Atlas Alliance Secretariat
Approved by BU 01.03.2017
Contents
1.Introduction
2.Accountability to Donors
3.Accountability to rights holders
4.Partnership Agreement
5.Budgeting
a)Budgeting Process
b)Planning
c)Controlling
d)Reviewing
6.Financial Management
7.Bank Accounts
8.Financial Reviews
9.External Auditing
10.Right of Access and Control
11.Human and Physical Resources
a)Human Resources
b)Fixed Assets
c)Procurement
12.Risk of Mismanagement of Funds
13.Ability and Responsibility to Complain and Raise Concerns
14.Financial Management and Internal Control Ckecklist
1.Introduction
This Manual sets out the principles and practices to be applied when managing resources supported by the Atlas Alliance. The target group for this manual are the development advisers and financial controllers in the Norwegian Atlas organisations, as well as directors/managers and finance managers/officers in their partner organisations. All staff are committed, through the Atlas Alliance contract with Norad, to ensure sound financial management, with a zero tolerance for corruption. The Manual provide minimum standards for responsible financial and resource management necessary when supported by Norad through the Atlas Alliance, and provides a check list with questions that can serve as a basis for dialogue and discussion with partners.
Proper financial management is a prerequisite for enabling every organisation to respond to the needs of stakeholders and beneficiaries. Accountability is the underlying driving force forresponsible financial management, which strive to apply the following principles:
- Fair and true: founded in laws and regulations, based on international financial reporting standards, and without fraudulent behaviour
- Timely, accurate and complete: correct and complete information delivered on time
Sound financial management and anti corruption does not only apply to Norad or other international donors’ funding, but should be integrated in the organisation through systems and culture. It applies to all aspects of the partner’s work.
The applicable authorised requirements and procedures for financial management shall be communicated and distributed to all staff. This pertains to both members of Atlas Alliance organisations and their partners.
2.Accountability to Donors
This manual relates principally to fundsprovided by Norad through the Atlas Alliance, but can also be used to manage funds from other donors.
The Atlas Alliance organisation is the direct recipient of funds fromNorad through the Atlas Alliance, thus is legally bound through the Letter of Commitment, and further the Atlas Alliance agreement with Norad,to ensure safe and sound management of funds.
Every organisation is expected to have its own set of authorised procedures and guidelines.
3.Accountability to rights holders
The Atlas Alliance is committed to be accountable to rights holders, sometimes referred to as beneficiaries and target group.
This means that the Atlas Alliance strive to deliver and give support as promised. It also entails that we encourage Atlas organisations and their partner organisations to ask their target group what would help in order for them to get the rights they are entitled to.
The Atlas Alliance encourages practical measures to enable our target group to raise concerns and complains with regards any information or activity that is deemed illegal or unethical. The Atlas Alliance endeavor to respond to the complaints in a prompt and relevant manner. We expect Atlas organisations and their partners to seek to work in the same way and provide appropriate mechanisms that enable their target groups to submit information and complaints.
Individuals who suspect financial misconduct but do not feel confident that it is safe to express these concerns to the partner organisation, should do so to the Norwegian Atlas Alliance organisation. The Atlas organisation first considers the validity of the claim, and then notifies the Atlas Alliance secretariat. The Secretariat can also be contacted directly at . If the scope of the suspected misconduct includes the Norwegian organisation or the Atlas Alliance secretariat, information or complaintscan be submitted in an anonymous manner through Norad’s whistle blowing channel ( For more information and guidelines, please see the Atlas Alliance Principles for preventing and managing corruption (attached).
The Atlas Allianceexpect that partners ensure that the following provisions are in place to ensure accountability to stakeholders:
- Intended beneficiaries of projects shall be informed of the objectives, planned activities and the available resources. This can be done by the relevant organisation through public meetings, and/or through public postings of key project information, including financial information.
- There shall be clearly accessible channels for beneficiaries to comment, raise concerns or complain. It should be possible to lodge complaints anonymously.
- To assure beneficiaries of impartial treatment, it should also be possible to complain directly to the Norwegian Atlas organisation.
- The complaints mechanisms should also deal with complaints of sexual harassments.
There should be established mechanisms for dealing with complaints that ensure that there is professional and unbiased follow-up. This should include the maintenance of a complete record of all comments or complaints, with a description of follow up actions.
4.Partnership Agreement
All financial relationships between the Atlas Alliance Foundation and its organisations are based on a legally binding contract,letter of commitment, which is based on the partnership agreement between the Atlas Alliance and Norad.
