FISCAL ACCOUNTABILITY PLAN - gov.mdmca.gov.md/upload/documents/0523121337764359FAP Revision September 2… · FISCAL ACCOUNTABILITY PLAN 1. General 1.1 Goals, Principles, and Development

MCA Moldova Fiscal Accountability Plan 1

Millennium Challenge Account Moldova

(MCA MOLDOVA)

FISCAL ACCOUNTABILITY PLAN

September 2011


The Millennium Challenge Corporation (MCC) and the Government of Moldova have entered into a compact for Millennium Challenge Account (MCA MOLDOVA) assistance to help facilitate poverty reduction through economic growth in Moldova in the amount of USD 262 000 000 (MCC Funding). The Compact specified that MCA Moldova shall adopt a fiscal accountability plan that identifies the principles, mechanisms and procedures to ensure appropriate accountability for the use of MCC Funding provided under the Compact.



MILLENNIUM CHALLENGE ACCOUNT- MOLDOVA

Table of Contents

1. General ......................................................................................................... 7

1.1 Goals, Principles, and Development of the FAP ................................................... 7

1.2 Authorized Parties ................................................................................................. 11

1.3 Procurement Agent ............................................................................................... 15

1.4 Fiscal Agent ........................................................................................................... 17

2. Multi-year Financial Plan and Detailed Financial Plans .......................... 19

2.1 Overview ................................................................................................................. 19

2.2 Budget Classification Structure ........................................................................... 19

2.3 Modifying Financial Plan ....................................................................................... 20

3. Opening and Management of MCA Bank Accounts ................................ 22

3.1 Local Bank Accounts (Permitted Accounts) ....................................................... 22

3.2 Common Payment System ................................................................................... 22

3.3 Authorized Parties ................................................................................................. 22

4. Accounting ................................................................................................. 24

4.1 Responsibilities ..................................................................................................... 24

4.2 Chart of Accounts .................................................................................................. 24

4.3 Accounting System ............................................................................................... 24

4.4 Automated Accounting System ............................................................................ 24

4.5 Access & Backup ................................................................................................... 26

5. Cash Management ..................................................................................... 28

5.1 Responsibilities ...................................................................................................... 28

5.2 Commingling of Funds .......................................................................................... 29

5.3 Currency Conversion ............................................................................................. 29

5.4 Working Capital ...................................................................................................... 29

5.5 Expiration of Spending Authority at the End of Period....................................... 30

5.6 Reinstatement of Limited Spending Authority .................................................... 30

5.7 Disbursements ....................................................................................................... 30

6. Procurement Process ................................................................................ 32

6.1 Procurement Plan .................................................................................................. 32

6.2 Pre-Procurement Approvals ................................................................................. 32

6.3 Procurement Activities .......................................................................................... 32

6.4 Contract Administration Activities ....................................................................... 33

6.5 Small Purchases .................................................................................................... 33

6.6 Purchases Related to Administrative Expenses ....... Error! Bookmark not defined.


7. Invoice and Payment Approval Process .................................................. 36

7.1 General Description of Vendor‟s Invoice ............................................................. 36

7.2 Cycle of Invoice Processing ................................................................................. 36

7.3 Responsibilities for Invoice Control and Halting / Rejection ............................. 39

7.4 Invoice Booking ..................................................................................................... 40

7.5 General Payment Provisions ................................................................................ 40

7.6 Spending Authority of the Funds ......................................................................... 41

7.7 Payments through Permitted Accounts .............................................................. 42

7.8 Direct Payment through Common Payment System .......................................... 42

7.9 Payments Related to Access to Agricultural Finance Activity .......................... 43

7.10 Eligibility Verification and 30-Day Tracking System ......................................... 43

7.11 Common Payment System Codes ...................................................................... 43

7.12 Ceiling Allocation through CPS .......................................................................... 44

7.13 Local Bank Account Balances ............................................................................ 44

7.14 Interest on Accounts ........................................................................................... 44

8. Taxes........................................................................................................... 46

8.1 General Provisions ................................................................................................ 46

8.2 Specific Tax Regulation ........................................................................................ 46

8.3 Tax Refund ............................................................................................................. 46

9. Personnel and Payroll ............................................................................... 48

9.1 General Provisions ................................................................................................ 48

9.2 Timesheet ............................................................................................................... 48

9.3 Payroll Calculation ................................................................................................ 48

9.4 Temporary Disability – Social Leave .................................................................... 49

9.5 Annual Leave ......................................................................................................... 49

9.6 Welfare and Other Benefits and Compensations ................................................ 49

9.7 Salary Deductions ................................................................................................. 50

9.8 Verification and Performance of Monthly Payments .......................................... 50

10. Asset Management .................................................................................... 50

10.1 General Provisions .............................................................................................. 50

10.2 Purchase and Maintaining of Fixed Assets Register ........................................ 51

10.3 Interoffice Transfer of Fixed Assets ................................................................... 51

10.4 Asset Handover and Usage Policy for IEs ......................................................... 52

10.5 Capitalization and Depreciation of Fixed Assets .............................................. 52

10.6 Disposal of Fixed Assets .................................................................................... 52

10.7 Inventory of Fixed Assets ................................................................................... 53

10.8 End of Compact Control of Assets .................................................................... 53

10.9 Small Value Assets .............................................................................................. 53


11. Travel and Vehicle Use .............................................................................. 54

11.1 Travel .................................................................................................................... 54

11.2 Vehicle Use........................................................................................................... 56

12. Public Outreach Funds and Representation Costs ................................ 57

13. Petty Cash .................................................................................................. 58

14. Reporting .................................................................................................... 58

14.1 Responsibilities ................................................................................................... 58

14.2 Reports ................................................................................................................. 59

14.3 Schedule, Destination, and Publication of Reports .......................................... 60

14.4 Retention of Records .......................................................................................... 63

15. Audits & Reporting on Misuse of MCA Moldova Funds or Assets ........ 63

15.1 Audit Plans ........................................................................................................... 64

15.2 Procuring Auditors .............................................................................................. 64

15.3 Types of Audits and Reviews ............................................................................. 64

15.4 Audit Reports and Findings ................................................................................ 64

15.5 Steps in the Financial Audit Process ................................................................. 65

15.6 Reporting on misuse of MCA Moldova‟s Funds or Assets .............................. 65

16. Internal Control Procedures ..................................................................... 66

17. Review of the Fiscal Accountability Plan ................................................ 66

Annex I: Chart of Accounts ........................................................................................ 67

Annex II: Signature Regulation ................................................................................... 71

Annex III: MCA Moldova Common Payment System (CPS) Codes ......................... 73


ABBREVIATIONS

BCS Budget Classification Structure CIF Compact Implementation Funding CPS Common Payment System DAF Director Administration and Finance of MCA Moldova DED Deputy Executive Director of MCA Moldova DFP Detailed Financial Plan DR Disbursement Request DRCD Deputy Resident Country Director of MCC (USA) EC Executive Committee ED Executive Director of MCA Moldova FA Fiscal Agent FAA Fiscal Agent Agreement FAM Fiscal Agent Manager FBO Finance & Budget Officer FAP Fiscal Accountability Plan FSP Financial Service Provider (USA) GOL Government On-Line (USA) GRN Goods / Works / Services Receipt Note HRO Human Resources Officer of MCA Moldova IE Implementing Entity/ies ITS International Treasury Services MCA Millennium Challenge Account-Moldova MCC Millennium Challenge Corporation (USA) MDL Moldovan Lei NBC National Business Center (USA) PA Procurement Agent PAA Procurement Agent Agreement PAM Procurement Agent Manager of PA PD Project Director PIA Program Implementation Agreement PIM Project Implementing Manager PIU Project Implementation Unit of MCA Moldova POF Public Outreach Funds PP Procurement Plan PPM HVA Post-Harvest Credit Facility Policies and Procedures Manual PRF Payment Request Form ProcD Procurement Director of MCA Moldova ProcO Procurement Officer PRN Procurement Requisition Notice QFR Quarterly Financial Report/Reporting RCD Resident Country Director (MCC-USA) SICF Supplier Invoice Control and Follow-Up Form SPS Secure Payment System SRA-PA Procurement Agent for Road Rehabilitation Project SProcS Senior Procurement Specialist of PA SC Steering Committee SVA Small Value Assets USD U.S. Dollars WC Working Capital


MILLENNIUM CHALLENGE ACCOUNT-MOLDOVA


1. General

1.1 Goals, Principles, and Development of the FAP

Goals

This Fiscal Accountability Plan (“FAP”) shall serve as a base policy on all financial issues undertaken under the Millennium Challenge Account – Moldova (“MCA Moldova”) grant received from the Millennium Challenge Corporation (“MCC”). This policy was developed in accordance with the Compact Implementation Funding Agreement (the Compact), Program Implementation Agreement (“PIA”), the Fiscal Agent Agreement (“FAA”), the Procurement Agent Agreement (“PAA”) and other Compact- related documents and requires approval by MCC. This policy applies regardless of the nature of the MCC grant, which may include grants made under 609(g) authority, pursuant to Compact (also known as Compact Implementation Funding (“CIF”), or the grant provided by the Compact.

The present FAP:

Supports MCA Moldova in achieving the goals of the Compact;

Translates the spirit of the statements of the Compact into regulations;

Provides a framework for common management for the financial structures of MCA Moldova;

Defines financial management procedures and modalities;

Serves as a policy for program financial management practices;

Establishes a cooperation based on verification of documentation between the central entities of MCA Moldova and the third parties operating with or for the project;

Ensures that the arrangements, conditions and documentation under the Compact, supplementary agreements and the MCC Cost Principles are all taken into consideration.

Based on the objectives and policy defined in the Compact, it seeks to provide users with reference tools for the principles and procedures to be followed in:

Implementing activities financed by MCC;

Keeping the financial and accounting records.

Principles

Internal accounting control consists of the plan of organization, procedures, and records related to the safeguarding of assets and reliability of financial records. An effective internal control system includes the checks and balances required for the appropriate authorization and recording of transactions and ensures that access to


assets is limited to authorized personnel. Each transaction should be divided into tasks which are completed in alternating order by different individuals in order to increase the chance of detecting unintentional errors and preventing fraud.

Four basic tests – completeness, validity, accuracy and maintenance – should be consistently applied to all transactions. All transactions must adhere to the Cost Principles for Government Affiliates Involved in MCC Compact Implementation as outlined on the MCC website.

Area of application and responsibilities

The FAP applies to all the activities financed by MCC and implemented by MCA Moldova.

Every entity operating under MCA Moldova (the management of MCA Moldova, the projects, the Fiscal Agent, the Procurement Agent, the “Implementing Entities”, and the MCA Moldova‟s contractors) must follow and consistently apply the FAP requirements and procedures.

There should not at any time be any action contrary to the requirements or prohibitions in the Compact or other supplementary agreements thereto.

Capitalized terms used but not defined herein shall have the meaning given to them in the Fiscal Agent Agreement and the Procurement Agent Agreement.

Updates

Given that the FAP is a guide for evolving activities in the field, it is likely that the rules on implementation it contains will be subject to modification. Any problem in practice with the details of the procedures must be noted in writing for review by the DAF as the person responsible for this area at MCA Moldova. Amendments to the basic documents of the program or MCA Moldova (Compact and supplementary agreements) may also result in changes to the FAP procedures.

To ensure that the terms of the Compact and the supplementary agreements are complied with, proposed modifications should be made in writing and should go through a series of checks. The entity in question:

lists the discrepancies between reality in the field and the details of the procedure or;

lists the stages for review following signed amendments to the basic documents of the program or of MCA Moldova;

submits the list to the entity directly above it in the hierarchy;

suggests alternatives, with reference to the basic arrangements (Compact, supplementary agreements and other complementary normative acts), to procedures in similar projects operating in the same area, and legal practice in the field;

forward the list and the alternatives listed above to the Executive Director (ED).

The Executive Director (ED), Deputy Executive Director (DED), Director Administration and Finance (DAF), Fiscal Agent (FA), and Procurement Agent (PA):


review the suggested modifications and comment on them in the light of the basic documents (Compact, supplementary agreements, legislation);

submit the changes to MCC for approval;

approve the new procedures;

update the FAP and circulate the new procedures to the entities involved.

This review procedure shall be timed in such a fashion to meet the semiannual review and approval of the FAP timeline.

All new procedures and regulations in the FAP are put into force by a memorandum from the DAF after the approval by MCC and MCA Moldova Executive Committee (“EC”).

Program Overview and Budget The five year, USD 262 million Program (CIF and Compact) aims to increase investment and private sector activity in Moldova. The Program Goal and Objectives are expected to have a substantial impact on increasing economic growth and reduce poverty in the country.

The Moldova‟s proposal is the result of analysis, drawing from economic data and feedback from civil society, government, other donors and the private sector, that identified Moldova„ s weak business environment and the poor quality of roads, water and power infrastructures as the key binding constraints to growth.

The Program is a series of strategic investments designed to improve core physical and institutional infrastructure and increase investment and private sector activity. The Program comprises two Projects: “Road Rehabilitation Project” and “Transition to High Value Agriculture Project”.

