FINANCIAL GUIDELINES AND REPORTS

South Initiatives and TEAM (TEAM only for DRC in this info session)

25 June 2014

Content

1. Introduction2. General provisions3. Reports: activity and financial report 4. Budget lines5. Financial reporting model6. Budget changes

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1. Introduction

• 2nd Call for projects within Country Strategies (2013, 2014)

Duration Budget

TEAM DRC Max. 4 years Max. 250.000 EUR

South Initiative (Cuba, DR Congo, Ecuador, Tanzania, Uganda, Vietnam, South Africa and Ethiopia)

Max. 2 years Max. 75.000 EUR

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2. General provisions

• How to start…

• Signed contracts, “starting date” …

• Opening of a bank account in partner country– Link SI : no account – no local coordination cost

– For Cuba : start very quickly to establish the terms of references with MINCEX

– preparing a North-South budget

• Financial agreements between partners

• Contract (tripartite agreement)

• Agreement between 3 stakeholders in the project:

1. VLIR-UOS

2. Flemish Higher Education partner

3. Partner university

• Contract contains basic information and mutual obligations of the three parties involved

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• North-South budget

• The budget contains funds for spending in Belgium and in partner country

• A proposal for division is made, based on the activities and discussion between the partners: what to spend where?

• This North-South division can always be changed

• Based on the division, a money transfer can be organized as soon as possible…

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• Opening bank account in partner country

• Separate account for the project:– At a well-known, trustworthy bank

– Never on a person’s name, but with the university as account holder

• Mandate holders of the account:– At least two persons have to sign for a withdrawal

– They have to be able to represent the university

• Currency? USD, EUR, local currency?7

Budget transfer from Belgium to partner country

• 4 transfers per activity year from VLIR-UOS to the Flemish partner (UGent; KU Leuven: debitnote)

• Transfers always conditionned by receipt of funding from DGD.

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S = 25% Year 1 Year 2 Year 3 Year 4 Year 5

S1 < 4 w after sign. Contract : S1

Apr : 25%

Reports Y1? Apr

Reports Y2? Apr

Reports Y3? Apr.

S2 < 4 w after sign. Contract :S 2

July July July July

S3 Okt. N Okt. Okt. Okt. Okt.

S4 Jan. N+1 Jan. Jan. Jan. Jan.

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Budget transfer from Belgium to partner country

• Own policy of the Flemish partner to transfer money to the South. Good practice : work with cash call (planned

activities and budget needed; copies of justifications of previous cash calls sent? Copy of bank statement to show there is an insufficiency of funds and matches provisionary report expenditures?)

Good practice : cash call : T3 if 80% of T1 has been justified; T4 if missing 20% of T1 is justified and 80% of T2, etc…

Good practice : never transfer large sums in 1 time (risk of bank failure, exchange rate risk,…)

Good practice : never wire money before KB is signed, wait for tripartite agreement to be signed

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Budget transfer from Belgium to partner country (contd.)

• When money arrives, bank statement will indicate exchange rate

In principle, all transfers can be considered “advances”, and before the next one comes you should be able to demonstrate the last one has been (largely) spent

Good practice : send statement to partner in the North because it will be used to calculate exchange rate

• Budget management

• Clear procedures:– Who approves expenses?

– Who makes the payments and who controls them?

– Is it clear that personnel costs and other allowances cannot be changed without agreement with three partners?

– Control: keeping track of advances, reconciling bank/cash, honor declaration (exceptional + approved by responsible)

Accounting and reporting

• Have the E2 also correctly registered. 11

• How to spend the money? (important)• For every expense we need a correct

justification– Clearly numbered and classified

– The originals are kept in the partner country, the scans/pdfs are sent to Belgium

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• How to spend the money? (important)• What is a correct justification piece?

– For every purchase of a good or service there has to be a “tax invoice” from the provider

– For per diems: a signed proof of receipt (no sitting allowances!)

– For workshops: a list of attendants, signed by each + invoice from supplier (refreshments, food, …)

– Never accept pro forma invoices as justification

– Payments to persons: only on the basis of signed service contract or employment contract

– Are the invoices addressed to the university and not to a person?

