finance and administraton management for …pdf.usaid.gov/pdf_docs/pa00mn1b.pdf · david rochkind /...

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FINANCE AND ADMINISTRATON

MANAGEMENT FOR USAID

FUNDING

TRAINERS’ MANUAL

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DISCLAIMER The author’s views expressed in this publication do

not necessarily reflect the views of the United States Agency for

International Development or the United States Government.

USAID.GOV FINANCE AND ADMINISTRATION MANAGEMENT TRAINERS’ MANUAL 2

PREFACE

The Liberia Accountability and Voice Initiative (LAVI) project is a five-year USAID funded project to

strengthen multi-stakeholder partnerships to advocate for and monitor policy and accountability reforms.

It aims to increase the influence of citizens and media in governance of public goods and services, as well

as to create more effective, accountable and inclusive governance in Liberia. LAVI is comprised of four

complementary objectives:

Increased horizontal and vertical linkages among actors engaged in similar issues;

Increased organizational capacity of targeted CSOs to participate in issue-based reforms;

On-going capacity development services available on local market; and

Learning and methodologies shared and applied by other development actors.

The purpose of LAVI’s second objective is to help address civil society’s continued dependence on short-

term, ring-fenced donor funding that limits the ability of CSOs to make long-term strategic plans and

develop sustained partnerships. While individual organizations have developed some advocacy and

management skills, it remains difficult for coalitions to achieve large-scale impact. Partners must enhance

and refine skills in key capacity domains to build civil society’s skills base and improve professional practice.

This, in turn, will maximize their effectiveness in advocating for and monitoring policy and accountability

reforms in Liberia.

USAID FORWARD

Below are excerpts taken from USAID website https://www.usaid.gov/usaidforward. USAID Forward

has three main areas, of which one is the promotion and strengthening of local partnerships. LAVI is

one concrete example of USAID’s commitment toward USAID Forward in Liberia.

USAID Forward At a Glance

Promote sustainable development through high-impact partnerships and local solutions. In order to achieve

long-term sustainable development, we have to support the institutions, private sector partners and civil

society organizations that serve as engines of growth and progress for their own nations. USAID Forward

embraces new models for public-private partnerships and increased investment directly to partner

governments and local organizations.

Forward Progress

The Agency made significant progress since USAID Forward was first announced in 2010.

Deliver results on a meaningful scale through a strengthened USAID

Stronger Local Partners through Direct Engagement The percentage of Mission staff engaged

directly with local partners overseas continued to grow in 2015 building on continuing efforts at direct

engagement with a host country government, regional entity, or a local nongovernmental organization or

commercial organization. Missions have learned that direct engagement yields results and are using a broad

range of approaches, including:

direct training to build capacity (financial, procurement, reporting);

joint program monitoring and field trips; and

operation manuals on how to work with USAID.

https://www.usaid.gov/usaidforward

TABLE OF CONTENTS

Contents Preface .................................................................................................................................................................................. 2

Table of Contents .............................................................................................................................................................. 3

Acronyms and Abbreviations .......................................................................................................................................... 6

Introductions ...................................................................................................................................................................... 8

Set up the Training ........................................................................................................................................................ 9

Session 1: USAID Overview ......................................................................................................................................... 10

1.1 ROLES within USAID .......................................................................................................................................... 12

1.2 USAID Funding Cycle .......................................................................................................................................... 13

1.3 Types of Awards ................................................................................................................................................... 14

Session 2: USAID Rules and Regulations ................................................................................................................... 14

2.1 USAID Cost Principles ........................................................................................................................................ 15

2.2 10% Indirect Costs ............................................................................................................................................... 15

2.3 USAID Rules and Regulations – Procurement Restrictions ...................................................................... 16

2.3.a Demonstrate the SAM by opening www.sam.gov. ............................................................................... 16

2.4 ADS Grants and Cooperative Agreements ................................................................................................... 17

2.4.a Branding, Marking, and Media Relations .................................................................................................. 18

2.4.b Organization Policies and Procedures ..................................................................................................... 19

2.4.c Resources for Understanding USAID Rules and Regulations ............................................................ 20

2.5 Rules and Regulations Scavenger Hunt Activity ............................................................................................ 21

3. Fraud .......................................................................................................................................................................... 21

3.1 Preventing, Detecting, and Reporting Fraud ............................................................................................. 22

3.2 How to Report Fraud ..................................................................................................................................... 22

4. Accounting Practice Standards ............................................................................................................................ 23

4.1 Chart of Accounts ........................................................................................................................................... 24

4.2 Record Keeping ................................................................................................................................................ 24

4.3 Reconciliation ................................................................................................................................................... 25

4.4 Internal Controls ............................................................................................................................................. 25

4.5 Local Taxes........................................................................................................................................................ 26

4.6 Financial Reporting .......................................................................................................................................... 27

5. Procurement ............................................................................................................................................................ 28


5.1 Competing and Documenting Procurement ............................................................................................. 30

6. Inventory................................................................................................................................................................... 32

6.1 Central Inventory with Physical Reconciliation ........................................................................................ 32

6.2 Expendable vs. Non-Expendable .................................................................................................................. 33

6.3 Title and Use of Property .............................................................................................................................. 34

6.4 Activity Segregation of Duties ...................................................................................................................... 35

7. Budgeting .................................................................................................................................................................. 36

7.1 Direct and Indirect Costs .............................................................................................................................. 37

7.2 10% de minimis ................................................................................................................................................. 38

7.3 Cost Share ......................................................................................................................................................... 39

7.4 Budget Management ........................................................................................................................................ 40

8. Central Budget ........................................................................................................................................................ 41

8.1 Cost Recovery .................................................................................................................................................. 41

8.2 Portfolio Management .................................................................................................................................... 42

8.3 Financial Planning and Cash Management .................................................................................................. 43

8.4 Activity Create a Budget ................................................................................................................................ 45

9. Understanding Your Agreement ......................................................................................................................... 46

9.1 Scope of Work ................................................................................................................................................. 48

9.2 Key Personnel ................................................................................................................................................... 48

9.3 Terms and Conditions and Reporting Requirements ............................................................................. 49

9.4 Activity Know Your Agreement .................................................................................................................. 49

10. Human Resources ................................................................................................................................................ 49

10.1 Human Resources Manual ........................................................................................................................... 50

10.2 Salary Scale ...................................................................................................................................................... 52

10.3 HR File Requirements .................................................................................................................................. 53

10.4 Local Labor Laws ........................................................................................................................................... 53

10.5 USAID Requirements ................................................................................................................................... 54

10.6 Non-Liability ................................................................................................................................................... 56

10.7 Code of Ethics ................................................................................................................................................ 56

11. Communication ................................................................................................................................................... 57

11.1 How often and what format? ...................................................................................................................... 57

11.2 Requesting Changes ...................................................................................................................................... 58

11.3 Reporting a Problem ..................................................................................................................................... 59

12. Audits (Financial) .................................................................................................................................................. 60


12.1 Communication with Auditors................................................................................................................... 61

12.2 Management Responses ............................................................................................................................... 61

ACRONYMS AND ABBREVIATIONS

ADS Automated Directive Systems (USAID)

AIDAR USAID Acquisition Regulations

AO Agreement Officer

AOR Agreement Officer's Representative

APS Annual Program Statement

CCN Cooperating Country National

CO Contract Officer

COI Conflict of Interest

COP Chief of Party

COR Contract Officer's Representative

CPFF Cost Plus Fixed Fee

CSO Civil Society Organizations

CY Calendar Year

DCOP Deputy Chief of Party

DUNS Data Universal Numbering System

EBD Employee Biographical Data form

EPL Excluded Parties List

Expat Expatriate (U.S. Citizen or U.S. Resident)

