2 - finance ppt branded revised.ppt - UNRWA · • Automated online project tracking report to monitor project status funding and budget availability. • Options to report either

finance update

adcom - june 2013 2

contents

• May 2013 General Fund Cash Forecast

• Audit Update

• 2014 -15 Budget Update

• Project Tracking Report

• Workforce Reporting

• Activity Based Costing (ABC) Update

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cash flow 2013 – general fund – May 2013

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US$ m

Act Act Act Act Act F/C F/C F/C F/C F/C F/C F/C

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total

B/F Cash Balance 6.4 94.2 70.8 56.9 99.4 87.8 125.5 87.7 52.1 7.5 (38.4) (41.5)

Inflows (Donor

Income, PSC and

Other Income)

156.9 36.5 27.4 89.9 41.0 87.0 10.4 11.1 1.5 2.9 47.3 21.5 533.4

Outflows (Capex, Fx

(Gain (losses) incl

Derivs)

(69.0) (59.9) (41.4) (47.4) (52.5) (49.3) (48.2) (46.7) (46.1) (48.8) (50.5) (45.1) (605.0)

Cash Balance 94.2 70.8 56.9 99.4 87.8 125.5 87.7 52.1 7.5 (38.4) (41.5) (65.2)

UNBOA 2012 – external audit

• Draft 2012 Audit Report Available – Final Mid July

• Provident Fund, nil audit observations, -Unqualified Opinion

• Microfinance, 1 audit observation, - Unqualified Opinion

• General Fund, 32 audit observations, -Unqualified Opinion

• Historical low audit observations – Non material

• UNRWA IPSAS compliant – Top 1/3 adopter, Low cost $1.1m

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ongoing budget 2014-2015

• Need to present 2014-2015 (GF + Projects) Budgetto UN New York by 30th June 2013

• Budget Meeting held with All Directors in May

• For Internal Reporting purposes, further “Fine –Tuned” Budget for further considerations by End of November

• Cross Agency issues to be clarified

- Class formation

- Uniform vehicle replacement

- Building Maintenance

- General Capex spend

- Otheradcom - june 2013 6

project tracking report

• Automated online project tracking report to monitor project status funding and budget availability.

• Options to report either by Agency wide, by Field Location and by Department.

• Ability to extract report into excel with additional project information

• Columns for reporting

• Project Information – Project code, Status, Project Description, Project Manager, Project Start and Expiry date.

• Pledge Information – Pledge amount, Received amount and Outstanding pledge amount.

• Funds availability – Allotment, Unfunded Requirements, Hard Commitment, Soft Commitment, LTD Allotment, LTD Expenditure, Free Balance and Current Month Expenditure.

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project tracking report

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1st

Half

2nd

Half

workforce reporting (GF, Projects, EA & Total)

• Aggregate Encumbrance Report - GF, Projects, EA and Total

• Standard System Generated Report

• Updated Monthly from General Ledger

• Actual vs Budget

• Drill down from total to Field/Department & Programme / Sub Programme

• Columns for reporting

• Workforce for Area Staff, International Staff , LDC and Daily paid working on General Funds, Projects, Emergency appeal and Restricted funds.

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activity based costing (ABC) - status

• UNRWA Activities “Dictionary” which captures and describes all external and internal services/activities.

• Cost structures –Grouped and analyzed - staff costs, supplies, infrastructure costs, direct and indirect costs.

• Mapping of Financial accounting system to the ABC accounting system is complete

• Fair and transparent cost allocation methodology defined to provide the total costs of the front line activities.

• Designed reports and KPIs.

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Expenditures and

revenues non-

relevant for mgt

accounting

Fin

an

cia

l a

cc

ou

nti

ng

Reporting

Da

ta t

ran

sfe

r

Costtypeaccoun-ting

+calculatedCosts

Cost allocation, based on staff utilization, percentages or other allocation factors or KPIs

Cost objectAccounting

Here:Activity Based

CostingCost center accounting

Secondary cost types based on internal cost allocationP

rim

ary

cost ty

pes b

ased

on c

hart

of accounts

• Total cost of activities / services(direct / primary and indirect / secondary costs)

Direct Costs

(statistic)

Secondary costs

Project Approach, Scope & Methodology

Typical value flow ABC

project approach, scope & methodology

Example 1: detailed core activity - education


Field specifics

LebanonField specifics West

Bank

Education

(EDU-L1-1)

Schooling(EDU-L2-1.1)

Teacher Training & Developement (EDC/ ESF)

(EDU-L2-1.2)

Technical & Vocational Education & Training

(EDU-L2-1.3)

Planning & Management / Support Services

(EDU-L2-1.4)

Secondary Education (Lebanon)(3-EDU-L3-1.1.2)

Basic Education(EDU-L3-1.1.1)

