GWP South Asia 21-25 April 2014

Notes from Finance and Administration Review GWP South Asia 21‐25 April 2014 Notes from Finance and Administration Review of GWP SAS 21‐25 April 2014 Contents 1. Background…………………………………………………………………………….…………………………….2 1.1 Internal audit and financial reviews………………………….………………………………………………2 2. Acknowledgement…………………………..……………………………….…………..……………………..2 3. Summary of recommendations……..……………………………………………………………………..3 3.1 Summary………………………….…………………………………………….…………………….…………………..3 3.2 Recommendations……….…………………………………………….………………………………………….3‐4 4. Notes Finance and Administration………………………………………………………………………..4 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 1 | P a g e Accounting principles……………………………………………………………………………………………….4 Delegated authorities and bank signatories……………………………………………………………..4 Procedures for procurement, travel, payments and reporting………………………………….4 Handling and reporting of foreign currencies, exchange rate differences…………………5 Procedures for advance payments and receivables………………………………………………….5 Monitoring cash flow for GWP………………………………………………………………..……………….5 Fixed asset register and control, including insurance policy ………………….…………………5 Staff contracts, salary and benefit calculations…………………………………………………………5 Accounting system and coding structure……………………………………………………………..…..6 Preparation of the financial reports and distribution of expenditures between goals6 Reconciliation of accounts ……………………………………………………………………………………….6 Match Financial Reports and General Ledger……………………………………………………………7 Contractual arrangements receiving Country Water Partnerships……………………………7 IWMI/RWP/SLWP/GWPO relationship …………………………………………….………..…………….7 Notes from Finance and Administration Review of GWP SAS 21‐25 April 2014 1.
Background 1.1 Internal audits and financial reviews The financial reviews of the RWP Secretariats are compulsory activities for GWPO, based on instructions from the GWPO Steering Committee’s Audit and Finance Subcommittee, which has been acknowledged and emphasised by the Core Donors, the Sponsoring Partners, and financial partners. Extract from the Standard Conditions IWMI Agreement
The Host Institution shall permit a duly authorised representative of GWPO,
Financiers and external auditors to inspect records and accounts relating to the
Programme from time to time. 2.
Acknowledgement Sandra Lindholm acknowledges with gratitude the active and knowledgeable support by the GWP SAS Team and IWMI Sri Lanka. GWPO recognises with gratitude the support and services provided by IWMI Sri Lanka under the Hosting Agreement. A special thanks to Priyanka Dissanayake for her contribution during the review. 3.
Summary of Recommendations Summary 4.5 Procedures for advance payments and receivables 4.6 Monitoring cash flow for GWP 4.7 Fixed asset register and control, including insurance policy 4.8 Staff contracts, salary and benefit calculations 4.10
Preparation of the financial reports and distribution of expenditures between goals 4.13
Contractual arrangements receiving Country Water Partnerships 4.14
IWMI/RWP/SLWP relationship Recommendations 4.5 4.6 4.7 2 | P a g e Procedures for advance payments and receivables In line with the Financial Guidelines, the CWP transfer shall be reported as “CWP receivable” in the RWP Balance Report until reported as expenditures by the CWP. Transfers to CWPs should be based on a Cash flow forecast, not on the budget. (Starting Q1) Monitoring cash flow for GWP The Regional Coordinator and WACDEP Project Manager to request cash flow forecasts from the CWPs and funds sent to the CWPs should be according to cash flow forecasts and not budgeted forecasts. (Starting Q2) Fixed asset register and control, including insurance policy GWP SAS to maintain a separate fixed assets register of all assets less than 5 years old. (Follow up October 20) Notes from Finance and Administration Review of GWP SAS 21‐25 April 2014 4.8 Staff contracts, salary and benefit calculations A recruitment panel should participate in the interview process for recruiting junior staff/consultant. 4.10 Preparation of the financial reports and distribution of expenditures between goals GWP SAS should encourage CWPs to report on time. Funds should be transferred to CWP’s only after receipt of a satisfactory financial report and cash flow forecast. (Starting Q2). The RWP confirms that Bhutan use accrued basis accounting. (Q4) GWPO finds a solution to ensure Bhutan Audits are submitted on time. (Start dialogue with Bhutan Auditors October 20) 4.13 Contractual arrangements receiving Country Water Partnerships We recommend that IWMI sends a letter to SLWP stating that they will charge 5% of expenditures for hosting SLWP. IWMI signs contracts with the remaining 5 CWPs. (By June 15) 4.14 IWMI/RWP/SLWP relationship We recommend that the Regional Coordinator keeps SLWP in the loop on discussions with IWMI that concern SLWP. We recommend that who travels where is decided by the Chair/at planning meetings. We recommend that new RWP staff are introduced to SLWP members at start of employment. 4.