FAA formerly FOG

FAM Finance and Administration Management

FAR Federal Acquisition Regulations

FFP Firm Fixed Price

FY Fiscal Year

GAAP Generally Accepted Accounting Principles

HR Human Resources

IDIQ Indefinite Delivery Indefinite Quantity

IG Inspector General

IQC Indefinite Quantity Contract

LOE Level of Effort

LOP Life of the Project

LSP Local Service Providers

LTTA Long Term Technical Assistance

M&E Monitoring and Evaluation

NGO Non-Government Organization

ODC Other Direct Cost

OFAC Office of Foreign Assets Control

PO Purchase Order


PVO Public Volunteer Organization

RFA Request for Application

RFP Request for Proposal

SAM System for Award Management

SOA Schedule of Authority

SOW Scope of Work

STTA Short Term Technical Assistance

T&M Time and Material

TCN Third Country National

TO Task Order

USAID United States Agency for International Development

USD U.S. Dollars

USG United States Government

INTRODUCTIONS

This manual is intended to be a living document to guide and direct trainers of finance and

administration management specifically to comply with the United States Agency for International

Development (USAID) rules and regulations. Local Service Providers (LSPs) will use this manual to

conduct training and coaching. The LSPs may customize this manual and adjust the sequence of the

topics; however, subject specific changes to the content shall be approved by the LAVI Capacity

Development Director. This manual has embedded documents and a navigational pane that will facilitate

an easier flow of information and referencing. When viewing in MS Word, open the Navigation Pane

under the View tab; and when viewing in PDF, use the hyperlinks.

The target audience of the training is Liberian civil society organizations (CSOs) who have been or will

implement projects funded by USAID under grants or cooperative agreements. From USAID Liberia’s

Country Development Cooperative Strategy 2013 – 2017, page 30.

“The Mission will provide similar HICD (Human and Institutional Capacity Development) assistance

(capacity to manage public resources) to targeted private sector partners under DO2, and to selected

civil society partners under DO1 (Governance), DO3 (Health) and DO4 (Education).”

The CSOs to be trained will be professionals in the areas of finance, administration, accounting, grants

management, and program management. The methodology of the training will draw on the participants’

previous experience and knowledge. The trainers will be sure to incorporate all participants, using

smaller working groups, encouraging opportunities for all participants to contribute, and being mindful of

who needs extra encouragement, while not putting anyone in an uncomfortable position.

Trainers shall acknowledge the four different learning styles that may be present in the training class:

listening and speaking, reading and writing, visual, and doing. The training methodology and activities in

this manual will address all four of the learning styles.

Energizers or ice-breakers will be listed as a catalogue of options to utilize when needed. Certain

energizers will be matched with specific topics where a correlation can be made between the activity

and the topic.

Finance and Administration Management covers many topics that impact the entire organization. Non-

compliance with USAID rules and regulations regarding finance and administration may result in financial

loss for the organization, loss of a project, possible suspension or restriction from U.S. Government

(USG) funding, and possible criminal charges. The rules and regulations are large and thorough; this

training will cover them generally and provide the participants with resources to further research more

specific areas of concern.

SET UP THE TRAINING

Venue: Ensure that there is a dedicated space with limited interruptions, climate and lighting control, a

projector, and enough space to for the trainer to move freely between the participants’ tables. Ideally

tables are set up with about 6 participants per round table, which better facilitates the group work

activities.

Be sure to have a point of contact for the venue to rely on for any issues that may arise. Communicate

with the venue your desired schedule for tea breaks and lunch, if relevant.

Equipment and Supplies: Projector, screen for projector (large enough for the furthest seat away to see

all the material), two flip chart stands, four flip chart pads, markers (black, blue, green, and red) masking

tape, Post It notes (average about 10 per participant), note pads and pens for each participant, and

watch or clock.

Trainer(s): Familiarize yourself with the training material; ask for clarifications in advance; practice

activities; review the time schedule to estimate the needed amount of time for each topic and activity;

and schedule enough time to prepare the handouts, activities, and tools in advance. Arrive at least 30

minutes before the scheduled start time to set up flip charts, projector, and greet participants. (Note

that the pattern may be to arrive 30-60 minutes after the scheduled start time; as the trainer, it is

professional to be there and ready prior to the scheduled start time.) It is recommended to have one

lead trainer and one supporting trainer for diversity and to ensure full inclusion of all the participants.

(Note that both trainers should be present and paying attention whether they are leading the session or

not.)

Participants: All staff involved in finance and administration should be required to attend FAM training.

Staff that are responsible for managing project budgets and staff responsible for developing

proposal/project budgets should be invited to the FAM training. The highest level senior manager, or

the person responsible for the overall financial performance of the organization, should also be invited

to the FAM training.

Testing: As a measurement to monitor and evaluate (M&E) the effectiveness of the training, pre-training

tests will be completed by each participant. The same test will be given to the participants to complete

after the training to evaluate the effectiveness of the training. These are important documents and must

be kept in the M&E files. Someone other than the trainer, such as a logistics assistant or M&E officer, is

responsible for distributing and collecting all pre and post training tests for record management.

Registration: All training must include a registration sign-in form that lists the person’s full name, job

title, affiliated organization, and signature. This registration form is used to justify the expenses of the

training, support the M&E data, and record which participants attended which days of training for

certification of completion. Someone other than the trainer, such as a logistics assistant or M&E officer

is responsible for distributing and collecting all registration forms.

Housekeeping and Training Rules: Communicate with the participants where the restrooms are and any

other relevant logistical information about the venue. Training rules need to be established and shared

in the beginning. Generally, training rules should include, promptness (both arriving on time and

finishing on time), respecting others’ comments and questions, keep side conversations limited,


collaborative environment, confidentiality (this is essential when training sessions involve participants

from more than one organization), silence phones, and no computers or phones (talking or texting)

while in the training sessions.

SESSION 1: USAID OVERVIEW

Objective: Understand USAID’s roles, funding cycle and types of awards as they relate to the Civil

Society Organizations.

As you present this slide emphasize the importance of USAID’s accountability to U.S. taxpayers.

Share a story about a headline regarding misuse of USAID funds or make one up.

https://www.theguardian.com/global-development/2014/sep/26/liberian-senate-transparency-ebola-funds

Discuss the Development Objectives of USAID Liberia.

Ask participants to name some projects they know and which objective they believe the project

addresses.

https://www.theguardian.com/global-development/2014/sep/26/liberian-senate-transparency-ebola-funds


USAID Liberia is pushing to develop stronger and more local ties with CSOs to implement projects.

As a demonstration of this, the LAVI project has hired us to train you to better position you to

implement USAID projects.

Motivate the participants, specifically the senior management by sharing the next slide. Reference https://explorer.usaid.gov/country-detail.html#Liberia

Explain the difference between obligated and disbursed. In 2014 there was a negative amount of

$1.6 million of obligation that was not disbursed. Why?

https://explorer.usaid.gov/country-detail.html#Liberia


1.1 ROLES WITHIN USAID

Describe the following:

The fine balance between the two major roles at USAID for the CSOs, Agreement

Officer and Agreement Officer’s Representative.

The need for written delegation from the AO to the AOR, and the prime implementer

must have a copy of this delegation.

The role that the prime implementer may play between the AO and AOR.

Reference Link to who is who and the Automated Directive System https://www.usaid.gov/who-we-are/agency-policy

Note that ADS is in chapters, 300 titled “Acquisition & Assistance”

https://www.usaid.gov/who-we-are/agency-policy


1.2 USAID FUNDING CYCLE

Activity: Print out the Funding Cycle Signs. Hand the signs out to each participant. (If there is

limited time or not enough participants (12); then, you can tape the signs up on the walls around the

room.)

The signs are numbered in the order of the cycle.

Funding Cycle Signs.docx

Note the following points:

Emphasize the fact that U.S. Congress approves step 3 the annual plan and budget,

which requires USAID to strictly follow it.

Note that the time between step 6 and 7 (RFA and Submission of Applications) is

typically 4-8 weeks long, which means drafting the budget early in the process is

important and be aware you will do many versions of the budget. It is easier to change

the budget than it is to change the entire technical approach.

BAFO is typically reserved for 2-3 bidders (finalists), whereby USAID asks questions or

request certain changes, such as staffing, pricing, or technical direction.

