Administrative guidelines for Danish organisations with humanitarian partnership agreements with the Danish Ministry of Foreign Affairs 1 S i d e
List of contents 1. INTRODUCTION... 4 2. OVERALL OBJECTIVE OF THE PARTNERSHIP FACILITY... 4 3. GENERAL DEMANDS ON THE PARTNERSHIP ORGANISATION... 4 4. PARTNERSHIP AGREEMENT... 6 5. OVERALL CONDITIONS ON RESPONSIBILITIES OF PARTNERSHIP ORGANISATIONS... 6 6. REPORTING AND ANNUAL CONSULTATIONS... 7 7. SPECIFIC GUIDELINES FOR THE USE OF FLEXIBLE FUNDS... 10 8. PRINCIPLES FOR THE ADMINISTRATION OF THE BUDGET... 13 9. COOPERATION WITH PARTNERS IN DEVELOPING COUNTRIES... 16 10. REPORTING TO THE MINISTRY OF FOREIGN AFFAIRS... 17 11. RELEASE OF PAYMENTS UNDER THE PARTNERSHIP AGREEMENT... 18 12. PRESENTATION OF ACCOUNTS... 19 13. AUDIT AND MONITORING... 21 14. THE PARTNERSHIP ORGANISATION S INTERNAL ADMINISTRATION... 22 15. THE SUPERVISION BY THE MINISTRY OF FOREIGN AFFAIRS... 23 16. OVERVIEW OF REPORTING AND ACCOUNTING DEADLINES... 23 2 S i d e
List of annexes Annex 1: Annex 2: Annex 3: Annex 4: Annex 5: Annex 6: Annex 7: Annex 8: Annex 9: Annex 10: Annex 11: Annex 12: Annex 13: Annex 14: Format for partnership agreements Format for presentation of budget Format for presentation of accounts Format for performance report Form for requesting release of payments Auditing instructions Administrative check list Overview of reporting and accounting deadlines during the year Guidelines for disbursements and reimbursements Form for reporting suspicion of irregularities Seniority-based maximum rates for remuneration of activity specific technical assistance Form for reporting on the release of flexible funds Format for proposal Form for OpenAid/DAC reporting 3 S i d e
NOTE: These guidelines were prepared in Danish and translated to English. In case of discrepancies or doubt, the Danish version will prevail. 1. Introduction These guidelines describe the administrative and technical requirements that the Danish Ministry of Foreign Affairs impose on organisations with a humanitarian partnership agreement (partnership organisations) in order for these to meet the overall responsibilities related to grants and to establish a solid basis for the ministry s supervision. The guidelines concern processes related to the cooperation in the partnership and outline the partnership organisations responsibilities and duties in this regard. Attached to the guidelines are a template for partnership agreements and audit instructions as well as a number of templates for use in the ongoing cooperation between the organisations and the Ministry of Foreign Affairs. The administrative guidelines form part of the overall guidelines of the Ministry of Foreign Affairs for Danish bilateral aid http://um.dk/da/danida/samarb/hum-org/stoette/partner-aft/, and should be regarded as a living document that will be continuously revised by the ministry as needed. It is the responsibility of the partnership organisations to keep themselves informed of any changes to the guidelines. 2. Overall objective of the partnership facility The objective of the partnership facility is to provide organisations (which over time have demonstrated necessary technical and administrative capacity) with improved predictability and a greater degree of flexibility - while the organisations in return plan and document results in accordance with Denmark s humanitarian priorities. 3. General demands on the partnership organisation The partnership organisations must at any given time full-fill the following basic requirements: The partnership organisation must be able to document longstanding engagement and continuity in the planning of its interventions and be able to describe its core competencies and areas of focus. The partnership organisation s humanitarian activities financed under the partnership agreement, including choice of partner countries, partners, target groups, specific areas of interventions and activities, must be based on the at any given time relevant strategy for Denmark s humanitarian efforts and contribute to the fulfilment of Danish development objectives, ea., as expressed in the current strategy for Denmark s development 4 S i d e
cooperation. Other specific guidelines and strategies may also apply following possible changes and adjustments in the Danish development policy. The partnership organisation must focus its long term interventions financed from the partnership agreement in countries covered by the list of prioritised protracted crises announced by the Ministry of Foreign Affairs and it must develop a strategic frame for these interventions. To facilitate the planning and preparation of revolving plans by the partnership organisation, the ministry will on the basis of consultations with the partnership organisation as early as possible and no later than 1 st July make public a list of prioritised protracted crises for the following year. The partnership organisation must to the extent possible cooperate and coordinate with relevant international and national actors, including through participation in UN cluster coordination, consolidated appeals (CAPs) or similar coordination mechanisms. The partnership organisation must ensure that activities, also those implemented by local partner organisations, are implemented in accordance with basic principles and guidelines for Denmark s humanitarian action. The partnership organisation must to the extent possible support the capacity of local partners for efficient implementation of activities. The partnership organisation must maintain and further develop a satisfactory internal level of administrative and technical capacity for the implementation and quality assurance of interventions, including ensuring a professional preparation, implementation, monitoring and evaluation of activities. The partnership organisation must ensure that local partners and others that receive part of the grant funds are not included on the UN or EU list of designated terrorist groups. The partnership organisation must ensure sound administration and exercise costawareness in the administration of grant funds. Procurement has to be undertaken on the most efficient basis in terms of price, time and quality and the partnership organisation must, if queried, be able to document applied procedures for purchases. The partnership organisation must adhere to good international practise for procurement, as per relevant guidelines and directives from, i.a., DG ECHO and other parts of EU, the World Bank and UNHCR. The partnership organisation must have developed an anti-corruption policy as well as an ethical codex to be applied in its work and in the management of funds. The partnership organisation must document the results of its interventions and ensure a high level of quality in the humanitarian activities. The partnership organisation must be able to document fulfilment of minimum standards for administrative, financial and programmatic procedures and exercise a systematic approach to quality assurance and monitoring. 5 S i d e
