant accounts, as well as ensure that the Danish organisation has fulfilled all the above described requirements. Upon finalizing the audit and after the signing of the authorized signatory of the Danish organisation, the auditor can sign the integrated auditor s report and submit the final audited accounts to the Danish organisation. It is the responsibility of the Danish organisation to submit the final and signed audited accounts to CISU, together with a confirmation that any unused funds, interests etc. have been returned to CISU, and copies of any transfer documents. Last, but not least, it is the responsibility of the Danish organisation to ensure that all original vouchers etc. from the Danish organisation have been returned from the auditor, as the vouchers are to stored for a min. of five years after the end date of the grant. For grants above DKK 200,000 Auditor and audit requirements Recipients of DERF grants above DKK 200,000 are obliged to have the final accounts of the intervention audited by a state-authorised or chartered public accountant. Accordingly, the Danish organisation must have or appoint an auditor to undertake the audit of the grant accounts. The auditor of the grant must adhere to good public auditing practices 3 and needs to audit the final accounts of the grant in keeping with CISU s audit instructions for grants above DKK 200,000. It is mandatory upon the Danish organisation to ensure that its auditor confirms in writing his/her willingness to carry out the auditing assignment in compliance with the provisions of the CISU audit instructions. After auditing the final accounts of a grant, the auditor must therefore affirm that the audit has been conducted in accordance with the aforementioned CISU instructions. In addition, the audited accounts must include an audit report with the auditor s assessments and conclusions based on the audit carried out. Also, the audited 3 This is the term for Forvaltningsrevision 9

10 grant accounts must be accompanied by a long-form audit report, as per the usual requirements for the longform audit reports, i.e. internal controls etc. The long-form audit report can be in sequence with the organisation s long-form report, or be issued specifically for the grant accounts. The auditor in Denmark must also conduct overall supervision of the grant auditing carried out locally in the country of the humanitarian crisis. Consequently, it is important that the Danish auditor, prior to the commencement of the intervention, is able to approve the local auditor, whose work must adhere to international standards as well as be ready to sign an agreement including auditing according to the CISU audit instructions, i.e. including the good public auditing etc. Final Account The accounts for grants above DKK 200,000 must be audited by the Danish organisation s own auditor, who should also undertake overall supervision of the audit conducted abroad. The auditor must be a stateauthorised or chartered accountant. It is recommended that grants with a budget of more than DKK , will undergo local audit with regards to the expenses occurred in the local context. However, due to the crisis context of the DERF grants, it is important to underline that local audit must not jeopardize the security and safety of the local staff or a local auditor. Deadline and general specification for final account When the intervention has been completed, you need to draw up the final accounts for the grant, which is to be audited by an external auditor. The format to be used for this purpose is available on the DERF website. The deadline for submission of the audited report is within three months of the end date of the intervention. It is important to keep track of any budget revisions made during the grant period, i.e. revisions made with or without CISU approval, as per the described procedures above in section 5. The final audited accounts must include the original approved budget, the final revised budget and the actual accounts/expenses, which is evident in the format to be used. The account material must contain: A specification of grants received towards the agreed intervention, both from the DERF and other financial contributors, including the organisation itself. An easy-to-read presentation of expenses incurred. The income statement (i.e. a table that compares the budget with actual spending) must indicate the latest approved budget figures, i.e. the latest revised budget. Certified copies or scanned versions of all expenses occurred in the partner countries, with voucher number, original amount and currency, as well as the expense description in stated in English (.e.g. written note on the original voucher in the local language). If the local partner has an accounting system, the report covering the grant expenses must be submitted, to reconcile the vouchers. If a local audit has taken place, and the grant expenses can be explicitly explained, the audit report together with a report from the accounting system can replace the certified copies/scanned versions of the expenses. Furthermore, bank statements and petty cash reconciliations must be submitted. Due to the local rules and regulations, the local partner cannot be asked to submit original vouchers to Denmark or other places outside the country. A management report, which is integrated in the audited account report, describing the grant and the intervention in brief, i.e. changes in the budget etc. as well as a brief overview of the results of the intervention. The auditor must prepare an auditor report to be included in the accounts and a long-form audit report, accompanying the audited grant accounts. 10

