! 0ARIS ECTOR ERC.2007/WS/8 $IVISION

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2 ERC.2007/WS/8 Paris, April 2008

3 page 2 INTRODUCTION INTRODUCTION

4 At the beginning of 2004, a comprehensive Practical Guide to UNESCO s extrabudgetary activities was prepared and circulated to UNESCO staff, as well as interested Permanent Delegations and National Commissions, in reflection of the rapidly growing role of extrabudgetary contributions in UNESCO s resource base. The Guide has been very well received, and appears to have proven useful for all the various actors in the many aspects of UNESCO s extrabudgetary action. Very major developments have, however, taken place in the field of extrabudgetary cooperation over the last few years. First of all, the Director-General has approved an overall Action Plan on improved management of UNESCO s extrabudgetary activities, which was presented to the Executive Board at its spring session of 2006, and which contains important policy measures and procedural innovations with regard both to programming, resource mobilization, implementation, and monitoring of extrabudgetary activities. The main provisions of the Action Plan have then been compiled in a table on Delegation of Authority and Accountability (ToAA), published with Administrative Circular 2285 of 18 February 2007, and which spells out the role, and accountability, of each UNESCO actor in the whole spectrum of extrabudgetary action. Moreover, the rapid developments in the policies and modalities for development cooperation at the country level, notably in the framework of the Delivering as One approach, have an important impact of UNESCO s extrabudgetary programming and resource mobilization, which must also be taken into account during the further development of UNESCO s own policies and procedures. In order to enhance knowledge and understanding for the Action Plan and the ToAA, a comprehensive information and training plan is being developed for UNESCO staff. The present, fully revised and updated version of the Practical Guide, represents a cornerstone in this material. However, in view of the very rapid developments both within UNESCO, and within international development cooperation in general, the Guide will be supplemented by mainly web-based reference material and inter-active self-training modules. A Quick Start Handbook for UNESCO s extrabudgetary activities will thus be made available on-line in early 2008; and an extrabudgetary HelpDesk will be created in UNESCO s Intranet site ( comprising templates for all the main documents pertaining to extrabudgetary cooperation; multiple hyperlinks to allow cross reference to other relevant information material, including donor profiles, and UNESCO decisions and documents pertaining to extrabudgetary cooperation; and a dedicated address under the overall coordination of ERC/CFS (exbhelpdesk@unesco.org) that will allow centralization of all queries relating to extrabudgetary policies and procedures, and effective monitoring of timely responses. Finally, it should be noted that provisions in UNESCO s Administrative Manual that are impacted by the extrabudgetary Action Plan are in the process of being updated As was the case for the 2004 version of the Guide, the present Guide, and the above mentioned training and reference material, is meant to facilitate all aspects of UNESCO staff s involvement in the Organization s vast extrabudgetary activities, and should therefore be seen as a set up helpful tools and guidelines, rather than constraining measures. Ahmed Sayyad Assistant-Director-General For External Relations and Cooperation page 3 INTRODUCTION

5 page 4 TABLE OF CONTENTS Overview of general policies and procedures for UNESCO s extrabudgetary activities 06 Actors in UNESCO 12 Project Preparation 22 The Budget 28 Funding Partners 34 General Presentation 35 UNESCO s main funding sources 36 Bilateral Government Donors 36 South/South Cooperation 39 Self-Benefiting Funds-in Trust Arrangements 39 United Nations Funds and Programmes 40 Multilateral Development Banks 43 The European Commission 45 The Private Sector 45 Project Implementation 48 Reporting 52 Monitoring and Evaluation 56

6 A B C ANNEXES Main actors in the programme/project cycle: Who does what and when? 62 Main documents pertaining to funds-in-trust cooperation: 64 a. Check list for project document b. Check list for agreement with funding source c. Model for exchange of letters for (simplified) agreement with funding source d. Plan of Operations with a beneficiary country e. Check list for narrative reporting Interpretation of UNESCO s extrabudgetary budget codes 76 page 5 TABLE OF CONTENTS

7 page 6 OVERVIEW OF GENERAL POLICIES AND PROCEDURES 000 FOR UNESCO S EXTRABUDGETARY ACTIVITIES OVERVIEW OF GENERAL POLICIES AND PROCEDURES FOR UNESCO S EXTRABUDGETARY ACTIVITIES

