GLOBAL FUND GRANT PROGRAMMES

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GLOBAL FUND GRANT PROGRAMMES 
FINANCIAL MANAGEMENT SYSTEMS (with references
to the Western Cape Global Fund Grant
Programme) Presented by Dr John Frankish
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CONTENTS

• 1. Performance Based Funding
• General principles implications
• Importance of detailed accurate
  planning
• The W Cape GF Grant Programme
• Activities general management systems
• Budgets
• Budget development
• Expenditure tracking
• Budget adjustment
• 4. Performance Monitoring
• SR Management
• Contractual arrangements
• Monitoring reporting systems
• Management issues
• Some Special GF Finance Considerations
• Exchange rate fluctuations
• Interest
• Disbursement delays
• VAT

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1. Performance Based Funding
Forms the basis for the entire Global Fund grant
management system Therefore if you want your
grant funds to flow smoothly, you need to
implement performance-based management systems
procedures on the ground AND, because
systems/procedures on the ground are
performance-based, you should also find that you
are able to perform better!
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Implications of Performance Based Funding

• Requires management systems that
• Plan in detail the activities to be undertaken,
  the cost of those activities, the
  outputs/outcomes of those activities, the
  measurement of those outputs/outcomes
• Regularly monitor activities, expenditure
  outputs/outcomes
• Alert relevant managers as early as possible to
  potential problems that need to be addressed
• Allow for appropriate adjustments to be made
  (programmatic /or financial)
• Reward performance penalize under-performance

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Performance Based Funding

• Linkage of expenditure (funding) to
  outputs/outcomes (performance)
• In order to be able to do this, one MUST PLAN
  PROPERLY
• What outputs/outcomes does one want?
• What are the indicators targets for those
  outputs/outcomes
• - with time-frames?
• What activities need to be undertaken to
  achieve these
• - with time-frames?
• What inputs are required to be able to
  undertake these activities
• (personnel, goods services, equipment, etc)
  with time-frames?
• What budgets are required to pay for those
  activities
• with time-frames?

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Performance Based Funding
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2. Western Cape Global Fund Grant Programme

• 4 Objectives
• ARV Treatment almost entirely PR activities
• Peer Education almost entirely SR activities
• Palliative Care almost entirely SR activities
• Community Based Response entirely SR SSR
  activities

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• Integration of Global Fund Programme into Normal
  Departmental Management Systems Activities
• Global Fund Grant Programme Manager
• responsible only for grant management
• Departmental Objective Programme Managers
  (provincial regional levels)
• responsible for all programmatic activities of
  that Objective (Dept GF)
• Financial administration officer for GF
  Programme (provincial regional levels)
• responsible for financial administration of GF
  Grant
• reports within the Departments Finance
  Component and to the Programme
• Managers
• Financial Management System
• We use the standard provincial government
  financial admin system
• Special Finance Sub-Programme created for the
  GF Grant Programme
• Within that, sub-divided into
• 4 GF Grant Programme Objectives
• Responsibilities (Provincial office / regional
  offices / institutions)

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3. BUDGETS

• 3.1 Budget Development
• PR Objective 1
• Zero-based
• Activities / quarter
• Inputs / quarter (personnel / drugs /
  lab tests / counselors)
• Budgets / quarter
• Normative budget allocations
• Personnel based on normative patient/staff
  ratios govt salary scales
• Drugs Lab Tests based on provincial treatment
  protocol for first second line treatment,
  assumes 0.5 of patients change to second line
  treatment every month after the first 6 months on
  first line treatment
• Counselors based on normative patient/counselor
  ratios standard stipend/support cost per
  counselor
• Annual inflator

 
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• SR Objectives 2 4
• Normative allocations for activities
• Determined in consultation with SR organizations
• e.g. normative allocation per Peer Education
  Track per school normative allocation per
  Hospice Bed per day etc
• Flexibility allowed as to how SR wishes to
  allocate its total budget allocation between
  Expenditure Items
• Depends on SRs other funding support sources

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• 3.2 PR Expenditure Tracking
• Finance officials draw expenditure reports
  weekly
• GF Programme Manager draws expenditure report
  at least monthly
• (more often if expenditure problems
  potential or actual)
• Check reports for correctness ( immediately
  correct any errors!)
• Check reports for progress in expenditure flows
• Monthly expenditure report
• To Programme Managers finance officials, with
  actions
• required
• To GF Programme Management Meeting, with
  variance analysis

