Fifth Consolidated Annual Progress Report on Activities Implemented under the United Nations Bhutan Country Fund

Transcription

1 Fifth Consolidated Annual Progress Report on Activities Implemented under the United Nations Bhutan Country Fund Report of the Administrative Agent of the United Nations Bhutan Country Fund for the Period 1 January to 31 December 2014 Multi-Partner Trust Fund Office Bureau of Management United Nations Development Programme May 2015

2 Participating organizations and contributors PARTICIPATING ORGANIZATIONS CONTRIBUTORS Food and Agriculture Organization Austrian Development Agency United Nations Capital Development Fund Delivering Results Together UN Conference on Trade and Development United Nations Development Programme Expanded DaO Funding Window Swiss Agency for Development and Cooperation United Nations Environment Programme United Nations Educational, Scientific and Cultural Organization United Nations Population Fund United Nations Children's Fund World Food Programme 1

3 Abbreviations and Acronyms List of abbreviations and acronyms commonly used in the report: ccpap DDM GNH EFW FAO FYP IFAD IMNCI MDGs MPTF MPTF Office MoAF MoE MoHCA MOU OCHA RC RGoB SAA TOR UN UNAIDS UNCDF UNCTAD UNDAF UNDP UNEP UNESCO UNFPA UNICEF UNV UN Women WFP Common Country Programme Action Plan Department of Disaster Management Gross National Happiness Expanded Delivering as One Funding Window for Achievement of the MDGs Food and Agriculture Organization of the United Nations Five Year Plan International Fund for Agricultural Development Integrated Management of Neonatal and Childhood Illness Millennium Development Goals Multi-Partner Trust Fund UNDP Multi-Partner Trust Fund Office Ministry of Agriculture and Forests Ministry of Education Ministry of Home and Cultural Affairs Memorandum of Understanding Office for the Coordination of Humanitarian Affairs Resident Coordinator Royal Government of Bhutan Standard Administrative Arrangement Terms of Reference United Nations Joint United Nations Programme on HIV/AIDS United Nations Capital Development Fund United Nations Conference on Trade and Development United Nations Development Assistance Framework United Nations Development Programme United Nations Environment Programme United Nations Educational, Scientific and Cultural Organization United Nations Population Fund United Nations Children s Fund United Nations Volunteers United Nations Entity for Gender Equality and the Empowerment of Women World Food Programme 2

4 DEFINITIONS Allocation Amount approved by the Steering Committee for a project/programme. Approved Project/Programme A project/programme including budget, etc., that is approved by the Steering Committee for fund allocation purposes. Contributor Commitment Amount(s) committed by a donor to a Fund in a signed Standard Administrative Arrangement with the UNDP Multi-Partner Trust Fund Office (MPTF Office), in its capacity as the Administrative Agent. A commitment may be paid or pending payment. Contributor Deposit Cash deposit received by the MPTF Office for the Fund from a contributor in accordance with a signed Standard Administrative Arrangement. Delivery Rate The percentage of funds that have been utilized, calculated by comparing expenditures reported by a Participating Organization against the 'net funded amount'. Indirect Support Costs A general cost that cannot be directly related to any particular programme or activity of the Participating Organizations. UNDG policy establishes a fixed indirect cost rate of 7% of programmable costs. Net Funded Amount Amount transferred to a Participating Organization less any refunds transferred back to the MPTF Office by a Participating Organization. Participating Organization A UN Organization or other inter-governmental Organization that is an implementing partner in a Fund, as represented by signing a Memorandum of Understanding (MOU) with the MPTF Office for a particular Fund. Project Expenditure The sum of expenses and/or expenditure reported by all Participating Organizations for a Fund irrespective of which basis of accounting each Participating Organization follows for donor reporting. Project Financial Closure A project or programme is considered financially closed when all financial obligations of an operationally completed project or programme have been settled, and no further financial charges may be incurred. Project Operational Closure A project or programme is considered operationally closed when all programmatic activities for which Participating Organization(s) received funding have been completed. Project Start Date Date of transfer of first instalment from the MPTF Office to the Participating Organization. Total Approved Budget This represents the cumulative amount of allocations approved by the Steering Committee. US Dollar Amount The financial data in the report is recorded in US Dollars and due to rounding off of numbers, the totals may not add up. 3

5 Table of Contents Participating organizations and contributors...1 Abbreviations and Acronyms...2 Executive Summary...5 Introduction Strategic Framework Governance of the UN Bhutan Country Fund Allocation Criteria Steering Committee UN Resident Coordinator Administrative Agent Monitoring and evaluation Financial performance Sources and use of funds Partner contributions Interest earned Transfer of funds Expenditure and financial delivery rates Cost recovery Accountability and transparency Direct costs Annexes ANNEX A: Allocation Process for Un-earmarked Funds ANNEX B: UN Bhutan Country Fund allocation criteria ANNEX C: Terms of Reference for the Steering Committee of the UN Bhutan Country Fund. 23 4