Extra Curricular Activities(EDU-L4-1.1.1.3)

Teaching (3-EDU-L4-1.1.2.2)

Extra Curricular Activities(3-EDU-L4-1.1.2.3)

Education Staff Training(EDU-L3-1.2.2)

Pre-Service Training(EDU-L4-1.2.2.1)

In-Service Training(EDU-L4-1.2.2.2)

Institution Management & Professional Support

(EDU-L3-1.3.1)

Training(EDU-L3-1.3.2)

Extra Curricular Activities (EDU-L4-1.3.2.4)

Placement, Career and Social Guidance (EDU-L4-1.3.2.3)

Student Training (EDU-L4-1.3.2.1)

Instructor Training(EDU-L4-1.3.2.2)

Programme Management / Education front office

(EDU-L3-1.4.1)

Area Education Management & Professional Support

(EDU-L3-1.4.2)

Administration(EDU-L3-1.4.3)

Institution Mgt & Professional Support Trade Vocational (6-EDU-

L4-1.3.1.1)Institution Mgt & Professional

Support Technical Education (6-EDU-L4-1.3.1.2)

Trade Vocational Student Training (6-EDU-L5-1.3.2.1.1)

Technical Education Student Training (6-EDU-L5-1.3.2.1.2)

Placement & Career Guidance Trade Vocational (6-EDU-L5-

1.3.2.3.1)Placement & Career Guidance Technical Education (6-EDU-L5-

1.3.2.3.2

School Management & Professional Support (EDU-L4-

1.1.1.1)

School Management & Professional Support (3-EDU-L4-

1.1.2.1)

Institution Management & Professional Support

(EDU-L3-1.2.1)

Teaching (EDU-L4-1.1.1.2)

Preparatory Teaching (EDU-L5-1.1.1.2.1)

Elementary Teaching (EDU-L5-1.1.1.2.2)

Activities can be located on eachlevel of the hierarchy.

Costs and staff capacities alwaysneed to be allocated on the lowestlevel.

preliminary results – GFO

Detailed direct and indirect cost allocation


OverviewTotal Cost per Program/Activity - Example GFO

Direct Costs

Education HealthRelief & Social

ServicesInfra & Camp Improvement

Internal Support Services

Staff Costs – Area 117.70 13.82 3.03 7.02 6.97

Staff Costs – International .00 .00 .00 .19 1.98

Staff Costs – CAF 16.94 2.07 .40 1.07 1.04

Staff Costs - Retire. .81 .19 .09 .08 -.63

Staff Costs Total 135.45 16.08 3.51 8.36 9.36

Supplies 2.87 5.12 5.57 .06 1.72

Infrastructure Costs 1.94 .49 .21 .86 2.12

Training and Travel .11 .03 .02 .01 .09

Services .71 1.25 .15 .48 2.35

Subsidies .02 .37 5.08 .00 .06

Financing -.04 -.19 -.17 .00 -1.12

Depreciation .02 .30 .04 .00 .08

Non-Staff Costs Total 5.62 7.36 10.90 1.41 5.30

Total 141.07 23.44 14.41 9.77 14.66

Indirect Cost Allocations

Field internal

Core Activities 4.43 4.09 .20 .14 .00

Internal Services 10.03 .90 1.07 .61 .36

Executive Management 1.73 .18 .05 .10 -.28

Headquarter

Core Activities .82 .18 .20 .07 .00

Internal Services 4.05 .55 .36 .23 .00

Executive Management 3.53 .46 .24 .25 .00

Total 165.67 29.81 16.53 11.17 14.38

questions?

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Slide 19 of 6

appendix


Project plan activity based costing (ABC)

Project Timeline Based on 4 Months

• Project start date 1 June 2013 (already started)

• Project end date 30 September 2013

• Phase 1: Review, Research and Design (start date 1 June, ongoing 2- 3 months)

• Review and analyse exsting documents and model

• Gathering requirements

• Scope planning

• New model structure design

• Phase 2: Development (start date 23 June, 3 months)

• Software programming stage includes building required control files, database and calculation engine, etc.

• Phase 3: Testing and Qaulity Assurance (start date 24 August, 1 months)

• Unit testing, regression testing and user acceptance testing

• Phase 4: Building Reports and KPIs (start date 24 August, 1 months)

next steps


Project plan activity based costing (ABC) Next Steps

• Upon successful completion of the new software, the following shall be conducted:

• Run results for 2011 and 2012 based on the new model, set of management reports and KPIs

• Conduct joint workshops per program/activity group of HQ and field departments to discuss andanalyze the first ABC results and figures on one hand, and on the other hand challenge theactivity structure itself (structure, level of detail, comparability, etc.).

• Finalize allocations structure, reports and KPIs

• Agree on reports frequency and distribution list

• Use ABC reports as an integral part of the decision making process of the Agency.



