Professional Documents
Culture Documents
2012
Introduction
IFAD has a fiduciary role to ensure that its funds are used for the purpose for which intended
Project Accounting and Audit procedures should be based on best market practice as per IFAD underlying guidelines. These provide accountability and credibility as to use of funds IFAD guidelines require all projects to maintain accounts & records (separately or within a basket fund) These accounts should be audited by an independent auditor on an annual basis within a set timeframe (normally 6 months)
Objective
To provide information about the financial position, performance and resource flows of a project
Basis of Preparation
International Financial Reporting Standards (IFRS) (www.ifrs.org) International Public Sector Accounting Standards (IPSAS) (accruals or cash basis) (www.ipsas.org) National standards, if minimum disclosures are provided
These standards define what & how to report Cash (when money is actually spent/ received) or accruals (when legal commitment incurred irrespective of cash) basis, as long as consistently applied
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Cash
Modified Cash
Modified Accruals
Accruals
Cash basis
Modified Accruals
Accruals
Special account & Bank reconciliations all accounts Fixed assets, Training plan, Withdrawal Applications - received/ claimed
Other tips
Consolidate data from districts with PMU Back up & Business continuity plans Adequate filing systems - legally, project records need to be maintained for 10
years post closing
Discussion of Project Progress against AWPB - highlights/ learning tips Sources & Uses of Funds Statement Uses of Funds by Project Activities (supports the Sources/Uses of Funds) Physical Progress Report - physical outputs Physical Progress Report - status of large works and services Procurement Monitoring Report - narrative and tables
IFAD has no prescribed formats for Quarterly Reports - World Bank FMR
Formats are recommended
Example of an education project with significant construction activities, equipment purchases & training. The Sources & Uses of Funds Statement includes a cash forecast for the next 6 months, to facilitate project planning & monitoring. Physical progress is monitored by units of output, where practical, & by contract/work progress for construction activities.
Discussion of Project Progress Sources & Uses of Funds Uses of Funds by Project Activity Physical Progress Report Procurement Reports Procurement Monitoring Tables
IFAD Project Financial Statements (PFS) Formats Annual reporting (Cash basis)
Project information and performance Statement of project management responsibilities Report of the independent auditor Statement of income & expenditures/ receipts & payments (by category) Statement of income & expenditures/ receipts & payments (by component
Present any information about the basis of preparation of financial statements Provide additional information which is not presented on the face of financial statements
2. Significant Accounting Policies
3. 4. 5. 6. 7. 8. 9.
Budget basis of budget Cash/Fund Balances Direct Payments Government Counterpart Funds Other Donor Funds Other Receipts Non-current Assets (for disclosure purposes only)
10. Yearly Procurements 11. Allocation & Use of the Financing proceeds 12. Reconciliation of Funds Disbursed by IFAD & Funds Received by the Project
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The IPSASB encourages governments to progress to the accrual basis of accounting and to harmonize national requirements with the IPSASs prepared for application by entities adopting the accrual basis of accounting. IPSASB
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Accrual accounting was created to fill textbooks since it is more complicated than cash accounting -CPA Student
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FINANCIAL STATEMENTS
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STATEMENT OF OPERATING PERFORMANCE Recognise income when earned, i.e WA approved by IFAD, NOT when funds are received by project. Recognise expenses when incurred, i.e when billed to the project, NOT when paid.
Disclose income and expenses by category and component, same as cash basis
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BALANCE SHEET Recognise advances and prepayments as current assets in the balance sheet e.g in cases of replenishment of pre-financed expenditure Recognise Fixed assets at historical cost or re-valued amount, less depreciation and impairment losses Recognise payables as current and non current liabilities (due after one year) Recognise IFAD funds received in advance as deferred income (e.g in cases of disbursement by revolving fund)
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STATEMENT OF CASH FLOWS Adjustments to recoincile net cash to surplus/deficit Changes in working capital Cashflows from investing activities
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Identifies project risks such as credit risk in projects with significant credit components, e.g in microfinance where project funds are advanced to beneficiaries Identifies cross debts/commingling of donor/counterpart funds since balance sheet has sources of financing Counterpart finances i.e tax exemptions can be accounted for even when no cash is paid out. Analytical review of balance sheet items provides useful information for risk analysis.
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Withdrawal application form automatically produced by the system Contract & Procurement plan monitoring
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