11 It is the responsibility of the Danish organisation to gather all the above information and documentation, and submit the complete package to the appointed auditor. Furthermore, it is the responsibility of the Danish organisation to agree the dates and deadlines with regards to the audit, in order to fulfill the CISU deadlines. It is the responsibility of the Danish organisation to ensure that all the accounts details are in accordance with the book keeping, that the notes are filled out, and that the authorized signatory will sign the final version of the audited accounts for the grant. Weighted average exchange rate At the time of the final accounts, the conversion of accounting conducted in non-danish currency must take place at the rate at which the disbursements have been exchanged, using the so-called weighted average exchange rate. This key figure is calculated by listing all financial transfers from Denmark to the recipient country throughout the intervention. The total amount transferred in Danish kroner (DKK) is then divided by the total amount received in local currency or the currency used by the bank for the grant account, thus arriving at the weighted average exchange rate. Transfer document If equipment, stock, fixtures etc. are donated to partners or authorities in the recipient country after completion of the intervention, it is a good idea to draw up a transfer document, in which the recipient acknowledges receipt. If the price of an individual grant-financed investment to be transferred exceeds the tax authorities definition of a minor acquisition (2017 rate: DKK 12,300), a signed transfer document must be attached to the final accounts and submitted for CISU approval. A transfer document format is available on the DERF website. Unspent funds and interests Interest costs can be covered by the contingency, while unspent parts of the grant as well as interest accrued must be paid back to CISU s bank account number in Jyske Bank in connection with the submission of final accounts. The transfer must include the grant number as well as the name of the grantholder. 8. REPORTING OF PROBLEMS AND IRREGULARITIES CISU actively supports the international fight against corruption and advises grant holders on how to avoid corruption. For further information regarding anti-corruption code of conduct, definitions and mitigation measures, please see Annex A. Zero tolerance on corruption entails that all staff and grant holders upon suspicion or awareness of specific cases of corruption involving other staff members, business partners, partners in programmes and projects, and others with whom staff members and grant holders cooperate, are obliged to immediately notify the organisational management and CISU immediately. It is mandatory upon the governing body of the Danish organisation to immediately notify CISU: If significant difficulties arise in the implementation of the intervention, including problems regarding compliance with the budget approved. If significant problems arise in the organisation s relationship with the recipient country s authorities, partner or expatriate staff. 11

12 If there is well-founded suspicion or detection of theft, fraud, corruption, misuse or similar irregularities. Such reports must be submitted in writing, stating how the organisation plans to solve and follow up the difficulties or irregularities observed. A reporting format is available on the DERF website. You are very welcome to contact CISU if a project or an intervention runs into problems, enabling CISU to guide you in how to report the problems and how to pursue a solution. Upon suspicion or knowledge of specific cases of corruption, such as bribery, the decision to notify Danish or foreign authorities, including possibly reporting to the police, is taken by CISU, the grant holder and the Danish Ministry of Foreign Affairs on the basis of the available information. This applies to cases in Denmark as well as abroad, regardless of how the information came into the CISU's possession. Confirmed cases of irregularities will be published on DERF website and will be reported to the Danish Ministry of Foreign Affairs. 12