Notes Finance and Admin Method Meetings were held with the GWP SAS team, representatives from IWMI and the GWP SAS Auditor KPMG. Data and supporting documents was collected from the GWP SAS office, IWMI accounting and HR departments. GWP SAS Team Diluka PIYASENA Dulanji PERERA Lal INDURUWAGE Priyanka DISSANAYAKE IWMI Sri Lanka Amol KHISTY Gamini HALVITIGE Kamani RAJANAYAKE Kokila MUTTIAH Nadeesha RAJAPAKSHA Ranjish SAMARAKOON Rinku DOKANIA Upali KARUNANAYAKE Communications Officer ‐ 100% CORE Financial Assistant ‐ 100% CORE WACDEP Project Manager ‐ 100% WACDEP Regional Coordinator ‐ 100% CORE Director, Finance and Admin Financial Controller Senior Manager (HR Operations) Officer, Project Accounting Project Officer Accountant Manager, Financial Planning & Analysis Purchasing Manager GWP CWP SLWP 3 | P a g e Notes from Finance and Administration Review of GWP SAS 21‐25 April 2014 Ranjith RATNAYAKE CWP SLWP Country Coordinator Kusum ATHUKORALA CWP SLWP Chair GWP SAS Auditors KPMG Lasitha Tennakoon Manager, Audit Darshana WIJESINGHE Project Manager, Audit 4.1 Accounting principles GWPO Financial Guidelines requires the use of accrued accounting. Services and goods are acknowledged as expenditures only when received, regardless if invoiced or paid. Advance payments for goods and services not received are not acknowledged as expenditures. The accrued accounting principle is practiced by GWP SAS. Audit fees and Host fees: GWP RWP and CWPs apply the accrued accounting principle in 2013. RWP accrued EUR58893 for goods and services provided by IWMI in Q4‐2013. 4.2 Delegated authorities and bank signatories All payment including transfers to CWPs are coded, signed or email approved by the GWP Regional Coordinator and forwarded to IWMI to process the payments. Payment authorization signatories Gamini Halvitige and Ranjith Samarakoon up to $7,500. Gamini Halvitige, Ranjith Samarakoon and Director (over $7,500). 4.3 Procedures for procurement, travel, payments and reporting The IWMI procurement policy guidelines is used for GWP SAS procurements. Ranjith Samarakoon controls all procurements. The Requester puts in a request for consultancy. The Contracts and Agreements Officer creates a purchase request in the SAP system. Contracts up to USD25000 are approved by the Project Leader and Regional Director. Contracts over USD25000 are approved by the Project Leader, Regional Director and the Director General. Final approval by the Finance Department who prepare a SAP purchase order and the contract Consultancy contracts should not exceed one year, however extensions beyond one year require DG approval. Consultancy selection methods: Consultancy value (USD) Presumptive selective method Below 10,000 Direct contracting (sole sourcing) ‐ Selecting an individual consultant without competition only used when it offers a clear advantage over competition, e.g. consultant continues work, in urgent situations. 10,000 to 50,000 Restricted competition ‐ Selecting at least three qualified consultants chosen from the Register maintained by the HR Officer. Above 50,000 Open Competition ‐ ToR for the consultancy is advertised on IWMI website to allow equal opportunity and adequate notice of the requirements to send bids. Payments to consultants are based only on signed contracts. Advance payments should normally not exceed 50% and subsequent payments based on outputs/deliverables. 15% of the value withheld for final payment after final deliverables. Travel advance cash is collected from Accountants Department or IWMI provides the staff member with a letter to take to the bank if the amount is substantial. The cash balance is 4 | P a g e Notes from Finance and Administration Review of GWP SAS 21‐25 April 2014 settled within 7 days of returning to office together with the travel claim and supporting receipts. GWP SAS use GWP per diem rates. The in‐house travel agency comprises 3 travel agents and 2 IWMI staff. The most cost effective prices are used for purchasing tickets. 