As such, the partnership organisation must be able to document an administrative and financial capacity meeting the DG ECHO s standards either through an established partnership agreement with DG ECHO or through separate documentation for the ability to meet similar standards. The partnership organisation must also demonstrate adherence to the quality criteria in the Core Humanitarian Standard through external verification or certification. The partnership organisation must describe the principles for strategic application of flexible funds for preparedness and immediate humanitarian interventions. The partnership organisation must develop policies and procedures for riskmanagement. 4. Partnership agreement The partnership organisation and the Ministry of Foreign Affairs enter into a partnership agreement which, together with the partnership organisation s current documents of planned and implemented activities within the partnership, form the basis for the cooperation. Annex 1 contains the format for partnership agreements. The partnership agreement can include activities related to the Ministry of Foreign Affairs prioritised long-term crises 1 as well as a dedicated pool of flexible funds for preparedness and immediate interventions which are not connected to the prioritised crises. In general, funds from the humanitarian partnership grant cannot without special dispensation be used in countries with a GNI per capita above USD 3,300 2. In accordance with the principles for Good Humanitarian Donorship, the Ministry of Foreign Affairs encourages partnership organisations to develop all-encompassing strategies and programmes on country or regional level, which can be financed with contributions from different funding sources. In such cases documentation for planned activities could be the full program description and the full budget, with indication of the expected funding sources. 5. Overall conditions on responsibilities of partnership organisations The partnership organisation has vis-a-vis the Ministry of Foreign Affairs the full responsibility for planning and implementing activities financed from the partnership agreement, including 1 Interventions in relation to a prioritised longer-term crisis may also include regional consequences of a crisis an intervention in relation to Sudan can include a more regional approach with support to Sudanese refugees in Ethiopia and Chad, even if these countries are not generally prioritised. 2 The Ministry of Foreign Affairs updates the figure at least once annually, normally in September and possibly also in March. 6 S i d e
application of flexible funds for preparedness and immediate humanitarian interventions. It is the responsibility of the partnership organisation to: Ensure that the funds are spent in accordance with the at any time applicable strategy for Denmark s humanitarian action. Ensure that the undertaken reporting, implementation, etc. follows these guidelines. In case of doubt, the partnership organisations should contact the Ministry of Foreign Affairs. Ensure the necessary technical and administrative capacity to maintain satisfactory financial procedures, sound internal control, adherence with good book keeping practise, and that the partnership organisation exercise general cost awareness and economy. Maintain necessary insurance for all staff and insure project related equipment to a reasonable degree. The partnership organisation s duty of care for all staff is underlined. 6. Reporting and annual consultations Three annual reportings take place prior to the annual consultations, which normally are scheduled at the end of the year: The partnership organisation must each year no later than 15 June prepare and submit to the Ministry of Foreign Affairs a performance report on the previous calendar year as well as the form for OpenAid/DAC reporting. The partnership organisation must each year no later than 15 September prepare and submit to the Ministry of Foreign Affairs the organisation s audited annual accounts as well as audited accounts for the partnership agreement for the previous calendar year. The partnership organisation must each year no later than 1 November 3 submit to the Ministry of Foreign Affairs the proposal regarding strategic considerations on planned interventions for the coming three calendar years with a specific focus on the coming year s activities and the budget for these. 3 In special cases and after prior approval from the Ministry of Foreign Affairs the proposal and possible supplementary documentation, for example in form of international appeals, can be submitted later than 1 November. All documentation must, however, have been received at the Ministry of Foreign Affairs no later than 1 December. 7 S i d e
