Financial Procedures Pertaining to Contracts for Services, Work and Labour

Financial Procedures Pertaining to Contracts for Services, Work and Labour Accounting Notes Relating to the General Terms of Contract governing Contracts for Consulting Services, February 2007 These accounting notes are designed to facilitate accounting procedures and are always applicable, provided no provisions to the contrary have been stipulated in the Contract. 1. General 1.1 Forms GIZ's accounting form 41-15, consisting of the invoice, Personnel assignment schedule and annexes, must always be used when settling the accounts for contractually agreed services. The Firm of Consultant's own forms may only be used if they are identical to the aforementioned forms. The GIZ forms can be downloaded from the Internet at Bidding opportunities / Important documents / Invoices and accounting procedures. The direct link is: http://www.giz.de/en/ausschreibungen/17817.htm. Please send the completed invoice forms as originals with all annexes (especially the required vouchers) to GIZ. The Personnel assignment schedule must be signed. See Section 3 for detailed instructions for filling in the invoice form. 1.2 Submission of Vouchers Original vouchers must always be submitted for all items requiring evidence. These vouchers are to be sorted in accordance with the contractual items, numbered consecutively, attached to A4 sheets and must be stapled together. Please make any subsequent claims with the next partial invoice or with the final invoice. For each contractual remuneration item, a cover sheet in the form given below is to be attached to the vouchers being submitted: As at February 2007 1

Item: 11.... Voucher no./ Voucher date Brief description of voucher contents/service rendered Amount in foreign currency Exchange rate pursuant to weighted mean rate/giz rate Net sum in EUR (without cash discount) Totals: xxxxxxxxxxxx xxxxxxxxxxxxx Once your invoice has been processed, the vouchers will be returned to you for safekeeping, marked as "reimbursed", pursuant to Section 8.3 of the General Terms of Contract. The GIZ reserves the right not to accept and to return to the Firm of Consultants any invoices for which vouchers have not been prepared as outlined above. 1.3 Conversion of Costs Incurred in a Foreign Currency * The GIZ exchange-rate list used as a rule as specified in Section 12.9 of the General Terms of Contract "AVBC" is available on the GIZ website (www.giz.de/ Business Opportunities). If it has been agreed in the Contract that costs in foreign currency are to be converted to EUR based on currency exchange vouchers, the following documents are to be submitted: Currency purchase vouchers from the same period as the vouchers for costs incurred Bank vouchers demonstrating without omission the transfer of currency and the rate of exchange Details of money paid into the project bank account in foreign currency Record of all cash receipts in the project during a given accounting period (voucher no./voucher date/amount in EUR/exchange rate/amount in foreign currency) Weighted mean rate of exchange calculated on the basis of the total foreign currency received in relation to the amount of EUR exchanged The weighted mean rate must be calculated as specified below: * The term foreign currency in this text refers to any currency other than EUR As at February 2007 2

Name of the Firm of Consultants: Project no. Contract no. Annex to statement of account dated: Currency: Purchase of foreign currency pursuant to bank vouchers Voucher no. Date Amount brought forward from invoice dated (date) : Amount in EUR:... Exchange rate (weighted mean rate) Currency:... Accounting period: Amount in foreign currency:... Total: Calculation of the weighted mean rate: = Total foreign currency Total EUR Inventory updating:./. Total costs/lump sums/ overheads * Balance brought forward from statement of account as of: Total EUR: Weighted mean rate: Foreign currency: To calculate the inventory updating, deduct the total costs, overheads and any costs reimbursed as a lump sum. 1.4 Deductions Any discounts and rebates obtainable are to be taken advantage of and passed on to the GIZ. The GIZ reserves the right to deduct any discounts that the Firm of Consultant has failed to take advantage of. Likewise, any refunds and other price reductions are to be passed on to the GIZ. 2. Settlement of the Individual Items of Remuneration 2.1 Calculation of Periods of Assignment - Remuneration Items of Sections 11.1-11.3 of the General Terms of Contract A full expert month is made up of 30 calendar days, that is, it also includes Sundays and public holidays. In the event of a claim for remuneration covering less than a full calendar month, the actual assignment time (in Germany and abroad) shall be remunerated with one thirtieth (corresponding to a factor of 0.033) of the expert-month settlement rate per calendar day. When calculating the actual assignment time, the full months are counted first, and then the remaining days, and represented as a decimal figure (with three decimal places) in GIZ-Form 41-16. As at February 2007 3