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• How to spend the money? (important)• Purchases in partner country

– Purchases over 8,500 EUR need at least 3 pro forma invoices for VLIR-UOS

– What about the own university procurement procedures?

• Imported goods in partner country– Custom duties or any other taxes are to be paid by the

partner university from its own resources (if no exemption is granted)

• When goods are purchased, they have to be registered and marked (VLIR-UOS stickers) and put on an inventory list

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Starting date of the project

• Please let VLIR-UOS know the date of your first expenditure. That date will be the starting date of your activity year.

• The first expenditure needs to be before 31/12/2014

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Knowledge sharing and procedures

• Plan an information session with Southern partner

•Funding : Cash call

•Deviations from budget : clear procedure

•Justifications : • formal aspects

• Follow up

•Reporting : details in the reports » E.g per diem 20 EUR*5 days from 20 July till 24 July +

accommodation cost 32 * 4 for X : survey field work

» E.g. airline ticket econ. Class from Vietnam to Belgium dd 20/04 – 27/4 for Prof X

•Deadlines : internal and towards VLIR-UOS

3. Reports

• Activity reporting (AAR) and financial reporting (AFR)

• Yearly, and continuously!

• Final report at the end of the project

• Following VLIR-UOS formats (see website)

• Timing: – for projects with a starting date before 30/06/13: at the

latest 31/08/14

– for projects with a starting date between 01/07/13 and 31/12/13: at the latest 28/02/15

Internal deadlines within the university?17

• Annual Activity Report (AAR)1. Basic information2. Overview of the realized activities 3. Comparison between what was planned and the actual

accomplishment4. Comments on the performance of the project5. Justification of the differences between the budget and the

expenditures6. Perspectives for next year(s)7. “Soft indicators” = information concerning:

• Attitudes on decision making, conflict resolution, articulation of ideas, conceptual and strategic thinking etc.

8. List containing:• Purchased materials (investments)

• Staff (personnel) involved in the project

• Scholars (name, type of scholarship, time period, topic, guest institution)

• Overview international mobility

9. Optional: pictures, interviews, anecdotes, scientific material, press articles, etc. 18

• Annual Financial Report (AFR)

• Basically a list of expenses• Format in excel from VLIR-UOS• Made up of different sheets

1. Model IA: basic information

2. Model IB: overview of expenses per budget line

3. Model IC: details of the expenses made from the Belgian account

4. Model ID: details of the expenses made from the local account

5. Model IIB: cash and bank registers

6. Exchange rate calculation: weighted average exchange rate based on money transfers from Belgium to partner country 19

• Control procedure

In response to the reports VLIR-UOS will send comments and questions

Opportunity to reply and adapt Careful with the risk of refused expenses! When expenses are refused they have to be paid for

by other means, ideally the E2. Coordination costs (= lump sum)

At the end of a project year there will be a comparison between the accepted expenses and the transfers that have been made

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Control procedureDeadlines : 1 submission date of AR (see contract), 1 control report from VLIR-UOS, 1 formal adapted report with provided answers and copies of requested information and within a limited time frame (1 month or alternative date if this is requested before 1 week after control report).

Risk of refusal of expenditures.

Warning : Often late or incomplete submission of south report and justifications lead to considerable delays and considerable risk for future refusal of expenditures.

Good financial practice :

- discuss this risk with your partner and have these deadlines respected

- keep copies of justifications and tender documents in Belgium

- cash calls

- use control checklist before submitting the report to VLIR-UOS

4. Budget lines

A. Investment costsB. Operational costsC. Personnel costsD. Scholarship costsE. Coordination costs

→ See project proposal, annex ‘budget proposal’