Reports must be issued in English and sent by email 4 to um@um.dk with copy to hcp@um.dk. In addition to the electronic version, three hardcopies must be submitted to the Ministry of Foreign Affairs. It is noted, that documents submitted to Ministry of Foreign Affairs are encompassed by regulations of right of access to information as per Danish law, on public information in administration ( lov om offentlighed i forvaltningen, offentlighedsloven - law no. 606 of 12 June 2013). I. Performance report deadline 15 June The performance report, covering the previous calendar year, contains a description of results from the partnership organisation s humanitarian interventions in the individual crises (countries/regions), i.e. programme level, and an account of the use of flexible funds for preparedness and immediate interventions. On that basis, the report also contains an account of contributions to the implementation of the strategic goals as per the (at the time given applicable) Strategy for Danish Humanitarian Action. As far as funds from the partnership agreement are used to co-finance a larger programme with other funding sources, a joint programme report can be used. The partnership organisation s account can be based on internal monitoring systems and reports or follow the outline in annex 4 (template for performance reports). Performance reports must be brief and concise and at least include the elements outlined in annex 4. It should not exceed 15 pages. In addition to performance reports, the partnership organisations must fill in and submit the form for OpenAid/DAC reporting (annex 14) in order to adhere to the partnership organisation s commitment for international transparency, as defined by the Global Partnership as per the high-level meeting in Busan 2011. In the longer term this entails reporting in the international standard format IATI. Until reporting from partnership organisations are undertaken in the IATI-format, the Ministry of Foreign Affairs will publicise relevant information on interventions by partnership organisations via OpenAid.dk. The Ministry of Foreign Affairs will make public the received formats for that purpose without undertaking further editing. The form for OpenAid/DAC reporting is thus an opportunity for partnership organisation to make visible to a broader audience its humanitarian interventions. The Ministry of Foreign Affairs will recurrently use the reporting to inform the parliament ( folketinget ). OpenAid.dk cannot be updated by external parties. II. Accounts deadline 15 September 4 In consideration of the ministry s filing system the reports must be submitted in one consolidated file containing all information. If the file has a size preventing electronic submission, an USB stick or similar device containing the consolidated file has to be forwarded together with the hard copy version. 8 S i d e
The accounts are prepared and audited in accordance with chapter 12 and 13. Please also refer to annex 3 (template for presentation of accounts). III. The proposal for annual consultations deadline 1 November The proposal for annual consultations comprises strategic considerations on interventions for the coming three calendar years, with specific details of the coming year s activities as well as a budget for these. The partnership organisation can follow the template in annex 13 (template for the proposal) or they can use their own format. The proposal must be brief and concise and must a least contain the elements that are reflected in annex 13. It should not exceed 15 pages. In addition, a brief and concise description of the approach in the utilisation of the flexible funds, based on the administrative guidelines, is warranted. Considerations on strategy could possibly form part of this, including, a brief description of the expected channelling of funds, for example through cooperation with international networks, formalised agreements with such networks, expected types of activities deployment of staff and/or material contributions), etc. The annual consultations normally focus on future activities, including programmatic implications of possible developments in the specific crises, the application of lessons learned as well as overall results. Budget The budget for the coming financial year is approved by the Ministry of Foreign Affairs in connection with the annual consultations. At the same time, a discussion will take place on the budget figures for the following two years revolving plan, which will be part of the Ministry of Foreign Affairs considerations on allocation of budget frames for the coming financial years. Planned budget figures, that are based on relevant budget indications in the latest finance bill (Finanslov) and the estimated budget figures as per latest consultations, must be specified on country and intervention area. In terms of longer-term humanitarian crises, the interventions must be planned within the protracted humanitarian crises announced by the Ministry of Foreign Affairs. In case the partnership organisation works with regional programmes, the budget must contain a tentative distribution of the budget on countries 5 (in order to facilitate reporting of humanitarian contributions to EU and UN Financial Tracking System). The frame budget, indicated in Danish kroner, is prepared in accordance with the template in annex 2. Expenditures for programme and project activities must be specified by area of intervention and crisis /country. The choice of these must reflect the strategies of the partnership organisa- 5 As an example, a regional programme can focus on the Afghan refugee crisis with interventions both in Afghanistan and in neighbouring countries. Here the budget must indicate a tentative allocation of funds between the countries. 9 S i d e
tion. The area of intervention can be selected on the basis of internal definitions, however, the following must by applied, where relevant: Interventions for refugees and internally displaced persons (including host communities); Mine clearing and Small Arms Reduction The partnership organisation must furthermore, as per the template in annex 2.3 or following internal formats, account for total budgets for the specific longer-term interventions under the partnership agreement, divided on countries and sorted after type of costs 6, and with indication if other planned budget sources are co-financing. The more detailed budgeting on type of costs primarily represents an instrument for dialogue and the allocation is not binding the partnership organisation may thus change the allocation during the year. Because of the significant flexibility for budgetary amendments, the budget should as a point of departure not contain contingencies. In relation to flexible funds for preparedness and immediate interventions, the budgeting is undertaken without distribution on countries. 