6 Executive Summary The United Nations (UN) Bhutan Country Fund was formally established on 30 June 2009 with the conclusion of the Memorandum of Understanding (MOU) between 14 Participating Organizations 1 and UNDP s Multi- Partner Trust Fund Office (MPTF Office) in its capacity as the Administrative Agent of the UN Bhutan Country Fund. The UN Bhutan Country Fund became operational in December 2009 with the first contribution from the Expanded Delivering as One Funding Window for Achievement of the MDGs (EFW) 2. With the UN Bhutan Country Fund MoU expiring at the end of 2013 and the previous UNDAF/CPAP cycle coming to an end on 31 December 2013 the Bhutan UNCT revived the One Fund at the beginning of The UN Bhutan Country Fund was further extended until the end of the UNDAF: Bhutan One Programme In 2014, the UNCT was able to mobilize a total of US$ 1,157,120, with contributions from the Austrian Development Agency (US$ 378,120), Swiss Agency for Development and Cooperation (US$ 25,000) and the Delivering Results Together Fund (US$ 754,000). In accordance with the UN Bhutan Country Fund Terms of Reference (2014), the Steering Committee is responsible for prioritization and allocation decisions of the un-earmarked contributions to the UN Bhutan Country Fund. The overall management of the UN Bhutan Country Fund is led and coordinated by the Resident Coordinator in consensus with the Heads of the Participating Organizations. This Fifth Consolidated Annual Progress Report on the UN Bhutan Country Fund reports on the 2014 activities of the UN Bhutan Country Fund and the changes in the governance structure, including allocation and implementation modalities that have changed slightly in light of the new UNDAF: Bhutan One programme Through the UNDAF: Bhutan One Programme , the UN family in Bhutan had agreed to combine its efforts to achieving the following four outcome areas: Sustainable Development Essential Social Services Gender Equality and Child Protection Governance A total of US$ 1,116,460 were allocated to four UN Participating Organizations in 2014, with net funded amount being US$ 1,095,423 after receiving refunds of US$ 21,037. However, the implementation of most activities started only in 2015 as the funds were received late in In 2014, only one of the Participating Organizations (UNDP) reported expenditures (US$71,203). As of the end of the current reporting period, 31 December 2014, the net funded amount to Participating Organizations totalled US$3,419,500, with transfers being made to nine Participating Organizations implementing activities within nine outcomes/programmes between 1 January 2013 and 31 December The previous activities implemented through the DaO EFW were all operationally closed. In late 2014, four new 1 FAO, IFAD, UNICEF, UNFPA, UNDP, UNESCO, UNAIDS, UNOCHA, UNCDF, UNEP, UN Women, UNCTAD, UNV and WFP. 2 The Expanded Delivering as One Funding Window for Achievement of the Millennium Development Goals (EFW) is a global funding facility established to support UN Delivering as One countries. Current donors to the EFW are the Netherlands, Norway, Spain and the United Kingdom/DFID. 5

7 projects were created following the four outcomes of the new UNDAF: Bhutan One Programme : Sustainable Development, Essential Social Services, Gender Equality and Child Protection; and Governance. The financial overview is available in the Table 1 below. Table 1. Financial Overview, as of 31 December 2014 (in US Dollars) Sources of Funds Annual 2013 Annual 2014 Cumulative Gross Contributions - 1,157,120 3,576,120 Fund Earned Interest and Investment Income ,982 Interest Income received from Participating Organizations - - 5,064 Refunds by Administrative Agent to Contributors Fund balance transferred to another MDTF Other Revenues Use of Funds Total: Sources of Funds 46 1,157,337 3,585,167 Transfers to Participating Organizations 200,000 1,116,460 3,708,511 Refunds received from Participating Organizations (210,138) (21,037) (289,011) Net Funded Amount to Participating Organizations (10,138) 1,095,423 3,419,500 Administrative Agent Fees - 11,571 35,761 Direct Costs: (Steering Committee, Secretariat...etc.) - (411) 57,709 Bank Charges Other Expenditures Total: Uses of Funds (10,137) 1,106,585 3,512,982 Change in Fund cash balance with Administrative Agent 10,183 50,752 72,184 Opening Fund balance (1 January) 11,249 21,432 - Closing Fund balance (31 December) 21,432 72,184 72,184 Net Funded Amount to Participating Organizations (10,138) 1,095,423 3,419,500 Participating Organizations' Expenditure 357,556 71,203 2,377,244 Balance of Funds with Participating Organizations 1,042,256 The major vehicle for public transparency of operations under the UN Bhutan Country Fund during the reporting period was the MPTF Office GATEWAY ( and the dedicated UN Bhutan Country Fund website ( 6

