Objective 3.1

HIGHLIGHTS

  • To ensure prudent cash management, OCHA introduced more-effective budgetary controls, enhanced expenditure monitoring and streamlined liquidity management procedures. The UN Controller approved the transfer of funds between the two main OCHA trust funds, which allowed for more flexible and timely allocation of resources for humanitarian response.
     
  • OCHA’s fundraising activities resulted in additional multi-year funding and early disbursements by donors. Two thirds of extrabudgetary requirements were received by mid-year, ensuring predictable and stable funding. At the same time, OCHA’s donor income increased by US$17 million to reach $230 million, which enabled OCHA to respond to new and evolving emergencies.
     
  • ERF global guidelines were completed to provide country offices with the appropriate tools to support Humanitarian Coordinators (HCs) in managing ERFs. The guidelines provide clearer instructions on financial reporting and external auditing for ERF-funded projects.

Year In Review

In 2012, OCHA focused on increasing predictable income, including through additional multi-year funding agreements with donors; strengthening budget and cash management through closer monitoring and better reporting; and allowing more effective management of country-based pooled funds by providing central guidance and direction.

Between 2011 and 2012, OCHA's donor income increased by $17 million to reach $230 million. OCHA's relationships with its donors remained strong due to increasingly predictable funding flows and regular consultations at senior and working levels. For the first time, most requirements were covered by the end of the second quarter.  Most funds were again received unearmarked, enabling rapid scale-up in sudden-onset emergencies. This contributed significantly to the improvement of OCHA's liquidity, and the organization is in a much better position to plan its cash flow.

Other reasons for the improvement of OCHA’s liquidity included consolidating the cash management and financial reporting functions, and standardizing monitoring and reporting on income and expenditure. Combined with the UN Controller’s approval to transfer funds between OCHA’s main trust funds at headquarters, this allowed for more predictable financing of operations and better use of available resources.

To ensure prudent and effective administrative support of mandated activities, particularly in the field, OCHA upgraded existing procedures and put additional emphasis on promoting internal controls. This included revising procedures for reviewing outstanding obligations to allow accuracy in recording expenditure at the field level. In addition, OCHA adopted an Internal Control Framework to ensure proper stewardship and accountability of its resources, highlighting the responsibilities and authorities in place to support OCHA’s activities.

OCHA conducted a comprehensive review of the administrative field support provided by local service providers to determine options for best value for money at the country level. Further to the recommendation to maintain UNDP as the main service provider, OCHA endeavoured to improve service provision by agreeing on performance standards for service delivery at the field level, allowing timely support of humanitarian activities.

On 1 January 2014, the UN Secretariat will implement International Public Sector Accounting Standards (IPSAS) to ensure enhanced transparency and accountability of assets and liabilities. In preparation, OCHA updated its processes to ensure compliance with the reporting requirements, and staff were trained on the concepts of accrual accounting, which is a pre-requisite for IPSAS reporting.

To support the management of OCHA’s country-based pooled funds and to meet the requirements of external stakeholders, OCHA published the ERF global guidelines. They provide country offices with the appropriate tools to support HCs in managing ERFs. They also offer clearer instructions related to financial reporting and external auditing for ERF-funded projects. Together with initiatives in 2013 to streamline the operation of country-based pooled funds, these measures will ensure improved capacity for OCHA to manage and operate country-based pooled funds, and that proper control 

Progress against Performance Framework
RESULT 1 Prudent budget and liquidity management supported by rigorous data systems.
INDICATORS
1. Standard guidelines on cost planning and closer link with workplanning
BASELINE 2011

Income forecast and cost planning are prepared separately; workplans and cost plans are independent activities.

TARGET 2012

Link cost-planning exercise to donor funding projections and workplanning.

PROGRESS REPORT 2012

a) Cost planning increasingly linked with forecasting through the consolidation of cash management and financial reporting functions; progress includes standardized reporting on cash income and projections.