This agreement will contain the following:
- Amounts of support
- Currency of amount
- Project period
- Disbursement plan and requirements for each disbursement
- Explicit clauses of ways in which funds cannot be used
- Reporting requirements
- Auditing specifications
- Right for the Atlas Alliance secretariat to access and verify
- Ability of, and protection for, partner staff and beneficiaries to raise concerns and complaints
- Authorised bank details
- Signatories and contact persons
- Attached authorised budget, including cost rates for travel and accommodation
5.Budgeting
a)Budgeting Process
The process of budgeting can be divided into three main areas:
Planning is the preparation of the budget from data available, within the parameters of the organisation.
Controllingis the monitoring of the budget, usually month by month, to ensure that the actual income and expenditure match up with the estimates originally set.
Reviewingis the identifying of over- and under-budgeting and adjusting the total expectation for the year. This knowledge also feeds to the following year.
b)Planning
The first stage of a budget is to decide what you want to achieve over a particular period.
When constructing a budget the following steps are important:
- Identify the budget period (this may be more than one year for a project)
- Identify the activities to be financed in each period
- Calculate the cost of covering all the activities for the period
- Forecast the timing of these costs correctly over the period being planned
One of the main tasks in preparing a budget is costing i.e. working out in advance what the items in the plan will cost. Often this is done around cost centres, for example salaries or travel. Within each of these main activities there will be more cost centres. For example, in the case of travel using the organisation’s vehicle, there may be cost related to fuel, insurance, road tax, maintenance, repairs, driver's salary and depreciation (the decrease in vaule of assets). Identifying cost centres is one way of breaking a plan into parts so that nothing is overlooked - and successful budgeting depends on not overlooking expenditures.
A distinction is usually made between 'running costs' and ’capital costs’. Running costs are those which are incurred continuously e.g. salaries, rents, travel. These costs or expenditures are sometimes divided into ‘Recurrent’ costs (those which recur continuously such as salaries and travel) and ‘Non-Recurrent’ costs (those which occur at intervals such as whitewashing a building). Sometimes running costs are known as 'revenue expenditure'.
Capital costs relate to items that are incurred once only or periodically, and that will last for a longer period, typically for more than a year e.g. buildings, vehicles and equipment. Capital costs are sometimes referred to as investments.
All sources of incomes to the project/programme (ie. Other financial sources, donors, membership fees etc) must be included in the organisation's overall budget and listed in the annual account.
Check the budget for completeness and accuracy.
c)Controlling
To "control" one has to produce 'budget statements’ and ‘actualstatements’. These should clearly identify variancesor deviations, being the difference between the original estimate and the income or expenditure to date.
Budget revisions are recommended when needed. Re-allocations must be presented and explained to the Norwegian Atlas Alliance organisation as soon as the information can be presented clearly.
d)Reviewing
Reviewing takes place towards the end of the financial year or project period. Adjustments may be possible to ensure that adjustments can be made for under-budgeting and over-budgeting. It is also an opportunity for an organisation to identify areas that need to be improved during the next financial year.
6.Financial Management
The Atlas Alliance organisations and their partners are required to comply with the conditions detailed in Part II of the grant agreement between Norad and the Atlas Alliance (for more detail, see Part II: General Conditions, section 7: Financial Management).
The following points are designed to serve as a set of minimum standards:
- The partner organisation shall keep accurate accounts of income and expenditure using an appropriate accounting- and double-entry book-keeping system[1] in accordance with the applicable accounting and book-keeping policies in the jurisdiction of the partner organisation (see point 7.1 in Part II: General Conditions of the Grant Agreement).
- The accounts shall be kept up to date at least on a monthly basis. Bank reconciliations[2] shall be completed at least every month, and shall be documented by the partner.
- Accounts and expenditures relating to the project must be easily identifiable and verifiable, either by using separate accounts for the project or by ensuring project expenditure can be easily identified and traced within the general accounting and book-keeping systems (see point 7.3 in Part II: General Conditions of the Grant Agreement).
- Vouchers relating to foreign exchange transactions must be verified. The sources of the exchange rates used should be referenced.
- Allowance/Per Diem vouchers should have attached:
- List of names
- Titles/position of staff
- Period (date and duration, if relevant)
- Short description/explanation of activity
- Type of allowance
- Signed by the payee
- Signed by the recipient
- Approved by the director/head of staff/head of organisation
- Standard rate
- Original bank transcripts from a local bank should be available for each month.
- Bank reconciliations must be approved by a senior manager separate from the accounting staff conducting the bank reconciliation.
- Fixed assets and inventories must be listed in a fixed asset register, and entered on the balance sheet.
- Each month's accounts must be closed punctually and monthly financial report should be produced and submitted to project manager and secretary general/director monthly by a pre-set date.
- The accounting shall comply with generally accepted accounting principles and must not contain elements in violation of country laws and regulations.
7.Bank Accounts
All Atlas Alliance organisations receiving funds from the Atlas Alliance must submit a bank verification to the Atlas Alliance secretariat before any payment is made. The Atlas Alliance recommends that all Atlas Alliance organisations implement the same requirement for their partners.