Example for calculating the expert-month settlement rate Assignment in Germany From Mar 08 to 22 Assignment abroad From Mar 23 to June 04 Periods calculated: From Mar 08 to May 07 = 2 months = 2.000 From May 08 to June 04 = 28/30 = 0.933 Total = 2.933 Example for calculating the expert-month settlement rate and accommodation expenses Assignment abroad From Mar 23 to June 04 Periods calculated: From Mar 23 to May 22 = 2 months = 2.000 From May 23 to June 04 = 13/30 = 0.433 Total = 2.433 (cf. table in Section 3.3.4) 2.2 Travel Expenses (Section 11.4 of the General Terms of Contract) 2.2.1 General Information Travel expenses are generally reimbursed as a lump sum. However, if cost reimbursement upon presentation of evidence has been agreed on in the individual contract (without further specification), the following are considered travel expenses: Per-diem lump-sum allowances, pursuant to income tax regulations, upon proof of number of days spent travelling (please state date, time, place, purpose, destination, and, if applicable, person(s) with whom talks were held) Overnight accommodation allowance, upon presentation of hotel bill Transportation expenses upon presentation of proof, i.e. submission of original vouchers, in the form of: Used airline ticket and travel agency invoices, tickets, taxi receipts, etc. Km-based lump sums for journeys with the Firm of Consultant's own car (presently EUR 0.3/km in Germany). The km-based lump sum covers all running costs incurred for a car journey. The travel expenses to be reimbursed must be listed according to purpose, destination and duration of journey; the vouchers must be submitted with a cover sheet pursuant to Section 1.2 of these notes. 2.2.2 Settlement of accounts for travel expenses in the home country / Federal Republic of Germany on a lump-sum basis upon provision of evidence: As at February 2007 4

If a lump-sum reimbursement of travel expenses in the home country/federal Republic of Germany on provision of evidence has been agreed contractually, the name of the person travelling, as well as the date, purpose and destination (person(s) with whom talks are being held) of the journey, must be specified on the statement of account. Please note that the lump sum for a journey to the GIZ, during which discussions might be held on several contracts, may be reimbursed only once. 2.2.3 Deduction of input tax for travel expenses in the home country / Federal Republic of Germany upon provision of evidence: The input tax contained in the individual vouchers for travel expenses and accommodation costs is to be deducted. 2.3 Flight Costs (Section 11.4.3 of the General Terms of Contract) If a lump-sum reimbursement per flight has been agreed contractually, the used, original ticket (passenger coupon) must always be submitted when settling accounts, with or without the price being shown. If it has been agreed contractually that a price up to a certain amount on provision of evidence shall be reimbursed, the flight costs shall be reimbursed at the Economy Class rate. The original ticket (passenger coupon) and an invoice from the travel agency at which it was purchased are to be submitted as evidence. If the used ticket is not available in time for the partial settlement of accounts, please submit a copy of the ticket and the original invoice issued by the travel agency. Payment will then be made, under the proviso that the original ticket is submitted at the latest with the final invoice for the Contract. Flight tickets for outward and homeward journeys as well as for leave are to be attached to a separate sheet along with the names of the experts concerned and their family members. Rebates, discounts, refunds and all other price reductions are to be passed on to the GIZ. 2.4 Transfer Effects/Official Baggage (Section 11.5 of the General Terms of Contract) Costs shall be reimbursed pursuant to lump-sum rates stipulated in the Contract and eligible for inclusion in the partial invoice to be submitted following the expert's outward journey. As at February 2007 5

2.5 Items of Equipment (Section 11.6 of the General Terms of Contract) 2.5.1 The following costs will be reimbursed: Net purchase price of equipment procured (input tax is to be deducted if Firm of Consultants is liable to pay VAT) Transport, packing and insurance costs Bank charges, if procurement costs are not reimbursed separately Documents to be submitted: Original invoices from supplier, issued to the Firm of Consultants (if applicable, copy of the approved procurement list) Original invoices for transport, packing and insurance Copies of bank statements Comment: GIZ reserves the right to request and examine the complete procurement file when presenting of the accounts for the procurement of goods In all cases, the original record of surrender (GIZ form handover of equipment 24-7) is to be submitted, together with the inventory list (GIZ form 83-10). 2.5.2 Inventory and Surrender Since, according to the project agreement, the procured goods become the property of the project partner on entering the country of assignment, a record of surrender is to be filled in immediately (GIZ form 24-7, together with GIZ form 83-10), signed by the partner and submitted with the next invoice. If, for project-related reasons and by way of exception, surrender is not immediately possible, costs incurred for items of equipment can be reimbursed subject to the proviso that surrender take place at a later date, and only if the Firm of Consultants submits the following documents instead of the record of surrender: a) A list of the items of equipment to be reimbursed (pursuant to the cover sheet as described under Section 1.2) b) Proof of delivery (shipping documents, forwarding certificate of receipt with a list of all goods transported) c) The inventory list, GIZ form 83-10 As at February 2007 6