8 Introduction The Fifth Consolidated Annual Progress Report on Activities Implemented under the UN Bhutan Country Fund is submitted to the Steering Committee and Donors contributing to the UN Bhutan Country Fund, in fulfilment of the reporting provisions of the UN Bhutan Country Fund Terms of Reference (TOR), the Memorandum of Understanding (MOU) between the United Nations Development Programme (UNDP) as an Administrative Agent (AA) and Participating Organizations, and the Standard Administrative Arrangement (SAA) between UNDP as an AA and donors. The UNDP Multi-Partner Trust Fund Office (MPTF Office) serves as the AA of the UN Bhutan Country Fund. The Annual Report covers the annual reporting period, 1 January - 31 December 2014, including resources mobilized in 2014 for the UN Bhutan Country Fund. Since there were no activities carried out in 2014, the Annual Report is consolidated based on information and data on 2014 contributions to the UN Bhutan Country Fund and the changes in the governance structure, including allocation and implementation modalities that have changed slightly in light of the new UNDAF: Bhutan One Programme (hereafter referred as One Programme ). It is neither an evaluation of the UN Bhutan Country Fund nor the MPTF Office s assessment of the performance of the Participating Organizations tasks that belong to an independent evaluation. Report Structure The Annual Report consists of three chapters: Chapter One provides an overview of the strategic framework of the UN Bhutan Country Fund. Chapter Two provides an overview of the UN Bhutan Country Fund s governance and fund management arrangements. Chapter Three provides an overview of the financial performance of the UN Bhutan Country Fund, including contributions and expenditure by participating agency, One Programme Outcome and budget category. 7

9 1. Strategic Framework Bhutan became a democracy following the successful elections to the country s first democratically elected Parliament in March This major political transition requires support over the long term. Challenges remain to build a firm foundation for the smooth functioning of a democratically elected government, through further strengthening of the constitutional bodies, enhanced capacity development of local governments, and expanding the role of civil society, an independent media and continued progress in the socio-economic arena. The credibility of democratic governance, central to the achievement of human development, is dependent on the success of this new democracy. Bhutan s unique long term vision and guiding development philosophy of Gross National Happiness (GNH) is seamlessly aligned with the MDGs. The core pillars of GNH: sustainable and equitable socio-economic development, conservation of the environment, preservation and promotion of cultural heritage and good governance cover all of the MDGs. As such, just as the MDGs serve as a practical global road map for the Millennium Declaration, in Bhutan the MDGs are viewed as a highly relevant development strategic framework contributing to realizing Gross National Happiness as the country s long term development goal. This synergy between GNH and MDGs has enabled Bhutan to be one of the few countries in the region which is on track to achieving almost all of the MDGs by 2015.However Bhutan needs to pay attention on the increasing youth unemployment and the increasing number of HIV cases. The One Programme is the result of a highly consultative and participatory process involving the Royal Government of Bhutan, key national implementing partners, all resident and non-resident UN agencies supporting Bhutan and other international partners. The One Programme is fully aligned with national development priorities laid out in the 11th Five-Year Plan of the Royal Government. The UN Bhutan s Delivering as One approach has several components: One Programme: The overall goal of the One Programme is to maximize the contributions of Participating Organizations by enhancing coordination, coherence, and programmatic synergies to assist in building an equitable, prosperous and democratic Bhutan. There has already been a significant reduction in the number of work plans and project documents between the Royal Government and the UN Organizations as a result. Common Premises and Services, and Harmonized Business Practices: Taking advantage of the robust UN harmonization, both at programme and operations level, a joint Business Continuity Plan was first developed in March 2009, which further reinforces UN Bhutan s Delivering as One with mutual back-up facilities and equipment in case of major disruptive events. All the UN agencies present in the country except for WHO are housed in the One UN House, operating under an integrated ICT service, including further harmonization in procurement and other common services. Communicating as One: The UN Bhutan Communications Group comprising of representatives from all six resident agencies is responsible for ensuring a One UN image. The Group provides advisory support to the UNCT and ensures UN advocacy and communications through various channels. The RCO now leads the Communications Group in advancing joint advocacy and the One Voice approach of the UNCT. 8

10 Common Budgetary Framework and Joint Resource Mobilization: The UN Bhutan Country Fund is an opportunity for the UN in the country to have a common Fund as a new pooled mechanism to mobilize and allocate additional resources at the country level, targeting the unfunded gaps in the One Programme. Organizational Change Leadership, Structure, Skills and Culture: Organizational change has taken root in UN Bhutan through successful UN harmonization, both at programme and operations level. The Government has expressed its appreciation to the subsequent reduction in transaction costs as a result of the harmonized processes. The UN Bhutan Country Fund responds to both the Delivering as One approach and commitment to Aid Effectiveness as per the Paris Declaration. It was established to channel additional donors funding to support the underfunded portions of the One Programme and new initiatives responding to emerging needs. This enhances the flexibility and responsiveness of the UN system through the One Programme to adapt to national priorities. The UN Bhutan Country Fund continues to contribute to realizing the One Programme outcomes by strengthening the planning and coordination process, and channelling consistent and predictable funds towards the highest programme priorities. Contributions to the UN Bhutan Country Fund may be accepted from governments of Member States to the United Nations, from intergovernmental and non-governmental organizations, or from private sources. 9