During step 9 implementation, project financial audits may occur every year.


1.3 TYPES OF AWARDS

While the CSOs will mainly operate under Assistance (grants and cooperative agreements), it is worth

mentioning that there are different sets of rules for Acquisitions (contracts). The primary difference

between the two is that profit or fees are not allowed under Assistance, but are allowed under

Acquisitions. Assistance is only allowed direct costs and indirect costs (not profit).

Be prepared that there may be a lot of questions around these two types of awards. Regarding the

budget these questions should be addressed during the budgeting session.

SESSION 2: USAID RULES AND REGULATIONS

Objective: Understand the role that everyone in an organization has in complying with USAID rules and

regulations and how to find, interpret and apply them.

Be very clear that complying with USAID rules and regulations is everyone’s job in the organization.

Non-compliance could mean that everyone could be out of a job.


Assistance follows: Cooperative Agreement, 22 CFR 226 (Admin Requirements), OMB A-122 or 2 CFR

230 (Cost Principles), ADS Chapter 303 (Grants and Cooperatives), ADS Chapter 260 and 310

(Geographic Codes and Source, Origin, and Nationality), FAR Subpart 25 (Buy American Act),

Certifications and Assurances, Acquisitions and Assistance Policy Directives (AAPD), Organization’s

Written Policies, and Standardized Regulations (Per diem / Allowances)

There are three slides for USAID Rules and Regulations under Assistance/Cooperative Agreements.

2.1 USAID COST PRINCIPLES

Ask the participants what the three Cost Principles are. They are allowable (not restricted or

prohibited by USAID), allocable (directly related to the project from which the cost will be charged),

and reasonable (fair market price). Engage the participants on what they think these three principles

mean and provide examples. USAID eligible rules for procurement of services and goods is in the

Standard Provisions for Non-U.S. NGOs (the next slide).

2.2 10% INDIRECT COSTS

Show the participants the de minimis rate of 10% rule (2 CFR 200.414(f)). Then open the link to the

USAID Guidance on Indirect Costs, which is what they will need to understand the application of the

10% rule.

10% is applied to all the direct costs (labor, other direct costs, and program costs)

As of last year, the Inside NGO Grants and Finance Community Forum, were not clear on what the

reporting requirements are for the 10%. It is strongly advised to track what the 10% pays for and

ensure that it is not used for any unallowable costs.

It cannot be used to double pay direct costs either, such as a Director’s time.


2.3 USAID RULES AND REGULATIONS – PROCUREMENT RESTRICTIONS

Most of the CSO projects will not be significantly impacted by geographic codes or source, origin, and

nationality requirements. It is worth noting that the CSOs review their agreements for the geographic

code. Upon obtaining their code they can look it up under ADS Chapter 260.

ADS Chapter 310 - Source, Origin and Nationality states that any part in whole or part of cannot be

sourced from; originate from; or be the nationality of restricted countries. For example, if Syria is a

restricted country, the tractor cannot be manufactured in whole or in part in Syria, cannot be shipped

through Syria, nor can the company manufacturing the tractor be registered in Syria.

Buy American Act – Refer back to the USAID two fold mission regarding advancing America’s interests.

USAID is U.S. tax payers’ money and when possible USAID must ensure that USAID money is not going

directly toward competitors of American industry. This may be relevant in programs related to

agriculture and pharmaceuticals. Consult your agreement and then your USAID Agreement Officer for

any questions regarding restricted goods.

2.3.A DEMONSTRATE THE SAM BY OPENING WWW.SAM.GOV.

Under no circumstances is it allowed to procure or hire from a restricted party (organization or

individual) on the System for Award Management (SAM). This is a combined database for the excluded

parties list and the Office of Foreign Assets Control, whereby organizations and individuals are

restricted by the U.S. Government for a variety of reasons, such as money laundering, drug trafficking,

human trafficking, or disbarment by the United States Government.

Under some circumstances USAID will request a search of the UN Consolidated List, which lists the

individuals and entities subject to sanctions imposed by the UN Security Council. This requirement will

be stated in the agreement (cooperative agreement or grant).

http://www.sam.gov/


2.4 ADS GRANTS AND COOPERATIVE AGREEMENTS

ADS Series 300, specifically Chapter 303 states the policies for Cooperative Agreements and Grants to

non-governmental organizations.

Some highlights of Chapter 303 are:

Eligibility (eligibility of a recipient),

award decision (process of award decision making),

pre-award risk assessment (pre-award assessment and criteria),

cost share (requirements of cost share and eligibility of cost share),

subawards (options for subawards regarding public international organizations and partner government

entities),

unauthorized commitments and expenditures requiring prior approvals* (AO authority versus AOR

authority),

simplified grants (cost reimbursable for direct costs only and no indirect costs are allowed.,

fixed amount awards (fixed amount not based on actual cost incurred, requires specific program scope

and adequate cost data to establish a fixed amount), and

suspension and debarment (process whereby an individual or entity may be suspended or debarred).

Standard Provisions for Non-U.S. NGOs are mandatory and are essential to understand and refer back

to throughout the implementation of a grant or cooperative agreement.

Give the handout of the Table of Contents for the Standard Provisions. Note that the yellow

highlighted text is the newest revision (non-discrimination against beneficiaries).


Give some time for the participants to read the first 18 provisions in the table of contents and

ask them if they have any questions. If they have questions and the trainer is not able to answer

the question from the top of their head, open the link; read the provision together; and

interpret and summarize the provision.

Ask participants if they have any experience in any of these provisions.

Mandatory Standard Provisions For Non-U. S . Table of Contents.pdf

2.4.A BRANDING, MARKING, AND MEDIA RELATIONS

The USAID logo is required for all USAID funded projects, in compliance with their policies. Under

Cooperative Agreements or Grants, an organization is able to co-brand with USAID.


Note: USAID logo shall not be smaller than the organization’s logo or the host government logo.

USAID has strict standards and directions on the branding and marking. It is best to look at website for

guidance on how to use the logo (size, placement, and coloring).

Ask for examples of how to brand the following:

1. A training session in the field

2. Brochures promoting condom use

3. Project laptop

4. A survey to be shared with other partners and donors

5. Quarterly Reports to USAID

Media relations must be coordinated closely with USAID. It is best to discuss in advance with your

AOR prior to officially speaking with anyone from the press. Ask the participants for examples

of when they have experienced or witnessed a press experience be mistaken and an unintended

message is published.

2.4.B ORGANIZATION POLICIES AND PROCEDURES

While all organizations will be required to comply with USAID rules and regulations, each organization

will be audited against their written organization’s policies and procedures. These policies and

procedures must comply within any USAID rules and regulations and not exceed any thresholds set by

USAID. For example, the threshold for accommodations in other than Monrovia is set at $70 and meals

and incidental expenses per diem is $46; the organization’s policy on travel cannot exceed these rates.

Auditors will always ask for the organization’s written policies; a lack of written policies will be reason

for an audit finding, which USAID will see negatively. In some instances, USAID may determine that the

lack of written policies may be reason to not issue an award or issue an award under special conditions,

which often include the completion of written policies.

Written policies that will affect an organization’s ability to pass the pre-award risk assessment are: HR

(including a salary scale), procurement, finance and accounting, inventory, and travel. Policies and

procedures must clearly demonstrate internal controls, such as segregation of duties.

Sample written policies and procedures are available as public domain on www.ngoconnect.net. USAID

hired a consortium of implementers to create tools and templates for other USAID implementers to

utilize. These documents are in Word and Excel editable format, which are available for organizations

to take and adapt to their needs and context.

Demonstration: Open www.ngoconnect.net go to Organizational Development Toolkit in the left

margin. Note the various types of manuals and written policies with accompanying forms.

http://www.ngoconnect.net/



2.4.C RESOURCES FOR UNDERSTANDING USAID RULES AND REGULATIONS

Rules and regulations do change so be sure to make check www.usaid.gov to ensure you have the most

up to date version of the rule or regulation.

