How to cope with the residual risk of NGO co-financing?

Transcription

1 How to cope with the residual risk of NGO co-financing? Internal Audit Service (IAS): Audit on Non-Governmental Organisations in DG AIDCO & Action Plan Presentation by F.5 Regional Seminar in Cairo 3-7 April 2006

2 Community External Aid through NGOs: Financial & Regulatory Aspects Financial aspects: o significant amount disbursed to NGOs (estim. > 1bn EURO p.a., incl. the EDF), mainly by o fragmentation in terms of programmes and contracts o mainly in form of grants Regulatory aspects: o NGO Co-financing budget line for European NGOs (approx. 200 mio. p.a.) o all budget lines include NGO-funding with different legal bases (geographic/thematic) o The Cotonou Agreement with a reference to Civil Society

3 Audit objectives IAS objectives: identify key risk areas in COM activities with NGOs in areas of external aid managed by. Therefore, focus on assessment of the internal control mechanisms of NGOs funding by, with an emphasis on: o financial and legal compliance o effectiveness and efficiency

4 Audit scope: Audit scope Operational processes assessed as being more relevant: - the selection process - contract management (until final payment) - ex-post audits and controls - the supervision and reporting aspects Selected budget lines: - NGO Co-financing, other thematic ( health sector ), geographic (TACIS and Asia/Latin America) - NGO funding by the EDF - sample of 2 Delegations (Mozambique, Bangladesh)

5 Operational aspects of funding environment characterised by: Complexity organisation and legal basis Devolution and geographization of operational responsibilities contributed to fragmentation of knowledge of NGOs Potential high risk within the external aid environment No risk-free environment in that area Political visibility and sensitiveness

6 IAS recommendations The IAS Report contained 8 observations and 19 recommendations addressed to 1. Management of NGOs Data Centralise and re-organise NGOs information flows, defining a central point of contact Improve data quality on operators and reliability of information (CRIS) Work on a Commission-wide NGO definition Further develop Management Reporting System on NGOs

7 2. Assessment and Control of NGOs Develop a segmented actor-based approach for selecting NGOs and allocating funds Develop an on-going assessment on NGOs Strengthen the understanding of NGOs systems, with a focus on NGOs procurement policy (audit Terms of reference, ex-post controls) Rationalise monitoring and evaluation activities 3. Grant Procedures Favour the capacity building of beneficiaries (training, controls) Increase the efficiency of Calls for Proposals (planning, submission and evaluation)

8 Key considerations for NGOs perspective o Review in-depth the current approach towards the NGOs o Analyse the move towards a professionalisation of NGOs due to decentralisation and administrative burden o Associate other DGs of Relex family (and Commission) and extend to all Non-State- Actors o Strengthen cooperation with Member States o Consider the needs for resources and time to adapt Management Information Systems

9 Follow-up: Action Plan accepted all IAS recommendations and presented and Action Plan addressing them The Audit Progress Committee (APC) on 26 th September 2005: o o o o o supported the collaboration with development NGOs and acknowledged that the risk from working in this area can never be fully eliminated under the current circumstances considered the residual risk as very high noted that had accepted the recommendations made by the IAS and encouraged the service to implement urgently these audit recommendations aiming at reducing the residual risk to an acceptable level stated that both HQ and DEL should particularly focus on a rapid development and improvement of CRIS ( Common Relex Information System ), and create an NGO knowledge database, allowing all relevant Commission officials (HQ + DEL) easy access to quantitative and qualitative information on any given NGO partner of the Commission called the relevant services to facilitate a Commission-wide NGO definition.

10 Action Plan Objective: To implement IAS recommendations and transform operations with Non-State-Actors (NSA) by developing a knowledge management system supported by an improved information system based on CRIS and by establishing an actor-based and segmented approach. Key elements: - better know your client (mission, membership, management) - better adapt to decentralized environment - better segment to tap actors skills and strengths - implementation of knowledge management system - actors approach (multiple actors extended list of NSA)

11 Division into clusters In order to better address the recommendations in the Action Plan they were divided into three clusters: Compliance cluster Cluster Information system Cluster Knowledge management system

12 Compliance cluster The actions foreseen to implement the compliance cluster were scheduled to be completed by December 2005 and included: To improve understanding/knowledge of NGOs compliance with the Commission s procurement policies To specify the objective and monitor the quality of Certification audits To adapt the methodology for audit selection by To clarify, document and re-balance the Delegations role in a centralised project selection process To revise specific aspects of the Standard Contract To rationalise monitoring and evaluation activities

13 Information system Actions to be undertaken shall: centralise relevant information on NGOs in a common system re-organise flows of information around this information system improve the management reporting systems on NGOs increase the efficiency of the procedure for evaluating proposals optimise the contracting process at Delegation s level conduct workload assessments before launching local calls

14 Knowledge Management Actions to be undertaken shall: establish a central point of contact who is responsible for Knowledge Management in terms of NGOs improve the quality of data on operators at transaction level, based on a well-defined typology and a Commissionwide definition of a NGO promote a segmented approach for selecting NGOs beneficiaries and allocation of funds develop an on-going assessment of NGOs develop understanding of NGOs systems favour the capacity building of beneficiaries clarify the local partner status

15 Results & State of Play Compliance cluster The compliance cluster activities were mostly completed by the deadline set for December In particular, the following results are to be mentioned here: The revised version of the Practical Guide entered into force in February 2006 and will provide the basis for an acceleration and a simplification of the Calls for Proposals procedures and selection of projects. The revised Practical Guide includes a revision of the standard grant contract which among other improvements provides for the re-introduction of the contingency reserve, and new annexes (financial and narrative reports, expenditure verification report).

16 The new terms of reference and model audit report for an Agreed-Upon Procedure, have been drawn up. The methodology for the annual audit plan and the risk analysis have been substantially revised. The role of the Delegations in the selection process has significantly been strengthened, by giving the Delegation of the country where the action is to take place the role of second assessor for the evaluation of the proposals As regards the rationalization of monitoring and evaluation activities a new deadline had to be set. The revision of the Implementing Rules of the Financial Regulation are on-going.

17 Timeframe & State of Play Clusters information system and knowledge management Both the improvement of the existing information system and the establishment of a new knowledge management system are mutually dependent. Due to the complexity of activities to be implemented the completion date, tentatively, was set for December 2006 when the actions under the third cluster will start to deliver their first operational benefits. As regards the creation of a KM system supported by an improved CRIS data base, a task-force has been created under the lead of Unit F5. The concept of the system Potential applicants data on-line registration (PADOR) was presented to s Director General ( ) and to representatives of: NGOs, MS, COM services, MEPs (in the context of the so-called Quadrilogue ( )..

18 Key elements of PADOR to be mentioned here: -The possibility of an On-line registration of potential applicants -Establishment of a legal typology of actors -Categorization of actors according to their specific capacities -Certification of NSAs (benefits: acceleration, simplification, transparency) The PADOR data base will be a building-block of the new knowledge management system and will enable to implement an actor based and segmented approach within the new architecture of external aid, thereby putting actors at the core of the aid delivery process.