Road Rehabilitation Project. The primary objectives of the Road Rehabilitation Project are to increase the income of the local population through reduced costs of transport, and reduced costs of goods and service; to reduce losses to the national economy resulting from the deteriorated condition of the roads and reduce the number of road accidents through improved traffic conditions.

Rooted in the National Development Strategy and the Land Transport Infrastructure Strategy (2008-2017), the Road Rehabilitation Project was developed with the assistance of external partners in the road sector (World Bank, European Bank for Reconstruction and Development, European Investment Bank, European Commission, and MCC, collectively the “Joint Group”). The strategy recommends the rehabilitation of the major trans-national axis that crosses Moldova from north to south.

The Road Rehabilitation Project will improve part of the M2 road (“M2”), which is an arterial highway from the Moldovan capital, Chisinau, through the city of Soroca, to the Ukrainian border and beyond to Kyiv, the Ukrainian capital. This route contains significant traffic flows, serves as a significant link between Moldova and Ukraine for private, passenger, and commercial traffic, and has been prioritized by the Government for rehabilitation.

The Road Rehabilitation Project consists of the following:


(i) M2 Road Activity.

MCC Funding will be used to rehabilitate and upgrade a 93 km portion of the M2, beginning near Sarateni at the southern end and ending at the junction with the R7 road west to Drochia (the “Drochia junction”) at the northern end (the “M2 Road Activity”). MCC Funding will also be used to replace or upgrade associated structures within this segment of the M2, such as bridges, drainage systems and culverts, to improve road maintenance and safety. The M2‟s improvement is expected to reduce vehicle operating costs, reduce travel time, change maintenance costs, cause an increase in the value of goods moved and cause an increase in frequent travel. Specifically, MCC Funding will support:

(1) Construction costs: These costs include, without limitation, pavement rehabilitation and strengthening, embankment construction, road safety improvements, replacement or upgrading of associated structures, such as bridges, drainage systems and culverts, and any activity associated with the environmental management plan developed with respect to the Activity.

(2) Non-construction costs: These costs include, without limitation, studies, construction supervision, environmental and social mitigation (including resettlement), and other project management costs and technical assistance to be incurred in connection with the M2 Road Activity.

(ii) Supplemental Feasibility Study ESIA and Design

MCC Funding will also be used for a feasibility study environmental and social impact assessment for the road segment from Arionesti to the border crossing in Otaci, detailed design work, a resettlement action plan and an updated environmental and social impact assessment for the entire road section from the Drochia junction to the border crossing in Otaci.

Transition to High Value Agriculture Project The primary objectives of the Transition to High Value Agriculture (THVA) Project are to increase rural economies by stimulating growth to high-value agriculture (HVA) production and marketing; devolve operations and maintenance of irrigation infrastructure from a central-planning era institution to water users; and catalyze future investment in HVA production by establishing a successful model and conducive institutional and policy environment for irrigated agriculture. Through rehabilitation of irrigation infrastructure, transfer of its operation and management to water user associations (WUA) that can provide greater reliability and sustainability of water services, and increased access to finance, training and markets, farmers will be able to engage in more intensive and diversified agriculture, particularly in the high value fruits and vegetable sector. Agriculture, a mains tray of the rural population and especially the rural poor, suffers from low productivity and innovation, contributing to high rate of poverty.

The THVA Project is a set of four reinforcing and integrated activities that, when implemented together will address what are recognized by both donors and domestic stakeholders to be the fundamental constraints to development of the sector. The activities are:

Rehabilitation of Centralized Irrigation Systems (CIS);

Irrigation Sector Reform (ISR);


Access to Agricultural Finance (AAF);

Growing HVA sales. From the financial standpoint, the budget of MCA Moldova Program is divided into four activities:

Description Total (USD)

Including:

CIF Compact 609(g)

Road Rehabilitation 132,840,000 800,000 132,040,000

Transition to High Value Agriculture 101,773,401 6,788,251 94,985,150

Monitoring and Evaluation 3,538,931 20,000 3,518,931

Program Management and Oversight

27,037,668 362,691 23,484,977 3,190,000

TOTAL 265,190,000 7,970,942 254,029,058 3,190,000

1.2 Authorized Parties

The Government of Moldova has created a legal entity, MCA Moldova to manage and oversee the implementation of the Program. As the Accountable Entity, MCA Moldova has the responsibilities and authority to oversee the Program, allocate resources, approve expenditures and procurements and account for the Program results.

An independent Fiscal Agent selected through an international competitive bidding process, has been engaged to provide fiscal management services. The procurement service will be provided by (i) an independent Procurement Agent selected through international competitive bidding for the THVA Project and MCA Moldova administrative procurements, and (ii) the State Road Administration (SRA-PA) for the Road Rehabilitation Project.


Institutional arrangements for implementing the Compact Program

Millennium Challenge Corporation

Government of the

Republic of Moldova

Millennium Challenge Account

Moldova

MCC

Resident Country

Procurement Agent -

External

Road Rehabilitation Project – entity of implementation

Road State Administration

Services and work

suppliers

Services and work suppliers

1) CIS Consultant, 2) Action Plan

and Relocation Consultant, 3)

Constructors, 4) Supervisors

Fiscal Agent

External

CONTRACTOR Implementation

(Project Manager for ISR and CIS)

Credit Line Directo-

rate (Access to

Agricultural Finance)

USAID

(Growing HVA

Sales Activity)

Participating

Financial

Institutions

Service providers

Consulting

companies

Transition to High Value

Agriculture Project – entity of

implementation for ISR and CIS

Common Payment

System (CPS)

US Treasury


MCA Moldova

Millennium Challenge Account Moldova (abbreviated as “MCA Moldova”) is a public institution that aims to coordinate the processes for developing and implementing the programs and projects funded by the Millennium Challenge Corporation and programs and projects funded by other donors.

MCA Moldova has the following bodies:

a) the Steering Committee, which is the superior management and supervising body. The Steering Committee is the independent and final decision-making body regarding the fundamental issues relating to the Projects;

b) the Executive Committee, which is the independent decision-making body and has authority to take final decisions regarding a limited number of issues as set forth in the MCA Moldova Bylaws;

c) the Consultative Group, which recommends and submits general proposals regarding the implementation of the Projects. Such recommendations and proposals are sent to the Steering Committee through its representatives on the Steering Committee;

d) the Management Unit, which represents the executive body of the MCA Moldova and is responsible for the daily management of the Projects.

The Management Unit includes the following key personnel: Executive Director, Deputy Executive Director, Road Rehabilitation Project Director, Transition to High Value Agriculture Director, Centralized Irrigation System Rehabilitation Activity Director, Director of Administration and Finance, Communications and Documentation Director, Procurement Director, Monitoring and Evaluation Director, Legal Advisor, Environment and Social Assessment Director, and Social and Gender Officer.

The current activity of the Management Unit is run by the Executive Director of the MCA Moldova, who will be assisted by a Deputy Executive Director.

The principal individuals authorized to act on procurement and financial management matters on behalf of MCA Moldova are as follows:

The Procurement Director (“ProcD”) shall serve as the primary official within MCA Moldova responsible for Procurement activity and compliance with the Program Procurement Guidelines. In the absence of the ProcD, the Procurement Officer (“ProcO”) of MCA Moldova is the primary official responsible for MCA Moldova procurement activities;

The Director of Administration and Finance of MCA Moldova shall serve as the primary official within MCA Moldova responsible for financial management activities and compliance with this Fiscal Accountability Plan and the Agreements mentioned herein. In the absence of the DAF, the Finance & Budget Officer (“FBO”) is the primary official responsible for MCA Moldova financial and administration activities.

MCA Moldova Organizational Chart (structure) can be depicted as follows:


Executive Director

THVA Project Director

CIS R Activity Director

CIS Technical Support Officer

ISR Activity Oficer

AAF Activity Officer

GHS Activity Officer

Environmental and Social Director

Environmental Officer

S&G Issues Officer

RAP Officer

RR Project Director

RR Project Officer

M&E Director

M&E Officer

Com. & Doc. Director

MIS Network Manager /

Webmaster

Media / Public Relations Officer

Public Outreach Officer

Translator / Interpretter

Translator / Interpretter

Procurement Director

Procurement Officer

Finance and Administrative

Director

F&B Officer

HR & A Officer

F&B Assistant

Office Manager

Receptionist

Driver

Driver

Driver

Driver

Deputy Executive Director

Executive Secretary

Administrative Assistant

Legal Advisor

Legal Counsel

General Counsel


1.3 Procurement Agent

An external entity will serve as the Procurement Agent for the THVA Project and other procurements needed to implement the Compact except for procurements implementing the Road Rehabilitation Project. The Moldova State Road Administration will serve as the procurement agent (SRA-PA) for the Road Rehabilitation Project. Any reference to the Procurement Agent in this document shall be applicable to both the external procurement agent and the SRA-PA.

The Procurement Agent shall act on behalf of MCA Moldova to manage the acquisition of a broad range of goods, works and services required for the implementation of the Compact Program. In this capacity, the Procurement Agent shall diligently oversee, discharge and perform all services necessary to achieve the optimum value for the monies expended by MCA Moldova, while ensuring that all procurement activity is conducted in compliance with the terms of the Program Procurement Guidelines in the Compact and applicable Supplemental Agreements.

The principal individual authorized to act on behalf of the external Procurement Agent on all matters related to exercising the Agent functions according to the Procurement Agent Agreement and in compliance with this Fiscal Accountability Plan and the Agreements mentioned herein is the Procurement Agent Manager (“PAM”) or nominee in his/her absence.

The external Procurement Agent (serving as procurement agent for THVA Project and other procurements under the Program) Organizational Chart can be depicted as follows:

Procurement Expert

/International/

Procurement Specialist

/Local/

Procurement Specialist

/Local/

Office Manager

Home Office

Project Director

Senior Advisor PA Manager

/Team Leader/

Procurement Expert

/International/

Surge Capacity

Procurement Specialists

Staff based in Moldova Staff based outside Moldova


The SRA-PA (serving as procurement agent for the Road Rehabilitation Project) Organizational Chart can be depicted as follows:

SRA – PA Organizational Chart

The external Procurement Agent will support and advise the SRA-PA in the execution of the procurement processes for the Road Rehabilitation Project.

Basic guidelines and approval procedures for the procurement of goods, services, and works by any supplier/provider are covered in the Program Implementation Agreement.


In all procurement matters requiring action by MCA Moldova, the Procurement Agent shall take the required actions related to administering of all procurements funded by the grant in a manner consistent with the PIA, in particular the MCC Program Procurement Guidelines. No procurement action shall be finalized or contract signed until it is determined to have complied with the applicable requirements (if any) for approval by the Steering Committee of MCA Moldova and/or MCC, as may be required by the PIA, the Fiscal Agent Agreement, Procurement Agent Agreement and Program Procurement Guidelines.

1.4 Fiscal Agent

The Fiscal Agent shall act on behalf of MCA-Moldova to provide a broad range of financial management services that are requested by MCA-Moldova to implement the activities funded under the 609(g) Agreement and the Compact with MCC Funding. In this capacity, the Fiscal Agent shall diligently oversee, discharge and perform all services necessary to ensure that all financial management activities are conducted in strict compliance with the principles, rules and procedures set out in the 609(g) Agreement, the Compact and any Supplemental Agreements as defined in the Compact.

The phases of financial management, including budgeting, accounting and reporting to MCC shall be conducted in compliance with International Financial Reporting Standards (“IFRS”) and to Moldovan Authorities in compliance with the Public Accounting Framework. The standard to be applied is the modified cash-based reporting and accounting.

The principal individuals authorized to act on behalf of the Fiscal Agent on all matters related to exercising the agency‟s functions according to the Fiscal Agent Agreement and in compliance with this Fiscal Accountability Plan and the agreements mentioned herein are:

Fiscal Agent Manager;

Senior Financial Management Specialist;

Senior Accounting Specialist;

Senior Payments and Tax Specialist.

The FA‟s internal structure can be depicted as follows:


FISCAL AGENT ORGANIZATIONAL CHART

Senior Financial

Management

Specialist

Senior Accounting

Specialist

Senior Payments &

Tax Specialist

Accountant

Fiscal Agent Manager

Project

Officer

Project

Director

Technical

Advisor

Administrative

Coordinator

Office Manager

Driver

AAS

Development Specialist

IT Specialist


2. Multi-year Financial Plan and Detailed Financial Plans

2.1 Overview

The Multi-year Financial Plan has the budget structure as set out in Annex II, Exhibit A of the Compact. The Detailed Financial Plan (“DFP”) reflects the funding that MCA Moldova expects to commit and the disbursement of funds it expects to make, forecasted by quarters of the Compact term. The Detailed Financial Plan breaks down both commitments and cash requirements to the Task level (although it should be noted that approval of the Quarterly Disbursement Request submission by MCC is only at the Activity level, the rest being supporting information), as dictated by the Work Plans, on a rolling quarterly basis for the upcoming quarters of the Compact.

The quarters shall begin on the first day of January, April, July, and October for the purposes of the Detailed Financial Plans and the Disbursement Requests (“DR”). The first quarter shall start on the Entry into Force date. The first disbursement request shall cover the same period as the first quarter (disbursement may occur earlier under a 609g agreement and CIF).