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Budget lines TOTAL (EUR)A. Investment costs (max. 25% of the total budget) 0A.2. Equipment 0A.4. Office furniture 0A.5. Others 0B. Operational costs 0B.1. Preparation costs 0B.2. Maintenance of equipment 0B.3. Consumer goods 0B.4. Communication 0B.5. Representation costs (max. 500 EUR per year) 0B.6. Travel costs in Belgium and locally 0B.7. Congress registrations 0B.8. Local per diem 0B.9. International travel costs 0B.10. International overnight expenses 0B.11. Shipment costs 0B.12. Others 0C. Personnel costs (max. 25% of the total budget) 0C.1. Service contracts 0C.2. Topping-up 0C.3. Employment contracts 0D. Scholarship costs 0D.1. Short term funding in Belgium 0D.2. Study scholarships (e.g. Master) in Belgium 0D.4. Study scholarships (e.g. Master) in partner country 0

Subtotal A-D 0E. Coordination Costs 0E.1. In Belgium (lump sum 5% of the A-D total) 0E.2. Local coordination costs (lump sum 5% of the A-D total)* 0

TOTAL 0

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A. Investment costs

Durable goods (> 125 EUR) with long use Should be registered and handed over to the

partner university at the end of the project

• A.1. Buildings • New physical infrastructure and renovation of

existing infrastructure is not possible

• A.2. Equipment• A.3. Vehicles

• No vehicles in South Initiatives

• A.4. Office furniture• A.5. Other 24

B. Operational costs

project related costs, directly linked to activities leading to a previously defined IR (intermediate result)

↔ coordination costs for general management of the project

e.g.: • costs related to the organization of a workshop, • consumer goods,• field trip transport,• publications, • software licenses, • travel costs …. 25

B. Operational costs: detailed lines

• B.1. Preparation costs• Preparatory activities, e.g. fact-finding mission by

Flemish promoter to partner country

• Between date of approval by Belgian Minister and starting date of the project

• max 2,500 EUR

• B.2. Maintenance of equipment• An amount to anticipate necessary maintenance

• B.3. Consumer goods• Consumables necessary for the achievement of

project results

• E.g. small lab material, chemicals, books, replacement pieces, office supplies, fuel, ….

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B. Operational costs: detailed lines

• B.4. Communication• Telephone, internet, fax, invitations,

brochures,…

• Always based on invoices, no lump sums

• B.5. Representation• Max. 500 EUR per project year

• Diners, receptions, small gifts, ….

• Has it been budgeted?

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B. Operational costs: detailed lines

• B.6. Travel costs in Belgium and partner country Always based on invoices, no lump sums Careful: when using local transport within the same city during a

(international) visit the per diem is supposed to cover the costs

In Belgium• Public transport (train, bus)

• Taxi: only with justification, in exceptional cases

In partner country• Car: fixed kilometer allowance

– no higher than Belgian kilometer allowance (0,3461 EUR/km)

» Updates on VLIR-UOS website

– the allowance covers costs for fuel, driver, insurance, etc.

• If necessary rental car

• Train, boat, bus, metro or other means of transport– Reimbursement of the ticket

• Plane: local economy flight28

B. Operational costs: detailed lines

• B.7. Congress registrations• When there is an active participation (poster,

paper)

• B.8. Local per diem• = Lump sum compensation to cover travel related

expenses (transport within city, meals, communication, etc.)

• ≠ Salary or service contract• Only when travelling to another city• = Based on the local scales : maximum 20

EUR/day • Costs of hotel covered separately based on

invoices with a proposed maximum of 50 EUR/night (DRC: max 100 EUR/night) 29

• For local missions in RD Congo:

1 . Follow budget

2. Or follow country strategy agreements

per diem local in EUR

Bukavu Max 34

Goma Max 37

Kinshasa Max 52

Kisangani Max 32

Lubumbashi Max 55

Autres endroits Max 23

B. Operational costs: detailed lines

• B.9. International travel costs• Travel costs for international visitors, NOT for

scholarships• Based on invoices• Plane ticket: economy class, airport taxes,

handling fees• Other costs:

– transport to and from the airport

– visa (careful! visa for Belgium is free!)

– passport

– passport pictures

– costs for certificates

– insurances 31

B. Operational costs: detailed lines

• B.10. International overnight expenses• Residential costs for visitors, NOT for scholarships

• Visit can take a max. of 21 days

• International per diem– = lump sum allowance calculated on the nights spent in

the country

– List of per diem amounts per country (changes frequently!)