7. Specific guidelines for the use of flexible funds The flexible funds are aimed at securing rapid and efficient emergency relief to populations suffering from humanitarian disasters or who are endangered by the same. The flexible funds enable the partnership organisation to react swiftly and in a flexible manner to an immediate humanitarian crisis, both through the deployment of personnel and through economic and material contributions. It is assumed, that the partnership organisation already has capacity present at the location, which can be brought to immediate use either directly or through an international and/or local partner. The use of the grants The grant must be utilised in accordance with the general description approved by the Ministry of Foreign Affairs, as part of the proposal for the annual consultations. In general the following applies: Allocation of flexible funds must, as a main rule, be in response to an actual international or national appeal or similar concrete request for support and is not (as is the case with other elements of the partnership agreement) tied to the Ministry of Foreign Affairs list of prioritised protracted crises. 6 For example personnel, investments, evaluation, etc. 10 S i d e
The allocation can be utilised to support emergency relief through the deployment of experts for the purposes of undertaking coordination or solving specific tasks, the deployment of special response units, the purchase and shipment of emergency items (goods and equipment), interventions applying vouchers or cash, financial or manpower contributions in response to appeals etc. through international or national partners, assistance for early recovery after disasters or crises as well as strengthening the international disaster preparedness. The grant may not be used for purchasing or shipping second-hand clothes or second-hand equipment. The deployment of experts can also be undertaken with the aim of an overall strengthening of the response capacity at international organisations or national members of international networks (UN, ICRC, IFRC, etc.) as well as for the participation in cluster coordination. The flexible funds can to a limited degree be used for preparedness, including the prepositioning of emergency-related goods in local or regional warehouses as well as for the replenishment of these. Pre-positioning can only be undertaken following an international or national appeal or similar concrete request for support. Without previous approval from the Ministry of Foreign Affairs a maximum of 20 percent of the total allocation can be spent on preparedness, including pre-positioning. In case the flexible funds are needed for financing specific administrative functions and systems which are beyond the normal scope for administration of funds, the purpose must be described in the proposal for the annual consultations, with indication of the expected budget for such tasks. This could include recruiting and training of experts, maintenance of necessary database systems, etc. Flexible funds may not be used with the aim of initiating longer-term interventions and the activities may thus not be dependent on subsequent follow-up interventions. The establishment of possible new longer-term interventions are discussed during the annual consultations. Specific requirements in the management of flexible funds To ensure a swift and flexible response to immediate crises, contributions of up to 10 percent (but with a maximum of 3 million kr. for a specific crisis) of the total budget for preparedness and immediate interventions can be released by the partnership organisation without prior approval from the Ministry of Foreign Affairs. For partnership organisations with a total budget of less than 5 million kr. contributions of up to 500.000 kr. can be released without prior approval 7. 7 If the total pool of funds for example is 2 million kr. it could without prior approval be released in 4 grants of each 0.5 million kr., disregarding the general rule of 10 percent. 11 S i d e
Contribution is understood to be the total assistance for a specific crisis. In reality a contribution can for example be released through several deployments of personnel over a period of time. Deployment of individuals with the aim of supporting the UN or the International Red Cross Federation can always be undertaken without dispensation from the above mentioned 10 percent rule. In relation to longer-term crises there may be a need for the release of larger or several contributions. This would warrant prior approval from the Ministry of Foreign Affairs. The flexible funds cannot without prior approval from the Ministry of Foreign Affairs be used for the financing of activities in areas or programmes for which the partnership organisation already has received funds from the partnership agreement or from special grant for an immediate crisis. 8 This requirement for prior approval is, however, not applicable in relation to deployment of personnel to UN organisations, ICRC, IFRC and international networks 9. The following types of interventions must, if nothing else is agreed at the annual consultation, be presented to the Ministry of Foreign Affairs for approval before initiating: Support for building a general response capacity through the deployment of staff to undertake capacity building, development of systems and participation in coordination efforts, the pre-positioning and purchasing of equipment etc. for emergency responses, which are beyond a normal immediate intervention. Support to interventions that are not initiated on the basis of an international appeal or direct request from a multilateral or national partner including possible own implementation of special interventions. The partnership organisation must ensure that emergency interventions financed from the flexible funds are assisting the intended beneficiaries and that the assistance to these is timely and efficient. The partnership organisation itself will, if necessary, closely monitor the implementation in the recipient country. The financing of financial monitoring trips will, as a main rule, be covered from overheads. Any deviation from this requires a specific explanation for the special monitoring needs and will have to be presented to the Ministry of Foreign Affairs for prior approval 10. 