Budget Management
Income Planning
Planning at country office level is based on the non-staff working allotments issued by the Regional office and the other financial resources expected to become available during the year, such as AOS, secondments, GCCC and sale of surplus property. As regards expenditure, forecast should be worked out based on the activities that each office plans to carry out during the year. For this exercise it is important to maintain a good record of prior years’ recurring costs to be updated to reflect the current cost of goods, services and utilities.
In case the outcome of the planning indicates that the overall resources will not be sufficient to cover the forecast expenditure, the country offices may be provided with an additional allocation by the responsible Regional Office using the Budget Management module in COIN to prepare a Periodic Budgetary Report (PBR) where it is possible to calculate the forecast requirement against each budget account and the projected balance at year end.
- GCCC
- AOS
- Sale of surplus property
- Secondments
- VAT Reimbursements
Government Counterpart Cash Contributions (GCCC)
Latest content update: 01/06/2014
For a number of countries, the Host Country Agreement for the establishment of FAO Representations stipulate the host country Government’s obligation to contribute in cash towards the running costs of the FAOR office. The stipulated amount is expressed either in US Dollars or local currency and payable into the local imprest account of the FAO Representation.
a) Summary of the process
The yearly amount receivable from the host Government is set as income target (negative income or income to be earned) in the corresponding FAOR’s base working allotment. Regional Offices request Finance Division to raise necessary invoices against which the amount actually paid by the Government is recorded as actual income thus offsetting the income target for the corresponding amount.
The management actions regarding this process are the responsibility of the Regional Offices.
| b) Role of Regional Offices: (click to open) | (open all | close all) |
Based on the annual GCCC amount stipulated in the Agreements, invoices are raised by CSF (Accounts Receivable) at the beginning of each year. (See also guidance on Liaison with CSF on GCCC).
When issuing the allotment for FAOR Network, OSP will advance up to 80% of the total GCCC invoiced amount at the Regional Office level. If actual receipts are lower or higher than the amount allotted, OSP adjusts the advance accordingly upon request from the Regional Office.
Once the amount paid by the Government has been credited against the related invoice, the Regional Office has to prepare a journal voucher to increase the FAOR allotment by the amount received thus offsetting the initial yearly target and send it to OSP for uploading in Oracle.
Once the journal is uploaded in ORACLE, the related amount is automatically displayed in the Budget Management module in COIN. (HOW TO link to related COIN On-Line Help site).
d) Role of FAORs: (click to open)
In case the Government is not in a position to meet its financial obligation, the FAO Representative should negotiate for alternative methods of settlement or the conversion of GCCC into in-kind contributions (e.g. personnel, ...).
To be submitted to Regional Offices during April, July and October each year.
Administrative and Operational Support cost (AOS)
Latest content update: 01/06/2014
The Regular Programme allotments (net appropriation resources) may be complemented by the AOS income which is credited by OSP on a monthly basis to the Budget Holders for the projects they operate, based on the actual delivery.
The current budget planning process requires the establishment at the beginning of the year of “AOS Income Targets” for all divisions/offices at headquarters and in the field at all levels (Regional/Subregional Offices, FAORs) for any income they are expected to earn.
For FAO Representations the estimated AOS income target is displayed as a forecast in the COIN Budget Management module derived from FPMIS records.The target is automatically calculated in FPMIS based on the estimated AOS earnings generated from the forecast yearly delivery of all the projects operated by each FAO Representation. It is therefore essential that FPMIS records be regularly updated by FAO Representations to ensure the calculation of a realistic AOS target.
FAORs receive 50% of the AOS generated by projects that apply the standard PSC/DOC rate (i.e. 13% for Trust Funds, up to 10% for UNDP projects and 7% for TCP) but a reduced percentage or nothing in case of reduced rates. For instance, in the case of EC-funded projects where the PSC rate is set at maximum 7%, the whole AOS income is currently used to cover the so-called “Central Services” costs while the operational and administrative costs of the operating unit (the Country Office in this case) are expected to be covered through direct charges to the project budget specifically envisaged in the project document.
The AOS income also includes the contribution for the assistance that FAORs provide for the implementation of emergency and other projects operated by TCE (calculated at 7% of the AOS income generated by TCE). AOS pertaining to emergency deliveries are currently posted at the Regional Office level.
For a proper financial planning and in order to avoid under-expenditure, it is important that anticipated AOS earnings are committed and/or spent before year end, especially during the end of the biennium without necessarily waiting for actual posting.
Detailed information about the management of the FAOR’s AOS income can be found here.
Sale of surplus property
Latest content update: 01/06/2014
Ideally, financial planning should consider the sale of surplus property belonging to FAO Representations, and the estimated proceeds of sale set as income target by the responsible Regional Office, following consultation with the individual FAO Representative.
As a matter of fact, this has proved to be not practicable. Therefore, the income is recorded as such at the time the sale has taken place and the relevant proceeds recorded in the financial books of the Organization.
Secondments
Latest content update: 01/06/2014
Whenever possible, financial planning should also consider the envisaged secondment of FAOR staff to projects or other FAO units and the relevant estimated income set as a target by the responsible Regional Office, following consultation with the individual FAO Representation. This target will be offset at time of recording the actual income deriving from the secondment.
For details on processing secondment of staff, link to CSS Intranet JV GLS003 and to CSF Intranet GLP001
Reimbursements of Value Added Tax
Latest content update: 01/06/2014
In line with the Host Country Agreement, VAT exempted supplies and services should be recovered on a periodic basis. The reimbursement should part of the financial planning for revenues in order to offset the actual costs of procured supplies and services.