The document discusses guidelines and requirements for project financial statements and quarterly reports for IFAD funded projects. It provides guidance on preparing financial statements in accordance with international accounting standards on an annual basis and quarterly reports. The financial statements should include minimum disclosures such as expenditures by category, statements of income and expenditures, balance sheets, and notes to the accounts. Quarterly reports should include updates on project progress, sources and uses of funds, procurement activities, and physical progress.

1. Project Financial Statements & Quarterly Reports Dec 2010

2. Introduction 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) Where possible, national systems should be used IFAD has a fiduciary role to ensure that its funds are used for the purpose for which intended

3. Project Financial Statements (PFS) Objective To provide information about the financial position, performance and resource flows of a project Basis of Preparation Prepared in accordance with: I nternational 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

4. Minimum best practice disclosures Expenditures – by category/component as per legal agreement, preferably with comparison to budget Inflows and Uses of funds – separate disclosure of inflows from different sources Notes to the Accounts – including accounting standards used, details of bank balances, fixed assets, counterpart funding Statement of WAs – in USD and/or SDR, annual and cumulative Status of funds in SDR – cumulative Special account statement & reconciliation Project Financial Statements (PFS)

5. Financial Accounting & Reporting Income & Expenditure Statement – by category/component as per legal agreement, plus resource flows, review actual costs versus budget Special account & Bank reconciliations – all accounts Fixed assets, Training plan, Withdrawal Applications - received/ claimed Monthly accounting/ reporting 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

6. Financial Accounting & Reporting 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 Quarterly reporting

7. Discussion of Project Progress Sources & Uses of Funds Uses of Funds by Project Activity Physical Progress Report Procurement Reports Procurement Monitoring Tables Source: WB FMR Pages 17-24 (Annex A Sample) Sample Quarterly Reports Format (World Bank) 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.

8. 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) Balance sheet (if accruals basis) Statement of comparative budget & actual amount Statement of Special Account Activities & Reconciliation SOE – Withdrawal Application Statement – annual & cumulative Status of funds (in SDR) Notes to the Financial Statements IFAD Project Financial Statements (PFS) Formats – Annual reporting

9. Basis of reporting In accordance with the underlying accounting principles of reference the notes to the financial statements of an entity should: Present any information about the basis of preparation of financial statements Provide additional information which is not presented on the face of financial statements Significant Accounting Policies Basis of Preparation Cash Basis of Accounting Foreign Currency Transactions PFS – Notes to the Financial Statements Suggested Minimum Disclosures:

10. Budget – basis of budget Cash/Fund Balances Direct Payments Government Counterpart Funds Other Donor Funds Other Receipts Non-current Assets (for disclosure purposes only) Yearly Procurements Allocation & Use of the Financing proceeds Reconciliation of Funds Disbursed by IFAD & Funds Received by the Project PFS – Notes to the Financial Statements

11. Expenditure by components & categories per legal agreement Expenditure by Financier Ability to print Financial Statements according to Govt/IFAD/IPSAS accounting policy Advances utilisation by Service Providers & staff duly aged to facilitate follow-up Bank balances held by service providers Commitments beyond actual billings/ invoices Budgetary control information to ensure expenditures do not exceed set limits Bank reconciliation using the system Receivables in form of replenishment applications in transit & any refunds that may be due from Government Withdrawal application form automatically produced by the system Contract & Procurement plan monitoring Accounting Software for IFAD Projects Capacity Analysis

12. Thank You