8 An organisation which, through the partnership agreement or a separate emergency grant, works to help refugees in Mogadishu will therefore not without prior agreement with the Ministry of Foreign Affairs be allowed to use flexible funds to deploy additional staff to Mogadishu but would as an example be allowed to deploy staff to a newly arisen refugee situation in Somaliland. 9 As an example the partnership organisation will be allowed without prior agreement to deploy a specialist in camp coordination to UNHCR in South Sudan, even if the partnership organisation at the same time receives funds for the integration of returned refugees to the country. 10 As this concerns minor emergency grants, the Ministry of Foreign Affairs does not expect regular monitoring visits. If the partnership organisation finds it relevant to conduct spot check-based visits to emergency interventions it could possibly be incorporated and budgeted for in connection with the proposal prior to the annual consultations, where the strategy for the use of flexible funds is described. 12 S i d e
Reporting to the public The partnership organisation is responsible for preparing and submitting the following information on the use of flexible funds for preparedness and immediate interventions: Immediate reporting to the Ministry of Foreign Affairs every time contributions from the flexible funds are released. The reporting is done by submitting the standard form (annex 12). The requirement of immediate reporting is not applicable for contributions that only relate to deployment of personnel to support UN, ICRC, IFRC and international networks. Here the reporting can be on a quarterly basis although no later than when 500.000 kr. has been spent on deployment to one specific organisation or crises. The reporting must include an overview of man months 11, distribution on countries and budget. Furthermore, partnership organisations must in connection with immediate crises on a recurrent basis inform the Danish public, i.a., on the homepage of the partnership organisation, in order to make the interventions visible to the public. In the information to the public it should be mentioned that the intervention is financed by the Ministry of Foreign Affairs. The Ministry of Foreign Affairs must be informed through the forwarding of a copy or link to press statements, etc. In connection with allocations above 500.000 kr. for immediate crises the Ministry of Foreign Affairs must always be informed prior to the public announcement in order to allow for possible coordination of press contacts can be discussed. 8. Principles for the administration of the budget The partnership organisation will initiate activities according to the agreed revolving plan. It is a prerequisite that the partnership organisation has prepared and filed appropriate documentation to initiate and implement planned activities as well as for internal grants and budgets, which may be requisitioned by the Ministry of Foreign Affairs. Re-allocations between the specific budget lines for intervention areas and countries can be undertaken as per the following rules: Re-allocations between countries and focus areas can without prior approval be done up to a limit of 10 percent of the debited or credited main budget line. The partnership organisation must in connection with re-allocation between countries and focus areas always consider whether the budgetary changes lead to changes in the planned activities and outputs and, if necessary, submit revised versions of targets and indicators. 11 A man month is defined in accordance with the regular practice of the Moderniseringsstyrelsen. 13 S i d e
The Ministry of Foreign Affairs must approve specific or accumulated re-allocations exceeding 10 percent of the debited or credited main budget line in the latest approved budget. The partnership organisation must in connection with the approval process account for the impact of the budgetary change on outputs and indicators. Transfer of funds to subsequent years can be done in accordance with the following rules: Unspent funds on the individual budget lines can, adhering to the above guidelines for re-allocations, be carried forward to the following year without prior approval although a maximum of 10 percent of the total grant of the partnership agreement of the year can be carried forward. Unspent flexible funds can, however, only be carried forward as flexible funds to the following year, unless otherwise agreed. Transfers to following years do not (within the stipulations outlined above) require prior approval, but when the accounts indicating the year s expenditure are ready a revised budget needs to be submitted. Possible re-allocations and transfers will have to be explained. Expenditure will subsequently firstly be taken from transferred funds and thereafter from the allocation for the year (cf. chapter 11). Expenditures to implement activities (for instance in terms of advisory services) can be included in the individual activity budgets. It is also possible to budget with activity-specific technical assistance from the permanent staff of the partnership organisation. The budget for this must be based on estimated man hours and must subsequently be documented through time registration (see below). When entering into agreements and contracts with local partners, suppliers, etc., the partnership organisations should, as a point of departure, in the documents reflect the Ministry of Foreign Affairs anti-corruption clause: No offer, payment, consideration or benefit of any kind, which could be regarded as an illegal or corrupt practise, shall be made - neither directly nor indirectly - as an inducement or reward in relation to tendering, award of the contract, or execution of the contract. Any such practise will be grounds for the immediate cancellation of this contract and for such additional action, civil and/or criminal, as may be appropriate. At the discretion of the Danish Ministry of Foreign Affairs, a further consequence of any such practise can be the definite exclusion from any tendering for projects, funded by the Danish Ministry of Foreign Affairs. In case the partnership organisation has a similar and fully adequate clause, this could alternatively be used. 14 S i d e
