United Nations Economic Commission for Europe. Directive on Establishment of Agreements and Management of Extrabudgetary Resources

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1 United Nations Economic Commission for Europe ECE Directive No November 2014 Directive on Establishment of Agreements and Management of Extrabudgetary Resources I. Introduction The present Directive follows the relevant United Nations (UN) Financial Rules and Regulations, administrative instructions related to the establishment and management of Trust Funds; establishing, administering and controlling General Trust Funds; Technical Cooperation Trust Funds; Programme Support Accounts; as well as guidelines on the preparation of Host Country Agreements. 1 II. Purpose The purpose of this Directive is to ensure transparent, effective and efficient management of extrabudgetary resources and to strengthen accountability of staff of the Economic Commission for Europe (ECE) for their use. III. Criteria for Acceptance of Extrabudgetary Funding The following criteria shall guide the acceptance of extrabudgetary funding by ECE: Mandate. Voluntary contributions and/or private donations can be accepted only for those extrabudgetary projects, which clearly fall within the ECE mandate. Demand. Voluntary contributions and/or private donations can be accepted for extrabudgetary projects requested by a country or group of countries. Expertise. Voluntary contributions and/or private donations can be accepted only for activities where ECE has the necessary expertise Capacity for financial management and reporting. Voluntary contributions and/or private donations can be accepted only if the ECE can ensure their effective management and meet the donor reporting requirements. 1 ST/AI/188, ST/AI/284, ST/AI/285, ST/AI/286 and ST/AI/342 1

2 Principles for social investments (PSIs). The UN Global Compact Principles shall guide the acceptance of voluntary contributions and/or private donations for Social Investment, which specifies that contributions be Purposeful, Accountable, Respectful and Ethical. IV. Establishment of Agreements Donor Agreements 2 a. A donor agreement shall be established for any arrangement involving a donor, ECE and if applicable, a co-implementing agency. The donor agreement shall clearly outline the responsibilities of all parties, the funding arrangements and any other coordination issues. It should be signed at the time of the preparation of the project document. b. In the case of technical cooperation projects, the agreements between ECE and prospective donor Governments shall be established as per the model agreement provided in the appendix to ST/AI/285. c. In the event the Organization has established an overarching umbrella agreement with a specific donor or group of donors, such as the Financial and Administrative Framework Agreement (FAFA) with the European Union or the World Bank, the specific contribution agreement shall be made in accordance with the provisions set forth in the umbrella agreement. d. In accordance with the current delegation of authority to ECE, acceptance of contributions and signature of financial-related Agreements, Memorandum of Understanding (MOU), or exchange of letters with donors and implementing partners governing contributions must be reviewed and cleared by the Executive Officer in advance. e. Prior to initiating an Agreement with a Donor, project/programme managers must forward to the Executive Officer all correspondence relating to financial and/or administrative matters of agreements/arrangements with donors and implementing partners, for the review. Project/programme managers should make no commitments to donors and/or implementing partners, on any draft agreement/arrangements and/or terms and conditions, prior to the review and clearance by the Executive Officer. f. The Executive Officer shall ensure that: (i) (ii) (iii) These comply with the UN regulations and rules and related administrative instructions; These do not directly or indirectly involve additional financial liability to the ECE, and that, These ensure that the UN s procurement, recruitment and audit policies are upheld and that the required level of programme support costs are provided for in all agreements. g. The Executive Officer is required to submit any donor agreements containing special conditions to the Controller s office for determination of their acceptability. No 2 This does not apply to the TIR Convention which is governed by a MOU. 2

3 Agreement/MOU should be signed, nor any contribution accepted, until the acceptability of the conditions attached thereto has been determined. h. Whereas the Executive Secretary is asked by the donor to sign an agreement, the Executive Officer shall initial all pages of the reviewed and cleared Agreement or MOU prior to submission to the Executive Secretary for approval. i. Upon approval and signature of the Agreement/MOU by the Executive Officer, the originals should be returned to the project/programme manager for onward transmission to the donor/implementing partner for the signature. j. Once all parties concerned sign the Agreement/MOU, one original should be submitted to the Executive Office and a copy maintained by the Division. k. The Executive Office shall promptly send a copy of the signed agreement to the Chief of FRMS at UNOG and keep the original in the Executive Office. l. The Executive Office, to keep them up-to-date, shall regularly review all funding agreements with main donors. Cooperation Agreements a. A Cooperation Agreement could be established in relation to any area of the ECE programme of work. Unlike the Donor Agreement, it has no financial implications. b. A draft Cooperation Agreement should be submitted to the Executive Officer for clearance, prior to its submission to the Executive Secretary for approval. Host Country Agreements a. When entering into discussion with a Host Country in relation to an ECE meeting outside Geneva, the project/programme manager shall inform the Executive Officer of the proposal. b. The Executive Office shall then confirm with the Controller that the country concerned has satisfied its financial obligations to the UN with respect to previous Host Country Agreements; c. Upon the clearance by the Controller, the Executive Office notifies the concerned Division that they can proceed with the negotiations and the preparation of the draft Host Country Agreement; d. The proposed draft Host Country Agreement must be reviewed and cleared by the Executive Officer, by the UNOG Senior Legal Officer, the Chef de Cabinet and other relevant UN Services, as required, for conformity with the guidelines set out in the administrative instruction ST/AI/342 on Host Country Agreements; e. Upon clearance of the Agreement, the Executive Officer shall initial all the pages and submit to the Executive Secretary for approval and finalization; 3