MCA Moldova, with the assistance of the FA, shall prepare detailed budgets on a rolling quarterly basis for all future reporting periods through the Compact Term.

Detailed budgets shall be prepared to cover approved work plan activities. MCA Moldova Project Directors (“PD”) shall be responsible for the development and timely submission of Work Plans. Detailed budgets shall include the costs of the contract(s) and other incidental costs. Detailed budgets shall also include a schedule of projected cash requirements to fund these costs. In addition, all contracts shall include an explicit schedule of cash payments required to meet contract obligations, as well as clear references to specific tasks as the lowest level of detail as per Budget Classification Structure provided for in Section 2.2.

The DAF will be responsible to the ED for the generation of detailed financial plans. As part of his responsibility, the DAF will coordinate the efforts of the technical units involved, the Procurement Agent, the Fiscal Agent, the relevant staff members within MCA Moldova responsible for the project/administration expenditure, PDs, and others to develop realistic plans. The DAF will submit the detailed financial plans to the Executive Committee for approval. After EC approval, the detailed financial plans will be submitted to MCC for approval. After these approvals the detailed financial plans will be formally transmitted to the FA for entry into the budget commitment accounting system.

According to the MCA Moldova bylaw, annual budgets developed based on detailed financial plans shall be submitted to the Steering Committee for approval. After approval, annual budgets shall be submitted to the Ministry of Finance and other governmental bodies in case of such requirements.

Detailed Financial plans will be managed by the ED and DAF with all assistance by the FA as requested. The FA will be responsible for all budget record keeping and budget reports to the donor and to the Ministry of Finance. The FA will also be responsible to provide accurate and timely information to MCA Moldova management to assist in budget management decisions.

2.2 Budget Classification Structure

The basic structure of the budget classification shall follow the line item structure of the Multi-year Financial Plan as set out in Annex II of the Compact. The budget classification structure must be expanded so that the Projects shall be broken down by Activities, each Activity shall be divided into Sub-Activities, and each Sub-Activity shall be further divided into Tasks, as the lowest level of details. An accounting code with XX numerical digits shall be reserved for each Project, Activity, Sub-Activity, and Task. The Program Management and Oversight line shall include costs related to Program Administration (MCA Moldova), the


Fiscal Agent, the Procurement Agent, and Audits and any other costs associated with the administration of the Program.

The detailed financial plans are broken down into four (4) levels of detail based on the following budget classification structure and all financial transactions shall be recorded according to the budget classification structure:

A – B – C – D

A: Project Code (X digit) B: Activity Code (.X digit) C: Sub-activity Code (.X digit) D: Task Code (.X digit)

Example for Road Rehabilitation Works of the Road Rehabilitation Project:

Level A: 1. Road Rehabilitation Project

Level B: 1.1. M2 Sarateni – Drochia Junction

Level C: 1.1.1 Construction Works

Level D: 1.1.1.1 Road Rehabilitation Works

The individual codes are to be defined in consultation between MCC, MCA Moldova, FA, and PA and amended from time to time as the program requires. Changes in code structure as well as existing codes require prior mutual agreement by MCA Moldova and the FA. The coding is to be formalized and approved by the DAF in writing and made available to all parties involved. The code table remains in effect until such time as new written instructions are issued.

The Compact budget only prescribes the level of financial detail down to the Activity Level (Level B). Because of this, any changes between Activities (Level B) or higher, must be approved by MCC before they can be effected.

2.3 Modifying Financial Plan

Approval Thresholds

Budget adjustments shall be made in accordance with activities included in MYFP (Annex II Exhibit A) of the Compact.

Requesting Reallocation of Funds

All requests for adjustments to the budgets at the project level and the activity level (Level A and B) shall normally be approved as part of the quarterly MCC Disbursement Requests subject to approval of the EC and MCC. Special adjustments at the project and activity levels may be made within a quarter but would still be subject to approval by the EC and MCC in the form of an Out-of-Cycle Disbursement Request. A reallocation of funds is documented in Schedule A of the Quarterly Financial Reports (“QFR”). Any changes across or within the Level C or below, only require the approval of MCA Moldova.

Any reflection of reallocation of funds contained in the QFR must have a clear explanation of the unfunded requirement, a cost analysis, and an explanation of the impact on the project/activity from where the funds are coming, and why the reallocation of funds across project/activity lines is necessary at this point.

A justification for the record is required for all reallocation of funds regardless of whether such reallocation requires MCC approval.


A detailed description of an emerging project requirement, identified to receive a budget increase, must include the time sensitivity of funding the requirement; why the requirement was not anticipated; what level of decision-making authority has agreed to the value of this new requirement, and all alternative funding levels options must be disclosed.

A detailed description of the requirement will include a detailed analysis of how all costs associated with the requirement are calculated; the anticipated procurement activity associated with this requirement; specific critical timelines related to this new requirement; and the priority of need recognized by MCA Moldova management.

A clear explanation must be secured by the Project Director of the project/activity from where the funds are coming, which verifies that the reallocation of funds from the project/activity will not in any way jeopardize or put at risk the remaining activities of the project/activity in order to meet the Compact goals for that project.

During the life of the Compact, funding associated with a particular program line may be determined excessive for a variety of reasons such as refined contract costs or reduction in the scope of work, etc., and thus, this excess funding identified may be deemed available for reallocation into a different project line.

The components of the projects and project costs are developed well before the Compact is signed and certainly well in advance of the Entry into Force activation. Each estimated budget line for a project is developed using the best information at the time of development in terms of key events in the life of the project, which will require procurement of goods and/or services. However, realistically, from the time of project budget development to the time of actual implementation, there could be a lag of many years. In light of this fact, it also must be recognized that there may be tremendous changes to market conditions such as currency valuations; service or product competition changes; shortages of materials or expertise; or compelling project requirements, such as environmental aspects, which were never anticipated or foreseen in the budget mark and thus those original budgets could contain out-year funding shortage risks.

MCC‟s preference is that the excess funds stay in the budget for the project until a majority of Compact projects are under contract and there is limited possibility that other Compact components will require additional funding.

Revaluation of Non-USD Commitments

Where contracts are registered for payments in non-USD currency, the Fiscal Agent must review non-USD commitments to ensure that budget limits are not exceeded. Should an excess over budget occur, the DAF and ED must be alerted and an appropriate budget allocation be requested to cover the excess. The non-USD commitments shall be revalued as follows:

- Closed (Paid) Commitments shall be revalued by FA on a monthly basis according to the payment amounts, using the commercial exchange rate of the last conversion, as per the provisions of section 5.3 of Fiscal Accountability Plan.

- Future (Projected) Commitments shall be revalued by FA on a quarterly basis in conjunction with preparation of QDR and submitted to DAF along with DFP for QDR preparation purposes. The revaluation shall be performed based on the exchange rates published by the National Bank of Moldova on the last business day of the first month of the current quarter.

Should the exchange rate change by more than 15% between the last date of the first month and last date of the second month, the revaluation of all non-USD commitments should be made according to the exchange rates published by the National Bank of Moldova on the last date of the second month of the current quarter.


3. Opening and Management of MCA Bank Accounts

MCA Moldova uses the MCC Common Payments System (“CPS”) to effect grant disbursements from the US Treasury. Within CPS, the two payment processes within a Compact use: (i) local banks to receive monthly grant disbursements from MCC via a CPS Payment Request Form (“PRF”) listing the permitted account as the recipient account, and then makes payments from the local bank accounts and/or (ii) a CPS PRF with instructions to credit a vendor‟s account directly.

3.1 Local Bank Accounts (Permitted Accounts)

The Bank Agreement, between MCA Moldova, the Fiscal Agent and the local bank outlines the procedures and obligations surrounding Permitted Accounts.

MCA Moldova shall provide in writing to MCC the designated account number and wire transfer instructions for the Permitted Account no later than ten (10) calendar days prior to the initial MCC Disbursement. If any Permitted Account changes during the Compact Term or the Permitted Account information with respect to such Permitted Account otherwise changes, MCA Moldova shall provide in writing to MCC any modifications to such Permitted Account Information then on file with MCC as soon as practicable, but in no event later than ten (10) calendar days prior to the immediately succeeding MCC Disbursement.

MCA Moldova shall notify the bank not to deposit any MCC Disbursements into a closed Permitted Account, and should inform MCC immediately about such closure and the reasons the Permitted Account was closed.

Permitted Accounts shall be opened at a local bank which was competitively selected to manage MCA Moldova program funds. One account shall be a local currency denominated account (“Local Account”) per source of funds (609g and Compact) to manage local currency payments. USD denominated account (“Special Account”) per source of funds (609g and Compact) shall be used to manage any USD payments. Detailed instructions on the remittance of interest back to MCA Moldova can be found in the Bank Agreement. No further bank accounts in the name of MCA Moldova may be held unless explicitly approved by MCC. Funds should remain in the Special Account and transferred to the Local account as needed. The account balance held in the Permitted Accounts shall not exceed an amount which is mutually agreed by MCC as appropriate in order to cover a maximum of thirty calendar days of small local payment local currency requirements. This will include travel advances, small purchases, payroll and petty cash.

3.2 Common Payment System

The CPS refers to any system used by MCC to process payments in USD or any other currency directly to vendors for goods, works, and services received. MCC is currently utilizing the International Treasury Services (“ITS”) as the CPS provider for non USD payments and the Secure Payment System (“SPS”) for USD payments.

3.3 Authorized Parties

The two Fiscal Agent officials with signatory authority for CPS payments and primary responsibility for the accounts are as follows:

1. Fiscal Agent Manager; 2. Senior Financial Management Specialist.

The alternate signatory shall be:

1. Senior Accounting Specialist.


All Payment Request Forms (PRF) should be prepared by FA and signed by the DAF of MCA Moldova. In his/her absence it should be signed by the FBO.

The Fiscal Agent shall ensure that at all times two signatories are available to meet the MCA Moldova‟s local checking account needs. The FA, by a person other than the bank primary and secondary signatories, shall perform the reconciliation of bank statements with the accounting records no later than fourteen (14) calendar days after the end of an accounting period. Discrepancies shall be followed up in no more than ten (10) calendar days.

The two Fiscal Agent officials with signatory authority for permitted accounts payments are as follows:

A. First signatories:

Fiscal Agent Manager or Senior Financial Management Specialist

B. Second signatories:

Senior Accounting Specialist or Accountant


4. Accounting

4.1 Responsibilities

MCA Moldova is responsible for Program Implementation and is the sole authority for authorizing expenditures. MCA Moldova is responsible for submission of all documents required in connection with payments and as outlined in this and the subsequent Fiscal Accountability Plan. The Fiscal Agent is responsible for execution of payments, all accounting functions and documentation compliance. The FA shall keep the original documents that support expenditures, obligations, and payments.

4.2 Chart of Accounts

The FA and MCA Moldova have jointly established a single Chart of Accounts, approved by MCC, which shall be used for the duration of the Program. The full Chart of Accounts can be found in Annex I to this FAP. Any changes to the Chart of Accounts require the mutual agreement between MCA Moldova and FA before they are submitted to MCC for approval.

4.3 Accounting System

The FA maintains an accounting system to serve as the basis for audit and financial reports. The FA produces auditable financial statements for audits of MCA Moldova. Financial transactions shall be recorded on a modified cash basis. This means that the FA will prepare the semi-annual auditable Fund Accountability Statement (“FAS”) on a Cash Basis (recording income when received and expenses when paid), but preparing supplemental schedules listing the following:

1. Receipts (funds, interest and others);

2. Accounts Payable and Receivable;

3. Expenses;

4. Bank accounts;

5. Petty cash.

Totals for the schedules shall be footnoted on the FAS at each six-month auditable period.

The accounting system also includes a budget and commitment section. The budget used in the system is the MCC approved budget and the commitments are approved contracts signed by MCA Moldova, both in total volume and split over time according to payment plan. This allows providing up-to-date information on the unused, remaining budget, which is calculated by deducting commitments from the budget. Reports of unused, remaining budget are produced from the system.

4.4 Automated Accounting System

The Fiscal Agent will maintain an Automated Accounting System using Oracle/Universal Accounting software, which:

Records commitments to obligate budgeted funds;

Records receipts and payments, and assets and liabilities;

Generates reports as requested including current summary statement of accounts and ad hoc reports in the formats specified by MCA Moldova;

Produces financial reports for MCA Moldova on the administration and management of the Program;

Produces financial reports to MCC as specified;


Ensures data security;

Provides on-line user-friendly access to MCA Moldova and MCC.

The proposed program is an integrated information system for automated financial management and accounting. Universal Accounting operates on all Windows platforms (preferably Win XP Pro).

The system is built on “client/server” technologies, which provides simultaneous operations by users regardless of the workflow (data entry, reports generation, etc) and their accounting unit.

The system was developed in Moldova in accordance with:

Moldovan Law number 113-XVI of 24th of April 2007 "Accounting Law”;

Requirements of external donors related to financial reports within the projects funded by them.

The system was built on two-layer module scheme.