Overhead costs The overhead costs of 5 percent will not have to be specified or documented by the partnership organisation, neither in the budget phase nor in the accounting phase. In the budget phase the overhead cost is calculated as 5 percent of the total budget for the partnership agreement (including administration). In the accounting phase the overhead cost is calculated as 5 percent of actual expenditure 12 of funds under the partnership agreement, including administration. The unspecified overhead costs must cover the additional general administrative expenditures for the partnership organisation, stemming from administration of funds, including costs related to the head office and possible country offices (rent, cleaning, general office costs, transport, electricity and water, support staff and other operational expenditure). Losses and gains from exchange rate fluctuations are regarded as operational expenditures or income and must therefore be added to or subtracted the basis for calculating the unspecified overhead costs. In addition to the above mentioned costs related to maintain office, annex 7 contains an overview of activities that can be covered from the overhead costs and the activity specific TA support. The Ministry of Foreign Affairs can in specific cases decide to lower the amount for overheads in relation to contributions to international organisations, appeals or other specific arrangements, where the partnership organisations only to a limited degree is expected to have expenses related to administration, monitoring and reporting. Expenditure related to activity specific TA support Expenditures related to activity specific TA support undertaken by permanent staff of the partnership organisation (in head office or country offices) can be included in the accounts on the basis of registered time. A prerequisite for including these expenditures is that they were budgeted in the activities under the partnership agreement; that the partnership organisation applies a time-registration system which accounts for actual time spent; that the expenditures subsequently, if queried by the Ministry of Foreign Affairs, can be documented in accounts and reporting from the activity. For own and international staff the expenditure must be reported as salary costs, including overhead as per annex 2.3. In addition, it is necessary to issue Terms of Reference for activity specific TA support, indicating what areas the employee of the partnership organisation must contribute to and what the purpose is. Annex 7 contains an overview of examples on activities which can be registered as activity specific TA support. In connection with the presentation of accounts for the partnership organisation, the Ministry of Foreign Affairs can demand specific information on how recorded income has affected the partnership organisation s total administrative expenditure and in case of TA services offered 12 In this case actual expenditure can either be registered as accrued expenses or disbursements, depending on the applied accounting principles of the partnership organisation. 15 S i d e
by staff from the country office a specification of the total costs of the office as well as specification of the amounts included in the accounts for the partnership agreement. The total expenditure which in Denmark can be charged to the grant consists of a) actual costs for salaries for individual staff members up to a maximum of the seniority based maximum rates in annex 11 and b) 80 percent of a) in overhead to ensure relative cover of general operational expenditure. For staff deployed to country offices or similar the total expenditures that can be charged the grant consist of a) actual salary costs of the individual staff members, observing the indicated seniority-based maximum levels in annex 11, b) 80 percent of a) in overhead for relative coverage of overall operational expenditures and c) the relative share of actual expenditures (not related to salary) for costs related to deployment according to the Ministry of Foreign Affairs issued guidelines for advisors deployed to the field. For local staff at country offices or similar the total costs that can be charged the grant comprise a) actual costs related to employment and b) 80 percent of a) in overhead costs. The level for hourly rates under a) which can be charged the grant may not exceed the average level of salaries for similar organisations in the country. Activity based accounts can include expenditure directly linked to implementation and management, including expenditure in relation to local programme management (programme staff and their office rent, general office expenses, travel costs, housing, vehicles, equipment, etc.) as well as TA assistance and other services that aim at quality assurance of the implementation of activities. Audit costs Audit costs in relation to individual programmes are covered by the programme budget. Audit costs in Denmark and in country offices are budgeted separately. 9. Cooperation with partners in developing countries The partnership organisation s cooperation with partners in developing countries should always be based on written agreements. The partnership organisation must in that regard inform the partners of stipulations in the partnership agreement and the present guidelines. The agreement should also contain the anti-corruption clause from the Ministry of Foreign Affairs (cf. chapter 7). The partnership organisation must ensure that their partners management of and control with grant funds is undertaken in a responsible and satisfactory fashion. This also applies for equip- 16 S i d e