General criteria for the definition of activities

• The Activities Dictionary describes UNRWA´s comprehensive service portfolio in a harmonized and mandatory structure for the

• Field Core Activities (=External services / front line activities) and the

• Internal Support Services• The primary focus is on the Field Core activities, which

are supposed to bear full absorption costs and thus provide transparency on the total costs of UNRWA´s front line activities

• In general, all activities and services shall be defined according to the following criteria:

• Output- /result-oriented view, independent from the organization structure (tangible activities!)

• Continous, recurring provision of services, not single one-time measures

• Completeness of tasks and clear description• Clear differentiation between activities, non-

overlapping• Measurability (Input, Output, Outcome / Time,

Costs, Quality)• Appropriate level of detail, considering steering

relevance and managerial burden (planning, budgeting, cost allocation, etc.)



Major activity groups

Core Activities

Internal Support Services

Executive Management & Governance

Based on their functional character, activitieshave been grouped in three majorcategories:

Core Activities reflect the agency´s front-lineactivities.

�The core activities are the major focus of theABC exercise, so they have the highest levelof detail and bear full absorption costs.

�Internal Support Services have the characterof real services with a potential serviceprovider – customer – relation (at leastpartially).

�The management focus for these services isincreasing efficiency by given quality levelsof services.

�Executive Management & Governancecomprises all corporate, management andmanagement support functions, which havea more superior, political and tacticalcharacter (no real or potential serviceprovider – customer – relation), e.g. Com-Gen Office, DIOS, Dispute Tribunal, etc.



ABC cost type groups

Staff Costs-Area

� Area Staff � Basic Salaries� Hazard Pay and Special

Payment� Provident Fund Agency

Contributions� SPOA, SOA and Others� Overtime and Excess hours

supplement� Special Allowances� Health Related Expenses� Miscellaneous Allowance� Annual Leave Accrual

� LDC and Temporary Staff

Staff Costs-CAF

� CAF

Staff Costs-Retire.

� Retirement Benefits – Severance� Retirement Benefits – EVR

Supplies� Inventory Supplies� Non inventory Supplies

Infrastructure Costs

� Utilities� Maintenance of Premises� Equipment and Construction

Training & Travel

� Training� Travel

Services

� Admin Support Services� Consultancy Services� Hospital Services� Miscellaneous Services

Subsidies� Cash Subsidies to hardship cases� Cash Subsidies to patients� Other Subsidies

Financing� Capitalization� Cost Recovery

Depreciation � Depreciation

Staff Costs-International

� International Staff



ABC cost allocation model

Internal ServicesCore Activities

Organization (Departments, etc.)

Ou

tpu

t-V

iew

Inp

ut-

Vie

w

1 1Allocation of

capacities and costs

2Microfinance

*

Emergency*

*As not part of GF, the activities have been defined, but are not used in the ABC costing model

What are the total costs of

UNRWA´́́́s front line activities/ services?



ABC cost allocation model HQ

Field AField B

Field n

1Allocation of HQ overhead costs to the fields

2Allocation Field Office Management to core activities and internal support services

3Allocation internal support services to core activities

1

1

1

2

2

3

4Allocation core activities to core activities (only ICI)

4

preliminary results total direct costs per field & program


2011 actual costs

Field Education Health

Relief &

Social

Services

Infrastructure &

Camp

Improvement

Human

ResourcesFinance

Procurement &

Logistics

Information &

Communication

Technology

Administrative

SupportSecurity

Executive

Management &

Governance

Legal

AffairsTotal

Headquarters* 2.4 0.7 1.0 1.7 4.3 3.7 2.8 4.4 2.9 0.6 19.0 1.3 44.6

Gaza 141.1 23.4 14.4 9.8 -0.1 0.8 7.1 0.7 2.2 1.4 2.0 0.4 203.4

Lebanon 35.9 15.9 7.1 4.2 0.9 0.4 3.0 0.6 1.6 0.7 1.2 0.1 71.6

Syria 29.7 8.3 4.2 1.3 0.0 0.6 1.6 0.3 .3 0.3 1.7 0.0 48.2

Jordan 70.6 15.4 7.0 4.1 1.2 0.5 2.6 0.4 1.4 0.2 1.8 0.0 105.2

West Bank 54.0 20.8 4.2 4.5 2.7 0.7 5.2 0.7 3.3 1.4 1.6 0.4 99.5

Total 333.7 84.6 37.8 25.6 9.1 6.8 22.4 7.1 11.7 4.5 27.2 2.1 572.6

% of Total 58.3% 14.8% 6.6% 4.5% 1.6% 1.2% 3.9% 1.2% 2.0% 0.8% 4.8% 0.4% 100.0%

(amounts in million USD)

• Based on 2011 actual costs, the following table illustrates the breakdown of direct costs toeach activity group.