 

b) Procedures on cost planning and budget amendments included in the Internal Control Framework.

 

c) SOP for “Humanitarian Financing Units cost plan preparation and funding” completed.

2. Effective liquidity management
BASELINE 2011

Consolidation of cash reserves, introduction of new procedures for emergency cash reserves, challenges in cash flow forecasting and poor oversight of expenditure.

TARGET 2012

Development of SOP on cash management, monthly monitoring of cash reserves, realistic cash requirements, Office of Programme Planning, Budget and Accounts agreement on movement of funds between the Trust Fund for Disaster Relief Assistance and the Trust Fund for Strengthening of OCHA.

PROGRESS REPORT 2012

a) The UN Controller granted OCHA authority to transfer funds between the two main trust funds to enable flexible cash management. However, central services only agreed the mechanism to administer these transfers in late 2012. The SOP on cash management will be completed in early 2013 to reflect the agreed mechanism.

 

b) Internal reimbursable loans/advances are continuously tracked to ensure payment of outstanding loans/advances. 

3. Increased predictable income supporting more effective cash management
BASELINE 2011

Seven multi-year funding agreements.

TARGET 2012

+1

PROGRESS REPORT 2012

A new multi-year MoU was signed with France on 5 November 2012. It covers strengthened political and institutional dialogue (including on specific humanitarian crises), sustained financial contributions (flexible and early payments to OCHA, CERF and pooled funds) and ongoing provision of Associate Experts.

4. Integrated budget, expenditure, income planning and data management systems
BASELINE 2011

Multiple headquarters’ systems and modules, locally developed software packages, proliferation of stand-alone databases; automated information-sharing between headquarters and field not possible. Manually integrated income-and-expenditure reports piloted (September 2011); ad hoc financial forecasting (income and expenditure) informs budget process.

TARGET 2012

Selection of single integrated and comprehensive data management platform, serving as the primary common database for budgetary and financial information, accessible simultaneously by headquarters and field staff. Semi-automated income-and-expenditure reporting products piloted; integrated financial planning system informs budget process and cost plan amendments.  

PROGRESS REPORT 2012

OCHA senior management endorsed the adoption of an interim administrative information management system, pending the implementation of the Secretariat-wide ERP system Umoja. OCHA continued its support for Umoja readiness, including through participation in workshops on Future Service Delivery models for the UN Secretariat.

5. Readiness for International Public Sector Accounting Standards (IPSAS) implementation in 2014
BASELINE 2011

IPSAS implementation scheduled and UN processes being reviewed for compliance.

TARGET 2012

Training and preparatory work to ensure compliance with IPSAS-12 (inventory management) and IPSAS-17 (property, plant and equipment) to be undertaken.

PROGRESS REPORT 2012

Staff were trained on the concepts of accrual accounting, which is a pre-requisite for IPSAS reporting. OCHA updated its processes to ensure compliance with reporting requirements, including reporting for the revision of non-expendable property (NEP) with a value above $20,000 and on field office lease agreements to facilitate future reporting from field offices. 

RESULT 2 Financial management of field-level pooled funds (CHF Somalia and ERFs) meets programmatic and donor requirements.
INDICATORS
1. Timeliness of ERF disbursements to be systematically monitored and improved
BASELINE 2011

Speed of disbursements targeted within 10 working days, but often took longer. There is no systematic monitoring tool to measure and make an evidence-based analysis on the speed of the disbursements.

TARGET 2012

Disbursement processes will be systematically monitored through an Excel-based tracking database developed by ASB and FCS by Q4.

PROGRESS REPORT 2012

a) The development of the project cycle management database has been delayed in order to align the system to Umoja. It has been necessary to evaluate the implications and the opportunities to address OCHA’s needs through Umoja. Contacts with the Umoja team have been established to explain OCHA’s requirements and to explore the possibility to address them within a time frame compatible with OCHA’s goal.