The first layer includes:

abstract module that performs operations related to: registration of transactions, registration of opening stock, input interface for users, supplementary interfaces, chart of accounts and multi-level directory of analytical information;

general multi-level directories;

center for automatic generation of transactions and execution of supplementary operations.

The second layer includes:

custom modules for registration of documents (each module is designed for a certain accounting section/unit and processes certain types of documents);

reporting module;

module of system administration;

custom modules for dedicated data operators.

The system implies processing of primary documents. It does not contain logical restrictions of processing periods. During the system operation there is no need to close/cut previous processing periods.

The system contains special objects for data input, which automatically help users to identify required data and minimize input errors.

A powerful generator of reports allows quick visualization of necessary reporting forms. A wide set of options allows identifying virtually any report structure, grouping and drilling down data at any detail level. Template Editor allows setting fonts and other visual parameters of reports. All reports can be exported to Microsoft Excel.

A special generator of accounting transactions allows maximum automation of data input. A wide range of built-in macros covers various accounting issues at automated units/sectors across organization.

The database used by the Universal Accounting System is conceptually oriented at data storing and processing in electronics documents:

all data to be processed must be formulated in the form of e-document(s);

all analytical objects/units/breakdowns across the system are assigned unique running codes (regardless of their given value);

all supplementary stationary data are contained in supplementary directories/lists;

access to analytical objects/units/breakdowns is determined by configuration of given accounts from the chart(s) of accounts;


each e-document contains transaction-related and accounting meanings;

all metadata for typical configurations are stored as configurations in the database.

All documents are set out to automatically generate the accounting entries (as required). Generation takes place after the introduction of this document for specific information in special tables. Documents are objects, which are entered, modified and deleted. Deleting a document from the log leads to the cancellation of accounting entries generated at its disposal. By changing the information in special registers the document leads to the re-generation of accounting entries; old are deleted.

In order to display documents it is foreseen to have some static information which sometimes should be updated at regular intervals (exchange rates, rates of consumption of materials and working hours, information about employees, etc.). There is a special type of document – forms, which allow viewing and making changes to the above-mentioned data. The forms are not subject to the creation or removal, as documents. Creating or deleting certain range of data, can only be performed by means of specific forms.

The adequate mapping of financial, economic and business transactions is conveyed by means of documents and forms incorporated into the database. The information entered can be printed through the generation of printing forms. Forms can be displayed as electronic documents or in form of a report and serve as a primary instrument that reflects the data selected from different documents, which are grouped and summarized as per reporting requirements. The design and contents of printed forms, regardless of the type (report or a printed form of the primary document) can be configured according to any particular requirements.

4.5 Access & Backup

Access to the automated accounting system for data entering and data modification is only available for FA staff having a professional requirement to work with the system. MCA Moldova (ED, DED, DAF and MCA Moldova‟s Finance Staff) or MCC personnel, RCD, Deputy Resident Country Director (“DRCD”), shall have read-only rights. Other MCA Moldova staff, including Project Directors and outsiders such as auditors, will have limited access which will require formal written approval by either MCA Moldova or MCC to be permitted access (Friendly users). The system is password protected; sharing passwords with any other individual (also other permitted users) is strictly prohibited.

The Fiscal Agent has established a data backup system and Disaster Recovery Plan. The current data backup system for the FA Automated Accounting System features a number of backups and redundancy features.

Universal Accounting has been developed according to the two-sectional client-server architecture. Universal Accounting Database Server is built on SQL-compatible Oracle RDBMS (versions XE/SE/EE). The client-side part is a standard Windows application which physically represents one folder with executable and supplementary binary files. All the data and configuration are stored in the database. It is necessary to install a standard set of binary libraries at client desktops by installing the Universal Accounting client-side part, to install Oracle client and setup the path to the database in the Oracle client standard configuration.

Universal Accounting data backup is organized in compliance with the ISO 17799 “Information Security”. Data backup allows restoring the information system after possible accidents caused by technical, software or external matters which have led to failure of information system and/or corruption of all or part of data.

Data is backed up by standard means/components supplied with Oracle servers (details could be found in the document “Oracle® Database Backup and Recovery Basics 10g Release 2 (10.2) B14192-03” posted on the Oracle website).


Client applications are backed up through saving of an installation disk which includes installation files from the Universal Accounting supplier, Oracle standard client-side software and archived folders with an up-to-date version of Universal Accounting client application.

In order to ensure correct data backup in the Universal Accounting information system it is necessary to:

1) create a special script-file which will create an archive-file containing a backup copy of:

a. working database configuration (a database object containing user data);

b. database code from all relevant configurations;

c. all templates of printing forms and reports.

2) activate Oracle database functions of logging all data transactions (Archive Logs) to allow restoration of data at any time-point, and not only the point when the backup copy was created;

3) setup Windows task manager, or another similar application, so that it automatically executes the above-indicated script-file daily.

In order to ensure failure-proof performance at client workstations, after each installation or update of the executable client side of Universal Accounting it is necessary to back it up using standard Windows application, e.g. in ZIP-archives or simple copies on CDs.

In order to ensure smooth performance of the above-mentioned software procedures the IT Specialist is responsible for:

1) continuous control of backup results, i.e. successful creation and storage of archives, their completeness and integrity, etc;

2) continuous control of access to the database server, making sure it is not used the purposes unrelated and/or dangerous to information system performance, e.g. Internet-surfing, entertainment applications, including but not limited to computer games, etc. Software installations (including but not limited to anti-viruses, browsing applications, office packages, etc) on the server should be coordinated with the Universal Accounting supplier;

3) continuous control of stable and failure-proof performance of the server. Unexpected failures in electric power, restarts, system failures and disconnections are very dangerous in terms of data security and usually lead to data corruption;

4) configuration of operating systems in the part of security and user access rights;

5) continuous monitoring of free disk space in order to ensure correct data saving and integrity of backup files;

6) periodic copy of backup files to external data storage devices (CDs, DVDs, etc) and remote FTP-server.

7) Daily copy of back up file of AAS is forwarded to the remote FTP server at Fiscal Agent HQs.


5. Cash Management

Payments are made via CPS (mainly) or the permitted accounts. Payment procedures are described in greater detail in Chapter 7.

As a general rule:

1. MCA Moldova will provide the Fiscal Agent with all necessary documentation and information to prepare the Payment Request Form;

2. The Fiscal Agent will prepare the corresponding Payment Request Form (either a Non-US Bank Payment or a US Bank Payment) incorporating all necessary details to deliver payment to the final beneficiary.

The Payment Request Form will be signed both by the DAF of MCA Moldova and the Fiscal Agent authorized parties, which will be uploaded into the MCC Secure FTP system. Upon effective payment confirmation (CPS report), the FA will record it as an in-kind disbursement and execute the corresponding payment regularization.


Fiscal Agent

The FA shall monitor the amount of funding available in each Permitted Bank Account and the amount of funding budgeted for Program and Project Activities during the current and subsequent Quarterly Disbursement Periods, or more frequently as prescribed to ensure sufficient and appropriate level of available cash. The FA shall instruct the bank as stipulated in the Bank Agreement to transfer from the Special Account and convert into local currency the amounts needed for payments that shall be made from the Local Account, based on the current exchange rate between local currency and the USD as per provisions of the Bank Agreement.

The FA shall provide certification to MCA Moldova regarding the status of funds in the Permitted Accounts monthly or ad-hoc. Budget and cash requirement projections are made in USD.

Project Directors

MCA Moldova‟s Project Directors shall estimate on a rolling quarterly basis for the Compact period both the level of commitments and the cash requirements needed to liquidate those commitments and to meet other expenses where prior commitments are not made, such as payroll expenses, and submit such estimates to MCA Moldova DAF.

PDs shall consider the time required for procurement, contract execution, and supplier/provider delivery in estimating when cash payments shall be required.

PDs, in coordination with the Procurement Director, Procurement Agent, DAF and Fiscal Agent, should provide the relevant information to keep the documents consistent.

MCA Moldova

MCA Moldova, with the assistance of the FA and information provided by the PDs, shall prepare a consolidated Detailed Financial Plan and an estimate of the amount of cash needed for the next quarter in preparing the Disbursement Request (“DR”).

MCA Moldova shall consider:


Cash estimates of the next quarter of the Detailed Financial Plans as submitted by the PDs and Implementing Entities;

The amounts unspent and estimated to remain unspent at the end of the current quarter.

The calculation of required cash is made by MCA Moldova in the DFP - Cash of the Quarterly Financial Reports included as part of the DR package. This amount represents the approved spending authority for the next period.

The primary method to assure appropriate cash allowance shall be the confirmation that at the time a commitment is registered, there is either sufficient cash allowance to make the payment through the Common Payment System, or that the cash payment shall fall into a subsequent quarter, and that the commitment was included in DFP Commitment of the most recent QFR.

5.2 Commingling of Funds

Funds provided by MCC must not be commingled with any other funds from any source whatsoever, except as explicitly authorized by MCC.

5.3 Currency Conversion

Currency conversions shall be tracked and managed by the Fiscal Agent consistent with the Compact, any Supplemental Agreements, including the Fiscal Agent Agreement, the Bank Agreement, or other agreements between MCC and MCA Moldova.

For non-USD payment transactions handled via the CPS, the conversion rate of the CPS must be used by posting the payment entries with the official rate or making the necessary adjustment for each individual transaction. Differences to the cost entry are to be charged to a foreign exchange-gains/loss analytical code using the same budget codes as the underlying transaction.

For any other USD to local currency conversion, daily foreign exchange-rates are shall be applied, based on the daily exchange rates published by the National Bank of Moldova (www.bnm.md) reduced by 0.02 MDL/USD as per Bank Agreement provisions. Conversion rates shall be entered into the FA‟s automated accounting system based on bank account statements.

The USD equivalent of payments performed in local currency and the balances of all non-USD cash and bank accounts shall be booked using the commercial exchange rate of the last conversion. Any exchange rate gains/losses identified as per local account(s) shall be booked as “Other Expenses” (Task code: 4.1.2.9) of the budget classification structure. The Fiscal Agent shall document by printing and filing the official exchange rates per currencies used as per National Bank of Moldova publications.

5.4 Working Capital

MCC will authorize a Working Capital allocation of USD 500,000 for Compact funding and USD 100,000 for 609(g) and CIF funding. At its discretion, MCC may elect to provide additional working capital for a given period, the amount of which will be detailed in the Disbursement Response Letter. Approval of a DR automatically creates the Working Capital allocation for a given period; no special action is necessary from MCA Moldova. The Working Capital allocation is valid during the given quarterly approval period and for thirty (30) additional days after its close of the quarter.

Working Capital may be used only for expenditures that were approved by MCC in the most recent Detailed Financial Plan, but for which inadequate funds were budgeted or whose

http://www.bnm.md/


timing for payment is later than originally anticipated. Working Capital may not be used for expenditures for which Conditions Precedent to disbursement were not met, and the expense to be paid with the Working Capital may not be included in the Detailed Financial Plan of the next period.

Requests to use Working Capital are to be submitted to MCC‟s Financial Service Provider (“FSP”) on a Payment Request Form using the following procedure: the Fiscal Agent submits a standard Payment Request Form and includes the designation (“WC”) at the beginning of the entry in the “Invoice number” column. The Fiscal Agent should state the reason for the request in column 12, “Additional Information.” With this information, MCC‟s FSP will deduct from the current approved Working Capital spending authority.

5.5 Expiration of Spending Authority at the End of Period

MCA Moldova‟s authority to submit Payment Requests, via the FA, to the FSP for expenditures included in an approved DR shall expire on the last day of the next month following the applicable quarter covered by such DR, except as otherwise noted above and in Section 5.6, “Reinstatement of Limited Spending Authority”.

If a new DR is not approved by the first day of the next quarter, MCA Moldova will not have the authority to submit requests for payment to FSP for any expenditures relating to the approved DR for the previous period, except as provided in section 7.1.2 and section 7.1.4 of the CPS manual (both of which provide for an additional 30 days). At the end of that 30-day period, FSP must halt payments until such time as MCC approves a new DR Package and/or FSP receives notification from MCC‟s Department of Finance that they can continue making payments.

5.6 Reinstatement of Limited Spending Authority

After the expiration of spending authority at the end of the period described above in section 7.1.3 of the CPS Manual, MCC may authorize in exceptional circumstances only a temporary reinstatement of spending authority to cover specific payments that exceed the usual Working Capital amounts of USD 500,000 for Compact funding or USD 100,000 for 609(g) and CIF funding, or when Working Capital is otherwise not available. The total amount of the reinstated spending authority may only be as high as the unused spending authority from the prior period, and is only available during the first thirty (30) days after the close of that period or until the date of the next DR submitted to MCC, whichever is earlier.

The reinstated spending authority may be used only for expenditures that were approved by MCC in the most recent DFP, but for which inadequate funds were budgeted or whose timing for payment is later than originally anticipated. The reinstated spending authority may not be used for expenditures for which Conditions Precedent to disbursement were not met, and the expense to be paid with the reinstated spending authority may not be included in the DFP of the next period.