11 2. Governance of the UN Bhutan Country Fund 2.1 Allocation Criteria The allocation criteria for the UN Bhutan Country Fund (Refer Annex B) provide an objective basis for resource allocation decisions by the Steering Committee to allocate un-earmarked resources to the respective outcomes/outputs of the One Programme. The criteria for initial allocation are mainly related to One Programme relevance, Delivering as One, resource gaps and agency comparative advantage. Additional criteria for subsequent allocation are related to absorption capacity. The Outcome Groups are responsible for ensuring that their proposed activities meet the fund allocation criteria. The Terms of Reference for the UN Bhutan Country Fund were updated in 2014, noting that the aim of the Fund is to support coherent resource mobilization, allocation and disbursement of resources to support the un(der)funded portions of the One Programme and new initiatives responding to emerging needs. For example, the minimum threshold for allocations was increased to US$100,000 from the earlier US$10,000 to encourage programmatic approaches and ensure operational efficiency. The One Programme document, as well as joint programmes and agency programme documents falling thereunder is the programmatic planning document that will serve as the basis for funding requests and allocations. 1. For un-earmarked contributions, fund allocation will follow a two-tier process as reflected in the Fund Allocation Process in Annex A. The joint Outcome Groups will submit their priorities for funding based on the updated funding gap matrix, finalized at their Annual Review meetings in November each year. These proposed priorities will be compiled and reviewed by the Office of the Resident Coordinator and the GNH Commission and submitted to the Steering Committee. 2. The Steering Committee will review the proposed priorities and approve the initial prioritization if required, and based on it, the Steering Committee will submit an overview of the Resource Gap matrix to the development partners in December each year. Upon receipt of funds from donors, the Steering Committee will make the allocation decisions, based on the financial status of the Fund and the needs of the Government. The Steering Committee will inform the Country Programme Board of the final endorsement at the Board s annual meeting. For decision making, at least half of the Steering Committee members should be present or provide delegated authority. Decisions will be based on a consultative process and will be documented jointly by the Office of the Resident Coordinator and the GNH Commission. 2.2 Steering Committee The Steering Committee is comprised of UN signatories to the UN Bhutan Country Fund and the Gross National Happiness (GNH) Commission, and is co-chaired by the Secretary of the GNH Commission and the UN Resident Coordinator. The ToR for the Steering Committee is attached as Annex C. 10

12 The Steering Committee will be responsible for prioritization and allocation decisions of the un-earmarked contributions to the UN Bhutan Country Fund. The initial prioritization for allocation will be guided by recommendations from the Joint Outcome Groups annual review process. The Steering Committee will guide the operations and management of the Fund; it will annually review the joint resource mobilization strategy and subsequently implement it. The Steering Committee will ensure that the Country Programme Board is informed of the allocations, and will take into consideration the Country Programme Board s strategic priorities. During the reporting period, no Steering Committee meeting was convened due to a change in the Secretary of the GNHC Government Co-chair. However, the Co-chairs of the Steering Committee met on 5 September 2014, and allocation decisions were made through formal exchange of letters. 2.3 UN Resident Coordinator The overall management of the UN Bhutan Country Fund is led and coordinated by the UN Resident Coordinator in consensus with the Heads of the Participating Organizations. In line with the overall objective of Delivering as One in Bhutan, the UN Resident Coordinator is responsible for: Strategic leadership of the UN Bhutan Country Fund on the basis of the One Programme; Advocating and mobilizing resources for the UN Bhutan Country Fund in collaboration with Participating Organizations; Lead a consultative process on allocations from the UN Bhutan Country Fund, and make final decision if consensus cannot be reached, with documented process and rationale for these decisions; Signing the Memorandum of Understanding with Participating Organizations and the Standard Administrative Agreement(s) as a witness; and Implementation of the programme activities funded by the resources from the UN Bhutan Country Fund will be the responsibility of the Participating Organizations, as stipulated in the Memorandum of Understanding. The RC will hold the Heads of Participating Organizations accountable for their Organization s results that are funded through the UN Bhutan Country Fund. 2.4 Administrative Agent As stated in the Memorandum of Understanding, Section I, the UNDP MPTF Office will, as the Administrative Agent: a. Receive contributions from donors that wish to provide financial support to the Fund; b. Administer such funds received, in accordance with this Memorandum of Understanding including the provisions relating to winding up the Fund Account and related matters; c. Subject to availability of funds, disburse such funds to each of the Participating UN Organizations in accordance with instructions from the Steering Committee, taking into account the budget set out in 11

13 the approved programmatic document 3, as amended in writing from time to time by the Steering Committee; d. Consolidate statements and reports, based on submissions provided to the Administrative Agent by each Participating UN Organization, as set forth in the TOR, and provide these to each donor that has contributed to the Fund Account and to the Steering Committee; e. Provide final reporting, including notification that the Fund has been operationally completed, in accordance with Section IV below; f. Disburse funds to any Participating UN Organization for any additional costs of the task that the Steering Committee may decide to allocate (as referred to in Section I, Paragraph 3) in accordance with TOR. In line with the provisions of the Memorandum of Understanding, the Administrative Agent will ensure that the finalized annual consolidated report on the UN Bhutan Country Fund, is compiled and distributed to all donors contributing to the Fund and to the Participating UN Organizations, including maintaining an appropriate level of fund information on the UN system website for Bhutan ( and the UNDP MPTF Office s website ( to ensure transparency and visibility of donor contributions. 2.5 Monitoring and evaluation Monitoring and Evaluation Framework developed for the One Programme guides the M&E of the programmes funded through the UN Bhutan Country Fund. The UN M&E group provides technical advice and support on all aspects of results-based-management to the UN Country Team and to the Outcome Groups to monitor the One Programme development results and Delivering as One results. The UN Country Team has opted to use the national monitoring and reporting system which is in accordance with the Paris Declaration on Aid Effectiveness. 3 As used in this document, an approved programmatic document refers to the One Programme Joint Work Plans which is approved by the Steering Committee for fund allocation purposes. 12