 

b) ASB monitors the timeliness of disbursement for the first instalment payments, and for the payment requests submitted and processed during 2012 until 31 December 2012. It took an average of nine days to effect the payment.

 

c) Simultaneously, OCHA has developed a temporary solution to ensure adequate follow up of the critical steps of the project cycle management process, including disbursements. A temporary solution (awaiting outcomes of consultations with Umoja team) for ERFs and CHF Somalia, based on SharePoint technology, is in its final stage of development and will be operational by February 2013.

2. Standardized policies and procedures established and monitored
BASELINE 2011

Draft global ERF Guidelines (along with detailed SOP and administrative guidelines) to be finalized by Q4 2011.

TARGET 2012

a) ERF Guidelines and SOP adopted; at least 80 per cent of compliance achieved.

 

b) CHF Guidelines review and revision initiated.

PROGRESS REPORT 2012

a) The Global ERF Guidelines were endorsed by the SMT on 20 September and signed into effect by USG/ERC Valerie Amos on 9 October. By Q4 2012, OCHA initiated the compliance monitoring through teleconferences with OCHA country offices using a semi-structured questionnaire to identify and assess the initial experience and challenges in rolling out the guidelines. In January 2013, OCHA reviewed all parts of the guidelines related to the finance and administration section. A set of actions scheduled for 2013 was agreed to reflect suggested changes and to conduct consultations between the Chief of Finance and the Chief of the Funding Coordination Section to reach a final decision. 

 

b) In April and October 2012, OCHA organized two workshops to discuss with fund managers, UNDP and the Multi-Partner Trust Fund the revision of the CHF Guidelines. Those consultations revealed the need to have a more comprehensive review and broader consultation including all stakeholders. OCHA has therefore revised the timeline for the review of the guidelines, now planned for Q3 2013.

3. Level of reporting compliance by implementing organizations improved
BASELINE 2011

Delayed receipt of interim and final reports from implementing partners, resulting in delayed disbursements of final payments. OCHA has no direct control over timely submission of financial reports.

TARGET 2012

a) Ensure a proactive follow-up of reporting submissions through an Excel-based tracking database developed jointly by ASB and FCS by Q4.

 

b) Sixty per cent of all pooled-fund reports received within the agreed reporting periods.  

 

c) Develop a global ERF monitoring-and-reporting framework in the form of a guidance note to be annexed to the ERF guidelines by the end of 2012.

PROGRESS REPORT 2012

a) In Q4 2012, OCHA consolidated data to follow up on the status of financial reports and audit of projects funded by ERFs and the CHF Somalia. Since November 2012, OCHA has been tracking these data. As of 22 January 2013, the status is as follows:

 

Interim financial reports were contractually required for 307 projects, of which 306 were received by OCHA (99.6 per cent).

 

450 final financial reports were required, of which OCHA has collected 443 (98.4 perc ent). 

 

Final financial reports were submitted to OCHA with an average delay of 36.6 days. 

 

Eighty external audits have not started (17.5 per cent); 181 are under way (39.7 per cent); and 77 that have ended are under final review before a final payment can be processed (17 per cent). 

 

There are 16 cases where NGOs have to reimburse funds to OCHA (3.5 per cent) and 36 cases where external difficulties and delays are observed (8 per cent). For instance, cases where the implementing partner is no longer in country and the external audit cannot be carried out; cases where there are obstacles in identifying a suitable auditing firm to provide the services according to standard; or cases where the auditing firm has faced obstacles that impede the culmination of the audits, such as non-cooperative NGOs.

 

b) The project cycle management tool (Arigatool) will be developed as part of the Umoja process and has therefore been delayed. An interim solution, based on a SharePoint technology, will be developed.

 

c) Data collected will allow OCHA to improve the overall timely management of reports, audits and reimbursements, and to formulate clear policies including sanctions when necessary. 

 

d) Information about audit services agreements has been collected. Different OCHA sections are working together to ensure that every CO will have such an agreement signed.