The USAID website has many resources in the form of guidance documents and training modules on

how to work with USAID. https://www.usaid.gov/work-usaid/get-grant-or-contract/trainings-how-work-

usaid Training modules include: Understanding Types of USAID Awards; Effectively Responding to

USAID Award Solicitations; Preparing Budgets for Assistance Applications; Guide to Non-U.S.

Organization Pre-Award Survey (NUPAS); Sub-Partnerships; Post-Award Orientation Conferences; and

Financial Reports.

Inside NGO is a non-profit organization based in the U.S. that specializes in networking, training,

supporting and advocating for non-profit NGOs implementing USAID projects. They conduct training

sessions around the world in many areas around project management and compliance. Membership also

includes the ability to join subject specific “Member Community” where professionals can ask questions

and get answers.

As mentioned earlier, USAID hired a consortium of implementers in the U.S. to create tools, manuals,

and training on implementing USAID awards. www.ngoconnect.net provides numerous resources for

understanding and complying with USAID rules and regulations.

http://www.usaid.gov/

https://www.usaid.gov/work-usaid/get-grant-or-contract/trainings-how-work-usaid

https://www.usaid.gov/work-usaid/get-grant-or-contract/trainings-how-work-usaid



2.5 RULES AND REGULATIONS SCAVENGER HUNT ACTIVITY

Form groups of 2 or 3 people (no more than 3 people). Each group must have one laptop with Internet.

Print the USAID Rules and Regulations Activity for each participant. Each group will answer one list of

questions per group. Allow enough time for all groups to answer all seven questions. Encourage all the

participants to work as teams, ask them NOT to divide the questions to answer them individually. The

purpose is to give all the participants to gain practical experience in looking up rules and regulations and

interpreting them together. This is NOT a competition of who completes it first.

USAID Rules and Regulations Activity.docx

3. FRAUD

Objective: Provide practical examples of how to prevent, detect and report fraud.

Define fraud. Ask the participants what are the different types of fraud. False representation of the

facts by word or action, misleading, intentionally withholding information, deceit, theft, and cheating,

typically for personal and/or financial gain.

This section also includes the prevention of bribery and gratuity.

One of the best ways to prevent and detect fraud is segregation of duties, which means that multiple

people have responsibilities in completing a task for internal controls. The next slide asks why we need

segregation of duties and brain storms which functions need segregation of duties.

Activity: Start the discussion asking why we need segregation of duties. Then, brainstorm what

functions need to have segregated duties.


3.1 PREVENTING, DETECTING, AND REPORTING FRAUD

Write on flip charts the following questions and post them on different walls in the room:

• How do you prevent fraud?

• How do you detect fraud?

• How do you and where do you report fraud?

Let the participants walk around and write what they think should be done on the flip charts. (Note if

they use markers be sure that the markers do not leak through the flipchart onto the walls.

Alternatively, have participants write on Post It notes or sticky pieces of paper and put them on the flip

charts.)

Go around the room and read the responses. At the end of each flip chart ask them what is currently

happening versus their responses.

3.2 HOW TO REPORT FRAUD

Each organization must have a policy on how to report fraud with a non-retaliation policy. The Office of

the Inspector General published a handbook that details the types of fraud and indicators of fraud for

many different tasks in project management, such as procurement, finances, and drafting scopes of work.

It is best to inform your USAID AO and/or AOR prior to reporting fraud to the OIG, so that they are

aware of it. If this is not possible, report the fraud directly to the OIG. See the hotline and e-mail.


4. ACCOUNTING PRACTICE STANDARDS

Objective: Understand the importance of accounting practice standards with practical tips on complying

with USAID reporting requirements and good project management.

Without clear and consistent accounting practices an organization will be unable to make informed

decisions; submit the requisite reports; and maintain its existence. Proper accounting standards enable

an organization to comply with local laws; obtain donor funding; and make strategic decisions to grow

or strengthen an organization. It directly affects an organization’s ability to properly budget for funding

and overall cost recovery.

Each CSO will be required to have written accounting procedures by USAID. An open source

accounting manual sponsored by USAID is on www.ngoconnect.net. This manual can be adapted to any

CSO’s needs. http://www.npi-connect.net/od-toolkit/-

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Financial and Accounting Procedures Manual NGOconnect.doc

Accounting software is important but not always feasible. As an organization grows it will be wise to

invest in a proper accounting software package, such as QuickBooks or anything that allows for internal

controls on data entry. That is entries cannot be deleted or edited rather a correcting action is made to

change the entry.

In some instances, USAID will require separate bank accounts for project funds to ensure that there is

no comingling of funds. Under no circumstances can an organization take funds from one project and


http://www.npi-connect.net/od-toolkit/-/asset_publisher/xM8s/document/id/929556/maximized;jsessionid=78EE698ABD1754D853469ACE64E8EDA1?redirect=http%3A%2F%2Fwww.npi-connect.net%2Fod-toolkit%3Bjsessionid%3D78EE698ABD1754D853469ACE64E8EDA1%3Fp_p_id%3D101_INSTANCE_xM8s%26p_p_lifecycle%3D0%26p_p_col_id%3Dcolumn-8%26p_p_col_count%3D1%26p_r_p_564233524_categoryId%3D0%26p_r_p_564233524_tag%3D







use it for another project, regardless if the projects are related, the money will be refunded in a few

days, or it is between two projects both funded by USAID.

This session will go into detail on the major tasks and standards in accounting.

4.1 CHART OF ACCOUNTS

Each organization must have a chart of accounts to segregate their expenditures, revenue, assets, and

liabilities so that senior managers are able to understand the organization’s financial health and the status

of a project. The chart of accounts should clearly be coded so that financial activities of projects can be

distinguished from each other. This will reassure donors of proper project management and internal

controls.

The chart of accounts should be set up with enough detail to allow the organization to track the

financial status (spending and balance) of any given project; the amount of central operational expenses

and any central operational expenses not recovered by projects; spending by categories, such as labor,

office costs, transport, program activities, communications; cash management needs; and forecasting, to

name a few.

If your organization does not have a clear chart of accounts it is an immediate need to resolve this.

4.2 RECORD KEEPING

Diligent and timely record keeping is important for accuracy, time management, and prevention and

detection of fraud. Every organization should make it a policy that daily record keeping is done by the

accounting team. In order to help facilitate this it is advisable to block a few hours every day in which

the accounting team is left undisturbed by others. Accounting staff that are interrupted while entering

accounting data are more likely to make mistakes, which takes significantly more time to identify and

correct at the reporting time.


Accounting records must be kept in an organized manner that enables anyone to be able to quickly and

easily retrieve a specific transaction within minutes. It is advisable to organize transactions by

transaction numbers, not by dates or by projects.

For each transaction the supporting document should be attached to the transaction voucher, such as a

copy of the check, signed receipt of payment document, purchase order for which the payment is being

made.

Original receipts should remain with the accounting records, not grants, HR, procurement, or programs.

4.3 RECONCILIATION

Bank and petty cash reconciliations should be done at the very least monthly. Documentation of the

reconciliation must be recorded and filed properly. For internal controls, another person who does not

conduct the reconciliation must review and approve the reconciliation.

More frequent reconciliations can be a tool to manage the diligence and timeliness of record keeping,

such as weekly reconciliations of bank and petty cash accounts. This is also a good tool if the financial

reporting period is taking a long time to reconcile, more frequent reconciliations will reduce the

reporting period in which to identify the mistake(s).

4.4 INTERNAL CONTROLS

Internal Controls are policies and procedures put in place by an organization’s senior management to

protect the organization and its staff from fraud. While Internal Controls cannot prevent all misconduct

it makes it more difficult to commit fraud and easier to detect possible fraud. For example a signatory

authority approval matrix or a schedule of authority would be an internal control tool. See below draft

sample schedule of authority.