4 f. The Executive Office shall send a copy of the signed Host Country Agreement to the Chief of FRMS at UNOG. V. Establishment of Trust Funds ECE Trust Funds are established in conformity with UN financial regulations and rules, per UN Administrative Instructions and guidelines. 3 VI. Establishment of Projects a. Currently, projects can be established exclusively under the existing ECE Technical Cooperation Trust Fund. 4 b. Upon the receipt of the written pledge of a voluntary contribution from a donor, the project/programme manager fills in the template and an estimated results-based budget at the expected accomplishments level approved by EXCOM and submits them to the Project Management Unit (PMU), for review and clearance. The templates for the project, the request for donor payment, the results-based cost plans and the initial allotment requests are available at the Intranet website of the Executive Office. 5 c. Upon the review of the programme of work, PMU shall advise the project/programme manager on whether the extrabudgetary funding requires EXCOM approval. 6 d. After the clearance of PMU, the project/programme manager submits the template with an annex to EXCOM for approval, if applicable. e. Once the project is approved by EXCOM, the project/programme manager shall obtain the clearance from the Executive Officer and the approval from the Executive Secretary, to establish a Project Identification Code (PIC) in IMIS. f. At the time of requesting a PIC number the project/programme manager shall submit to the Executive Office a copy of the certificate in project management training. The Executive Office keeps this certificate for its records and only requires this certificate once. g. After the receipt of the PIC number, the project/programme manager prepares the request for donor payment, gets it signed by the Executive Office and sends it to the donor. h. When the donor s funds are received, the project manager prepares a detailed resultsbased cost plan at the activity level and submits a request for initial allotment. This 3 Currently, ECE has one Technical Cooperation Trust Fund (ECE) and seven General Trust Funds: EIA (Environment for Europe), LPA (EMEP Sub-account "Mobile Sources of Air Pollution"), LRA (Financing of the Implementation of the Convention on Long-Range Trans-boundary Air Pollution (EMEP)), LUA (EMEP Sub-account "Voluntary Contributions towards Funding of Effect-Oriented Activities under the Convention"), EHA (Human Settlements), EAA (Electronic Data Interchange for Administration, Commerce and Transport) and LTA (Long-Term European Timber Trends and Prospects). 4 This refers also to activities and projects which technically are not technical cooperation projects All projects are subject to approval by EXCOM, except those already approved by Sectoral Committees or convention bodies as part of their work programmes. 4

5 allotment request shall include 13% Programme Support Costs, unless special conditions are approved by the UN Controller, and 15% mandatory operating reserve. i. All EXCOM templates shall be uploaded and regularly updated on the PMT, which will be available on the ECE public website. VII. Management of Trust Funds Management of the General Trust Funds and Technical Cooperation Trust Funds includes the following steps: Planning stage: Preparation of an annual results-based cost plan and related allotment request a. Annual results-based cost plans for the following year will be prepared by the respective project/programme manager and submitted through the Division Chief and to the EO by 15 November of each preceding year; b. The annual results-based cost plan, including the related Programme Support Costs, should correspond to the approved project document/s and broken by calendar year. The results-based cost plan shall be revised at least once a year when the actual expenditures for the previous year are known and the estimated costs for the following year are prepared; c. The Executive Office shall review the results-based cost plan to ensure that the budget lines are within respective object classes and that the resource levels are appropriate and adequate for the activities proposed by the project/programme manager; d. Upon satisfactory review, the Executive Officer shall forward all General Trust Fund annual results-based cost plans for the following year to the Chief of the Financial Resource Management Section (FRMS), UNOG by 30 November of each year and retain on file the Technical Cooperation Trust Fund results-based cost plans as per the Delegation of Authority; e. The project/programme manager is responsible for subsequent timely preparation and submission - through their respective Division Chief - of an allotment request to the Executive Officer; f. The Executive Officer approves the allotments for all Technical Cooperation Trust Fund projects and requests FRMS, UNOG to issue an allotment for all General Trust Funds from taking into consideration the level of received cash, programme support costs and operating cash reserves. Monitoring and reporting stage: reporting to donors and ECE intergovernmental bodies a. The substantive and financial reporting arrangements set forth in agreements with donors should be implemented in a timely manner; 5