Requests to use such funds are to be submitted to FSP using the following procedure: The Fiscal Agent submits a special payment request form authorized by the usual signatories and the MCC RCD. The Fiscal Agent should state the reason for the request in column 12, “Additional Information.”

5.7 Disbursements

No DR shall be executed unless in accordance with the Compact, including Section 2.3 thereof, any other Supplemental Agreements, and the required authorizations as defined in this Fiscal Accountability Plan. DRs shall outline the cash needs over the next quarter broken down by each month of the quarter.


DRs shall be made in conjunction with the submission of the Quarterly Financial Reports (QFR), or more frequently if allowed by MCC. They shall be submitted to MCC twenty (20) calendar days prior to the end of each quarter.

See www.mcc.gov/countrytools/compact/implementation.php for instructions and forms on developing DRs.

Once the DR has been approved by MCC, MCC will inform the FSP of the amount approved by MCC for quarterly spending authority for the Disbursement Period. The FSP will then accept PRF‟s requesting up to the cash requirement amount listed on the approved QFR.

Cash transfers to the Local Accounts are then registered by the FA whenever funding levels in the accounts require replenishment. The FA shall update the accounting system based on the revised Detailed Financial Plan.

MCA Moldova, with the assistance of the Fiscal Agent, shall estimate the amount of cash needed for the next quarter in preparing the MCC Disbursement Request. MCA Moldova shall consider:

(i) Cash estimates of the next quarter of the detailed budgets as submitted by the IEs;

(ii) The amounts unspent and estimated to remain unspent at the end of the current quarter;

(iii) The amount of Accrued Interest earnings anticipated for the next quarter;

(iv) The calculation of required cash is made by MCA Moldova in appropriate sections of the MCC Disbursement Requests.


6. Procurement Process

6.1 Procurement Plan

Procurements for goods, works, and services shall only be made if they are included in the MCC approved Procurement Plan (“PP”), prepared by the PA in coordination with MCA Moldova‟s ProcD and also in collaboration with Project Directors every six months.

However, small procurements for MCA administrative purposes with an estimated cost of up to USD 25,000 could be initiated without such procurements being included in the PP.

Before the PP is presented to MCC for approval, it must be reviewed by the Procurement Director in liaison with DAF and FA to ensure that commitments foreseen in the PP are available in the budget. A copy of the approved PP shall be forwarded to the FA for inclusion into the Automated Accounting and Budgeting System.

Even though a procurement action is listed in the procurement plan, the PA must receive a notification or authorization from the ED or nominee to start the procurement process.

6.2 Pre-Procurement Approvals

Procurement activities required for MCA Moldova administrative needs could be carried out either by MCA Moldova itself or delegated to the PA.

For the procurement activities to be carried out by the PA, the relevant IE and/or PIM shall initiate a procurement request by filling out a Procurement Requisition Note (”PRN”) that specifies the description and the quantity of the goods, works, or services to be procured. The IE and/or PIM shall submit the PRN with a cost estimate of the requested goods, works and services to the PD for onward presentation to the ProcD.

The ProcD shall review the PRN to determine if it complies with the approved Procurement Plan. If it does then the ProcD shall countersign the PRN and submit it to the DAF. If, however, the PRN does not comply with the Procurement Plan, the ProcD shall notify the IE, through the PD, and initiation of the procurement is stopped.

The DAF shall review the PRN to ensure that funds are available for the planned procurement. If funds are available for the Procurement, the DAF certifies that the request complies with the detailed Financial Plan and approves the procurement. The DAF shall submit the approved PRN to the ProcD who shall seek final authorization from the ED or nominee prior to submission to the PA at which time the procurement process is initiated.

The original of the approved PRN shall be kept in the procurement records with the PA.

This procedure will need to be updated upon receipt of the Procurement Operations Manual.

6.3 Procurement Activities

The Procurement Agent shall undertake the procurement process in accordance with the MCC Program Procurement Guidelines (http://www.mcc.gov/mcc/bm.doc/mcc-guidelines-programprocurement.pdf), the Procurement Operations Manual and the Procurement Agent Agreement. Specifically, the following procurement activities will require involvement of the FA in close collaboration with the PA:

Evaluation of proposals/bids. The FA will provide support/assistance in verifying the completeness of the financial information submitted by the consultant/bidder.

Contract negotiations. The PA and FA will advise and assist MCA Moldova in the contract negotiation process.

http://www.mcc.gov/mcc/bm.doc/mcc-guidelines-programprocurement.pdf

http://www.mcc.gov/mcc/bm.doc/mcc-guidelines-programprocurement.pdf


The PA and the FA shall ensure that contracts stipulate only payment via bank transfers. All contracts must include a detailed payment schedule, with payment terms not to exceed 30 days after receipt of a valid invoice and the FA to be named as the invoice recipient. The consultant/contractor shall also be instructed to submit their invoice only after receipt of and together with the goods/works/service acceptance note.

Cost overrides. If the procurement results in an award recommendation that exceeds significantly the amount of funds planned for it and budget allocations are not sufficient to cover the amount to be contracted, the PA shall inform the ProcD. The ProcD in consultation with the PD and the DAF, shall review the cost estimates for any defects, and either (i) notify the PA to cancel the procurement, and initiate a new procurement with reduced scope as necessary, or (ii) increase its funding in accordance with Section 2.3 of this FAP, taking into account that contract payment terms should coincide with quarterly disbursement planning. If budget allocations are not planned, the ED and the PA shall be notified by the FA and the procurement is suspended.

Availability of funds. Immediately before the contract is submitted to MCA Moldova/MCC for clearance, the ProcD will submit the contract to FA through the DAF for confirmation that the funds to be committed are still available in the budget.

The ED, or if so delegated, the DED have the sole authority to sign the contracts with the supplier/provider, contractor, consultant; however, in the absence of one of them, a procedure shall be established in writing stipulating who will sign on behalf of the missing signatory (see also Annex II).

6.4 Contract Administration Activities

The FA shall retain the original contract, with a copy retained by the PA and the MCA Moldova. Another copy shall be given to the PD. The FA shall enter the amount of the commitment into the appropriate ledger of the accounting system.

The PA shall coordinate and cooperate with the PD in order to ensure that the goods have been received and the works and services have been provided in accordance with the terms of the contract.

6.5 Small Purchases Related to Administrative Expenses

The ED has the sole authority to sign contracts with the supplier/provider; however, in his/her absence, appropriate delegation of authority may be made. In the case of contracts for the provision of goods, works and services with an aggregate contract value of up to US$ 2,000, the ED may delegate contract signing responsibility to the DED.

Purchase of goods, small works and consulting/non-consulting services for required for MCA Moldova administrative needs is initiated by the Office Manager.

A simplified purchase procedure shall be used for administrative expenses, which refer, inter alia, to the following list of items:

Meeting and logistics arrangements

Utilities

Subscriptions

Cleaners, maintenance, office support, water/tea/coffee etc.

Short term experts in running the MCA administration

Advertisements

Public outreach events


Airline tickets

Postal and courier expense, including all procurement correspondence

Any other purchase of small value, as per the thresholds stated herein below, which is required for the MCA-Moldova office needs.

In order to initiate a small purchase, a Requisition Note shall be drawn up, containing a description and quantity of the items to be purchased.

The original approved Requisition Notice (RN) is kept by the Office Manager.

For all items below $500 direct contracting (sole source) can be used.

For all items above $500, MCA-Moldova shall ensure that the requests for quotations are open, fair, and competitive, and a simplified shopping procedure shall be followed by soliciting three quotations, where practical, by directly calling for brand names and/or for items with generic description of requirements. Standard service and warranty clauses will be included in the purchase request, if applicable.

It is prudent that MCA-Moldova announces all intents to purchase on its website, so that a potential supplier may approach with an offer.

However, it is acceptable for the MCA-Moldova to directly invite three suppliers to provide quotation for all purchases worth above $2,000 per contract.

A single quotation is requested from a sole source without competition, in case:

A) sufficient proof is provided in MCA-Moldova files that a previous attempt to obtain competitive quotations resulted in less than three quotations;

B) where quotations are not likely to be comparable (for example, airline tickets for different routing).

The justifications invoked as per above should be documented in the MCA Moldova files prior to initiating the purchase from single source.

In all procedures above USD500, MCA-Moldova shall ensure the prices paid have been checked for reasonableness. Reasonableness determination should be done by comparing with the prices for similar goods purchased recently and/or with the estimation prior to the purchase. Price comparison and decision to award shall be documented in an evaluation report.

All evaluation reports are kept in a file by the Administrative Assistant.


Subsequently to adoption of the award decision, the Office Manager shall submit the evaluation report to Legal Advisor for drawing up the contract with the supplier/provider/contractor/consultant.

Before making payment to the contractor, supplier or consultant of the goods, works or services, the Fiscal Agent shall verify against the Excluded Parties list such payee is eligible to receive MCC Funding.

Purchases for administrative expenses are not considered procurement activities and, therefore, are not subject to MCC Program Procurement Guidelines application.

Purchases for administrative expenses are not required to be included in the MCA‟s Procurement Plan.

6.7 Procurement-Related Expenses The following procurement-related expenses shall not be deemed part of the fees and such expenses of the external Procurement Agent shall be reimbursed by MCA-Moldova directly and separate from the fees; provided, however, that MCA-Moldova has previously approved such expenses to be incurred (including the amount of such expenses):

(a) advertising of procurement announcements, general procurement notices, contract awards and other procurement-related notices;

(b) the cost of printing and delivering bidding documents to prospective bidders; and

(c) fees for technical experts participating in bid or proposal review panels.


7. Invoice and Payment Approval Process

7.1 General Description of Vendor‟s Invoice

All supplies must be supported by a proper invoice submitted by a vendor. Invoices shall be submitted in original as described in the contract, to the relevant Project Director of MCA Moldova upon or after the delivery of the goods or services, all relevant supporting documents being duly attached. As an exception, the invoice can be sent by fax or as email attachment, in PDF format before submission of the original that cannot be received more than thirty (30) days after the reception of the copy already sent by fax or by e mail.

The relevant Project Director stamps the invoice “Received on…” and verifies that all invoice mandatory details are filled in as per provisions of the section “General Description of Vendor‟s Invoice” of the Vendor Invoice Procedure (see Procedure Manual). Those invoices with any missing details shall be returned by the Project Director to the vendor for completion/correction and re-submission.

In order to get the certification that goods or services have been delivered or performed as specified in the contract, all invoices shall be supported by a Goods/Works/Services Receipt Note („GRN‟) for the goods, works, and services provided.

Upon the reception of the invoice the relevant PD attaches the Supplier Invoice Control and Follow-up Form („SICF‟) to the invoice; this form will follow the circuit of controls and will be signed by each stakeholder of the control for evidences.

All prepayments that will be done on base of Pro-Forma Invoice without any supporting documents, shall follow the same circuit of control and be approved by the ED. When the definitive invoice will be received, it will follow the normal circuit of control.

7.2 Cycle of Invoice Processing

The Compact and subsequent agreements require that payments be done only for the valid invoices. The Supplier Invoice Control and Follow-up is particularly designed for verification and certification purposes. Controls on the SICF are evidenced by the signatures of each stakeholder. The following steps to verify and check all invoices respectively for Small Purchases, Works, and Services shall be followed when preparing payment approval for invoices. A. Small Purchases In order to classify a transaction as Small Purchase, it shall meet the following criteria:

The purchase amount shall not exceed the threshold of US$2 000

The type of purchase – Goods

The payment shall be performed through permitted accounts

The following steps are required to process an invoice related to small purchases:

Step 1. Vendor issues and submits the invoice to MCA Moldova responsible person for that particular purchase.

Step 2. Responsible person certifies for the consistency between the invoiced goods and the ones actually received/to be received. He/she issues a SCIF and logs relevant information and controls. When the items are purchased based on a Contract, the set of documents is forwarded to the ProcD (Step 3) otherwise to the DAF (Step 4).


Step 3. Procurement Director certifies for the conformity of documents with the Contract provisions and upon the completion of this activity forwards them to DAF.

Step 4. DAF reviews and forwards the invoice to ED for final approval and payment authorization, which shall come in form of SICF validation that directs FA to make payment.

Step 5. DAF sends the approved invoice to the FA for payment.

Step 6. FA performs the verification of the SICF and the technical review of the invoice. After reviewing an acceptable invoice, the FA issues a payment order to the Local Bank for credit into Vendor‟s bank account.

B. Civil Works (FIDIC Applicable Contracts)

The following general steps are required for processing of documents:

Step 1. Contractor/Vendor creates an Interim Payment Statement („IPS‟) as per stage of work and sends six (6) original copies and all supporting documents to the Engineer. The 56 day clock starts (from the time the IPS is submitted to the Engineer).

Step 2. Engineer performs the verification of IPS based on Execution Drawings and Construction Drawings and makes adjustments to the IPS (if any). Engineer issues an Interim Payment Certificate („IPC‟) in six (6) original copies based on the adjusted/approved IPS and delivers them to the State Road Administration (SRA-PA) and/or Project Implementation Manager (PIM).

Step 3. SRA-PA and/or PIM performs the verification of the Interim Payment Certificate (6 copies) based on the adjusted/approved IPS and upon approval, delivers two (2) copies to the PD of MCA Moldova.