SAMPLE Schedule of Authority.xlsx

Activity: Divide the participants into groups of 2-3 people. Each group competes as a team and creates

a fun team name. The first team with the most correct answers will win. See the Tools for Internal

Controls ANSWER sheet to grade the submissions. When the team member brings up their submission

make sure they have their team name on the paper and write down the time when they submit their

answers. Timing might be the determining factor of who wins.

Disburse a handout “Activity Tools for Internal Controls” to each participant FACE DOWN and tell the

participants not to look at the handout. Once all the participants have received a handout tell them to

start answering the questions. The first team with the most correct answers is the winner. If possible

provide a small token prize.


Activity Tools for Internal Controls.docx

Tools for Internal Controls ANSWERS.docx

4.5 LOCAL TAXES

The tax revenue code of Liberia mandates that CSOs deduct and withhold the following taxes:

1. Employee withholding (on the 10th of the following month)

2. Withholding payments to third parties

3. Social Security (10 days after the payment)

4. 10% Service Tax for consultancy services and rent (10 days after the payment)

5. Resident permits for expat staff (annual)

6. Work permits for expat staff (annual)

7. Business registration (annual)


4.6 FINANCIAL REPORTING

Ask the group:

What financial reports are their organizations doing now?

Ask the group what financial reports their management has requested that you have or have not

been able to provide?

What reports do you wish you were able to create?

o Outstanding advances

o Payroll, income taxes, social benefit charges

o Fuel cost to fuel usage

o Spend to Date by category, project, or donor to analyze trends

o Overhead expenses

o Central financial report on the organization

What reports do you think are important?

What decision making would be impacted by correct and complete financial reports?

o Strategic planning (on which programmatic areas to focus)

o Hiring and team dynamics

o Compensation plans with benefits

o Resource mobilization (decision to bid and which donors to pursue)

o Pricing budgets

o Partnerships

o Capital Assets (procurement)


USAID requires quarterly and/or monthly financial reports, depending on the terms and conditions of

the Award. It will be essential that an organization be able to forecast their spending/cash needs as

accurately as possibly on a one month and quarterly basis. This will require significant communication

and planning between the project management team, senior management, and the finance team.

5. PROCUREMENT

Objective: Understand the importance of an organization’s procurement policies and the necessary

documentation around procurement.

Procurement is the riskiest area for fraud or misuse of funds. USAID will require every CSO to have

written procurement policies. The best practice is to have every employee in the organization to be

given a verbal briefing and access to the hard copy of the policies and procedures; then they should sign

an acknowledgement of the procurement policies and procedures and commitment to adhere to them.


While an organization can put in place internal controls, it is important to always be aware of the

possibility of misuse or fraud. Procurement is also frequently audited in detail to confirm that an

organization is following its own written procedures. Documentation is very important for standard

transactions and even more important if and when there is a deviation from the organization’s policies.

This is often referred to as a “Note to File” and explains the reason for the deviation and what

mitigating actions were taken to manage any risk.

Note that allowable items for procurement are discussed in Section 2 USAID Rules and Regulations.

Each agreement will have the Mandatory Standard Provisions for Non-US Nongovernmental

Organizations, which will detail the prohibited and restricted goods for procurement. This will vary

based on the type of project. The list of prohibited goods is not allowable under any circumstances:

military equipment, surveillance equipment, commodities or services for support of police and other law

enforcement activities, abortion equipment or services, luxury goods, gambling equipment, or weather

modification equipment.

Restricted goods can be given special permission through the Agreement Officer: agricultural

commodities, motor vehicles, pharmaceuticals, contraceptives and condoms, pesticides, used equipment,

and fertilizer. https://www.usaid.gov/sites/default/files/documents/1876/312.pdf

https://www.usaid.gov/sites/default/files/documents/1876/312.pdf


5.1 COMPETING AND DOCUMENTING PROCUREMENT

In each organization’s procurement policy thresholds should be established for competitive

procurement. These thresholds take into consideration local context, the type of work the organization

conducts (i.e. the types, frequency, and amount of procurement needed), and risk. Remember that risk

needs to be managed and operational efficiency is essential. Think about what the thresholds and levels

of competition.

Ask the participants what documentation do they think needs to be in a procurement file.

Activity: Divide the participants into groups by organization. Ask the groups to complete or create

their own thresholds, competition levels, documentation, and approvals by completing the attached

table for their organization. Give each participant a copy of the activity handout.

Activity Procurement Thresholds Table.docx


Competition levels could be a variation of the below or exactly the below:

A. No bids or quotes

B. At least three verbal quotes documented by staff

C. At least three written quotes from offerors

D. Request for quotes, proposals, or application to selected entities in the relevant field (NOTE, it

must be well researched and documented on how you selected these entities.)

E. Public notice or advertisement of the request for quote, proposal, or application.

Be sure that documentation at the highest level of competition includes:

Advertisement or public notice of the procurement; request for bid/proposal/application/quotation; all

on-time submitted bids/proposals/applications/quotes; a note to file for any bids received after the

submission deadline stating the bid was not accepted; evaluation criteria which was released in the

request for bids; list of evaluation committee members; individual scores of evaluation committee

members for each submitted bid; combined scores of committee members, final selection, and narrative

on how the selection was made; and any negotiations (financial and/or technical) with the selected

bidder.


6. INVENTORY

Objective: Understand USAID’s requirements for inventory management and provide practical tips.

Inventory is another high risk function where misuse and fraud can occur. It is important to understand

that items paid for by USAID must be used specifically for that designated USAID project and

documented.

6.1 CENTRAL INVENTORY WITH PHYSICAL RECONCILIATION

Every organization should keep a central inventory of all their physical assets with regular (annual at the

least) and unscheduled surprise physical reconciliations by a person not responsible for the inventory.

Assets must be marked with unique identifying codes, such as NXP-2016-034, which could represent

non expendable asset purchased in 2016. Inventory marking of the asset must remain on the asset until

the formal disposition (as approved by USAID) and physical handover of the item. (Additionally, the

USAID branding must remain on the asset, even after the disposition.)

Ask the participants what should be recorded in the inventory.


o Accurate description

o Serial number, model number, and other identifying numbers,

o Procurement date and cost

o Location

o Condition

o Data on the disposition of any property (such as date of disposition, sales price, method

used to determine current fair market value)

Ask the participants of examples of how and why a physical reconciliation would not match.

o Damaged equipment

o Equipment listed as assigned to the incorrect person

o Equipment relocated to a regional office but not documented

o Missing equipment

o Stolen equipment

Unscheduled surprise physical counts of inventory are important to do for internal controls. The

documentation of these surprise physical counts is important to demonstrate strong internal controls to

current and potential donors.

6.2 EXPENDABLE VS. NON-EXPENDABLE

USAID ADS 303, Standard Provision M7 for non-U.S. NGOs defines non-expendable equipment

(“capital assets”) as an item with a procurement cost of $5,000 or more and a useful life of more than

one year. However, each organization may define their non-expendable threshold lower to suit their

country context, organization’s needs, and risk management. It is common to lower this amount. It is

advisable to make the threshold consistent throughout the organization and its projects.

Expendable property is items under the non-expendable threshold that are not required to be recorded

in an inventory. However, it is important to manage and control these items against misuse and be able

to defend that these items were being properly. An example of this is having one person responsible for


the items, keeping them in a cabinet, distributing them, tracking the stock, and requesting the

replenishment of them.

6.3 TITLE AND USE OF PROPERTY

Specific to non-U.S. NGOs under a Cooperative Agreement, title to all property purchased with USAID

money immediately vests in the recipient organization, unless stated otherwise in the award agreement.

This means the property is the direct responsibility of the organization and they are required to hold

proper insurance to cover the property and properly maintain the property. The organization is

required to reserve the property for the purpose of the award during the award period. Once the

award period is completed, the organization must use the property in the following order of priority:

i.) Activities funded by USAID, then

ii.) Activities funded by other United States Government (USG) agencies, then

iii.) As directed by the Agreement Officer.