2.6 Flexible Remuneration Item (Section 11.11 of the General Terms of Contract) Insofar as a flexible remuneration item has been agreed in the Contract, it may be used to settle additional costs for items that have already been agreed in the Contract, based on the contractually agreed amounts for individual items and bases for settlement. The following inputs/services/contributions are not eligible for coverage under the flexible remuneration item: - Contribution to compensate for non-performed partner inputs (see Section 4 of the General Terms of Contract Governing Contracts for Consulting Services) - Procurement of additional materials and equipment (see Section 5 of the General Terms of Contract Governing Contracts for Consulting Services) - Mobilization costs replacement of experts (see Section 9 of the General Terms of Contract Governing Contracts for Consulting Services) - Costs incurred as a result of an interruption in activities (see Section 17 of the General Terms of Contract Governing Contracts for Consulting Services) - Additional home leave flights (see Section 11.4.3 of the General Terms of Contract Governing Contracts for Consulting Services) The costs for the above-mentioned inputs may be settled only if prior consent has been obtained from the GIZ and a corresponding supplement to the Contract has been drawn up. Before individual items that have not been contractually agreed are availed of, specialist approval of the content of the said items must be obtained and a corresponding contractual arrangement concluded. Contractually agreed lump sums may not be increased. If long-term experts are to be switched to short-term assignments, any remuneration already provided for leave, illness (see Section 14 of the General Terms of Contract Governing Contracts for Consulting Services), as well as home leave flights (see Section 11.4.3 of the General Terms of Contract Governing Contracts for Consulting Services) and transfer effects (see Section 11.5 of the General Terms of Contract Governing Contracts for Consulting Services) must be taken into account. Example of the Use of the Flexible Remuneration Item: If, in order to achieve objectives, short-term or long-term expert months are required in addition to those contractually agreed, this item may be used to reimburse costs on the basis of the agreed monthly rates. As at February 2007 7

If, in order to achieve objectives, funds or expert months for further training of professionals and executives from cooperation countries are required in addition to those contractually agreed, the costs incurred may be settled using this item on the basis of the agreed amounts for individual items. 3. Instructions for Filling in the Accounting Forms 3.1 General Requirements The new EU Invoicing Directive (2001/115/EC) 1 establishes the following mandatory items of information that must be included on every invoice. Please be aware that we cannot accept invoices that do not provide this information. Invoices (total amount above EUR 100) the supplier's full name and address the customer's full name and address (GIZ GmbH) a sequential invoice number the date of issue a description of the quantity and nature of the goods supplied and/or services rendered (e.g. moderation of a workshop on..., consultancy in...). In other words the supplies billed must be named and the calculation of the amount must be transparent, e.g.: fee days x fee rate = amount billed or/and quantity x price = amount billed the date of the supply or payment (month), if different from the date of issue (net) amount broken down by tax rates (19%, 7%, 0%) and the VAT amount applicable to the amount VAT rate (is generally stated in front of the relevant VAT amount see above) if no tax is billed this must be explained: i.e. if parts of the net amount or the entire invoice amount are billed without VAT, the reasons must be given (e.g. "exempt from tax as small business or "transitory item" etc.) gross amount the supplier's tax number or VAT identification number 3.2 GIZ form 41-15 3.2.1 Please leave the first section in the invoice (top left) empty and after completing and printing the form affix your company stamp to it. 1 Further informationen at: GIZ website: www.giz.de Bidding opportunities/important documents http://ec.europa.eu/taxation_customs/taxation/vat/traders/invoicing_rules/index_en.htm Letter from Federal Ministry of Finance dated 29 January 2004 IV B/ - S 7280-19/04, BStBI 2004 I p. 258 VAT Act (German acronym UStG) Articles 14, 14a & 15. As at February 2007 8