Step 4. PD reviews and certifies the IPC and forwards one copy of it to Procurement Director. PD cannot modify or reject the IPC. He can only review it to confirm with the Engineer the expectations for subsequent measurement, evaluation, and certification in the future IPCs. PD also codes the IPC with correct chart of account against budget. PD issues an SICF and logs relevant dates therein, which is forwarded along with IPC and supporting documents for further processing.

Step 5. ProcD certifies for the availability of Performance Security, Advance Payment Guaranty and Insurances as required per Contract provisions and upon the completion of this activity forwards the signed IPC to DAF.

Step 6. DAF reviews and forwards the IPC to ED for final approval and payment authorization, which shall come in form of SICF validation that directs FA to make payment.

Step 7. DAF sends the approved IPC and SICF to the FA for payment.

Step 8. FA performs the verification of the SICF and after reviewing it, creates a Payment Request Form that is uploaded into NBC for direct payment after being countersigned by DAF.

C. Goods, Works (Non-FIDIC Applicable Contracts) and Services

The following general steps are required to process an invoice:

Step 1. Vendor issues and submits the invoice with supporting documents to the relevant PD.


Step 2. PD reviews and certifies the invoice and supporting documents and forwards them to the Procurement Director. PD issues a SICF and logs relevant dates therein, which is forwarded along with invoice and supporting documents for further processing.

Step 3. Procurement Director certifies for the availability of Performance Security, Advance Payment Guaranty and Insurances as required per Contract provisions and upon the completion of this activity forwards them to DAF.

Step 4. DAF reviews and forwards the invoice and supporting documents to ED for final approval and payment authorization, which shall come in form of SICF validation that directs FA to make payment.

Step 5. DAF sends the approved invoice and supporting documents to the FA for payment.

Step 6. FA performs the verification of the SICF and invoice and after reviewing the both, creates a Payment Request Form that is uploaded into NBC for direct payment after being countersigned by DAF or in case of payments through the local permitted account, the FA issues a payment order to the Local Bank for credit into Vendor‟s bank account.

D. Day Requirements

In compliance with the described steps, deadlines for invoice processing are settled differently for the various types of goods, works and services. For Civil Works, timing for processing shall be done in accordance with FIDIC 2006 Red Book and shall be defined in calendar days. Goods and services invoices are processed according to the Compact and other Agreements, requiring the payment be done within thirty (30) days.

Therefore the schedule is as follows:

Small Purchases

Responsible person 2 working days Procurement Director 2 calendar days (if applicable) DAF 3 working days Fiscal Agent 3 working days

Total days of processing 10 working days

Civil Works (FIDIC Applicable Contracts)

Project Director 4 calendar days Procurement Director 3 calendar days DAF 7 calendar days Fiscal Agent 7 calendar days

Total days of processing 21 calendar days

Goods, Works (Non-FIDIC Applicable Contracts) and Services

Project Director 9 working days Procurement Director 3 working days DAF 5 working days Fiscal Agent 7 working days

Total days of processing 24 working days

E. Other Invoice Supporting Documents


In addition to supporting documents already described above, a supplementary Delivery-Acceptance Report is required for purchases of equipment that require state registration or certification (e.g. vehicles, buildings etc).

For travel related payments, a Travel Order shall be attached to the Invoice or other related documents.

7.3 Responsibilities for Invoice Control and Halting / Rejection

A. Responsibilities of each stakeholder

Each stakeholder for invoice processing shall check invoices corresponding to their responsibilities. All invoices must be approved by MCA Moldova‟s Executive Director, before to be submitted to the Fiscal Agent for payment.

The Project Director, Procurement Director, DAF and FA (Senior Payments and Tax Specialist) shall perform their verification of invoice and supporting documents as per provisions of the section “Responsibilities for Invoice Control and Halting / Rejection” of the Vendor Invoice Procedure (see Procedure Manual).

The Fiscal Agent shall enter a valid invoice into the 30 days Tracking System, only after approval of the invoice by the Executive Director.

B. Halting / Rejection of the Invoice

If the invoice does not met all requirements described above, or if any deviations or discrepancies are found during the control, the invoice processing can be halted or the invoice can be rejected by each stakeholder of the invoice control processing.

The cases of halting of the 30-day payment period:

When the goods/services were not received/performed by the time the invoice was recorded as received, the invoice date of reception shall be amended in the 30 Days Tracking System accordingly, a note shall be added next to the stamped date, and proper documentations shall be attached to the invoice.

When a dispute arises but faults can be rectified without rejecting the invoice, e.g. report approval still to be confirmed, the 30-day payment period is halted.

Halting starts from the day when the vendor is notified by MCA Moldova in writing, including by email: the precise motive shall be included in the SICF as well as a proposed solution; the following sentence or any equivalent phrase, shall be included in the SICF: "the payment period is halted from this day; this halting will cease when all elements will be obtained to make the invoice valid".

The "clock ticks again" from the day when all elements are provided to make the invoice valid again.- The halting is notified to the vendor by the Project Directors or any other stakeholder of the invoice processing, who initiate the halting. A copy is sent to the Director of Administration and Finance, to the Fiscal Agent and to the Procurement Director.

The set of documentation is kept at MCA Moldova„s level during the halting period.

The Fiscal Agent records the halting, and on its end, in the 30 days Tracking System with a short note of the motive. AII related documents or notes are added to the set of documentation.

An invoice can also be rejected if:


The goods, works or services were not received/performed by the time the invoice was recorded as received

The goods, works or services do not meet the standards, specifications or deliverables from the contracting documents

The supplier is on the black lists

The rejection of the invoice should be done not later than 9 days after such determination is made and the supplier shall be notified within 13 days upon the rejection. Any rejection shall be communicated to the relevant Project Director, by the stakeholder rejecting the invoice, in order to allow him to notify the vendor the reasons for rejection and the way to settle the deficiencies.

An invoice is valid unless it is specifically REJECTED by the any of the stakeholders of the SICF. If an invoice is rejected, the 30 day payment deadline stops and does not begin until another invoice is presented and the reason for rejecting the initial invoice has been corrected.

The relevant Project Director shall hold a ledger of rejected invoices, indicating the date and the motive of the rejection, as well as the date of submission of a valid invoice.

7.4 Invoice Booking

Invoices are processed on a daily basis in the order in which they are received from DAF, after being duly approved by the ED. Upon reception, the invoice is booked into AAS by the Fiscal Agent SPTS, which is automatically registered into the 30-Days Tracking System.

Upon the booking of invoices into 30-Days Tracking System, the Automated Accounting System can generate several reports including the 30-Days Prompt Payment Report, the List of Suppliers with Deliveries Exceeding 20,000 US Dollars and the List of Invoices not Paid within 30 Days.

The DAF shall inform in advance the Fiscal Agent of the issues to be resolved with a particular vendor.

7.5 General Payment Provisions

All invoices approved and certified in accordance with MCA Moldova Policies outlined in this FAP are received by the Fiscal Agent for payment. Payments can be done using MCA Moldova‟s Local Permitted Account or CPS Direct Payments using vendor‟s banking information. Any payment mechanisms shall be used at the discretion of MCA Moldova‟s DAF. In order to manage MCC program funds, MCA Moldova, C.B. Moldova-Agroindbank S.A. and Fiscal Agent jointly signed a Bank Agreement, dated September 7th, 2010 based on which, the following accounts were opened:

Special U.S. Dollar Accounts (U.S. Dollar Account)

Special Moldovan Lei Accounts (Local Account)

The Bank Agreement outlines the procedure and obligations of the parties related to the management of bank accounts.

Payments from the Special and Local Accounts will only be authorized through a written payment instruction duly signed by two Designated Signatories of the Fiscal Agent and in the form approved by the Bank Agreement - Payment Order. All transfer instructions can be delivered to the Bank using Internet Banking System in accordance with the Contract no. 2011/002 dated February 4th, 2011.


The authorized signatories of the Fiscal Agent for the payment instructions are:


Senior Financial Management Specialist (as alternate)

Senior Accounting Specialist

Accountant (as alternate)

The Fiscal Agent shall monitor the amount of funding budgeted for the Program and Project activities during the current Disbursement Period to ensure sufficient available cash. At the beginning of every month, the Fiscal Agent (SPTS) shall prepare a Request for funds for the Local Permitted Account.

In order to request the funds to the Permitted Account the Fiscal Agent shall use the NON-US Bank Payment Request Form. These funds will be transferred to the Local Permitted Account and shall be used for the following purposes:

one month payroll

one month of travel advances

one month of petty cash needs for re-disbursements to local vendors for the different small purchases

The CPS Direct Payment is a payment system that uses the U.S. Department of Treasury‟s, International Treasure System (ITS) and Secure Payment System (SPS). All U.S. bank payments use SPS and all non U.S. bank payments use ITS. For CPS Payment, authorized signatures from the Fiscal Agent for payment approval and Payment Request Forms uploading are:


Senior Financial Management Specialist

Senior Accounting Specialist, as alternative

The CPS payment process is initiated by preparing the appropriate Payment Request Form. There are two different types of Payment Request Forms that may be submitted:

Non-US Bank Payment Request Form (for ITS payments)

US Bank Payment Request Form (for SPS payments)

The Fiscal Agent shall ensure that two authorized signatories are permanently available to process payments.

7.6 Spending Authority of the Funds

The cash request for the quarter is included in the Disbursement Request Package which is submitted to MCC no later than 20 days prior to the commencement of each disbursement period. The relevant MCC staff, i.e. the Department of Administration and Finance, checks, certifies and approves funds for this disbursement period. MCC sends a disbursement letter to MCA Moldova detailing the amount of funds approved for the corresponding disbursement period. Then, MCA Moldova shall submit a copy of this letter to the Fiscal Agent.

The Fiscal Agent shall submit payment requests only relating to the expenditures included in an approved Disbursement Request (line 5 of the Disbursement Request). The Fiscal Agent‟s authority for submitting payments expires the last day of the applicable quarter covered by such Disbursement Request. If a new Disbursement Request is not approved by the first day of the next quarter, the Fiscal Agent will not have the authority to submit payment requests to the Financial Service Provider for any expenditures relating to the approved Disbursement Request for the previous quarter, except the following:

Payments from the Working Capital allocation


The Working Capital allocation is valid during the given quarterly approved period and for an additional 30 days after the end of the related quarter. This allocation may be used for expenditures that were approved by MCC in the most recent Detailed Financial Plan, but for which the budgeted funds were inadequate or time for payment is later than originally projected.

In case of reinstatement of Limited Spending Authority

MCC may authorize in exceptional circumstances a temporary reinstatement of Spending Authority during the first 30 days after the closing of the period or until the date of the next Disbursement Request submitted to MCC, whichever is earlier.

7.7 Payments through Permitted Accounts

The funds will be requested into the Local Permitted Bank Account, and will be allocated to the appropriate Project/Activity. Once an invoice has been approved and certified the Fiscal Agent‟s Senior Payments and Tax Specialist shall prepare a bank payment order based on the approved set of documentation. The issuing procedure of the bank payment order may be done in emergency or normally for the establishment of the form in Lei or in US Dollars. The modality of completing a bank payment order is provided by the Regulation of Transfer of Credit approved by the National Bank of Moldova No. 373 dated December 15th, 2005.

Bank payment orders shall be signed by the authorized signatories of the Fiscal Agent and submitted to the bank to process the transfer to the beneficiary. When the transfer is performed, the bank sends to the Fiscal Agent a confirmation of payment. The copy of the bank payment order containing the bank‟s confirmation that the said payment was performed, shall be duly attached to the invoice.

Upon the reception of the confirmation that an invoice was paid, it shall be cancelled by a stamp “PAID” to prevent reuse.

7.8 Direct Payment through Common Payment System

This system allows paying in US Dollars or MDL, directly from the MCC Secure FTP System, vendors for goods, works, and services received. The Fiscal Agent‟s Senior Payments and Tax Specialist shall complete an appropriate Payment Request Form („PRF‟).

The form of the Payment Request Form depends on the recipient bank: U.S. bank or non U.S. bank. It shall be signed by MCA Moldova‟ DAF and by the authorized persons from the Fiscal Agent. The completed and signed Payment Request Form is uploaded into ITS-NBC System by each of the signatories of the Fiscal Agent that receive a Successful File Delivery Notification, indicating the number of the Payment Request Form. The Fiscal Agent receives from ITS-NBC weekly and monthly reports of payments performed.

The payment should be delivered to the beneficiary bank account within 5-7 days.

For internal control and payment security, the Fiscal Agent signs the Payment Request Form just before uploading it into ITS-NBC System.

All invoices and Payment Request Forms shall be cancelled by a stamp “PAID” to prevent reuse.


7.9 Payments Related to Access to Agricultural Finance Activity

The amounts disbursed for Access to Agricultural Finance Activity will be performed through MCA Moldova Permitted Accounts in US Dollars, MDL or Euro, particularly opened for this activity as per provisions of the PPM of MCA Moldova.