Organizations must maintain the property in good condition with documentation of any maintenance

required and performed. This is specifically essential for photocopier generators and vehicles. See the

sample vehicle use policy with a log sheet template from www.ngoconnect.net sponsored by USAID.

This is an open source document that can be used by any CSO to adapt and use.

SAMPLE Vehicle Safety and Use Policy with log sheet.doc

Adequate steps must be taken to safeguard from loss, damage, or theft. In the event of loss, damage or

theft; investigate the cause document it and correct any system failure, if needed.

Distribute handout for participants to read later.



Standard Provision for non-U.S. NGO M7.pdf

6.4 ACTIVITY SEGREGATION OF DUTIES

Create five groups and give them the activity handout. Each group should have 1-3 sheets of flipchart

paper and a marker to do the activity. Be clear that only one group does one process and that they are

only allowed to use the people listed in the handout, no extra staff members. Each group should

nominate a person to present their process and segregation of duties. (If you are short on time you can

just ask a few groups to volunteer.)

Segregation of Duties Activities.docx


7. BUDGETING

Objective: Understand the difference between direct and indirect costs; application of the 10% de

miminis; and cost share requirements.

Budgets are essential to any operations. This session focuses on project specific budgets. Typically

project budgets are made as a part of a proposal or application process. This means that budgets need

to be competitive so that they will win the bidding process. While project budgets are thoroughly

inspected by the potential donor or partner, budgets are guides that an organization uses to manage the

expenses in line with how the donor agreed.


Multi-year budgets often have changes that may or may not be in the control of the organization.

Budget realignments are not uncommon, and can be expected on an annual basis. Your specific

agreement or contract will state what variations are allowed between budget line items or categories.

For example, shifting money from more than 10% of the travel budget to labor may require the USAID

AO’s written approval. Note that typically, USAID does not like to see budget moving away from

“program activities” to anything else. Also, the overall ceiling of the entire budget cannot be exceeded.

Here are some points about project budgets:

There are a few terms that USAID do not want to see in a budget: contingency or

miscellaneous.

Each organization must be clear on who is managing the budgeting process. That is only one

person should be making any changes to the MS Excel spreadsheet.

Be sure that the units are clearly defined and are consistent.

Budget notes are important to explain any assumptions that were made or to justify certain

costs.

It is essential that you recover all costs in the budget. (This will be elaborated on in the next

session, as will negotiating.)

Budgets must match with the technical proposal. For example, if the technical proposal says it

will train 150 people for three days; then there should be training costs to cover 450

people/days.

Budgets should always be within the solicitation range.

7.1 DIRECT AND INDIRECT COSTS

Direct costs are cost that can be directly linked to the project activity or direct support to the project

activity. Indirect costs (also known as overhead costs) are costs that are necessary for the organization

but not the specific project. According to 2 CFR 200, Subpart F, Appendix IV, Section A.1: “Indirect

cost are those that have been incurred for common or joint objectives and cannot be readily identified

with a particular final cost objective.”


Activity: Write on two flipcharts “Direct Cost” on one and “Indirect Cost” on the other. Place them

on opposite sides of the room or away from each other. Ask the participants to go up and write down

budget line items for what they think is the correct type of cost (direct or indirect) on the flipcharts.

Give them about 5-10 minutes to do this. Then, read out loud some of the items listed and discuss

whether they would be direct or indirect costs.

Mention that one type of cost could be both direct and indirect. For example, the Finance Manager

could be direct for the amount of time s/he spends on the project finance reports. Additionally, the

Finance Manager will charge some time to indirect costs that support the overall operations of the

organization.

7.2 10% DE MINIMIS

According to 2 CFR 200, Subpart E, Section 200.403 (f), organizations that have not received a

negotiated indirect cost rat may elect to charge 10% of modified total direct costs (MTDC) which may

be used indefinitely. As described in 2 CFR 200, Subpart E, Section 200.403, factors affecting allowability

of costs, costs must be consistently charged as either indirect or direct cost, but may not be double

charged or inconsistently charged as both. If chosen, this methodology once elected must be used

consistently for all USG awards until the organization obtains a NICRA. See OCC Guide for Non-Profit

Indirect Cost Rate 3-14-16 for guidance on indirect costs. Provide a soft copy or a link to this

document.

https://www.usaid.gov/sites/default/files/OCC_Guide_for_Non-Profit_Indirect_Cost_Rate-3-14-16.pdf

Soft copy is in the folder labeled “Resources”

https://www.usaid.gov/sites/default/files/OCC_Guide_for_Non-Profit_Indirect_Cost_Rate-3-14-16.pdf


7.3 COST SHARE

Some request for applications or donors will explicitly ask for organizations to provide cost share. Ask

how many organizations have contributed cost share already under a USG agreement? What proof or

supporting documentation did they provide for their cost share? Emphasize the fact that cost share is a

legal term that if stated in their agreement and budget, it is a legal requirement for the organization to

provide that amount and have the required supporting documentation. This means if a cost share

amount is not met the organization will legally be required to refund the USG that amount. Auditors

will inspect the documentation and make recommendations for repayment if the type of cost share is

not allowable or the documentation is not adequate.

It is strongly advisable that organizations explore cost share contributions that do not require cash

payments, such as staff member’s time, office rent, or cash.

Ask different participants to read each of the criteria for cost share from the slide. Be sure to

emphasize that (2) any other form of USG funding cannot be considered as cost share for a USAID

project.


7.4 BUDGET MANAGEMENT

Managing a budget is not just about be careful to not overspend, but also noting when you are

underspending, which can be an indication of programmatic challenges or poor performance. Ask

participants what tools they use to manage project budgets.

It is not possible to track and manage project budgets if standard accounting practices are not followed.

Here is a sample tool to track actual spend against the awarded amount or the obligated amount.


8. CENTRAL BUDGET

Objective: Understand the importance of central budgets to ensure full cost recovery.

Ask participants the questions from the slide. Now that you have discussed project specific budgets,

how do you include project budgets into your organization’s central budget?

8.1 COST RECOVERY

The main purpose to maintaining an organizational central budget is to ensure that organizations are

recovering all their costs on the projects they implement.


If you do not know your operational costs you will not know if you are recovering all your costs.

Operational costs vary based on what your portfolio of funded projects is. It is difficult to frequently

change operational costs based on your portfolio of funded projects. For example, staff size and office

space cannot be easily decreased without a negative impact on the organization.

8.2 PORTFOLIO MANAGEMENT

In order to truly understand your organization’s operational costs and financial health, an organization

needs to track its portfolio and plan properly. Here is a sample tool that can be used to track an

organization’s portfolio. It is important to look into the future as far as possible and make the

appropriate plans and decisions. For example, if the portfolio is going to reduce in 12 months the top

priority should be to win new business. Another reason it is important to track your portfolio is

because it helps you understand your operational costs and better plan to recover them.


Open the Portfolio Tracker and show them the column headings. The rows can be shaded like a Gantt

chart.

Portfolio Tracker.xlsx

8.3 FINANCIAL PLANNING AND CASH MANAGEMENT

Under Cooperative Agreements, USAID finances activities prior to submission of financial reports.

Recipients are required to keep this money in an interest bearing bank account. Under no

circumstances may the money be used for anything other than the agreed upon budget for the specific

project.

USAID or a prime implementer will obligate an amount in your cooperative agreement or grant to

manage their risks. You must track your spending against the obligated amount and notify the client

once you have spent 75% of your obligated amount so that they can do a modification to the agreement

to obligate more money. Failure to do this jeopardizes your ability to get the remaining amount of the

agreement.


Financial reports to USAID involve both information of what is spent, but the planning of what will be

spent.

Refer to the Resources Folder for the soft copies of the SF-425 and SF-134 with the relevant

instructions.

Cash management is more planning. There are many helpful tools to properly manage an organization’s

cash.


8.4 ACTIVITY CREATE A BUDGET

This activity takes a lot of time, estimate about 3-4 hours for this activity and later presentation.

Arrange the participants into groups of no more than three people in a group. Create a project budget.