14 3. Financial performance This chapter presents financial data and analysis of the Bhutan UN Country Fund using the pass-through funding modality as of 31 December Financial information for this Fund is also available on the MPTF Office GATEWAY, at the following address: Sources and use of funds As of 31 December 2014, 4 contributors have deposited US$ 3,576,120 in contributions and US$ 9,047 has been earned in interest, bringing the cumulative source of funds to US$ 3,585,167 (see respectively, Tables 2 and 3). Of this amount, US$ 3,708,511 has been transferred to 9 Participating Organizations, of which US$ 2,377,244 has been reported as expenditure. The Administrative Agent fee has been charged at the approved rate of 1% on deposits and amounts to US$ 35,761. Table 1 provides an overview of the overall sources, uses, and balance of the Bhutan UN Country Fund as of 31 December Table 1. Financial Overview, as of 31 December 2014 (in US Dollars) Sources of Funds Annual 2013 Annual 2014 Cumulative Gross Contributions - 1,157,120 3,576,120 Fund Earned Interest and Investment Income ,982 Interest Income received from Participating Organizations - - 5,064 Refunds by Administrative Agent to Contributors Fund balance transferred to another MDTF Other Revenues Use of Funds Total: Sources of Funds 46 1,157,337 3,585,167 Transfers to Participating Organizations 200,000 1,116,460 3,708,511 Refunds received from Participating Organizations (210,138) (21,037) (289,011) Net Funded Amount to Participating Organizations (10,138) 1,095,423 3,419,500 Administrative Agent Fees - 11,571 35,761 Direct Costs: (Steering Committee, Secretariat...etc.) - (411) 57,709 Bank Charges Other Expenditures Total: Uses of Funds (10,137) 1,106,585 3,512,982 Change in Fund cash balance with Administrative Agent 10,183 50,752 72,184 Opening Fund balance (1 January) 11,249 21,432 - Closing Fund balance (31 December) 21,432 72,184 72,184 Net Funded Amount to Participating Organizations (10,138) 1,095,423 3,419,500 Participating Organizations' Expenditure 357,556 71,203 2,377,244 Balance of Funds with Participating Organizations 1,042,256 13

15 3.2. Partner contributions With the UN Bhutan Country Fund MoU expiring at the end of 2013 with the previous UNDAF/CPAP cycle coming to an end on 31 December 2013 the Bhutan UNCT revived the One Fund at the beginning of The UN Bhutan Country Fund was further extended until the end of the One Programme period In 2014, the UNCT was able to mobilize a total of US$ 1,157,120, with contributions from the Austrian Development Agency (US$ 378,120), Swiss Agency for Development and Cooperation (US$ 25,000) and the Delivering Results Together-Fund (US$ 754,000). The Austrian Development Agency contribution was allocated to Access to Justice programme (Outcome 4) and Gender Joint Programme (Outcome 3); the contribution from the Swiss Agency for Development and Cooperation was allocated to Access to Justice programme (US$ 10,000) and to support effectiveness and coherence across the four One Programme Outcomes (US$ 15,000). The contribution from the Delivering Results Together-Fund was allocated according to the three policy initiatives in the UNCT proposal to support vulnerable groups in Bhutan: Policy initiative 1 to establish baselines and targets for vulnerable groups to facilitate inclusion in existing and new policies (US$ 267,500, under four different Outcomes); Policy initiative 2 to ensure the inclusiveness of social services for vulnerable groups (US$ 214,500 under Outcome 2, essential social services); and Policy initiative 3 to ensure that the implementation of policies related gender equality and protection of women and children is in line with international norms and standards (US$ 272,000 under Outcomes 1, 3 and 4). Table 2 provides information on cumulative contributions received from all contributors to this Fund as of 31 December Table 2. Contributors' Deposits, as of 31 December 2014 (in US Dollars) Contributors Prior Years as of 31-Dec-2013 Current Year Jan-Dec-2014 Total Austrian Development Agency - 378, ,120 Delivering Results Together - 754, ,000 Expanded DaO Funding Window 2,419,000-2,419,000 Swiss Agency for Development & Cooperation - 25,000 25,000 Grand Total 2,419,000 1,157,120 3,576, Interest earned Interest income is earned in two ways: 1) on the balance of funds held by the Administrative Agent ('Fund earned interest'), and 2) on the balance of funds held by the Participating Organizations ('Agency earned interest') where their Financial Regulations and Rules allow return of interest to the AA. As of 31 December 2014, Fund earned interest amounts to US$ 3,982 and interest received from Participating Organizations 14