7.10 Eligibility Verification and 30-Day Tracking System

The Fiscal Agent shall fulfill the periodic Eligibility Verification as per requirements of the Program Procurement Guidelines (PPG). Vendors listed on any of the following websites shall be recognized as ineligible:

World Bank Debarred List: http://web.worldbank.org/WBSITE/EXTERNAL/ WWWBSITE/EXTERNAL/EXTABOUTUS/ ORGANIZATION/ORGUNITS/EXTDOII/O..content MDK:21182440~menuPK:2452528~pagePK:64168445~ piPK64168309~the SitePK:588921.00html

Excluded Parties List System: http://www.epls.gov/

US Treasury, SDN: http://www.treas.gov/offices/enforcement/ofac/sdn/

US Commerce, Denied Persons List: http://www.bis.doc.gov/dpl/default.shtm

US Commerce, Entity List http://www.bis.doc.gov/entities/default.htm

US State Department, DTC: http://www.pmddtc.state.gov/debar059.htm

US State Department, Terrorist Exclusion List (TEL)

http://www.state.gov/s/ct/list/

Eligibility Verification shall be done twice a year by checking whether all required persons or entities which are active as of January 1st and July 1st of each calendar year have valid contracts. Documentation of these checks should be produced and kept on record as per the requirements of the PPG, and filed no later than 15 days after the dates stated above.

The deadline for the payments shall be less than 30 days from the date the invoice is accepted by the Project Director or the deliverables are approved whichever is later. The Fiscal Agent shall record all invoices in order to monitor the compliance with this term and for this purpose a monthly report 30 Days Tracking System shall be developed into the AAS and maintained by the SPTS of the Fiscal Agent.

7.11 Common Payment System Codes

The CPS is designed to adhere to the approved and formal MCC process incorporated in the Quarterly Financial Reporting. The QFR process details the major Compact Program‟s past expenditures and expected expenditures by each major Project and Activity. CPS will mirror image the Compact‟s multi-year plan major Project and Activity level with an Oracle Code assigned to each program/project level. The Fiscal Agent is responsible for aligning the Chart of Accounts which depict these summary level programs or project budget lines and note the Oracle Code assigned by NBC. In addition, NBC provides a Moldova Code which will remain constant for the duration of the Compact. Both of these, the Moldova Code and the Oracle Code by major Project and Activity budget line are important for each payment request. As identified on the „Payment Request Form‟, these Oracle Codes must be identified for each payment request. These codes enable MCC to update on a real time basis each payment against the major project area. It‟s important to note, the memorializing of each payment using this Oracle Code becomes the historical payment information embedded in the MCC reports and will be used to respond to any official internal or external call of financial reporting. Thus accuracy in posting of payments and use of the correct Oracle Code is paramount to clean financial reports (see Annex III).

http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/ORGANIZATION/ORGUNITS/EXTDOII/0,,contentMDK:21182440~menuPK:2452528~pagePK:64168445~piPK:64168309~theSitePK:588921,00.html

http://www.epls.gov/

http://www.treas.gov/offices/enforcement/ofac/sdn/

http://www.bis.doc.gov/dpl/default.shtm

http://www.bis.doc.gov/entities/default.htm

http://www.pmddtc.state.gov/debar059.htm

http://www.state.gov/s/ct/list/


7.12 Ceiling Allocation through CPS

As each QFR is approved, the ceiling amount by major Project and Activity will be tracked as „Not to Exceed‟ Budget Authority. This Budget Authority for each program/project will expire at the end of 90 days or on the first day of the month of the new quarter. There is a narrow allocation of emergency ceiling in the amount of USD 500,000, which will be considered similar to Working Capital and available only for those valid invoices that are submitted to MCA Moldova after the quarterly Budget Authority has expired, yet the services or goods were approved through the prior QFR process and delivered within the quarterly time frame. A typical example of this occurrence is salaries, rents, utility payments.

Upon occasions where goods or services, which were approved in the QFR, and are delayed in delivery and/or the presentation of invoice falls into the next quarterly time frame, a one time „Special Payment Request Form‟ must be utilized if the payment of this invoice falls above the working capital threshold of USD 500,000. Although the form for the „Special Payment Request Form‟ is distinct from other Payment Request Forms to alert NBC of their use, the invoice approval process leading to its use is the same. One critical difference is MCC must approve use of each „Special Payment Request Form‟ and the signature of the MCC Resident Country Director or delegated alternate must be included. This form performs two actions. First, it increases the spending allowance that was zeroed out at the end of the prior period to an amount equal to the approved payment request, but no greater than the amount of the approved QFR for that project and activity in the previously approved QFR. Second, it initiates the payment process to the beneficiary as would a standard Payment Request Form.

7.13 Local Bank Account Balances

CPS performs payment delivery within five to seven business days. The payment system should not exceed this time frame. Therefore, there is no value to retaining cash reserves in the local bank account. The amount residing in the local accounts should be at an appropriate level and should only support MCA Moldova‟s immediate cash needs (one month salaries, travel and other small expenses). At this time, the MCC will not provide a prescriptive local currency amount to be held in this Permitted Account; however, MCC will monitor on a monthly basis the existing values in these accounts. If the values grow excessive, MCC will provide further guidance as to the allowable amount to be retained in this account.

7.14 Interest on Accounts

The selected bank will pay interest on funds held in the Special Account and in the Permitted Account in consistence with Bank Agreement, unless otherwise agreed in writing by the Parties and MCC. Interest will be calculated daily and credited to the Special Account at least on a monthly basis.

The selected bank shall remit all Accrued Interest earned on funds in the Special Account or any Other Permitted Account(s) to a United States Government account designated in writing by MCC within a time frame not to exceed 10 working days (as per the Bank Agreement), unless otherwise specified by the Compact, agreements supplemental to the Compact, or program documents specific to the project for which the remittance was made.

The USD equivalent of the remitted interest amount earned on funds held in the Local Account(s) shall be calculated based on the daily exchange rates published by the National Bank of Moldova on the payment date


The instruction to the bank should be accompanied with a simultaneous notification to MCC, MCA Moldova Entity management, and NBC as specified in these instructions.

Each Interest transfer should be advised to the following address:

Name Organization Email

EXT Interest Remittance mailbox

NBC Billings and Collections; MCC Division of Finance; MCC DCI Fiscal Accountability; US Dept of Treasury

[email protected]

mailto:[email protected]


8. Taxes

8.1 General Provisions

It is MCA Moldova‟s policy to first seek a tax exemption and not pay the amount including tax and then seek reimbursement from the Government/State Fiscal Inspectorate. Only in rare circumstances when taxes are paid contrary to the provision of the Compact and the Government decision will MCA Moldova/other beneficiaries will pay and then request reimbursement.

MCC Funding in accordance with the Compact, Section 2.8 and other relevant agreements, supplemented by the Decision of the Government of Moldova no. 949 dated October 12th, 2010, which entered into force on October 22nd, 2010, are exempted from any taxes imposed under laws in effect in the territory of Moldova.

The FA shall maintain a system to track all tax exemptions; taxes assessed and paid, and tax reimbursements by the Government. If a tax has been levied and paid contrary to the requirements of this Section 2.8 the FA must notify MCA Moldova and MCC of any failure by the Government, to timely administer such tax exemptions or promptly reimburse such taxes, as detailed in the Tax Exemption Procedure of the Procedure Manual.

8.2 Specific Tax Regulation

(a) Tax exemption shall apply to:

Accrued Interest;

Goods (except the petroleum products) and services performed by the subjects of taxation, which represents the result of their activities in the Republic of Moldova;

Goods (except the petroleum products) imported;

Income received from providing of goods, works and services within the “Compact Program”;

(b) Vendors providing construction services (“Construction Vendor”) to MCA Moldova or any other vendors making large-scale procurement of petroleum products (at list 1 metric ton for each procurement) to be used in connection with such construction projects, shall pay the VAT and excise duties at the point of purchase and will request refund of these taxes. The decision on refund will be taken by the State Tax Inspectorate within forty five (45) days in accordance with the Compact, Schedule E from the submittal of the request;

(c) National legal person established in accordance with the law of the Republic of Moldova and the national natural persons involved in “Compact Program” are not exempted from income tax, social insurance contributions and medical assistance mandatory insurance charges, but are subjects of the taxation in accordance with the legislation in force in the Republic of Moldova;

(d) The exemption from taxes shall be done based on an official letter from MCA Moldova, issued on official letterhead, indicating the name of the project and the name of beneficiary of the exemption.

8.3 Tax Refund

When an invoice is paid with tax by MCA Moldova or its Vendors, its refund shall follow a normal refund procedure from State Tax Inspectorate. FA shall assist the beneficiaries of tax exemption in raising a claim through completing a Tax Refund Letter by citing the relevant


provision of the Compact Agreement. The claim will be addressed to the State Tax Inspectorate stating the following:

The period of refund

Details of the Tax Invoices

Amount of Tax

MCA Moldova or Vendor Bank Account

In these circumstances, a tax reimbursement shall be considered overdue unless reimbursed within thirty (30) calendar days (except petroleum products) from the date of submittal of the request for refund.


9. Personnel and Payroll


The MCA Moldova staff shall be employed through Individual Employment Agreements (IEAs) in line with the Labour Code of the Republic of Moldova. IEAs with the key staff shall be subject to prior approval of MCC and any action regarding the employment or termination of the employment with the key staff must be approved by MCC in advance.

The IEAs shall identify the person hired, the date of hire, the terms of hiring including duration, salary, benefits and any other rights and responsibilities under the IEAs, and shall be signed by the appropriate persons.

The individual consultants shall provide services to MCA Moldova according to Service Contracts, in line with the Civil Code of the Republic of Moldova.

The salary is any payment or income calculated by MCA Moldova according to the IEA or Service Contract for the work performed or services provided. The salary scales for each position shall be coordinated with MCC and approved by the MCA Moldova Steering Committee.

The MCA Moldova staff shall not be entitled to any overtime payments.

9.2 Timesheet

The MCA Moldova employees shall have strict regard to the normal working days, which are all week days except days off and public holidays, and working hours - 40 hours per week, i.e., 8 hours per day. On the eve of holidays, a reduced working schedule of 7 hours per day shall apply. Working time shall be exclusively and effectively used for the work of MCA Moldova. Employees shall not exercise any other profession or engage in any other employment outside, during the official working hours.

All employees shall be required to fill in the monthly Timesheet. The timesheet signed by each employee shall be submitted for the authorization to his/her direct supervisor (PD, DAF etc.), which shall then be submitted to the Human Resources and Administrative Officer (HRAO) not later than three working days before the end of each month. The HRAO shall check the accuracy of the information reported (number of days worked, business trip days, sick leave days etc.) and to make sure that the timesheet is duly authorized by the employee‟s direct supervisor and if satisfied, shall sign the timesheet, which shall then be forwarded for the approval to the Executive Director.

Once approved, the Director for Administration and Finance shall send the timesheet, along with other supporting documents (orders for paid leaves, orders for unpaid leaves, sickness certificates etc.) to the Fiscal Agent. In the event any changes occur from the moment of timesheet approval until the end of the month, the appropriate corrections shall be made in the following month.

9.3 Payroll Calculation

The Fiscal Agent shall calculate the salaries for each MCA staff member and the associated personnel income taxes, social insurance contributions and mandatory insurance charges for medical assistance based on the duly authorized and approved Timesheets, as well as other relevant supporting documents. The Fiscal Agent shall calculate the salaries by filling in the Payroll Ledger, which provides detailed information on gross salary calculations, associated deductions, as well as the amounts of net salary to be paid to each employee. Since the


remuneration of MCA Moldova employees is expressed in US dollars as per the Employment Agreements, the official exchange rates established by NBM on the day of calculation (which can be one of the last three days of the month) shall apply to the calculation of the salaries and the applicable income tax, social insurance contributions and mandatory insurance charges for medical assistance. The Payroll Ledger shall be submitted for approval to the Executive Director and the DAF.

Calculation of remunerations for non-staff local consultants shall be made according to the provisions of the Service Contracts as well as per the delivery-acceptance reports for the services rendered. In case the payment will be made in local currency, while the contract stipulates the amount to be paid in US dollars, the USD amount shall be converted into Moldovan Lei using the official exchange rate of the National Bank of Moldova on the day the remuneration is calculated.

9.4 Temporary Disability – Social Leave

The allowances for a temporary disability (sick or maternity leaves) shall be calculated in line with the Moldovan legislation in force, based on the sickness certificate. An employee may be permitted a sick leave on recommendations by an authorized medical doctor. The sick leave is effective upon the written approval of the ED or his/her designee.

The amount of the allowance shall be contingent with the average monthly income for the last six (6) calendar months preceding the month in which such incapacity occurred, calculated as per the relevant Moldovan regulations. This amount shall be used for calculating the attendant social insurance contributions. The average monthly income, used for the calculation of the sick allowance, cannot exceed the ceiling amount prescribed by the legislation in force. The allowance for temporary disability of MCA Moldova staff shall be calculated and paid along with the next monthly salary, provided that a sickness certificate is submitted. The data required for allowance calculation, such as work experience, disability period and other relevant data as required according to the sickness certificate shall be filled in by the HRAO and checked by the Fiscal Agent.