Hand out the sample technical proposal on which to base the budget. Give soft copies of the budget

template to each of the groups.

Technical Proposal Summary 1.docx

Budget vs. Actual Tracker.xls

Leave one hour for the groups to present their budgets (typically 10-15 minutes per group).

After about two hours or 30 minutes before they stop working on their budgets, give them the surprise

last minute changes. This imitates reality with last minute unexpected changes.

Last minute change budget activity.docx


After the groups have finished the budget, collect the soft copies of the budget on a USB memory stick.

(This will prevent the participants from working on their budgets while others are presenting.)

Participants will practice presenting their budget and justifying it.

Print out the CEO Critics and Client Critics, cut each question or comment as individual pieces of

paper. Hand them out to the participants to ask the presenter. It is best if you number the groups and

then make sure the number for the CEO and Client questions/comments do not match the number of

the group. For example, group 1 should not have CEO 1 or Client 1. Allow others to ask questions,

too. Be sure the presenter does not read the budget line for line, but presents their assumptions and

relevant budget notes.

CEO Critics.docx Client Critics.docx

9. UNDERSTANDING YOUR AGREEMENT

Objective: Understand how to read your agreement (grant and/or cooperative agreement), comply and

manage the project based on the agreement.

The order of precedence is that all projects must first comply with local laws; then USAID rules and

regulations; finally and more specifically the agreement (cooperative agreement or grant).


When managing a project, planning activities, hiring staff, complying with USAID requirements the

written legal agreement and any written legal amendments are the main documents that you review and

observe.

Whose job is it to read the agreement? Project manager, senior management, finance and

administration manager, and monitoring and evaluation officer, all have roles in implementing the terms

and conditions of the agreement. This session will discuss the major components of any agreement,

scope of work, key personnel, terms and conditions, and reporting requirements.


9.1 SCOPE OF WORK

The scope of work is often an exact copy of the technical proposal submitted. This is why the technical

proposal is so important to be attainable, reasonable, and clear. The SOW is the detail of what you are

legally obligated to programmatically perform. For example, if the SOW says you will conduct seven

training sessions for a total of 210 participants, this means that you will be evaluated on the delivery of

this, at the very least. Remind the participants of the session about types of awards. Under a Fixed

Amount Award (FAA) the client would be able to withhold the entire payment if only 170 or 205

participants were trained. Under a simplified agreement, you may still recover the full costs, but your

performance evaluation would most likely be negatively affected if you only trained 170 participants. In

some cases poor performance can be reason for the cancelation of an agreement.

Another important point on SOWs is “scope creep”; this is when a client asks for additional work to be

done or different work that are not stated in the agreement’s SOW. This can be as informal as an AOR

asking you on the way to a meeting to increase the number of training sessions from seven to eight; or

to change the location of a training session. This may seem reasonable, but there are cost implications

that an already tight project budget may not have the ability to absorb. Requests to alter the SOW

should be done in writing by the client and then made official with an official agreement modification. If

a client does ask you in person, respond that you can look into the possibilities but please send the

request in writing. There is no such thing as verbal agreement modifications. In other training sessions

we will discuss how to manage the client.

9.2 KEY PERSONNEL

There is a term in USAID contracts, “key personnel”, which means that any key personnel positions

require USAID approval to hire and consultation and notification to terminate. Key personnel typically

are integral position in the implementation of a project, such as the Chief of Party, Deputy Chief of

Party, technical lead, and sometimes monitoring and evaluation officer and finance and administration

officer. If given the chance, it is in your best interest to have as few as possible key personnel positions.

For example, be sure that your entire project staff list is not named as key personnel. This would mean

that if you had to replace a driver, you would need to submit a formal approval request to the USAID


AO for the person replacing the driver. Often key personnel are given specific evaluation criteria in the

bidding process, which the client scores against to select the winning proposal.

9.3 TERMS AND CONDITIONS AND REPORTING REQUIREMENTS

There are a standard set of terms and conditions for non-U.S. NGOs that are typically at the end of the

agreement document. These have already been referenced throughout the past training sessions.

Standard Provisions for Non-U.S. Nongovernmental Organizations – A Mandatory Reference for ADS

Chapter 303. See Resources folder for the full document. Remember the USAID Rules and Regulations

training session, the table of contents was given out in session 2.4. Reporting requirements are also

listed in the standard provisions.

9.4 ACTIVITY KNOW YOUR AGREEMENT

Activity: Divide into groups of no more than three people. Each group must have a computer. Make

sure all participants have a soft copy of the “Cooperative Agreement with USAID general” to search and

answer the questions from the handout “Activity Know Your Agreement”.

Soft Copy:

Cooperative Agreement with USAID general.pdf

Handout:

Activity Know Your Agreement.docx

10. HUMAN RESOURCES


Objective: Understand the details of USAID compliance regarding human resources.

Labor is the most expensive thing in most projects. Labor or people are dynamic and circumstances can

be sensitive. The risks around human resource management are law suits for wrongful termination,

poor performance leading to poor project evaluations or worse, misconduct leading to audit findings or

worse and poor leadership which has a negative impact on teamwork. Properly managed human

resources can lead to strong teamwork which results in compliance and technical delivery. This session

will focus on the compliance requirements for USAID regarding human resources.

10.1 HUMAN RESOURCES MANUAL

As with all finance and administration, a written manual is essential and required by USAID. This

includes a long list of topics that can be categorized as recruitment, hiring, and management.

Recruitment should be facilitated by the person designated to conduct human resource management.

Hiring managers and senior management make final recruitment decisions.


Job descriptions are essential for recruitment and managing performance, as they are a part of the

employment agreement.

Employee Biographical Data (Biodata) forms are required to be verified by the organization. This means

that an authorized person must sign each EBD stating that the salary information, education and

language skills must be verified. This can happen through phone calls, copies of degrees, employment

agreements, etc. However note that if there is suspicion of incorrect information the organization must

investigate and document the process to avoid future misunderstanding and possible unallowable cost

findings. For example, if a person states that they have a Master’s degree in Agriculture from University

X in 1998, but the University only started its Agriculture program in 1999; there is reason for

misinformation and this must be investigated before hiring. If the position required a Master’s degree,

USAID can determine that all the labor costs related to this person are unallowable.


10.2 SALARY SCALE

A salary scale facilitates a transparent work environment where employees are aware of their level in

the organization and their earning potential and managers are able to plan.

What are some of the benefits of establishing and following a salary scale?

Salary scale paired with job descriptions can be effective management tool to measure and

improve performance.

Easier salary determination and negotiation process.

Show potential donors that the organization is transparent and managed well.

Help senior managers make informed decisions as they develop annual and multi-year strategic

plans.


It is possible that the salary scale only has the ranges and levels and not the details if you want to make

this more for senior management, only.

See the sample salary scale from www.ngoconnect.net Open Grade and Salary Structure document.

Grade and Salary Structure.docx

10.3 HR FILE REQUIREMENTS

Review the below slide and answer any questions they may have on these requirements.

These are the documents that an auditor may request.

10.4 LOCAL LABOR LAWS



USAID requires organizations to comply with local labor laws. That means that if local labor laws

mandate that paid maternity leave is three months, the project must afford a female staff member this

upon giving birth. These costs are recoverable through the fringe benefits budget line. It is possible that

the budget was not created for maternity leave and if the amount exceeds 10% of the overall fringe

benefits budget line item the organization should request a budget realignment.

Be sure to monetize all the legally required benefits to include in the fringe benefits budget line. An

organization may offer more benefits than what is legally required as long as it is well documented and

fairly administered throughout the organization, for example medical insurance.

According to Article 18 of the Liberian Constitution, “equal opportunity for work regardless of sex,

creed, religion, ethnic background, place of origin or political affiliation”. Harassment such as abusive

language is prohibited.

10.5 USAID REQUIREMENTS

The Mandatory Standard Provisions for Non-U.S. NGOs lists the requirements; regarding HR we will

discuss the following policies: Drug Free Workplace, Anti-Human Trafficking, Disability, and

Nondiscrimination.