• Direct costs associated with Core Activities comprise 84% of 2011 actual costs while InternalSupport Services constitute 16% of total 2011 actual costs.

• Direct costs associated with Education constitute the largest expenditure (69% of total coreactivities costs and 58% of overall total costs for 2011).

Core Activities Internal Support Services

* Includes Amman & Gaza HQ

preliminary results total direct costs per field & program


2011 actual costs - core activities• As shown in earlier slides, the ultimate objective is to determine the ultimate cost of UNRWA’s

core front line activities. Hence, the table below shows the impact of allocating indirect costs associated with internal support services to core activities.

• Within each cluster, activity hierarchies with up to 5 levels have been developed to logically structure the activities and also provide a drill-down logic for the ABC reporting.

• The ABC Model allows further drill-down on each activity level where specific KPIs can be

developed and compared across the Agency.

Field

Education Health Relief & Social ServicesInfrastructure & Camp

Improvement

Total Direct

Total with Indirect Cost

Total Direct


Total Direct


Total Direct


Headquarters*

2.4 2.4 0.7 0.7 1.0 1.0 1.7 1.7

Gaza 141.1 165.7 23.4 29.8 14.4 16.5 9.8 11.2

Lebanon 35.9 56.0 15.9 21.2 7.1 8.7 4.2 6.8

Syria 29.7 40.9 8.3 12.0 4.2 5.0 1.3 2.3

Jordan 70.6 95.6 15.4 20.0 7.0 8.2 4.1 5.2

West Bank 54.0 74.0 20.8 29.0 4.2 7.1 4.5 5.6

Average 55.6 72.4 14.1 18.8 6.3 7.8 4.3 5.5

Total 333.7 434.5 84.6 112.7 37.8 46.5 25.6 32.8


* Includes Amman HQ and Gaza HQ

preliminary results total direct & indirect costs


2011 actual costs – core activities

• As shown in earlier slides, the ultimate objective is to determine the ultimate cost of UNRWA’s core front line activities. Hence, the table below shows the impact of allocating indirect costs associated with internal support services to core activities.

• Within each cluster, activity hierarchies with up to 5 levels have been developed to logically structure the activities and also provide a drill-down logic for the ABC reporting.

• The ABC Model allows further drill-down on each activity level where specific KPIs can be

developed and compared across the Agency.

Field

Education Health Relief & Social ServicesInfrastructure & Camp

Improvement

Total Direct


Total Direct


Total Direct


Total Direct


Headquarters*

2.4 2.4 0.7 0.7 1.0 1.0 1.7 1.7

Gaza 141.1 165.7 23.4 29.8 14.4 16.5 9.8 11.2

Lebanon 35.9 56.0 15.9 21.2 7.1 8.7 4.2 6.8

Syria 29.7 40.9 8.3 12.0 4.2 5.0 1.3 2.3

Jordan 70.6 95.6 15.4 20.0 7.0 8.2 4.1 5.2

West Bank 54.0 74.0 20.8 29.0 4.2 7.1 4.5 5.6

Average 55.6 72.4 14.1 18.8 6.3 7.8 4.3 5.5

Total 333.7 434.5 84.6 112.7 37.8 46.5 25.6 32.8


* Includes Amman HQ and Gaza HQ

preliminary results – cost distribution by cost types


2011 Costs by Cost Type

Depreciation

Financing

Infrastructure Costs

Services

Staff Costs - Area

Staff Costs - CAF

Staff Costs - International

Staff Costs - Retire.

Subsidies

Supplies

Training and Travel

Cost Distribution by Cost Type

• Staff costs remain the major cost item in the Agency’s expenditure constituting around 80%of 2011 expenditure with a significant portion relating to the Education core activity.

• Training and Travel expenditure amounted USD 4.16m in 2011. This amount is material in theabsolute sense although not a major percentage of the total Agency’s expenditure.

Cost Type Amounts % of Total

Depreciation 2,190,639 0.38%

Financing -6,242,758 -1.09%

Infrastructure Costs 22,690,689 3.96%

Services 31,214,246 5.45%

Staff Costs - Area 393,743,567 68.77%

Staff Costs - CAF 31,151,628 5.44%Staff Costs -International 25,305,313 4.42%

Staff Costs - Retire. 12,527,659 2.19%

Subsidies 16,949,196 2.96%

Supplies 38,895,461 6.79%

Training and Travel 4,160,613 0.73%

Grand Total 572,586,253 100.00%

2011 actual costs – core activities


finance department

www.unrwa.org

End of Presentation

adcom – june 2013

Slide 32 of 6

Documents

2 - finance ppt branded revised.ppt - UNRWA · • Automated online project tracking report to monitor project status funding and budget availability. • Options to report either