8 As a specialized agency of the United Nations, UNESCO is financed from assessed contributions from its Member States under the Regular Programme and Budget, approved by the General Conference for each biennium (the C/5 document). The Regular Budget amounted to USD 610 million for the biennium (33 C/5) and to USD 631 million for (34 C/5). 1 1page 7 OVERVIEW OF GENERAL POLICIES AND PROCEDURES FOR UNESCO S EXTRABUDGETARY ACTIVITIES UNESCO also derives a very large part of its total resources from extrabudgetary contributions in further reinforcement of the Regular Budget. Extrabudgetary contributions enable the Organization to achieve a greater impact and adequate outreach to Member States through operational activities at the national, regional and global level. In 2006, such extrabudgetary contributions amounted to USD 494 million (as expressed in allocations of available funds for already approved projects and programmes), and thus greatly surpassed the amount allotted under the Regular Budget, for the same period. The allocations available under extrabudgetary contributions in 2006 represented a major increase over the amounts for 2005 and 2004, respectively USD 373 million and USD 322 million. An overview of UNESCO s main funding partners is provided in section 5 below. More detailed information is provided in the extrabudgetary HelpDesk ( and in the regular reports to the Executive Board, most recently document 176 EX/INF.9. Extrabudgetary contributions are all funds paid into UNESCO other than the Member States assessed contributions; most of them (except additional appropriations to the Regular Programme), are classified as programme fiduciary funds (PFF), and are largely synonymous with voluntary contributions. UNESCO s main funding sources and partners in development cooperation are bilateral Governments, the United Nations system, the multilateral development banks, the European Commission, and the private sector. UNESCO may receive voluntary contributions under three main modalities: Appropriations to the Regular Budget, intended to reinforce an existing budget line. The funds are treated in the same manner as the Regular Budget, which mainly means that the contribution must be expended during the biennium for which it is allocated, and that no individual narrative or financial reporting will be provided to the funding source. This modality is therefore mainly used for relatively minor contributions directly related to Regular Programme activities, and for which the donor requires no particular narrative and financial reporting. Such appropriations are, however, regularly reported to UNESCO s Governing Bodies; Special accounts, created for support to a UNESCO Institute or larger-scale UNESCO programme. The special accounts are normally of a multi-year and multi-donor nature; the contributions are pooled in the account; the donor has no direct influence on the detailed utilization of the contribution within the institute or programme in question; and no individual narrative or financial reporting is provided to the donor. However, an annual financial and narrative report is normally prepared for the full special account. Special accounts may have their own financial regulations, and may also have their own advisory boards or steering mechanisms. If there are no specific financial regulations, UNESCO s Financial Regulations are applied; Funds-in-trust agreements directed towards a specific project or programme identified by the funding source in cooperation with UNESCO. A separate account is created for each activity; and detailed narrative and financial reporting is provided to the donor. The donor retains ownership of the funds throughout the life of the project and must be consulted on major modifications of the project design and budget. Possible savings at the end of the project are restored to the donor. Most funds-in-trust agreements are limited to a single donor, and tied to a single project; but multi-donor trust funds in

9 page 8 OVERVIEW OF GENERAL POLICIES AND PROCEDURES FOR UNESCO S EXTRABUDGETARY ACTIVITIES favour of multi-year programmes may also be envisaged. Funds-in-trust may be donated (intended for utilization beyond the donor s territory) or self-benefiting. The rapidly growing volume of extrabudgetary funds made available to UNESCO in recent years, and the fact that these funds increasingly surpass the volume of funds in the Regular Budget, has made it necessary for UNESCO to improve both programming, implementation and monitoring of extrabudgetary activities, and to define and apply a much more consistent strategy for extrabudgetary resource mobilization. In the spring of 2006, the Director-General has thus approved an Action Plan for Improved Management of Extrabudgetary Activities, whose main components are fully reflected in the Sections below. The Plan was presented to the Executive Board in document 174 EX/INF.4 (rev, for the English version only); and subsequent progress reports have been presented in documents 175 EX/35, 176 EX/43, and 177 EX/51. The reports have been largely well received; and the Board s ensuing decisions have encouraged the Director-General to pursue his efforts, and provided guidance in this respect. An overall policy document was presented to the 34th session of the General Conference (34 C/41) with a view to keep the Conference informed of the importance of extrabudgetary activities, and seek its overall guidance with regard to this major part of the Organization s action. The debate at the Conference resulted in resolution 34 C/72. The main components of the Action Plan have been translated into an operational Table on Delegation of Authority and Accountability (ToAA) on UNESCO s extrabudgetary activities, which will guide all steps of programming, resource mobilization, implementation and monitoring concerning extrabudgetary activities. The ToAA was published with Administrative Circular 2285 on 18 February 2007 (available on UNESCO s Intranet site). By memorandum DDG/07/20 of 15 November 2007 to all UNESCO staff, the Deputy Director-General recalled that the provisions of all ToAAs are meant to be respected by the staff; and that compliance with the ToAAs will be regularly monitored by UNESCO s Delegation and Accountability Committee, DAC. Efforts are also in process to update the relevant provisions of UNESCO s Administrative Manual, mainly chapter 2 (Planning, programme and budget), chapter 5 (Development cooperation) and chapter 6 (Reporting) in order to reflect the major provisions of the extrabudgetary Action Plan. Comprehensive training material is being developed to enhance knowledge and respect for the ToAA among UNESCO staff. While this Guide, and UNESCO s Administrative Manual, will remain the main reference material for the training, the training material proper will take the form of a Quick Start Handbook on UNESCO s Extrabudgetary Activities, which will be mainly web-based, and allow interactive self-training. It will be complemented by the above mentioned electronic HelpDesk under the overall coordination by ERC/CFS ( unesco.org/exbhelpdesk). The HelpDesk will present a number of templates for the main documents and instruments pertaining to extrabudgetary cooperation, as well as information on UNESCO s funding sources, notably their policies and procedures for cooperation with UNESCO. Both the templates, and the donor profiles, will be regularly updated. The HelpDesk will also contain a large number of hyperlinks to other web sites and documentation of relevance to extrabudgetary cooperation. Finally, the HelpDesk will comprise a dedicated e- mail address under overall coordination by ERC/CFS (exbhelpdesk@unesco.org)to centralize all queries on extrabudgetary activities, thus allowing rapid processing, and monitoring of timely responses from the concerned UNESCO units. The training package will finally comprise modules for concrete training workshops, targeted at the various relevant UNESCO populations at HQ and in the field. Both the reference texts, and the training material, will be regularly updated, as experience is being gained with the