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Variance Analysis

• Done monthly after book closure for the month
• Compares cumulative financial year (FY) budget
  to the end of that month, with cumulative FY
  expenditure to end of that month
• For each Objective, Responsibility Exp Item
• Explanations sought for any significant
  deviation (gt 10)
• Under-expenditures
• Outstanding administrative procedures
  (procurements, payments, etc) refer to Finance
  Officer
• Programmatic activity delays refer to Programme
  Manager
• Over-budgeting adjust budget allocations within
  Programme (or increase activities/targets)
• Over-expenditures
• More rapid programme implementation
• On-going? means under-budgeting needs budget
  adjustment (or programme slow-down)
• Price increases increase budgets or reduce
  targets
• Maladministration institute disciplinary
  procedures

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• 3.3 Budget Adjustments
• Annual budget for financial year (April
  March)
• Formal budget adjustment process
  (September/October)
• This year we have done a relatively major budget
  adjustment in respect of ARV drug budget
  allocations actual cost of ARV drugs / patient
  / month lower than expected.
• Excess ARV drug budget allocations shifted to
  capital budget allocations where cost estimates
  are higher than expected.

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PERFORMANCE MONITORINGOn-going monitoring is
built into the management system- Relevant
Programme manager is the official authoriser of
Programme expenditure- This ensures on-going
linkage of expenditure to activities, of
activities to expenditureFormal Monitoring
Process- Monthly expenditure reports submitted
to Programme manager- Monthly output (ME)
reports submitted to Programme manager-
Quarterly Progress Reports (activities/outputs/exp
enditure) submitted to Global Fund Programme
Management Committee and to Global Fund, the
LFA, the Sub-CCM and CCM
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5. SUB-RECIPIENT MANAGEMENT
5.1 SR Contractual Arrangements
Annual contracts per financial year
Standardized Agreements (approved by Dept of
Health legal services) o    Main
contract o    Annexure 1
Organizational details
Operational plan per quarter
o    Annexure 2 Budget per quarter
(major expenditure categories)
o    Annexure 3 Monitoring evaluation plan
per quarter o    Annexure 4
Compliance with Public Finance Management Act
2-Month budget advance at start of
financial year (to ensure adequate
cash flow) Monthly expenditure
claims settled provided that
o    Proof of expenditure is provided
o    Activities have been performed as per
operational plan o    Targets have
been met (or satisfactory explanation for
deviation) Expenditure claims
reconciled against advance before end of
financial year
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5.2 SR Monitoring Reporting Systems
Standardized reporting systems/formats per
Programme Monthly o    By 7th day of
following month o    Expenditure
claims, supported by certified copies of
expenditure vouchers bank statements
Monthly update of standardized SR
Excel budget/expenditure
reconciliation workbook
Explanation of deviations from budget
o    Output indicators, targets achievements
Explanation of deviations from
targets o    Programme manager
authorizes payment of expenditure claim
Quarterly o    By 7th day of following
month o    Quarterly Progress Report
- Operational plan achievements in
relation to Annexure 1
undertakings for the quarter -
Expenditure in relation to Annexure 2 budget for
the quarter - Output
achievements in relation to Annexure 3 targets
for the quarter
- Explanations of deviations Annually
o    Audited financial statement/report
o    Within 3 months of end of
financial year
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5.3 SR Management Issues

• Reporting o    Keeping to
  deadlines o    Accuracy of reports
  financial service delivery
• Verification o    Proof of
  expenditure o    Service delivery
  (quantity quality) o    Linkage of
  service to expenditure (beware double
• billing of different
  funders for same activities) o    PR
  capacity for site visits
• Allowance for some flexibility
  o    Operational adaptations may be required
  o    Budget adaptations may result from
  operational
• adaptations, or may be
  necessary for financial admin
• reasons (e.g. price
  changes, budget errors etc)
• Allowed, provided total annual budget allocation
  not exceeded and PR approves
• o    Total budget amendment may be required if
  SR is
• under-performing or SR to take on
  additional activities
• Requires formal amendment to SR Agreement

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6. SPECIAL GLOBAL FUND FINANCE
CONSIDERATIONS- Exchange rate fluctuations
Losses - may result in reduction or delay in
the range /or quantity of
activities (requires
explanation to condoning by GF/LFA)
- may be offset by other funding sources
or by interest Surpluses - may result in
acceleration of programme, or expansion
of programme
- may be useful to hold in reserve if exchange
rate unstable-
Interest - must be accounted for (PR SRs)
- can only be spent on GF Grant
Programme activities- Disbursement delays -
can severely disrupt Programme activites
if contingency
funding not available- VAT - host country
should not be levying taxes on GF Grant
Programme activities. VAT is paid, but must
be reclaimed from Receiver of
Revenue and reconciled back into GF Grant
Programme activities.