ment and other activities financed from the grant funds. It is the responsibility of the partnership organisation to ensure that partners in the recipient country receive the necessary training and information regarding the partnership organisation s anti-corruption policy and ethical code. When transferring assets to partners in a recipient country the transfer process must ensure that the partner provides a receipt for the transferred assets and their value. The transferring process must at the latest take place at the end of activities and include all items with a value above tax-related level for immediate depreciation of minor purchases, kindly also refer to the Danish act on depreciations ( afskrivningsloven ). Unspent funds, including unspent interests, must be repaid by the partner to the partnership organisation. 10. Reporting to the Ministry of Foreign Affairs All official correspondence to the Ministry of Foreign Affairs has to be submitted in electronic version to um@um.dk and not directly to the responsible case worker in HCP with a copy to hcp@um.dk and the case worker. The reporting of the partnership organisation to the Ministry of Foreign Affairs includes the following: I. Reporting on re-allocations Requests for re-allocations between countries and intervention areas must be forwarded in accordance with applicable guidelines, as per chapter 8. II. Reporting on the use of flexible funds When releasing flexible funds, the partnership organisation must as soon as possible and no later than three days after the release (cf. chapter 7) inform the Ministry of Foreign Affairs using the template in annex 12. III. Ad hoc reporting Reporting to the Ministry of Foreign Affairs must also be ensured if serious problems related to the implementation of activities occur, if significant difficulties in the relations to authorities in the partner country develop or if there are major changes in budgeting or activities in the approved programmes. The Ministry of Foreign Affairs is required to inform the Auditor General ( Rigsrevisionen ) in case of suspicion of irregularities in the management of grant funds. The partnership organisation is therefore required to inform the Ministry of Foreign Affairs (using the template in annex 10) if the partnership organisation in connection with the management of grant funds provided by the Danish state should have substantiated suspicion of irregularities or other misuse of Danish funds, including suspicion of grossly negligent administration, corruption or fraud. As a 17 S i d e
main rule informing the Ministry of Foreign Affairs is not relevant in case of for example robbery or simple theft committed by a third party (i.e. not staff members employed by the programme or partners), minor cash differences, cases of bankruptcy, lacking documentation for minor amounts, temporary delays in book keeping, etc., as well as temporary delays in administrative procedures that are not based on grossly negligent management. Incidents caused by traffic accidents, fire, natural disasters, etc. do not need to be reported unless there is suspicion of deliberate action. The Ministry of Foreign Affairs must always be informed in cases where an external investigation is initiated (e.g. extended audit, special audit or other investigative steps). In its reporting, the partnership organisation must to the extent possible account for the circumstances and for the reasons why the partnership organisation s supervision and control mechanisms could not prevent the incident. The Ministry of Foreign Affairs will if necessary subsequently inform the Auditor General. In addition, the Ministry of Foreign Affairs must be immediately informed if there are major changes in the assumptions related to the financing of interventions which are planned and documented as joint interventions with financing from multiple sources. The information must describe budgetary implications as well as implications for the implementation of planned activities. 11. Release of payments under the partnership agreement The partnership organisation will every six months submit a request for payment. The template in annex 5 is attached to the request for payment. The request for payment must be sent to hcpudbanm@um.dk and will be based on the commitment frame for the year in question and the expected expenditure so that there will not be an accumulation of state funds beyond what is needed for the implementation of activities. This applies to both partnership organisations in Denmark and in country offices as well as to local partners. The Ministry of Foreign Affairs must have received the request for payment at least three weeks prior to the desired transaction. It is the responsibility of the partnership organisation to ensure that the requests for payments are submitted by individuals authorized for this purpose. The Ministry of Foreign Affairs releases payments according to the first-in-first-out principle, so that possible outstanding funds from previous years commitments are released before releases of funds related to the commitment of the current year. Released funds must be deposited on a separate account in Denmark separate from the organisation s other funds unless other arrangements have been agreed with the Ministry of Foreign Affairs. It is the responsibility of the partnership organisation to enter into a written agreement with the bank, ensuring that the at any time unspent deposited funds on the account belong to the Ministry of Foreign Affairs and confirming that the bank is not authorised to set off any 18 S i d e
possible debt that the partnership organisation may have to the bank against the funds or to seize these. All funds provided by the Danish state that are utilised for partnership activities abroad must be documented as having been transferred abroad. Annex 9 contains guidelines for the release of payments under the partnership agreement as well as guidance on the return of unspent funds to the Ministry of Foreign Affairs. 12. Presentation of accounts As mentioned previously, it is the responsibility of the partnership organisation to maintain adequate and trustworthy book keeping including for funds transferred to partners. It must be ensured that financial procedures are satisfactory and contain adequate internal control mechanisms. It is assumed, that the book keeping of the partnership organisation is always up to date, has the necessary documentation of receipts and in general is in accordance with good practice of book keeping and accounts. If, at the end of the agreement, transfer of project equipment, inventory or buildings is foreseen to partners or authorities in the recipient country, the organisation has to produce a signed hand over document (cf. chapter 9). The partnership organisation must prepare and submit the following accounts to the Ministry of Foreign Affairs: i) Audited accounts for the partnership grant for the previous calendar year with