10 implementation of the extrabudgetary Action Plan. Overall monitoring of the implementation of the extrabudgetary Action Plan, and the associated ToAA, will be carried out by UNESCO s Delegation and Accountability Committee, which will also advise on necessary adjustments to the main provisions of the ToAA. The overall framework for all UNESCO activities is the Medium Term Strategy (C/4) and the Regular Programme and Budget (C/5) as discussed and approved by UNESCO s Executive Board and General Conference. The C/4 and C/5 documents constitute the overall programming framework for all extrabudgetary activities; these activities therefore need to be formulated and implemented in such a manner that they reinforce, and do not dilute, the overarching objectives and biennial sectoral priorities of the Regular Programme. Thus, extrabudgetary activities will be planned in the context of the preparation of the C/5 documents; and extended sectoral strategic frameworks (SSFs) will be elaborated to cover both regular budget and targeted/projected EXB activities. The SSFs will include specific objectives for extrabudgetary resource mobilization; and the results to be attained will aim at further reinforcement of the results stipulated in the C/5 document proper for each Main Line of Action (MLA) or inter-sectoral platform. Extrabudgetary activities will be targeted particularly at country level activities that enhance the regular budget activities, thus enabling UNESCO s actions to have a greater impact. The definition of the extended SSFs and their subsequent translation into an additional programme of project/programme outlines for targeted/projected extrabudgetary activities must reflect UNESCO s overall strategies and vision, but must also take into account the bottom-up approach as represented by contributions from Field Offices, reflecting the respective national development strategies, the various programming exercizes under the One UN approach, and notably the UNESCO country programming documents (UCPDs). The Director-General s instructions on the preparation of the additional programme for the biennium are contained in the Blue Note DG/Note/07/48 of 19 December More detailed guidance on the preparation of the outlines to be included in the additional programme was given in memorandum ERC/CFS/DIR/08/002 of 6 January 2008, which also provides a template for the presentation of the outlines. The first additional programme of targeted/projected extrabudgetary activities was identified by Programme Divisions, Field Offices and Institutes in direct alignment with the 34 C/5 document, generally at the level of Main Line of Action (MLA), or inter-sectoral platform. It was be assessed and approved by the Sector ADGs, and will be the basis for an extrabudgetary resource mobilization plan for the biennium, which also takes into account the policies and priorities of the funding sources. Collective donor consultations will be organized following each General Conference; the first such consultations took place on 28 March 2008 at UNESCO Headquarters. Based on the preliminary indications by the funding sources on that occasion, individual consultations will be scheduled with interested funding sources to reach agreement on the programmes and projects to be financed. The donors will be encouraged to extend their support with as little earmarking as possible, preferably at the level of MLA or inter-sectoral platform. Extrabudgetary resource mobilization is the joint responsibility of the Programme Sectors, Field Offices and Institutes, coordinated by ERC/CFS. Field Offices are of particular importance in mobilizing resources from field oriented multilateral funding sources the European Commission, the multilateral development banks, and the UN funds and programmes as well as some highly decentralized bilateral or private funding sources. The main components of the ongoing reform efforts in the UN system in the overall context of the Delivering as One concept also place increasing emphasis on the role of the Field Offices in 1 page 9 OVERVIEW OF GENERAL POLICIES AND PROCEDURES FOR UNESCO S EXTRABUDGETARY ACTIVITIES