– Per diem includes local transport, food, drinks, personal expenses, communication,…

• Hotel costs – Based on invoice

– “indicative maximums” per country

– NOT for: meals, room service, internet, telephone, etc.32

B. Operational costs: detailed lines

• B.11. Shipment costs• Shipment of investment and consumer

goods to partner country

• Packing, transport and insurance costs

• Local costs such as stocking, security, handling, local transport, ….

• NOT: import taxes!To be charged to the partner country who needs to undertake steps with relevant authorities to waiver these taxes

• B.12. Other33

C. Personnel costs

• C.1. Service contracts• C.2. Topping-up• C.3. Employment contracts

max. 25% of total project budget Changes to the personnel budget always have to

be approved by VLIR-UOS Performance based Belgian academic personnel must be made

available by the Flemish institution Guest lecturers and visitings: no fee except

reimbursement of travel and accommodation costs (incl. per diem) – no teaching allowances 34

C. Personnel costs: detailed lines

• C.1. Service contracts (max 25% of personnel budget)

• External forces for a very specific task

• Local scales

• Drawing up a contract

• C.2. Topping-up• Supplement to the salary of university staff involved in the

project

• Max. 40% of gross salary and max 25% of project budget

• Justification: salary slip

• C.3. Employment contracts• (Temporary) university personnel paid by the project

• Academic (researchers, etc.) , administrative (secretary, etc.), technical (driver, etc.)

• University salary scales35

D. Scholarship costs

• In Belgium:• Short term allowance (study/research stay – max. 6

months)

• Master scholarship (study scholarship – max. 2 years)

• PhD scholarship - only TEAM» Sandwich formula (1/3 Belgium, 2/3 partner country);

deviations must be requested to and approved by VLIR-UOS, in any case max. 24 months Belgium and max. 4 academic years

• Transport costs scholars (NOT on B.9)

Scholarships are supposed to aim at capacity building for partner institution

Detailed guidelines (incl. amounts) on VLIR-UOS website, updated regularly

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D. Scholarship costs

• Points of attention:

Correct amounts, without mixing up different guidelines Transparency of calculation in financial report No double accounting of lump sums (e.g. indirect travel

costs) No extras on top of the lump sums Visa to Belgium are always free Costs may not go beyond the project duration Accommodation: keep justification pieces, no accounting

of guarantees/cautions Participating in a congress :

for PhD : no payment of per diem since the scholarship continues to be paid ; hotel payment from the research allowance

For MsC: extra hotel reimbursement 37

D. Scholarship costs

• Transport costs:• International plane ticket in economy class + travel insurance (so,

not under B.9.)

• Indirect travel costs (visa = free)– Medical expenses for obtaining a doctor’s certificate (including costs for

obligatory vaccinations and necessary medicines);

– Legalisation of documents (e.g. photos);

– Transportation to and from the Embassy and/or airport in the home country and Belgium

• If it is necessary to make a long trip (e.g. to the capital) to obtain the visa– Most economical national or international itinerary (airplane or bus, 1

economy ticket)

– A per diem of € 20 per day (DRC: 52 EUR/night)

– Accommodation costs up to a maximum of € 50 per night for up to 10 days if a stay is required by the Embassy (DRC: max 100 EUR/night; upon receipt of hotel invoice)

• No travel costs in Belgium are reimbursed for scholarships (↔ visits) 38

E. Coordination costs

• E.1. Coordination costs in Belgium• Lump sum: 5% of the A-D total

• E.2. Coordination costs in partner country• Lump sum: 5% of the A-D total

• Only if a local project account has been opened for management of local funds

! Before 2013: 5% of actual expenditure (A-D)! ! From 2013: 5% of the approved budget (A-D)!

Costs related to the administration and coordination of the projecte.g. mailing, telephone, rental for offices, bank costs, … Exception : Banking costs have been accepted for RD Congo under B.

Operational cost since banks are extremely costly.

Save part of it as a reserve in case expenses are refused by VLIR-UOS!