13 Annex A: Anti-Corruption Code of Conduct, Definitions & Mitigation CISU actively supports the international fight against corruption and advises grant holders on how to avoid corruption. CISU offers advisory and courses for the grant holders within the field of anti-corruption and the mitigation measures. Below are described the definitions of the different types of corruption as well as the Code of Conduct expected from CISU staff and grant holders. Furthermore, mitigation measures are described. Code of Conduct and Definitions Corruption is defined as the misuse of entrusted power for private gain. It affects everyone whose life, livelihood or happiness depends on the integrity of people in a position of authority, it threatens the stability and security of societies, and it undermines democratic institutions and values. This definition corresponds to the concept of corruption in the Danish Penal Code and in international anti-corruption conventions, and it covers situations involving the taking and giving of bribes as well as other types of active or passive corruption. Corruption is best known in the form of bribery, fraud, embezzlement or extortion. However, corruption does not exclusively involve money changing hands; it may also include providing services to gain advantages, such as favorable treatment, special protection, extra services or quicker case processing. All CISU staff and grant holders must adhere to and promote the principles of the Code of Conduct presented below: Conflicts of interest arise from situations in which a member of staff, volunteer etc. has a private interest that could potentially influence, or appear to influence, the impartial and objective performance of his or her duties. Private interests include any advantage to oneself or one s family, close relatives, friends and persons or organisations with which one has or has had business or political relations. When faced with a potential or actual conflict of interest, staff/volunteers are required to promptly inform management. Bribery is the act of offering, giving (active bribery), receiving, soliciting or accepting (passive bribery) something of value with the purpose of influencing the action of an employee/volunteer in the performance of his or her duties. Bribery is a criminal offence in Denmark. Extortion occurs when staff/volunteer unlawfully demands or receives money or property through intimidation. Extortion may include threats of harm to a person or his/her property, threats to accuse him/her of a crime/illegal act, or threats to reveal embarrassing information. Some forms of threat are occasionally singled out for separate statutory treatment under the designation black-mail. Extortion is a criminal offence in Denmark. Fraud is the use of deception with the intention of obtaining an advantage (financial or otherwise), avoiding an obligation or causing loss to others. This involves being deliberately dishonest, misleading, engaging in deceitful behavior, practicing trickery or acting under false pretences. Fraud is a criminal offence in Denmark. Embezzlement is the misappropriation or other diversion of property or funds legally entrusted to someone by virtue of his or her position. Embezzlement is a criminal offence in Denmark. A gift is a financial or other benefit, offered, given, solicited or received in the expectation of receiving a benefit in return, in the context of corruption. Gifts and hospitality may be in themselves a manifestation of corrupt behavior. They may be used to facilitate corruption, or may give the appearance of corruption. Gifts 13

14 may include cash or assets given as presents, and political or charitable donations. Hospitality may include meals, hotels, flights, entertainment or sporting events. As a general rule, staff/volunteers should not receive gifts or other advantages. However, in observing and respecting local hospitality conventions, small gifts may be accepted. Nepotism is favoritism shown to relatives or friends without regard to merit. Relatives or friends are treated favorably based on the close personal relationship alone rather than on a professional and objective assessment of their skills and qualifications. Corruption Mitigation The mitigation of corruption, i.e. the prevention of corruption, starts early on in a partnership, even before a grant has been approved by CISU or other donors. In the beginning of the cooperation or development of a project, it is important that the partners discuss how corruption, fraud and misuse can be prevented or mitigated. Thus, it is important that the partners spend time together to get to know each others expectations and the organisational setup etc, so the mutual understanding is nurtured. For example, you can use the CISU financial management standards to examine the existing procedures and systems, and assess the needs for any updates, new systems etc. When CISU approves a grant, you can implement many mitigation measures to avoid corruption and the likes. Below are some examples on mitigation measures towards corruption and the likes. However, the list is not comprehensive, as many mitigation measures should be seen and taken with regards to the local context. Ensure that your partnership agreement include all necessary items, i.e. roles and responsibilities etc. Ensure that you have clear agreements within the partnership regarding deadlines and content for reporting and accounting. Use the CISU Accountability Dialogue Tool to examine the organisational accountability, legitimacy and transparency, for all organisations in the partnership. Maybe find inspiration for the ongoing monitoring in the CISU financial checklist. Be inspired by the tools etc. from Transparency International and other organisations working with anti-corruption. 14