11 page 10 OVERVIEW OF GENERAL POLICIES AND PROCEDURES FOR UNESCO S EXTRABUDGETARY ACTIVITIES the preparation of the One UN Plan, and the associated country level resource mobilization within the framework of the One UN budgetary framework and the One UN Coherence Funds. While these policies and modalities are still evolving, and the impact on UNESCO being assessed, it is clear that the Field Offices must combine their role in sector analysis, policy advice and national capacity and institution building, and advocacy with regard to the needs of the host countries in UNESCO s fields of competence, with providing services in concrete project identification and formulation, as well as resource mobilization. In particular, they may play a decisive role in influencing, in favour of UNESCO s mandates, such country level international planning instruments as the Common Country Assessments (CCAs) or United Nations Development Assistance Frameworks (UNDAFs), and the One UN Plans for the United Nations system, or the Comprehensive Development Frameworks (CDFs) and Poverty Reduction Strategy Papers (PRSPs) for the Bretton Woods institutions. The UNESCO Country Programming Documents will obviously also play an important role in UNESCO s positioning of its role in country level development cooperation. While the Heads of the Field Offices and of the Institutes have a large degree of autonomy in project identification and formulation, the relevant Programme Sector and ERC/CFS should be kept informed of all contacts beyond preliminary exploratory discussions in order to ensure compatibility with UNESCO s overall strategic objectives and programmatic priorities, and to promote overall UNESCO coordination and consistency. Funding agreements may be signed by the Heads of the Field Offices and Institutes for projects that have been generated by them, if the agreements comply with UNESCO s standard models. Failing that, prior authorization must be obtained from DIR/ERC/CFS, who will seek the requisite visas from the concerned UNESCO units before giving such authorization. Current rules and procedures relating to actual project and programme implementation are, by and large, seen to be adequate; but they are not always adhered to by staff, and enhanced efforts will be deployed by senior management to ensure greater compliance with the existing provisions. Furthermore, more consistent monitoring at senior management level is needed to enhance project and programme delivery in both quantitative and qualitative terms. UNESCO s standard formats for narrative reporting need to be respected, as must the timelines for the preparation and distribution of reports, with quality control exercised at the Sector ADG level. A Sector Alert System will be created to provide for a quarterly review, under the overall authority of the Programme Sector ADG, to identify extrabudgetary activities that experience quantitative or qualitative implementation problems, and propose corrective actions for them. Overall monitoring is undertaken, at least twice a year, by the College of ADGs and the Committee for Budget and Finance, and at least once a year by the Directorate. Information on the key trends and figures pertaining to UNESCO s extrabudgetary activities will be presented to each spring session of the Executive Board, normally as part of the normal Management Chart, with a more elaborate report to follow at the fall session, if so required. Furthermore, an overall report on extrabudgetary activities and their relationship and compliance with those of the Regular Programme will be presented to the General Conference. The sections below set out the main procedures relating to the handling of extrabudgetary activities, and also describe the respective roles of the various UNESCO units involved in these activities. Since this inevitably leads to some repetition, Annex A provides a consolidated table on each step in the cycle of an extrabudgetary activity, and the UNESCO unit responsible.

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13 page 12 ACTORS IN UNESCO ACTORS IN UNESCO

14 Extrabudgetary activities involve virtually everyone in UNESCO. While Project Officers in the Programme Sectors and Field Offices are the main actors in preparing and implementing such activities, the Division for Cooperation with Extrabudgetary Funding Sources (ERC/CFS) is the main interlocutor between the Organization and its extrabudgetary partners. Furthermore, the central services, especially the Bureau for Strategic Planning (BSP), the Bureau of the Budget (BB) and the Bureau of the Comptroller (BOC), but also the Procurement Service (ADM/PRO), the Legal Adviser (LA), and the Internal Oversight Service (IOS), have important roles to play. Below is a brief description of the main responsibilities of each of the actors. References are given to other relevant parts of this Guide as appropriate. PROGRAMME SECTORS, FIELD OFFICES AND INSTITUTES Formulation of project or programme proposals: Staff in the Programme Sectors, Field Offices and Institutes are responsible for translating the extended SSFs, identified in the context of preparation of the C/5, into programme/project outlines to be included in the additional programme of targeted/projected EXB activities. Quality control of these outlines is undertaken by the Sector ADG to ensure that they comply with UNESCO s standard forms/ models and unit costs, are relevant to UNESCO and the beneficiary country, as well as to other country programming exercises, and are within UNESCO s delivery capacity. In light of indications obtained during the collective consultations with funding sources as mentioned above, and subsequent soliciting of individual donor interest by ERC/CFS, Project Officers (POs), in consultation with their AOs, prepare substantive project or programme documents, which include a detailed multi-year, multi-component budget, to be visaed by BB before being submitted to the Director of the Programme Sector or Head of the Field Office or Institute for clearance and approval for onward transmission to ERC/CFS by the Sector ADG. [cf. Project Preparation and The Budget]. Implementation of projects: Once a project has been approved by a funding source, the Project Officer (PO) in the Programme Sector or Field Office concerned is responsible for ensuring the implementation of the project [cf. Implementation], including its registration in SISTER under the code to which it is linked. Revision of project documents and project budgets: When required, but at least once a year, the PO, in co-operation with his/her Administrative Officer (AO), must prepare a revision of the project budget and work plan for submission to BB to reflect actual progress under the project. If the modifications compared to the original budget are sufficiently important to warrant the donor s approval for instance if transfers between budget lines, or an overall increase in the budget, are proposed; or if it is necessary to extend the funding agreement - the budget is submitted to ERC/CFS, after visa by BB, for transmission to the donor for approval, highlighting the proposed modifications, their rationale, and the impact on the original project design and budget of the modifications. Such major modifications in the budget would normally also entail modifications in the project document itself, which must be approved by the donor at the same time. Transfer of funds to the project, and the issuance of new allotments, take place regularly, and on the basis of the approved/revised budget and work plan, together with the formal request for allotment. Unused budget funds under a previous allotment are automatically carried forward to the next financial year. [cf. The Budget]. 2 page 13 ACTORS IN UNESCO