16 amounts to US$ 5,064, bringing the cumulative interest received to US$ 9,047. Details are provided in the table below. Table 3. Sources of Interest and Investment Income, as of 31 December 2014 (in US Dollars) Interest Earned Prior Years as of 31-Dec-2013 Current Year Jan-Dec-2014 Total Administrative Agent Fund Earned Interest and Investment Income 3, ,982 Total: Fund Earned Interest 3, ,982 Participating Organization UNDP 4,780 4,780 UNFPA UNCTAD Total: Agency earned interest 5,064 5,064 Grand Total 8, , Transfer of funds Allocations to Participating Organizations are approved by the Steering Committee and disbursed by the Administrative Agent. As of 31 December 2014, the AA has transferred US$ 3,708,511 to 9 Participating Organizations (see list below). Table 4 provides additional information on the refunds received by the MPTF Office, and the net funded amount for each of the Participating Organizations. Table 4. Transfer, Refund, and Net Funded Amount by Participating Organization, as of 31 December 2014 (in US Dollars) Participating Organization Prior Years as of 31-Dec-2013 Current Year Jan-Dec-2014 Total Transfers Refunds Net Funded Transfers Refunds Net Funded Transfers Refunds Net Funded FAO 65,743 65,743 65,743 65,743 UNCDF 20,000 20,000 20,000 20,000 UNCTAD 20,000 (2,657) 17,343 99,000 99, ,000 (2,657) 116,343 UNDP 1,186,453 (245,176) 941, ,480 (16,311) 504,169 1,706,933 (261,487) 1,445,446 15

17 UNEP 48,165 48,165 48,165 48,165 UNESCO 25,000 (141) 24,859 25,000 (141) 24,859 UNFPA 333,685 (20,000) 313, ,705 (4,727) 172, ,390 (24,727) 486,663 UNICEF 443, , , , , ,378 WFP 449, , , ,902 Grand Total 2,592,051 (267,974) 2,324,077 1,116,460 (21,037) 1,095,423 3,708,511 (289,011) 3,419, Expenditure and financial delivery rates All final expenditures reported for the year 2014 were submitted by the Headquarters of the Participating Organizations. These were consolidated by the MPTF Office Expenditure reported by participating organization As shown in table below, the cumulative net funded amount is US$ 3,419,500 and cumulative expenditures reported by the Participating Organizations amount to US$ 2,377,244. This equates to an overall Fund expenditure delivery rate of 70 percent. However, since the funds for 2014 were received late in the year, they were programmed for implementation in 2015 and beyond in some cases. Therefore, the expenditure and implementation will be fully captured in the 2015 Annual Progress report. Table 5. Net Funded Amount, Reported Expenditure, and Financial Delivery by Participating Organization, as of 31 December 2014 (in US Dollars) Expenditure Participating Organization Approved Amount Net Funded Amount Prior Years as of 31-Dec-2013 Current Year Jan-Dec-2014 Cumulative Delivery Rate % FAO 65,743 65,743 65,491 65, UNCDF 20,000 20,000 19,113 19, UNCTAD 116, ,343 17,343 17, UNDP 1,682,188 1,445, ,966 71, , UNEP 48,165 48,165 47,994 47, UNESCO 25,000 24,859 24,859 24, UNFPA 491, , , ,

18 UNICEF 762, , , , WFP 449, , , , Grand Total 3,661,109 3,419,500 2,306,041 71,203 2,377, Expenditure by UNDAF outcome Table 6 displays the net funded amounts, expenditures incurred and the financial delivery rates by UNDAF Outcome. Table 6. Expenditure by UNDAF Outcome, as of 31 December 2014 (in US Dollars) Prior Years as of 31-Dec-2013 Current Year Jan-Dec-2014 Total Sector Net Funded Amount Expenditure Net Funded Amount Expenditure Net Funded Amount Expenditure Delivery Rate % 2018 Essential Social Services 298, , Gender Equality & Child Protection 306,000 19, ,000 19, Governance & Participation 353,080 51, ,080 51, Sustainable Development 158, ,400 0 Education 675, , , , Environment 447, , , , Governance 293, , , , Health 396, ,653 (4,727) 391, , Poverty and MDGs 511, ,822 (16,311) 495, , Grand Total: 2,324,077 2,306,041 1,095,423 71,203 3,419,500 2,377, Expenditure reported by category Project expenditures are incurred and monitored by each Participating Organization and are reported as per the agreed categories for inter-agency harmonized reporting. In 2006 the UN Development Group (UNDG) established six categories against which UN entities must report inter-agency project expenditures. Effective 1 January 2012, the UN Chief Executive Board (CEB) modified these categories as a result of IPSAS adoption to 17