You can move to the required sections by pressing the TAB key. We request your understanding for the fact that we are unable to accept any incomplete invoices especially where compulsory data are missing. Please do not alter the first sheet of the PC invoice form or the sheets relating to personnel costs, but simply complete them. However, the sheets for expendable goods and materials and equipment are designed in such a way that you can adapt them to your needs. 3.2.2 Please select the relevant type of invoice (partial invoice, final invoice, advance payment). When making requests for an advance payment - insofar as this has been agreed contractually - please state the day on which work has commenced. To facilitate the annual reconciliation of accounts on both sides (Section 12.12 of the General Terms of Contract), entries are to be made in line with those of the GIZ, as stipulated below: The GIZ enters advance payments and payments on account as prepayments, which must therefore be entered by the Firm of Consultants as prepayments received. Partial invoices and the final invoice are recorded by the GIZ as expenditure and must therefore be entered as income by the Firm of Consultants. 3.2.3 When you use the form the personnel costs are brought forward ("Amount brought forward for personnel assignment") automatically as soon as you have entered the appropriate data in the sheets "Personnel1_2" etc. Please complete lines 11.6 to 11.12 pursuant to the contract, where applicable with the contractually scheduled sub-items. Further sheets are available in the GIZ accounting form for you to create cover sheets (Other costs, Items of equipment). You can adapt these as needed. The sums of these sheets are not brought forward automatically into the invoice; you must do this by hand. The result is the "Net total costs". Add the net total costs to the VAT charged to the GIZ (percentage rate and amount), if applicable; the result is the "Total of all gross costs". 3.2.4 Continue as follows: Line 13.4 Line 12.2 Line 12.3 Retention of security: Only applies to contracts for work and labour in which such an option has been arranged. Please enter the advance payment to be made pursuant to the contract, broken down into the net amount and VAT. (Please enter the percentage rate). Please enter the advance payment to be paid back, broken down into the net amount and VAT. This results in the following: Total of all gross costs./. line 13.4 + line 12.2 As at February 2007 9

./. line 12.3 = Amount to be paid If this calculation results in a negative amount of payment (GIZ credit balance), this amount must be paid back to the GIZ immediately pursuant to Section 12.7 of the General Terms of Contract. The GIZ reserves the right to offset a credit balance at any time with accounts from other contracts or, in the event of minimal overpayment, with the next partial invoice. If the statement of account is not drawn up on time following completion of the contractual work, a recognisable credit balance must be paid back to the GIZ immediately, before the final invoice has been submitted. 3.3 GIZ Form 41-15 Personnel assignment schedule ("Personnel" pages of the GIZ form, landscape format, Personnel assignment schedule, Breakdown of personnel remuneration) This form records each individual item of personnel-related remuneration. The total is automatically transferred from this form to the first page of the GIZ Invoice form ("Invoice", Amount brought forward from personnel assignment...,). 3.3.1 The head data on the first page ("Invoice") are automatically transferred to the sheets "Personnel assignment schedule". 3.3.2 The "Personnel assignment schedule" is broken down according to "Actual times in accounting period" and "Total actual times". The experts are to be listed by name, stating the page number of the price schedule and the item number. 3.3.3 The Breakdown of personnel remuneration is calculated on the basis of the three settlement rates (11.1-11.3) and other contractually agreed items (11.4-11.5). 3.3.4 To calculate items 11.1-11.3 multiply the decimal figures determined based on the assignment period (see table below) with the agreed settlement rates. For pools of experts (short-term experts) that constitute one item in the price schedule, specify costs for all experts in the pool as one item. Specify the costs for each short-term expert in a separate attachment. In the event of a claim for remuneration covering less than a full calendar month (Sections 11.1 11.3 of the General Terms of Contract), the GIZ shall pay one-thirtieth (corresponding to a factor of 0.033) of the expert-month settlement rate per day, in line with the following list: * CD = calendar day 1 CD* = 0.033 11 CD = 0.367 21 CD = 0.700 2 CD = 0.067 12 CD = 0.400 22 CD = 0.733 3 CD = 0.100 13 CD = 0.433 23 CD = 0.767 4 CD = 0.133 14 CD = 0.467 24 CD = 0.800 5 CD = 0.167 15 CD = 0.500 25 CD = 0.833 6 CD = 0.200 16 CD = 0.533 26 CD = 0.867 7 CD = 0.233 17 CD = 0.567 27 CD = 0.900 8 CD = 0.267 18 CD = 0.600 28 CD = 0.933 9 CD = 0.300 19 CD = 0.633 29 CD = 0.967 10 CD= 0.333 20 CD = 0.667 As at February 2007 10

3.3.5 Please sign the Personnel assignment schedule as it contains binding information on the assignment of personnel. A signature line is provided for this purpose. 3.3 Invoices as Originals and by Separate Mail Please be aware that we need your invoice as an original and may not accept invoices transmitted electronically. In the interest of faster processing procedures - and thus in your interest too - please make sure that you send your invoices by separate mail. Never address your invoices to a particular staff member, but always as follows: DEUTSCHE GESELLSCHAFT FÜR INTERNATIONALE ZUSAMMENARBEIT (GIZ) GmbH Postfach 5180 65726 Eschborn Germany This will enable the GIZ postal service to forward your invoices immediately to invoice registration, thus ensuring they reach the invoice verification section along the fastest route possible. Should you have any further queries regarding the contract or invoicing, please contact staff members of the Finance Team responsible for your Country Department or Section 5034, who will be happy to advise you. As at February 2007 11