15 page 14 ACTORS IN UNESCO Drafting of reports: The PO prepares an annual (or more frequent, if requested by the funding source) report on the progress of the project. The PO also prepares a final report as soon as possible after the termination of the project in accordance with the format established by ERC/CFS/REP. Even if a final report is prepared by the Chief Technical Adviser of the project, or an implementing organization sub-contracted by UNESCO, UNESCO must add its own comments and approval of the report before its finalization. All substantive reports require the formal review and approval of the Sector ADG [cf. Reporting]. In addition to regular progress reporting, the PO may be requested by ERC/CFS to prepare a short implementation status report prior to each formal review meeting with the funding source, updating the most recent progress report, and providing recommendations on decisions to be made during the meeting. A check list for the most important elements in such reports is provided in the annexes. Concrete templates are comprised in the above mentioned extrabudgetary HelpDesk, since a few funding sources require specific formats to be applied. Monitoring of projects: The PO bears the key responsibility for regular monitoring of project implementation, focusing both on quantitative and qualitative aspects, and keeping in mind the need for possible remedial action. The future Sector Alert System, under the overall responsibility of the Programme Sector ADGs, will undertake quarterly reviews of problem projects, identified - upon request by the Sector - by BB and BOC if disbursements are slow, and by the EOs if the qualitative indicators and benchmarks contained in the project documents are not adequately met [cf. Monitoring and Evaluation] Evaluation of projects: The PO, in collaboration with the Internal Oversight Service (IOS), is responsible for initiating, organizing and following up project evaluations in accordance with the approved project document and corresponding budget, and the guidelines for the evaluation of development co-operation projects [cf. Monitoring and Evaluation]. The donor must be consulted on the terms-of-reference for the evaluation, and is normally invited to participate in the evaluation. Closing of project accounts: When all project activities are completed, the PO, in co-operation with the concerned AO, monitors the final payments under the obligations raised, ensures that all the remaining obligations are eventually liquidated, and requests the accounting section in BOC (BOC/FRA) to proceed with the closure of the project account. Upon the issuance of a final financial statement from BOC, BB is requested to close the project account. The PO also prepares a list of existing project equipment, so that ERC/CFS may consult the donor to obtain permission to transfer the ownership to the beneficiary Government. Possible savings in the project account are returned to the donor, normally through transfer to the General Fund created for the donor in question, unless prior agreement has been reached on another use [cf. The Budget]. THE DIVISION FOR COOPERATION WITH EXTRABUDGETARY FUNDING SOURCES (ERC/CFS) The main tasks of the Division for Cooperation with Extrabudgetary Funding Sources (ERC/ CFS) are to provide UNESCO colleagues with information about the overall policies, and possible particular requirements, of the different funding sources, including their substantive and geographical priorities, as well as with advice and assistance in the preparation of the various documents related to extrabudgetary cooperation. This starts with the funding aspects

16 of the extended SSFs, and also comprises the programme/project outlines for the additional programme of targeted/projected extrabudgetary activities, as well as substantive project proposals upon initial interest indicated by a funding source. The Division also coordinates the relations with donors/partners through the development and implementation of an extrabudgetary resource mobilization strategic plan, including broad collective consultations with funding sources, and subsequently soliciting interest from individual donors, and the eventual transmission of Sector-approved project documents. The Division is UNESCO s representative at the regular review meetings with the funding sources, where general presentations are given on overall trends in UNESCO s own policies and priorities with a view to sensitizing donors. On-going projects are reviewed; and new project proposals may also be discussed on these occasions. As will be seen from the presentation below of UNESCO s various funding sources, the cooperation modalities, as well as the cycles for presentation of new project proposals and the conduct of review meetings, vary greatly. CFS keeps the Programme Sectors normally via the EO s and the central services informed through an annual calendar of events, so that review meetings may be well prepared, and the decisions implemented; the Division also ensures that UNESCO may seize all opportunities to submit new project proposals for consideration in response to changing needs and funding possibilities. Since the Programme Sectors and Field Offices, as mentioned above, are responsible for the preparation of project proposals, the role of ERC/CFS is limited in this respect to a common sense control of the quality of content and clarity in presentation, as well as compatibility with the requirements of the funding source in question. After the formal presentation of the project proposals to the funding sources, ERC/CFS monitors their consideration and keeps the submitting UNESCO units informed. Following approval of a given project or programme by a donor, ERC/CFS prepares the funds-in-trust agreement, unless the contribution is directed towards a special account. Although some progress has been attained in the efforts to harmonize and simplify funding agreements, the various funding sources still tend to favour their own models. While formats may thus vary, a number of issues should always be addressed in a funds-in-trust agreement. Annex B.b provides a checklist for the main components, which should be used as a base for assessing possible agreements proposed by the funding source itself. Furthermore annex B.c provides a model for a simplified funds-in-trust agreement through an exchange of letters between UNESCO and the funding sources, normally applied with reference to an overall cooperation agreement in existence with the funding source in question. Templates for general funds-in-trust agreements with Government donors, as well as private entities, will be included in the extrabudgetary HelpDesk, together with models for agreements with UNESCO s main partners among the multilateral funding sources. These templates should always serve as the base when UNESCO itself proposes the funding agreement. As will be seen, the funding agreement generally formalizes the project document and corresponding budget, including programme support costs, stipulates the timing and modalities for the transfer of the funds, and sets provisions for the handling of accrued interest, narrative and financial reporting, evaluation, audit, and possible modifications in the project design and the budget. For country based funds-in-trust projects, ERC/CFS also prepares, in cooperation with the project officer, a Plan of Operations with the beneficiary (shown in annex B.d) The main purposes of this document are to ensure the concurrence of the beneficiary Government 2 page 15 ACTORS IN UNESCO

