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Operational and Financial Issues

Operational and Financial Issues. Energy and Environment Practice Workshop 6-9 October 2004, Almaty. Increased Pressure on Implementing Fees. UNDP Implementing fees averaged 9% over the past 4 years

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Operational and Financial Issues

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  1. Operational and Financial Issues Energy and Environment Practice Workshop 6-9 October 2004, Almaty

  2. Increased Pressure on Implementing Fees • UNDP Implementing fees averaged 9% over the past 4 years • GEF Council applying pressure on all GEF Implementing Agencies to reduce their implementing fees • A proposal was tabled to reduced fees from 9% to 7.5% • Corporate role of IAs and associated budget is also being challenged

  3. UNDP Fee Distribution • UNDP/GEF mandatory assessment to UNDP “Treasury” to increase from 1% to 2%. • UNDP COs receives 1/3 of total implementing fees, about 3% on average. • UNDP/GEF RCUs receives 1/3 of total implementing fees to provide services free of charge to COs

  4. Country Office Cost Recovery • In line with its mainstreaming strategy, UNDP/GEF will try to absorb increases in mandatory assessments and continue to provide 1/3 implementing fees to Cos • However, UNDP/GEF may have to charge for UNDP/RC time, in accordance with present SURF practices. • UNDP/GEF cannot charge implementing costs to project budgets • Only execution services (ISS) can be charged to projects at the request of Govt based on Universal Price List.

  5. Percentage Fee: Trust Funds and Third-Party Cost-Sharing (TFs and TPCS)

  6. Country Offices Regional Bureau Central Services Global Operations BDP or BCPR UNDP-GEF historical practice* 3% -- 1% -- ~5% UNDP’s new Cost Recovery Policy for non-core, global/ interregional funding sources, such as GEF 0.33% 0.33% 0.33% 1% Everything above 2% UNDP-GEF current practice* 3% 0.33% 0.33% 1% ~4.33% Comparison of fee distribution: Cost Recovery Policy vs. UNDP-GEF practice

  7. Enhancing Full Cost Recovery • Co-financing ? • How can we ensure accountability for fees?

  8. Co-Financing • GEF Definitions: • Co-Financing: Resources committed by GEF or other sources which are essential for meeting GEF objectives • Associated Financing: Resources earmarked for related activities • Leverage Resources: Additional resources beyond the project itself that are mobilized as a result of the project

  9. GEF Co-Financing Ratio Source: PIR FY 2003 Reports

  10. Sources of Co-Financing Source: PIR FY 2003 Reports

  11. Co-Financing: Potential and Issues • Substantial scope for Cost-Sharing (Cash), particularly if linked to poverty (SL) and governance issues in broader UNDP interventions – • Possible Barriers: • Low priority to environment • Difficult to implement cross cutting programmatic interventions

  12. Points for Project Revisions • Expenditures over total budget cannot be covered by GEF resources • Substantive budget revisions must be reported to GEF Secretariat via UNDP GEF • UNDP/GEF project revisions should be forwarded to UNDP/GEF RCU before signature (five day clearance on a no-objection basis) to ensure that changes in budgets among activities are reported

  13. UNDP/GEF Project Budget Cleanup for Atlas (ERP) 1 • Issues/problems identified in FIM: • Incorrect data – erroneous project numbers • Individual project budgets not updated via revisions • Total project budgets that have exceeded allocations • Cumulative budget balances as of end-2002 are inconsistent with UNDP financial records

  14. UNDP/GEF Project Budget Cleanup for Atlas (ERP) 2 • Type of projects involved: • Country projects • National (NEX) and Direct Execution (DEX) • UNOPS/UN System Agency Execution • NGO Execution • Regional projects • National (NEX) and Direct Execution (DEX) • UNOPS/UN System Agency Execution • NGO Execution

  15. UNDP/GEF Project Budget Cleanup for Atlas (ERP) 3 • UNDP/GEF has asked COs to take action on: • Examine/correct erroneous project budgets recorded in FIM • Budget revisions update, including mandatory revisions • Examine/correct budgets that have exceeded allocations • Examine/rectify budget balances as of end of 2002 to be consistent with UNDP financial statement records • Identify projects that are financially closed • Follow-up with executing agencies, if necessary, on all the above • Completion of country & regional project budget data-entry into FIM

  16. Completion of Migration to Atlas • All offices should ensure that: • Non-migrated projects are officially closed and final revision sent to GEF – by end of March • Re-phasing takes place for active projects as soon as 2003 final expenditure is available • Budgets are restructured for active projects • Inform UN executing agencies of new budget structure and reporting requirements • Ensure that OPS budgets are identical to UNDP projects in Atlas

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