19 comprise eight categories. All expenditure incurred prior to 1 January 2012 have been reported in the old categories; post 1 January 2012 all expenditure are reported in the new eight categories. The old and new categories are noted to the right. Table 6 reflects expenditure reported in the UNDG expense categories. Where the Fund has been operational pre and post 1 January 2012, the expenditures are reported using both categories. Where a Fund became operational post 1 January 2012, only the new categories are used CEB Expense Categories 1. Staff and personnel costs 2. Supplies, commodities and materials 3. Equipment, vehicles, furniture and depreciation 4. Contractual services 5. Travel 6. Transfers and grants 7. General operating expenses 8. Indirect costs 2006 UNDG Expense Categories 1. Supplies, commodities, equipment & transport 2. Personnel 3. Training counterparts 4. Contracts 5. Other direct costs 6. Indirect costs Table 6. Expenditure by UNDG Budget Category, as of 31 December 2014 (in US Dollars) Expenditure Category Prior Years as of 31-Dec-2013 Current Year Jan-Dec-2014 Total Percentage of Total Programme Cost Supplies, Commodities, Equipment and Transport (Old) 615, , Personnel (Old) 358, , Training of Counterparts(Old) 355, , Contracts (Old) 207, , Other direct costs (Old) 13,325-13, Staff & Personnel Cost (New) (22,987) - (22,987) (1.03) Supplies, Commodities and Materials (New) 202, , Equipment, Vehicles, Furniture and Depreciation (New) 20,723 7,819 28, Contractual Services (New) (66,224) 16,256 (49,968) (2.24) Travel (New) 192,061 10, , Transfers and Grants (New) 190, ,

20 General Operating (New) 91,853 32, , Programme Costs Total 2,158,653 67,103 2,225, Indirect Support Costs Total 147,387 4, , Total 2,306,040 71,203 2,377,244 1 Indirect Support Costs charged by Participating Organization, based on their financial regulations, can be deducted upfront or at a later stage during implementation. The percentage may therefore appear to exceed the 7% agreed-upon for on-going projects. Once projects are financially closed, this number is not to exceed 7% Cost recovery Cost recovery policies for the Fund are guided by the applicable provisions of the Terms of Reference, the MOU concluded between the Administrative Agent and Participating Organizations, and the SAAs concluded between the Administrative Agent and Contributors, based on rates approved by UNDG. The policies in place, as of 31 December 2014, were as follows: The Administrative Agent (AA) fee: 1% is charged at the time of contributor deposit and covers services provided on that contribution for the entire duration of the Fund. In the reporting period US$ 11,571 was deducted in AA-fees. Cumulatively, as of 31 December 2014, US$ 35,761 has been charged in AA-fees. Indirect Costs of Participating Organizations: Participating Organizations may charge 7% indirect costs. In the current reporting period US$ 4,100 was deducted in indirect costs by Participating Organizations. Cumulatively, indirect costs amount to US$ 151,488 as of 31 December Accountability and transparency In order to effectively provide fund administration services and facilitate monitoring and reporting to the UN system and its partners, the MPTF Office has developed a public website, the MPTF Office Gateway ( Refreshed in real time every two hours from an internal enterprise resource planning system, the MPTF Office Gateway has become a standard setter for providing transparent and accountable trust fund administration services. The Gateway provides financial information including: contributor commitments and deposits, approved programme budgets, transfers to and expenditures reported by Participating Organizations, interest income and other expenses. In addition, the Gateway provides an overview of the MPTF Office portfolio and extensive information on individual Funds, including their purpose, governance structure and key documents. By providing easy access to the growing number of narrative and financial reports, as well as related project documents, the Gateway collects and preserves important institutional knowledge and facilitates knowledge sharing and management among UN Organizations and their development partners, thereby contributing to UN coherence and development effectiveness. 19

21 3.8. Direct costs The Fund governance mechanism may approve an allocation to a Participating Organization to cover costs associated with Secretariat services and overall coordination, as well as Fund level reviews and evaluations. These allocations are referred to as 'direct costs'. In 2014, there were refunds of US$411 in the Bhutan Direct Cost Budget ( 20

22 Annexes ANNEX A: Allocation Process for Un-earmarked Funds Step 1: Submission Based on the joint Annual Reviews, the Outcome Groups submit updated resource gap matrix and indicate priorities for funding. Timeframe: November each year Step 2: Compilation & initial review: GNH Commission and Office of the RC compile and review the proposed priorities and submit the documents to the Steering Committee. Timeframe: First-half of December Step 5: Disbursement: Administrative Agent disburses the funds to the Participating UN agencies in accordance with the approved Work Plans within three (3) to five (5) working days after final allocation of funds. Timeframe: End March Step 3: Submission of resource gap The Steering Committee, comprising signatories to the UN Bhutan Country Fund MoU and the GNHC, reviews the resource gaps and approves the initial prioritization for funding. The approved resource gap is submitted to donors in December each year, with a copy to the Government. Step 4: Final Allocation Based on funds received from donors, the Steering Committee makes the final allocation decisions and informs the Country Programme Board. Timeframe: February or as and when needed Timeframe: Third week of December 21