17 page 16 ACTORS IN UNESCO with the project and corresponding budget; to stipulate possible counterpart contributions to be provided by the beneficiary (personnel, office premises, land for construction...); and to ensure respect for the immunities and privileges that UNESCO needs to implement the project. For funds-in-trust projects of a regional or inter-regional nature, Plans of Operations are prepared in a simplified manner, often through an exchange of letters to ensure that the involved beneficiary countries are in agreement with the activities, and are prepared to respect UNESCO s privileges and immunities. Plans of Operations are not normally prepared for projects funded by United Nations sources, the multilateral development banks or the European Communities, since the beneficiary Governments are more directly involved in the preparation of the project, often resulting in a tripartite agreement between UNESCO, the funding source, and the beneficiary. Considerations are currently in process within UNESCO as to whether Plans of Operations may be replaced, also for funds-in-trust arrangements, by tripartite agreements on the project document proper, with UNESCO s immunities and privileges covered by international conventions or a host country agreement. The authority to sign funding agreements with donors, and Plans of Operations with the beneficiary is vested in DIR/ERC/CFS, but may be delegated to Heads of Field Offices or Institutes in cases where the projects have been generated by them, and the texts follow the standard models. If standard agreements are not used, the documents need to be reviewed and approved by the concerned central units at headquarters (LA, BB and BOC) through ERC/CFS prior to signature by the Head of the Field Office. The signed documents are copied by ERC/CFS to the PO, the AO, and the relevant central services, including Archives; and BB is requested to establish the project account in FABS (the Project System (PS) and Funds Management (FM) modules), and the PO in SISTER (where it is listed under the same SISTER code as the Regular Programme activity to which it is attached). ERC/CFS will then request the funding source to transfer funds to UNESCO s bank account. During project implementation, ERC/CFS is responsible for submitting regular narrative and financial reports, prepared by the project officer and BOC/FRA, respectively, to the funding sources, as well as the final report and the final financial report. CFS also liaises with the project officer, IOS and the funding sources, on the preparation and implementation of project reviews and evaluations. There are currently two sections in ERC/CFS, each dealing with a particular set of funding sources: The Section for Bilateral Government Funding Sources (CFS/BLT) covers relations with bilateral Government donors, including self-benefiting funds-in-trust arrangements, as well as South/South cooperation. Since the majority of the contributions to UNESCO s special accounts stem from bilateral Government sources, CFS/BLT also monitors these arrangements, unless the Special Account in question pertains to an Institute, or a major established special UNESCO programme, with its own steering mechanism. In addition to the various tasks described above with regard to project presentation and approval, formalization of agreements with the funding sources and beneficiaries, submission of reports, and the carrying out of regular reviews with the funding sources, CFS/BLT also seeks to sensitize the bilateral Government donors in favour of UNESCO s mandates with a view to mobilizing additional resources for these activities. The Section for Multilateral and Private Funding Sources (CFS/MLT) is first of all responsible for UNESCO s funding relations with the traditional United Nations funding sources (mainly UNDP, UNFPA, UNICEF, UNHCR and WFP), but notably with the rapidly increasing number of new UN Funds and funding mechanisms, including country based multi-donor trust funds,