To be accounted for, but not reported to VLIR-UOS…39

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5. Financial reporting model

• AFR = Annual Financial Report• Basically a list of expenses• Format in excel from VLIR-UOS (see website)• Made up of different sheets

1. Model IA: basic information

2. Model IB: overview of expenses per budget line

3. Model IC: details of the expenses made from the Belgian account

4. Model ID: details of the expenses made from the partner country account

5. Model IIB: cash and bank registers

6. Exchange rate calculation: weighted average exchange rate based on money transfers from Belgium to partner country

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AFR: Model 1A

AFR: Model 1A

AFR: Model 1B

AFR: Model 1A

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AFR: Model 1C

AFR: Model 1A

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AFR: Model 1D

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AFR: Model 2B

• Bank and cash registers Based on real bank and cash registers Separate Model 2B for every currency used Can be replaced by the use of bank statements

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AFR: Rate

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AFR: Exchange rate

• Three ways to calculate exchange rate:1. Based on the transfers from Belgium: an average

rate will be calculated automatically for the entire year

2. Exchange rate per transfer

3. Exchange rate per expense: keeping all proof!

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AFR: rate method 1 = yearly average

• Working year 1: per transfer • Gross the amount leaving the Belgian account in

EUR• Net the amount arriving on the local account in the

target currency • Yearly average exchange rate: (Σ a) / (Σ b)

Bank charges of the transfers should be calculated within this exchange rate calculation

• Working year 2 and the next:• Same method• But the local balance (rest) of the previous year

should be included in the rate calculation, using, the yearly average of that previous year

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AFR: rate method 2 = per transfer

• Use the rate indicated by transfer for that amount, until the amount is finished

• Next rate with money from next transfer• In model 1D overwrite existing formulas with

the correct exchange rates for every used amount

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AFR: rate method 3 = daily rate

• Can be used• Justification piece required for every

expense• In model 1D overwrite existing formulas with

the correct exchange rate for every expense• Time-consuming, and not recommended by

VLIR-UOS• Possible through www.oanda.com

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AFR: Work flow

AFR: Points of attention before submitting

• SEE CHECKLIST ON WEBSITE• Respecting the financial guidelines • Only the division in budget lines A to E is relevant for

reporting (so no B.9, C.2 etc.) • Listing all expenses individually in Model IC of ID• All invoice dates should fall within the spending period of

the project year• Listing the expenses in the currency in which they have

been paid, with calculation to EUR and exchange rate justification when needed

• Transfer costs are part of the exchange rate calculation (so no separate accounting)

• Extra costs on hotel bill (apart from room cost) are to be paid with per diem

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AFR: Points of attention before submitting

• Detailed description: e.g.: per diem: country, amount per day, dates Plane ticket: trajectory, dates, passenger Workshop: theme, amount of participants, meal,…(special attention for those countries of which justifications are in a language we donot understand – Vietnam, Ethiopia,…)

• No import taxes • Keep copies of justification pieces (invoices or

receipts) for all local expenses at the Flemish partner• No advances or commitments in the AFR• Coordination costs reported as a lump sum,

accounted separately53

6. Budget changes

• Budget shift: shift in the budget within a project year, from one budget line to another

E.g. from A. Investments to B. Operations

• Budget transfer: transfer of (a part of) the budget from one project year to another

• Budget extension period: for extending the project

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Budget shift

= shift in the budget from one budget line to another within a project year:

• Is possible up to 20% of the last approved budget for that budget line

• With a good justification and approval of VLIR-UOS it is possible to shift more than 20% – Request electronically through VLIR-UOS-

formats (see website):» Word-document: narrative justification» Excel-document: figures

– This should always be submitted before the end of that project year

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Budget transfer

The unspent balance of one project year can be transferred to the next project years

• Approval needed from VLIR-UOS– Request electronically through VLIR-UOS-

formats (see website):» Word-document: narrative justification» Excel-document: figures

– To be submitted at the same time as the AFR of the previous year

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Information on website

http://www.vliruos.be/guidelines

1. International hotel and per diem allowances

2. Kilometer allowance

3. Scholarship guidelines

4. Financial guidelines

5. Reporting formats

6. Budget change formats

7. Control checklists 2014

www.vliruos.be

GOOD LUCK AND THANK YOU!