23 ANNEX B: UN Bhutan Country Fund allocation criteria The UN Bhutan Country Fund is open to all Participating UN Organizations signatory to the One Programme. Organizations can access the funds upon signing the Memorandum of Understanding and upon submission of their annual funding gaps based on the One Programme Results Matrix. Criteria for initial allocation of un-earmarked funding: 1. One Programme relevance 2. Unfunded gap at outcome level 3. Joint AWP i.e. two or more participating UN Organizations implementing 4. Comparative advantage in implementing the activities 5. Priorities which would otherwise not be funded 6. Activities which support core UN development priorities and priorities identified by the Steering Committee and Country Programme Board at the start of the annual programme cycle 7. Realistic outcome budget Subsequent allocations will in addition to the above include the following: 8. Implementing partners and Participating UN Organizations absorption capacity Previous track record: 1. Results 2. Expenditure rate and financial management 3. Reporting timeliness and quality of reporting 22

24 ANNEX C: Terms of Reference for the Steering Committee of the UN Bhutan Country Fund STEERING COMMITTEE OF THE UN BHUTAN COUNTRY FUND Terms of Reference Composition: The Steering Committee (SC) is co-chaired by the Secretary of the Gross National Happiness Commission (GNHC) and the UN Resident Coordinator (RC). Members include signatories to the UN Bhutan Country Fund MoU who have contributed to the resource gap analysis, and the Gross National Happiness (GNH) Commission. The Administrative Agent can be an ex-officio member of the Steering Committee. Other UN signatories to the One Programme may participate as observers. Key Tasks and Responsibilities: To review and approve their Terms of Reference and Rules of Procedures, based on the generic SC TOR, and update and/or modify them, as necessary, in case of compelling requirements. In case of departures from the generic TOR, the TOR of the SC should be referred for endorsement to the HQs Fiduciary Management Oversight Group; For funds earmarked by donors to thematic clusters/sectoral groups or Agencies and prioritized/allocated within thematic clusters, to review and ensure the alignment of the allocations with the strategic development framework of the country and approved national priorities; For un-earmarked funds, (1) to review and approve the criteria for the allocation of available MPTF resources; (2) to allocate available resources to thematic clusters, making sure that the allocations are aligned with the strategic development framework of the country and approved national priorities. The clusters will be responsible for the prioritization within the cluster allocation; To review and approve proposals from Agencies submitted (by thematic clusters/sectoral groups or otherwise) for funding; ensure their conformity with the requirements of the MPTF agreements (MoUs). To ensure the quality of proposals to receive funding from the MPTF. To discuss the MPTF requirements and priorities concerning, inter alia: - Programme/project management, including consistent and common approaches to programme/project costing, cost recovery, implementation modalities, results-based reporting and impact assessment, - Information management including appropriate MPTF and MPTF donor visibility; To define Terms of Reference and composition for the thematic clusters/sectoral groups or other similar review bodies. To ensure appropriate consultative processes take place with key stakeholders at the country level so as to avoid duplication or overlap between the MPTF and other funding mechanisms; To review and approve the periodic progress reports (programmatic and financial) consolidated by the Administrative Agent based on the progress reports submitted by the Participating Agencies 4. To ensure consistency in reporting between clusters; Consolidated annual reports should include a section on the 4 The standard reporting period is as per the MoU. 23

25 activity of the Steering Committee. To review findings of the summary audit reports consolidated by the internal audit service of the Administrative Agent. To highlight lessons learnt and periodically discuss follow up by Participating Agencies on recommended actions that have MPTF-wide impact; To agree on the scope and frequency of the independent lessons-learned and review of the MPTF commissioned by the SC, in consultation with the HQ Fiduciary Management Oversight Group. To review the draft/final reports on lessons learnt, ensure the implementation of recommendations and identify critical issues for consideration by the HQs Fiduciary Management Oversight Group (to be brought up to the ASG Group, if/as required). Decisions: The Steering Committee makes decisions by consensus. Decisions of the Steering Committee shall be duly recorded. Prior to presenting their position on a significant issue to the SC, its UN members have to make sure that it is endorsed internally by their Agencies and is in line with their Agencies regulatory requirements. Decisions on programme/project proposals will only be taken upon completion of a review by the appropriate thematic clusters, sectoral working groups or other SC agreed review bodies. Role of the UN co-chair/chair of the Steering Committee: To make sure that the decisions taken by the Steering Committee are in accordance with the regulatory requirements and frameworks of the Participating Agencies and agreements with the programme country and donors; To ensure that the decisions taken by the Steering Committee are duly recorded and promptly communicated to the members of the Steering Committee, including Participating Agencies, the programme country, and donors, as appropriate; To monitor the implementation of the decisions of the Steering Committee; To report to the MPTF Fiduciary Management Oversight Group on the evolving risks and to flag issues that may affect the implementation of the decisions of the Steering Committee or otherwise impede the operations of the Fund; The UN co-chair, representing the SC, is accountable to the Chair of the MPTF Fiduciary Management Oversight Group, representing the Committee, for the inter-agency fiduciary issues related to the Participating UN Agencies on issues related to funding through the UN for the MPTF activities. 24