18 further described in section 5 below. The UN Trust Fund for Human Security is, however, handled by CFS/BLT, since it is funded exclusively by Japan, who retains major control over programming and approval. CFS/MLT is also responsible for funding relations with the European Commission, the multilateral development banks and the private sector. While the Section s main responsibility lies in funding relations, CFS/MLT also deals with the relevant aspects of the operational policy relations with most of the UN agencies, including the United Nations Development Group (UNDG), comprising all the major UN funds and programmes and several specialized agencies, and playing an increasing role both in overall coordination of the operational activities of the UN system, and in policy setting. The Reports Unit (ERC/CFS/REP) (under DIR/CFS) monitors the regular progress reporting on funds-in-trust projects, as well as the preparation and overall distribution of final reports for all sources in accordance with the agreed formats. [cf. Reporting] THE BUREAU OF THE BUDGET (BB) BB provides advice and assistance to POs on the preparation of budget proposals, and on other budgetary aspects of extrabudgetary projects. BB also reviews project proposals to ensure that they comply with UNESCO s budget standards and cost recovery policy as reflected in BB s Guidelines regarding the budgetary aspects of extrabudgetary projects (October 2007). Once BB has visaed the proposed project budget, the document can be submitted by the PO to the Director/Programme Division or Head of Field Office or Institute for review, clearance and submission to the Sector ADG for final quality control, and onward transmission to ERC/CFS, and then to the potential donor. If standard support costs rates are not applied, prior approval must be sought from the DG via ERC and BB on a possible waiver, indicating sustaining arguments. Upon receipt of the approved funding agreement, and the Plan of Operations in the case of funds-in-trust, BB establishes the project account in FABS and assigns a specific budget code to it (see annexes for interpretation). BB also reviews and advises on budgetary aspects of project documents and budget revisions, issues authorization for expenditure in the form of allotments, issues periodical budgetary status reports and financial forecasts, and exercises budgetary control through the allotment system. Allotments for a given project are issued by BB upon request from the PO through the AO concerned, based on an annual work plan, and on condition that sufficient funds are available in the project account. The allotment is not split into individual budget components, but given as an annual lump sum corresponding to the funds received minus the programme support costs, respecting, however, the overall breakdown among the budget lines for the project as a whole. When the allotments have been issued, obligations may be made (called commitments in FABS in the form of funds reservations, travel orders, purchase requisitions or purchase orders), and project activities commence. If funds in a project account prove insufficient to allow the raising of obligations deemed necessary for the implementation of the project, ERC/ CFS must be consulted by the project officer or BB and, if need be, requested to approach the donor to accelerate the transfer of funds. [cf. The Budget]. Advance allotments remain an exception, since this practice weakens budget control. In this context, it should be underlined that project officers that make commitments in excess of allotments could be personally liable 2 page 17 ACTORS IN UNESCO

19 page 18 ACTORS IN UNESCO under the Staff Rules to reimburse the Organization for possible financial losses due to such commitments. As mentioned above, discussions are in process regarding the possibility of establishing a Sector Alert System to monitor both the quantitative and qualitative aspects of project implementation. In this context, BB with BOC and the Sector AOs would upon request from the Programme Sectors - identify, on a quarterly basis, projects with quantitative problems, and seek information from the respective POs as to the reasons for low disbursement rates in order to facilitate remedial action to be taken by the PO under the overall responsibility of the relevant Sector ADG [cf. Monitoring and Evaluation]. BB also participates in the semi annual review of EXB activities conducted by the Committee on Budget and Finance. THE BUREAU OF THE COMPTROLLER (BOC) BOC is responsible for the financial administration of extrabudgetary funds (including the receipt, management, investment and disbursement of funds). BOC also reviews the financial terms of donor agreements to ensure that they are in compliance with UNESCO s rules and regulations, and respect the standard reporting format. The Treasury Section (BOC/TRS) is responsible for the receipt of all contributions, and the temporary investment of any surplus funds. In general, voluntary contributions must be made in United States dollars, and credited to UNESCO Headquarters bank account in USD, or in euros and credited to UNESCO Headquarters bank account in EUR. Reception of funds in a currency other than USD or EUR, must obtain the prior approval of the Treasurer. Only when the Field Office, for such locally received funds, has informed BOC and BB that the funds have been received, and submitted the annual work plan and a request for an allotment to BB, is the Field Office able to start using the funds. BOC/TRS is also responsible for the verification of the financial credentials of potential funding partners in the private sector. To be able to issue an opinion on the financial strength of a potential partner, the following information needs to be addressed to the Treasurer: Official name an registration number (& the name of the register) of the company Official address of the company Date of creation Audited financial statements of the company for at least the past two years Description & monetary value of the contract in which UNESCO is about to engage The Accounting Section (BOC/FRA) maintains and monitors the accounts of the projects, and prepares regular at least once a year - financial reports on all income, obligations, and expenditure. In the context of the future Sector Alert System, BOC, with BB and Sector AOs prepares quarterly summary reports upon request from the Programme Sectors - on problem projects, e.g. with low disbursement rates, as identified in the project accounts. When a project is operationally terminated, the relevant AO in co-operation with the PO liquidates obligations as and when possible, and informs BOC/FRA. When all obligations are liquidated, ERC/CFS is requested to consult the donor on the handling of possible remaining funds. When the balance in the account is zero, BOC/FRA prepares a final financial report, and BB