4.4 Handling and reporting of foreign currencies, exchange rate differences Budget ‐ Kokoli Muttiah maintains the RWP budgets. IWMI uses January 1 rate for the budget and monthly rates for the expenditures. In the SAP accounting system it is not possible to exceed the budget as the system automatically denies the transaction. Budget revisions are based on requests from the Regional Coordinator who gets approval from the Network Officer. The budget in the SAP system mirrors the RWP budget. 4.5 Procedures for advance payments and receivables Funds are transferred to the CWPs at the beginning of each quarter according to the budgeted activities. In the quarterly RWP financial report, transfers not reported as expenditure by CWPs is reported as cash at bank and not as receivables. Recommendation: In line with the Financial Guidelines, the CWP transfer shall be reported as “CWP receivable” in the RWP Balance Report until reported as expenditures by the CWP. Transfers to CWPs should be based on a Cash flow forecast, not on budget forecasts. Starting Q1. 4.6 Monitoring cash flow for GWP Cash flow is monitored by the Priyanka and the WACDEP budget is monitored by the Lal. WACDEP transfers are approved by Lal and sent to Priyanka who checks if they have sufficient funds. Priyanka then sends the transfer template to Gimani to transfer payment to the CWP. Transfer requests are signed by Gamini and Amol. Since the transfers to CWPs is based on budget forecast there lacks appropriate cash flow monitoring should planned activity implementation change as CWPs would lack/have excess funds. 4.7 Recommendation: The Regional Coordinator and WACDEP Project Manager to request cash flow forecasts from the CWPs and funds sent to the CWPs should be according to cash flow forecasts ‐ starting from Q2. Fixed asset register and control, including insurance policy Original invoices are with IWMI who purchased equipment on behalf of GWP SAS. GWP SAS files its fixed assets invoice together with service invoices. 4.8 Recommendation: GWP SAS to maintain a separate fixed assets register including copies of invoices/receipts – All assets less than 5 years old – Follow‐up 20 Oct Staff contracts, salary and benefit calculations Recruitments: GWP prepares TORs. IWMI identifies the level of salary and advertises internally, externally and a more detailed version of the position on their website. The Regional Coordinator shortlists candidates and a task force consisting of the Regional Coordinator and IWMI HR interviews and testing the skills of those interviewed if necessary. GWP decides the duration of the contract and HR discusses with staff contract renewals 6 5 | P a g e Notes from Finance and Administration Review of GWP SAS 21‐25 April 2014 months before contract expiry. This process does not apply to recruitment of a junior staff/consultants. The IWMI staff policy is used. Salary allowances include vehicle allowance (entitled at RC and PM levels), but since IWMI does not provide vehicles for staff they are compensated in cash. All IWMI staff are also entitled to transport allowance. All leave is requested, approved, deducted or cancelled in the software system HR4U. Individual passwords are needed to enter into personal files. The Regional Coordinators leave is approved by the RWP Chair and the WACDEP Programme manager, Communications Officer and Financial Assistant’s leave is approved by the Regional Coordinator. Leave allocations: 20 public holidays, 6 days casual leave, 20 days annual leave, 12 days paid medical leave. Compensation day for each weekend or holiday day worked. No overtime is paid to the Regional Coordinator or the WACDEP Project Manager. The Financial Assistant is employed as a consultant. Staff cost distributions: RC and FA 100% Core; Communications Officer 40% Core 60% WACDEP; Project Manager 100% WACDEP. Recommendation: A recruitment panel participates in the interview process for recruiting junior staff/consultant. Lal requests additional support from the Financial Assistant to input CWP expenditures in the RWP consolidated template and other financial assistance should be granted. Part of the Financial Assistant’s costs could be charged to WACDEP. Can we recommend 1 day per week of the Financial Assistant’s time is allocated to WACDEP to resolve conflicts between the RC and WACDEP PM??