6 b. The project/programme manager is responsible for providing the information necessary to monitor the implementation of the project through the PMT and the preparation of any substantive reports agreed upon with donors and/or implementing partners; c. The Executive Office is responsible for preparing and/or providing the project/programme manager with the Funds Utilization Report (FUR) or financial report as stipulated in the agreement with the donor, or as and when required; d. The project/programme manager should provide the Executive Office with a copy of all agreed upon reports (substantive and financial, both interim and final) submitted to the donor; e. Once a year, the Divisions should provide a report on their technical cooperation projects/activities to the Sectoral Committees. The report to the Sectoral Committees should contain factual and accurate information about technical cooperation projects/activities, to ensure its credibility and to support well informed decisionmaking by the member states; f. The PMU is responsible for reporting to EXCOM and the Commission on ECE technical cooperation activities. Apart from information about implemented technical cooperation activities, this report shall contain full information about voluntary contributions of donors and expenditures of the Secretariat; g. The Executive Office, in collaboration with, and as requested by project/programme managers, is responsible for the timely preparation and submission of ad hoc financial reports to ECE and UN intergovernmental, including oversight, bodies. Completion stage: closing of Trust Funds and projects a. The Executive Office shall review and initiate the necessary administrative action for closing of implemented trust funds/project accounts in accordance with UN regulations, rules and instructions in effect. In the case of project accounts, the Executive Office shall contact the concerned project/programme managers three months before the end date of the project and inform him/her of the remaining funds. b. Should the project/programme manager need to extend the implementation period of the project he/she needs to obtain a written agreement from the donor/s and provide a copy of it to the Executive Office. c. In accordance with ECE Evaluation Policy, the project manager shall undertake an independent evaluation of the project if the budget of the project exceeds US$ 250, 000. d. Upon the completion of the project, or upon request, the Executive Office shall furnish the project/programme manager with a copy of the pertinent UN trust fund financial statement or a final Funds Utilization Report for submission to the donor/s. e. The remaining balance will be returned to the donor unless the donor informs in writing that it could be used for additional activities under the same project or reprogrammed for a new project. 6

7 f. Establishment of a new project from a reprogrammed funding shall follow the procedure stipulated in part VI of the present Directive. VIII. Conflicts of Interest All managers and staff involved in managing and implementing activities at ECE must be guided by the following: a) In the performance of their duties, ECE staff shall not seek or receive instructions from any Government or from any other authority external to the Organization. b) Avoid any potential conflicts of interest, as per UN Procurement Manual, Revision 7, Chapter 4 Ethical Standards in Procurement. c) Members of the Bureaux of ECE bodies, or the organizations where such members are employed, cannot be contracted as consultants, individual contractors or vendors 7 for ECE. IX. Effective Date The present Directive replaces ECE Directive 13 and annuls the ECE Guidelines for Establishment of Extrabudgetary Projects. The Directive takes place with immediate effect. It can be revised as appropriate and when required to conform to any subsequent administrative instruction from the UN Secretary General or decision of the relevant UN intergovernmental bodies. Executive Secretary 7 A Vendor is a potential or actual supplier or provider of goods, services and/or works to the UN. A Vendor may take various forms, including an individual person, a company (whether privately or publicly held), a partnership, a government agency or a non-governmental organization.). 7

8 DEFINITIONS Annex 1. Activity is action taken or work performed to transform inputs into outputs. A workshop, a seminar, an advisory mission, a meeting, a conference are examples of activities. 2. Agreement is a negotiated and typically legally binding arrangement between parties as to a course of action. (a) (b) (c) Donor Agreements are formal written contractual instruments, which shall be duly signed by the authorized representative of the contracting organization(s) and by the Controller, on behalf of the United Nations, unless the Controller delegates this authority to the UN Office concerned. Cooperation Agreements represent a form of mutual collaboration and shared responsibilities of the parties who, through an exchange of letters, agree to jointly implement the activities. A Host Country Agreement ensures that all additional costs to be borne by the host Government are determined and agreed upon in a consistent manner. 3. Allotment. The issuance of an allotment authorizes a project/programme manager to commit funds, obligate and expend against their respective budgets for a specific period and for a specific purpose in accordance with the UN Financial Rules and Regulations. 4. Conflicts of Interest occur when a staff member s private interests, such as outside professional relationships or personal financial assets, interfere or appear to interfere with the proper performance of his or her professional functions or obligations as a UN official. 5. Cost plan. A schedule of estimated expenditures for a programme or project by object of expenditure or budget line by calendar year. 6. Extrabudgetary resources are funds from all sources other than those derived from assessed contributions and revenue-producing activities of the United Nations. 7. Mandate. Requests and directives of the member states contained to the resolutions and decisions of UN and ECE intergovernmental bodies. 8. Programme is a set of projects aiming to achieve a common development objective. 9. Programme support costs. Administrative backstopping and service costs incurred to support the implementation of programmes and projects financed from extrabudgetary resources. 10. Project is a set of planned, interrelated activities designed to achieve certain specific objectives within a given budget and specified time period. 8

9 11. Project/programme manager is a staff member who manages all aspects (planning, implementation, monitoring, reporting and evaluation) of the project. 12. Trust Funds include accounts established with specific terms of reference or for the purpose of financing wholly or in part the cost of activities consistent with the Organisation s aims and policies. 13. Voluntary contribution is a payment or an agreement in writing (pledge) to make a payment in cash or in kind. 9