20 formally closes the project account. BOC also issues annual financial closing instructions for extrabudgetary accounts. The Financial Control Section (BOC/FCS) periodically reviews unliquidated obligations for validity and conformity with UNESCO s financial rules. THE PROCUREMENT DIVISION (ADM/PRO) Procurement is the overall process of acquisition, by purchase or lease, of goods, works and/or services required by the Organisation, governed by the principals of: fairness, integrity and transparency through competition economy efficiency and effectiveness best value for money While the AOs are accountable and responsible for all financial proceedings, the responsibility of the various elements of the procurement function is normally delegated to the POs. In any case, it is the responsibility of the Sector ADGs/Directors or Heads of Offices and Institutes to ensure that coherent procurement functions are established and maintained, in compliance with the UNESCO Manual 1025 and related instructions, and the provisions on the Contracts Committee (further described below). The Procurement Advisory Services of ADM/PRO provides comprehensive backstopping support to the concerned UNESCO units in all their procurement activities. The services include, but are not limited to: Establishment of a procurement plan Model documents (i.e. procurement forms for tendering and evaluation) Specifying the requirements (for goods, works and services) Identification of potential contractors Guidance in preparing solicitation documents Capacity building (training) In case the UNESCO unit responsible for the implementation of the project does not have the necessary procurement capacities, the Directors or Heads are obliged to consult with the Procurement Advisory Services of ADM/PRO at the planning stage for all high-value (equal to or exceeding USD 100,000) or otherwise complex procurement cases. THE CONTRACTS COMMITTEE All proposed contracts for services and purchase of equipment must be submitted to the Contracts Committee if the amount is greater than USD 100,000. The Committee consists of the Comptroller (chairperson), DIR/BB, DIR/LA and Chief ADM/PRO and a Programme Sector AO; in addition, other central services may be included in the meetings as appropriate, together with representatives of the UNESCO unit that prepared the contract. The Committee is mandated to review and approve contracts between USD 100,000 and USD 350,000. For contracts beyond USD 350,000, the Contracts Committee prepares recommendations to ADG/ ADM for final review and approval. The Committee normally meets once a week, and may also deal with the proposed contracts in writing. 2 page 19 ACTORS IN UNESCO

21 page 20 ACTORS IN UNESCO Manual item 326 lists the documents that must be submitted to the Contracts Committee to allow review of the proposed contract, notably form 807 duly signed, and an analysis of the various offers received for the services, works or equipment in question. All contracts beyond USD 30,000 are subject to formal competitive bidding. Manual item 1025 contains detailed provisions on the bidding and selection procedures to be applied, and also lists the conditions under which a waiver from the normal competitive bidding procedures may be obtained from the Approving Officer, in whom the respective authority is vested. This is notably the case when the proposed supplier is known to be the only source of supply, or when subsequent access to spare parts and maintenance necessitates the choice of a given supplier. IMPLEMENTATION PARTNERSHIPS In view of UNESCO s increasing recourse to partnerships with governmental entities, IGOs, NGOs, research institutions, universities, professional associations, foundations and other notfor-profit organizations for the preparation and implementation of its activities, simplified guidelines for the selection of such partners, and the subsequent conclusion of implementation partnership agreements, have been laid down in a new item 513 of UNESCO s Administrative Manual. The authority for the selection of such partners is delegated to the relevant Sector ADGs or Directors of Bureaux, Institutes or Field Offices in accordance with a set of criteria for «due diligence» specified in the item. For implementation partnerships beyond US $100,000, clearance must, however, be obtained from the relevant central services as also outlined in the item. While implementation partnerships, owing to their broader and non-commercial nature, thus do not obey to UNESCO s procurement rules and the authority of the Contracts Committee, in accordance with Manual items 1025 and 326 described above, the implementation partnerships will be monitored by a Review Committee, chaired by ADG/ERC or DIR/ERC/CFS, with secretariat services provided by ERC/CFS. The Review Committee will convene on a quarterly basis, and will make recommendations to the Director-General on possible adjustments to the policies and procedures governing implementation partnerships. THE BUREAU FOR STRATEGIC PLANNING (BSP) BSP collaborates with the Programme Sectors, Field Offices and Institutes, as well as ERC/ CFS, in the formulation of extended SSFs, and the assessment of programme/project outlines to be included in the additional programme of targeted/projected extrabudgetary activities to ensure quality in presentation, and overall compatibility with UNESCO s strategic objectives and main priorities.

22 THE OFFICE OF INTERNATIONAL STANDARDS AND LEGAL AFFAIRS (LA) LA is consulted on the legal aspects of non-standard agreements for cooperation whether with a funding source or a beneficiary Government - notably if the provisions may expose UNESCO to financial or political risks. The role of LA in this context is particularly important for funding agreements with partners in the private sector. THE INTERNAL OVERSIGHT SERVICE (IOS) IOS seeks to ensure that programmes are relevant and sustainable, delivered effectively and efficiently, and achieve the intended impacts. The C/5 Evaluation Plan lists evaluations to be carried out during the biennium in question. IOS promotes focus on results by encouraging the incorporation of lessons learnt from programme evaluations. IOS should be informed of all evaluations planned and under consideration in order to determine the best approach to manage the evaluation[cf. Monitoring and Evaluation]. 2 page 21 ACTORS IN UNESCO