4.9 Accounting system and coding structure The SAP accounting system is used and the coding structure is satisfactory (budget line – department – employee). GL sample in binder file. Priyanka codes all Core expenditures and Lal codes all WACDEP expenditures. All codings are approved by Priyanka before being entered into the accounting system by the Financial Assistant. 4.10 Preparation of the financial reports and distribution of expenditures between goals CWP financial reports templates are received, quality checked by Priyanka and Lal then the expenditure figures are consolidated into the expenditure sheet in the RWP financial report by the Financial Assistant. The report is then forwarded to IWMI (Nadeesha) to prepare the balance report, reconcile bank and send to GWPO. Expenditures are correctly distributed between goals. GWP SAS financial reports are submitted late to GWPO. Delays due to reports received late from CWPs or requests for clarifications/documents from CWPs. Delays from HI side due to public holidays. CWP Bhutan Audit was submitted late and they use cash basis accounting. KPMG requested that GWPO intervene to ensure that the Bhutan Audits are submitted on time. Recommendation: GWP SAS encourage CWPs to report on time. Funds should be transferred to CWP’s only after receipt of a satisfactory financial report and cash flow forecast. Ensure that Bhutan use accrued basis accounting in Q4. GWPO finds a solution to ensure Bhutan Audits are submitted on time. Start dialogue with Bhutan Auditors 20 6 | P a g e Notes from Finance and Administration Review of GWP SAS 21‐25 April 2014 4.11 Reconciliation of accounts Accounts reconciliations are accurate. 4.12 Match Financial Reports and General Ledger Yes. 4.13 Contractual arrangements receiving Country Water Partnerships There are no signed contracts between the Host Institution and the 6 CWPs. The auditors commented on HI fees charged to SLWP without no written agreement between the HI and SLWP. Recommendation: IWMI sends a letter to SLWP stating that they will charge 5% of expenditures for hosting SLWP. In accordance to GWP Financial Guidelines IWMI signs agreements with CWPs Bangladesh, Bhutan, India, Nepal and Pakistan. A copy of the GWP Financial Guidelines should be attached to the agreement ‐ by June 15 4.14 IWMI/RWP/SLWP/GWPO relationship SLWP is concerned that the Regional Coordinator interacts directly with the Host Institution on matters relating SLWP. One particular matter concerned the 5% host fees commented by the Auditors. GWPO requested the Regional Coordinator inform the HI about the requirements to have signed agreements with the CWPs. SLWP Chair expressed concerns that the Regional Coordinator is travelling to meetings/workshops instead of the most suitable professional person. The Communications Officer who started in January only met SLWP Chair in April. The Regional Chair will not attend the CP meeting in Trinidad due to illness. SLWP recommends that the budget for his trip to Trinidad should be used to send a representative to the CP meeting and not be used for the Regional Chair’s attendance to another meeting in Malaysia. Recommendation: We recommend that the Regional Coordinator keeps SLWP in the loop on discussions with IWMI that concern SLWP. We recommend that who travels where is decided by the Chair/work planning meetings. We recommend that new RWP staff are introduced to SLWP members at start of employment.
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