attached auditor s opinion, audit report and management s endorsement and review. ii) Audited annual accounts for the partnership organisation with attached auditor s opinion, audit report and management s endorsement and review. I. Accounts for the partnership grant Mo later than 15 September the partnership organisation must deliver to the Ministry of Foreign Affairs audited accounts for the partnership grant for the previous year, signed by the management and the auditor and with an attached management letter. The account must be based on the template in annex 3 and contain a comparison of the years expenditures and budget as well as similar figures from previous years for reasons of comparison. Accrued interests can be used for the financing of activities. Accrued interest is seen as part of the partnership grant and has to be shown as income. It is thus necessary to account for the use of accrued interests similarly to other funds. 19 S i d e
Expenditures related to the individual activities/areas of intervention need not be specified in the accounts of the partnership grant but the partnership organisation must keep specifications and documentation for both ongoing activities and activities completed within the year. This must include all expenditures both abroad and in Denmark. As part of its supervision with the use of grants, the Ministry of Foreign Affairs must be able to access for inspection the account information for the individual activities. The partnership organisation must ensure that unspent grant funds related to completed activities abroad are repaid to the partnership organisation by the partners and are included in the accounts for the partnership as returned funds. The partnership organisation must keep the documentation related to the accounts on file in accordance with the stipulations of the Danish act on book keeping. The documentation related to accounts must be kept on file for 5 years after the completion of an activity financed under the partnership agreement. It is not allowed to register provisions from partnership funds as income or expense unless this is done as part of the general accrual entries in the end of year ledger. The accounts of the partnership grant must be audited as indicated in chapter 13 and have attached a management letter. The audit does not include summaries of the consolidated accounts for the individual interventions under the partnership agreement. The accounts for the partnership agreement must be attached management s endorsement and review. The endorsement must, based on the accounts, describe major budgetary re-allocations and provide accounting-related explanations on discrepancies. Deviations of more than 10 percent must be separately explained. Further, it is necessary to comment on any possible audit reservations, both in the general accounts for the partnership grant, and in the specific activity based accounts as well as on outstanding activity based accounts, including presentation of planned initiatives for solving possible problems and pending matters. The accounting principles are determined by the partnership organisation together with the auditor. II. Annual accounts for the partnership organisation As soon as the partnership organisation s general annual accounts has been audited and approved by the board or other qualified body of the partnership organisation (and no later than 15 September) the accounts and the management letter must be submitted to the Ministry of Foreign Affairs in order for the ministry to establish an understanding of the overall activity and financial status of the partnership organisation. 20 S i d e
It is the responsibility of the partnership organisation to ensure a clear link between the annual accounts and (as a minimum) the total expenditures in the accounts related to the partnership grant (annex 3). This can possibly be done in the notes to the accounts of the organisation. Apart from information on the partnership grant it is, when preparing the annual accounts, also mandatory to include information on any other development activities, humanitarian interventions, etc. financed from other Danish state funds or from international organisations (EU, WB, UN. etc.). 13. Audit and monitoring The accounts for the partnership grant and the general annual accounts for the partnership organisation must be audited by a recognised auditor. The auditor of the partnership organisation also has the overall supervision with locally undertaken audit of expenditures abroad. Change of auditor must be communicated to the Ministry of Foreign Affairs, indicating the reason. It is recommended to change auditor every 3-5 year. As part of its supervision with the partnership organisations management, the Ministry of Foreign Affairs places specific requirements on the magnitude and kind of audit that must be undertaken of funds provided by the Danish state. These requirements are presented in the auditing instructions in annex 6. It is the obligation of the partnership organisation to ensure that the organisation s auditor at the time of entering into agreement, in written form confirms to adhere to the auditing instructions and that the auditor by giving his opinion confirms that the audit has been undertaken in accordance with the same. The partnership organisation s expenses for auditing in Denmark and at country offices are budgeted separately and are not covered by the overhead. The audit carried out locally in the recipient country must be undertaken by a recognized chartered auditing company and in accordance with internationally recognized standards, kindly refer to 1 and 2 in the auditing instruction. As part of overall supervision with the audit abroad the Danish auditor must assess the extent and quality of the audit undertaken by the foreign auditors. The Auditor General and the Ministry of Foreign Affairs have, as part of audit and supervision, the right to access all documents, reports, evaluations, budget- and accounts related documentation, etc. relevant to the management of the grant funds. In accordance with the Ministry of Foreign Affairs guidelines, the ministry or an individual authorised by the ministry has the right to have full insight in all aspects related to the use and 21 S i d e