Funds sourced from the Atlas Alliance cannot be used as loans, salary advance or mixed with other funds. This rule is described in the partnership agreement with Norad. In extraordinary circumstances, the partner should ask their Norwegian Atlas partner for permission.
Donor funds should be placed in interest-bearing accounts both in Norway and the project country.
As a rule, payments by partner should be done by credit transfer or cheques. Cash withdrawals are only exceptional, and then with smaller amounts. All withdrawals should have a minimum of two signatures.
8.Financial Reviews
It is important to question and establish an open dialogue about the financial management of the project/programme. Financial review(s) provides insight into routines (administrative as well as financial), and will improve the understanding of the project management. This provides an opportunity to improve routines and systems to ensure sound financial management and internal control within the project/programme.
The Atlas Alliance has developed a checklist on financial reviews related to project/programme visits. The Atlas Alliance recommends that financial reviews are conducted regularly throughout the co-operation. If there is a need for additional capacity or objectivity in a review, the Atlas Alliance secretariat can upon request carry out financial review(s).
9.External Auditing
External auditors must be state authorised in country of operation, whether in Norway or any other country. Most countries have a national audit institute or similar, which is a member of IFAC (
Instructions from the auditor in Norway should be sent directly to the auditor appointed in implementing country. Reporting from the local auditor should be communicated directly to the auditor in Norway.
The appointment of the local auditor should follow proper procurement procedures, including competitive proposalsor tenders.
Organisations are advised to make use of the same auditor over more than one year but change after a maximum of five years, to avoid lapse of objectivity.
If the organisation/partner has several donors, it is advisable to use the same auditor as this is more cost-efficient This will help the auditor see the complete picture
Audits must be performed in accordance with International Standards on Auditing (ISA).
Norwegian auditors will not approve project accounts not audited locally. The auditor’s task is not only to identify mistakes and insufficiencies, but also to give advice on how to improve routines and quality.
The contract for auditing should include a review of controls and the issuance of a management letter by the auditors. Management at the organisation or partner should approve an action planwhen the auditor identifies any issues to improve/correct. This shouldoutline the actions that will be taken to address any issues identified by the auditor, within one month of receiving the audit. The following year's annual report should include an overview of the status of the implementation of the recommended actions.
10.Right of Access and Control
The Atlas Alliance secretariat and organisations has the right to access and inspect their partner organisation’s financial routines and systems. The Atlas Alliance secretariat does this in dialoge and cooperation with the Norwegian Atlas organisations. Account books, receipts and bank statements shall be kept available for verification by the Atlas organisations as well as external auditors at any time during the agreement period. This documentation shall be stored for a minimum of five years.
The Atlas organisation may use internal or external actors (for instance auditor) for the inspection. The partner will be informed prior to actual inspection. An inspection may take place for various reasons; a) as a routine check/control, b) if there is reason to believe mismanagement of funds, c) any other reason.
11.Human and Physical Resources
a)Human Resources
All employeesmust have written employment contracts and all tax and national insurance regulations must be complied with.
All recruitment procedures must be properly documented, including shortlisting of candidates and reasons for choosing candidates.
b)Fixed Assets
Fixed assets are immovable property (land, buildings, etc.), motor vehicles, office furniture, machines, IT and telecommunication equipment with a value of more than USD 1000 per item. This is a minimum requirement – if partners use a lower limit, that is fine.All fixed assets must be listed on a fixed assets register. A simple excel file will suffice. The fixed assets register shall include the following details: Vehicle/inventory number, acquisition date, invoice number, make and model (and/or description/type), location and identification code.
Property such as cars, motor cycles, computers, etc in project countries should be insured. However, this must be assessed for each object based on the value of the object and the insurance premium.
Disposals of assets must be properly authorised by management.
c)Procurement
Procurement means the purchase of goods and services, as well as the contracting, hiring or renting of services, including those that generate a recurring cost. Authorisation procedures should be in place, and purchases over a pre-authorised limit in line with national regulation requires quotations from a minimum of three different suppliers. The quotations are to be requested, received and compared based on price, quality, time of delivery, terms of payment and previous experience (if any) with the supplier(s).
12.Risk of Mismanagement of Funds
Risk assessments must include the risk of fraud and corruption.
Before initiating a project/programme the Atlas Alliance organisation should always assess the financial management and the risk for corruption. It is important to establish a shared understanding between the Atlas organisation and its partner of the extent of corrupt behaviour and the measures to be activated if misuse of funds is revealed.Measures to avoid and detect corruption is a central requirementby Norad. Atlas organisations should continuously assess the risk of mismanagement of funds and corruption.
Some questions to consider include:
-Are the level of corruption and forms of corruption within the country/institution/organisation a risk factor for the project/programme?
-Are the financial management systems, capabilities and competence of the partner a risk factor?