Activity: Divide into four groups and assign one of the above requirements to each group to read and

present to the entire group. Be sure that each group has one computer and a soft copy of the

Mandatory Standard Provisions for Non-U.S. NGOs to search for the answer.


DRUG FREE WORKPLACE

In the event the recipient or any of its employees, subrecipients, or contractors are found to have

been convicted of a narcotics offense or to have been engaged in drug trafficking as defined in 22

CFR 140, USAID reserves the right to terminate this award, in whole or in part, or take any other

appropriate measures including, without limitation, refund or recall of any award amount.

Additionally, the recipient must make a good-faith effort to maintain a drug-free workplace and

USAID reserves the right to terminate or suspend this award if the recipient materially fails to do

so.

ANTI-HUMAN TRAFFICKING

(This is a long provision. Here is the bottom line.) Procedures for the recipient to prevent any

agents or subawardee at any tier and at any dollar value from engaging in trafficking in persons

activities described in section a (as defined by the UN, procurement of a commercial sex act, use of

forced labor, or acts that directly support or advance trafficking in persons) of this provision. The

recipient must also have procedures to monitor, detect, and terminate any agents or subawardee

or subawardee employees that have engaged in such activities.

DISABILITY POLICY

The recipient must not discriminate against people with disabilities in the implementation of USAID

funded programs and should demonstrate a comprehensive and consistent approach for including

men, women, and children with disabilities.

NONDISCRIMINATION (JUNE 2012)

Additionally, USAID is committed to achieving and maintaining a diverse and representative

workforce and a workplace free of discrimination. Based on law, Executive Order, and Agency

policy, USAID prohibits discrimination, including harassment, in its own workplace on the basis of

race, color, religion, sex (including pregnancy and gender identity), national origin, disability, age,

veteran’s status, sexual orientation, genetic information, marital status, parental status, political

affiliation, and any other conduct that does not adversely affect the performance of the employee.

In addition, the Agency strongly encourages its recipients and their subrecipients and vendors (at all

tiers), performing both in the U.S. and overseas, to develop and enforce comprehensive


nondiscrimination policies for their workplaces that include protection for all their employees on these

expanded bases, subject to applicable law.

While a country may not protect the same groups of people as the American laws, USAID does not

condone discrimination based on age, gender, race, religion, tribal affiliation, political affiliation, or sexual

orientation. Founded cases of discrimination can be grounds for the cancelation of an agreement.

10.6 NON-LIABILITY

USAID will not take on any liability on behalf of the recipient, its employees or consultants, or its

subrecipients. All agreements with employees, consultants or subrecipients must include be sure this

clause is included and understood.

“Notwithstanding any other term of this award, subawardees and contractors have no right to

submit claims directly to USAID and USAID assume no liability for any third party claims against the

recipient.” From Mandatory Standard Provision for Non-U.S. NGOs M.13

10.7 CODE OF ETHICS

Each organization must have a code of ethics and proper policies and procedures that enable a person

to report unethical business behavior in a safe environment without threat of retaliation. Unethical

business behavior can be in many forms, unaddressed conflict of interest, fraud, collusion, plagiarism,

unfair procurement or subcontracting, disobeying local laws, bribery or gratuity, or disclosure of

information that is confidential for technical or commercial reasons.


NGO Connect has a sample code of ethics statement that can be adapted by any organization.

Open document and briefly discuss the headings.

Code of Ethics Sample.docx

11. COMMUNICATION

Objective: Understand and practice communication skills.

Communication with the client can be awkward and puzzling, especially as you balance your

relationships with the AO and the AOR.

11.1 HOW OFTEN AND WHAT FORMAT?

The best rule of thumb when communicating with the client is to take notes and confirm what you

heard and understand in writing. When having a face to face meeting with USAID, write your notes in

an e-mail to the AO or AOR with a request to confirm that the understanding is correct.

It is a good idea to communicate at least once a month with the client. Presumably the AOR will be in

close communication, once a week. It is wise to check in with the AO once a month.

Donor communications usually revolves around technical, financial or compliance.


11.2 REQUESTING CHANGES

How do you request changes to your agreement with the client?

Activity: Ask for volunteers to role play three different scenarios; you need six people total to role play

the requestor and the client. Give them five minutes to prepare.


Tips:

Have the proposed changed ready, for example, if a key personnel resigns, notify USAID but

have the advertisement for the replacement ready to be released.

Provide any supporting documentation for justifying the change. For example, provide details of

the overspending on budget line items; how it got overlooked and overspent; and from where in

the budget is there savings to balance the overspending.

For programmatic delays or changes, it is important to have as much research and factual data

to justify the change and assure the client the impact will be comparable with the proposed

change.

11.3 REPORTING A PROBLEM

Reporting problems can be the most stressful.

Activity: Ask if the volunteers are willing to change roles. Role play the following three scenarios.


Tips:

Take responsibility, as appropriate; acknowledge how the organization could improve systems

or procedures to prevent these problems.

Explain what changes were made in the systems or procedures to prevent this problem from

happening again.

Consult with the AO on what actions need to be taken, such as reporting the problem to the

OIG.

Always be 100% truthful

12. AUDITS (FINANCIAL)

Objective: Understand how to manage and respond to an audit.

Every organization should have a financial audit to comply with the Government of Liberia’s

requirements. Failure to do the requisite audits may jeopardize an organization’s legal standing in

Liberia, which would in turn result in the cancelation of any agreements with the USG.

USAID may require audits that are both financial and technical in nature. These audits are serious in

nature and could result in the recommendation to USAID to either demand repayment of unallowable

costs or cancelation of the agreement. Financial audit related issues are all encompassing of this finance

and administration training. Each topic in this training series will be addressed in a financial audit.

Technical audits are called performance audits and will primarily relate to monitoring and evaluation

data. Note that client requested or required audits are selected from a pre-approved list of auditors by

the Office of the Inspector General and paid for under the project budget. (*Be sure to budget in the

project budget for an audit.)

Questions may arise that may be related to technical and financial matters. For example, the technical

relevance of cost share may be questioned.


Auditors should be treated with respect, professionalism and assertiveness. While they are at your

organization to audit your operations and performance, it is important to be confident and professional

while being 100% truthful.

12.1 COMMUNICATION WITH AUDITORS

While auditors are at your organization conducting the audit, this is the opportunity to establish a

professional relationship. Auditors are paid to investigate and (ideally) find problems. It is worth

remembering this and be as cordial as possible, but not apologetic. For some people this can be viewed

as a sign of admission of guilt and can set the wrong tone for the audit process.

When communicating with auditors both during an audit and after, it is important to document all

communications, including requests for information and information relayed to auditors. For example, if

an auditor requests for approved timesheets for employee X for the June 2016, January 2016, and

October 2015. When you provide the auditor with the documents, have the auditor sign a document

that states they received the documents.

12.2 MANAGEMENT RESPONSES

Every auditor should allow the organization’s management to respond in writing, which should be

included in the final audit report. Generally, there are numerous rounds of drafts that go between the

auditor and the organization’s management. There is a possibility if the first management’s response is

thorough enough that the audit finding may be reconsidered and removed.

What information should be included in a management’s response?

Do not take a defensive tone or overly apologetic, rather a factual tone. For example, an audit finding

that approved time sheets are missing for three months. The defensive response is, “The time sheets

are not missing they were filed incorrectly by the temporary HR Assistant.” The overly apologetic

response is, “We are very sorry. We made a mistake. Our regular HR Assistant was out on maternity

leave and our temporary person did not understand the system. He was a temporary staff hire so he

was not interested in learning the systems. We are sorry and we will not make this mistake again.” The

factual response is “The time sheets were misfiled, but are now filed correctly. The time sheets are

attached in this response. They were misfiled by a temporary staff member who has now been trained

properly and internal audits are conducted on random HR files annually.”

finance and administraton management for …pdf.usaid.gov/pdf_docs/pa00mn1b.pdf · david rochkind /...

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