9.5 Annual Leave

Every MCA Moldova employee shall be entitled to 28 days of paid leave during each leave cycle of the contract year. Annual Leave Applications shall be made in a free form that will be processed and authorized by the employee‟s direct supervisor (PD, DAF etc.). The application shall be recommended by the DAF and approved by the ED. The employee coming back from the leave will notify his/her direct supervisor on the returning day by sending an official e-mail and a copy to the HRAO.

The payments of the annual leave shall be made based on the Order of the MCA Moldova Executive Director which will specify the leave period. The amount to be paid shall be contingent with the average monthly income for the last three (3) months preceding the month of such leave.

9.6 Welfare and Other Benefits and Compensations

The payment of benefits and compensations shall be based on the Order of the Executive Director of MCA Moldova, which shall indicate the period and the reason for paid absences according to the Labour Code (in case of fulfilling national and public obligations as prescribed by the legislation in force, blood donation etc.), provided that all the required supporting documents are duly attached.


The amount to be paid for such days shall be contingent with the average monthly income for the last three (3) months preceding the month with such days.

9.7 Salary Deductions

The following deductions shall be made from the monthly salaries with regard to: personal income tax and other payments made by the MCA Moldova on behalf of the employee and others (un-cleared advance, any pecuniary loss caused by the employee to MCA Moldova where the employee has no reasonable defense, alimony etc.).

Salary deductions shall only be made according to the relevant supporting documents: MCA Moldova internal orders, enforcement orders, inventory memorandums etc. The personnel income tax deductions shall be made according to the application submitted by each employee and the applicable income tax rates. The deductions related to social insurance contributions and mandatory insurance charges for medical assistance shall be made according to the rates provided for in the Legislative Budget on Social Insurances for the corresponding year and the applicable ceiling.

9.8 Verification and Performance of Monthly Payments

Before making payments, the Fiscal Agent shall check on the availability of funds in the MCA Moldova budget approved by MCC. The Fiscal Agent shall also check on the compliance between the payroll ledger and the employment agreements in order to make sure that they are valid and the amount to be paid is correct.

The payment of salaries shall be made via transfer to the individual bank account of each employee. Having made the transfer, the Fiscal Agent shall issue individual cards for each employee, indicating the amounts of gross salary, the deductions and the net salary paid for the corresponding month.

10. Asset Management


The Program assets shall only be used in furtherance of the Compact objectives and shall not be made available for the personal benefit of any MCA Moldova employee or consultant.

Within the Compact, and due to the importance of their follow up, fixed assets have the following characteristics:

(a) Properties acquired with MCC Grant funds that are controlled by MCA Moldova;

(b) Their estimated useful life exceeds one (1) year and that value exceeds the limits established by the Moldovan legislation and for any equipment that is below the limits established by that legislation but which are particularly susceptible to loss or theft;

(c) Will be transferred to the Moldovan authorities when the program will be closed.

Assets should be recorded at cost. Cost includes all costs necessary to bring the asset to working condition for its intended use. This would include not only its original purchase price but also cost of site preparation, delivery and handling, installation, related professional fees for architects and engineers, and the estimated cost of dismantling and removing the asset and restoring the site.


Assets with a value of less than the limit established by Moldovan legislation for fixed assets or with useful life less than one (1) year are defined as “

Small Value Assets” (small tools) and are thus not maintained in the fixed asset register.

MCA Moldova shall provide insurance to cover its equipment, furniture and vehicles from; (a) fire and explosion, (2) natural accidents, (3) energy risks, (4) local and foreign staff travel, and (5) theft (including external, employee and vendors related). Those fixed assets shall be insured through a Moldovan insurance agency for full replacement value adjusted to the actual market value. Money received from fixed assets insurance, will be used to replace the assets with the same destination. Compact funds shall be available for minor repairs and normal maintenance due to regular and normal usage.

10.2 Purchase and Maintaining of Fixed Assets Register

Fixed assets shall be purchased according to the related MCC policy and guidelines. The fixed assets management, including reception, labeling, assignments, transfers inventories and other related activities are the responsibility of the MCA Moldova DAF with assistance of the Fiscal Agent in terms of MCA Moldova staff training related to fixed assets management.

The Office Manager will ensure that all fixed assets purchased by MCA Moldova are labeled with a unique identification code and will transmit this code together with the supporting documentation, through the DAF, to the Fiscal Agent for registering it into the Fixed Assets Register.

The Fixed Asset Register shall be integrated into the Automated Accounting System and maintained by the Fiscal Agent. The FA shall keep all records of the fixed assets, including files and supporting documents and shall supply assistance and training to MCA Moldova staff (as requested) related to fixed assets inventory and follow up system. The financial information in the Fixed Asset Register for each asset shall be recorded in both US Dollars and MDL.

The procedures to be followed by MCA Moldova related to fixed assets registration, marking and filing are set out as per the provisions of the section “Purchase and Maintaining of Fixed Assets Register” of the Fixed Assets Procedure (see Procedure Manual).

10.3 Interoffice Transfer of Fixed Assets

Fixed assets that are assigned to an employee may be re-assigned to another employee. The Office Manager shall prepare a Memo on Fixed Asset Transfer stating the description and the unique identification number of the fixed asset, signed by the delivering responsible employee and the employee who shall assume the responsibility over that asset.

The signed Memo shall be approved by the DAF and then submitted to the Fiscal Agent to record changes of the responsible person in the corresponding Fixed Asset Card. Therefore, an MCA Moldova interoffice transfer will only be allowed with DAF‟s authorization.

In cases of interoffice transfers related to movements between the projects, Minutes of Delivery – Acceptance / Movement of Fixed Asset (numbered and dated) will be issued by the DAF then filled in and signed by the delivering responsible employee and countersigned by the receiving responsible employee.

In cases of interoffice transfers related to inter-project movements, a duly numbered and dated Internal Transfer Voucher will be issued by the DAF then filled in and signed by the delivering responsible employee and countersigned by the receiving responsible employee.

The originals of documents will be kept by the Fiscal Agent, while copies of the same will be kept by the delivering responsible employee and Office Manager.


10.4 Asset Handover and Usage Policy for IEs

MCA Moldova will purchase assets and then hand them over to the IEs for use in carrying out their responsibilities. The purpose of this policy is to ensure that there are uniform procedures for handing over of all MCA Moldova assets to Implementing Entities and there is a proper usage and maintenance of those assets in accordance with MCC guidelines.

Fixed assets will be handed over to IEs for operational purposes only, while the title to the fixed assets will remain with MCA Moldova. IEs shall organize their internal system of management of fixed assets received from MCA Moldova and it should be the same as the one used by MCA Moldova. Support and training for its implementation should be provided by the Fiscal Agent (as required by MCA Moldova).

After procurement processes have been completed, MCA Moldova will register all assets internally and then make transfer to the IEs. Upon receipt of the assets, the IEs will take the responsibility for the effective, efficient, economical and transparent use of all assets to accomplish the goals of the program. In achieving this, the IEs will observe the rules and procedures as set out in section “Asset Handover and Usage Policy for IEs” of the Fixed Assets Procedure (see Procedure Manual).

10.5 Capitalization and Depreciation of Fixed Assets

Because the modified cash based accounting is used, MCA Moldova fixed assets will not be capitalized in the General Ledger and therefore there will be no depreciation taken either. Therefore, they will be expensed at cost on the date they are purchased, but tracked on the Fixed Assets Register throughout their useful life. In the event a fixed asset is repaired, rebuilt or modernized by a third party, Minutes of Delivery – Acceptance of Repaired, Rebuilt and Modernized Fixed Assets shall be completed.

For the purpose of reporting to the Ministry of Finance, assets will be depreciated following the straight-line depreciation method.

10.6 Disposal of Fixed Assets

When a fixed asset is damaged or becomes obsolete, the Office Manager will complete in agreement with DAF, the Fixed Assets Disposal Form. This form shall contain the unique identification number, description of the asset, the physical condition and reasons for disposal of the asset.

The DAF, or whom he/she designates to act on his/her behalf, along with the Office Manager shall inspect the asset together and sign the Fixed Asset Disposal Form if they believe an asset has no value. A short report detailing the key related findings shall be attached to the Fixed Asset Disposal Form.

If the fixed asset is stolen, a memo to the ED, describing the circumstances under which an asset was stolen shall be written by the person to whom the fixed asset is assigned or the relevant staff member. An incident shall be reported to the police and/or insurance agency and the corresponding report shall be kept in the file.

The original of the Fixed Asset Disposal Form shall be authorized by DAF, approved by the ED and submitted to the Fiscal Agent with all duly attached related documents, such as the Police Report in case of theft or accident or the report on the reasons for displacement. Likewise, the final destination of the remaining fixed asset shall be indicated: sale, storage for further use as spare parts etc. The Fiscal Agent shall make a corresponding entry in the AAS based on the approved form and remove the asset from the Fixed Asset Register. A copy of the Fixed Asset Disposal Form shall be kept by Office Manager and a copy of the same shall be kept by the employee responsible for the use of the said fixed asset.


10.7 Inventory of Fixed Assets

Regular inspection and physical counting of all assets shall take place, at a minimum annually by at least two independent counters selected by the ED and the DAF. The ED shall sign an internal order stating the designated members of the committee (at least 5 persons) and the timing of such inventory.

Upon the completion of inventory, reconciliation shall be immediately done with the list coming from the file for the same location (cost center). The variances identified, can lead to a new examination of the place of use and consequently, the statement can be updated with the actually identified list of fixed assets, which were not previously included in the statement.

The results of the count shall be checked against the Fixed Asset Register provided by the FA. The members of the committee shall decide upon the variances identified by issuing a memo describing the results of the physical count and the reconciliation with the accounting records. In the case of a discrepancy, the memo shall state the reasons identified during the count and the appropriate adjustments to be made.

Any proposed adjustments shall be clearly identified duly motivated on the memo kept by the FA and for which usual procedures for reception, transfer or displacement cannot be used. This memo shall be approved in advance by the DAF or ED, a copy of which shall be forwarded to the FA for recording the necessary adjustments that derive from the result of the inventory.

10.8 End of Compact Control of Assets

Any fixed assets remaining at the end of the Compact period will remain the responsibility of MCA-Moldova. If these assets are utilized and thus under control of an Implementing Entity, the documentation must be specifically initiated by MCA Moldova, in conjunction with MCC, to handover these fixed assets with specific instructions on accountability and maintenance of such assets consistent with the Compact directives.

At Compact closure, MCA Moldova has several options regarding disposition of Program Assets. MCA Moldova shall apply the following criteria by order of importance when evaluating the method of disposition of Program Assets:

• the ability to use the Program Asset to sustain the goals and objectives of the Compact;

• the value and remaining useful life of the Program Asset;

• the practicality of the disposition method.

For each category of Program Asset in a given Project, MCA Moldova will include its preferred disposition method in the Program Closure Plan. MCC may request a different disposition method prior to approving the Program Closure Plan. If MCC and MCA Moldova are not able to agree on an appropriate disposition method, MCC may, at its expense, have title to such Program Assets transferred to MCC if such Program Assets are in a deliverable state. In disposing of Program Assets, the Accountable Entity should take all reasonable steps to safeguard or delete sensitive information.

10.9 Small Value Assets

Small Value Assets (“SVA”) are assets that meet the following criteria: (a) their unit price is lower than the ceiling provided by the legislation of the Republic of Moldova, irrespective of their period of service, or (b) their estimated useful life is less than one (1) year, irrespective of their unit price.


Management of Small Value Assets

The management of SVA shall be based on the primary documents: tax invoices and invoices (for non-taxable supplies). The SVA shall be received/accepted by the designated person and accounted for by the Fiscal Agent.

The SVA having a unit price not exceeding 50% of the applicable ceiling, shall be expensed once they are put into service, provided that they are consumed in a single operation cycle. Those SVA having a unit price exceeding 50% of the applicable ceiling shall be 100% depreciated when put into service. Once obsolete, the SVA shall be written off using a Write-Off Form.

The write-off procedure shall be initiated by the MCA Moldova Office Manager by completing a Note that shall indicate the name of assets to be written off, the quantity and the reasons for writing them off. The decision regarding the writing-off of the assets shall be taken by the members of the committee in charge with the control of assets.

Every time a Write-Off Form is completed, the DAF shall submit a copy of the Note and the Write-Off Form to the Fiscal Agent for accounting purposes by the last day of the same month.

Inventory of Small Value Assets

The inventory of SVA shall be performed by an Inventory Committee, the membership of which shall be defined as per the Inventory Order issued by MCA Moldova. The SVA found missing shall be accounted for as per the decision of the MCA Moldova Inventory Committee.

11. Travel and Vehicle Use

11.1 Travel

Travel of MCA Moldova staff and consultants of the Implementing Entities (collectively called MCA Moldova Traveler) shall only take place in furtherance of Compact objectives and shall not be used for the personal benefit of any employee or individual. All travelers irrespective of rank must adhere uniformly to the following rules.

Travel Approval

The travel shall be initiated by the MCA Moldova traveler either following his/her superior‟s instructions or on his/her own by completing a Travel Authorization Request indicating all the travel related information (purpose, mode, period, names of persons that are going to travel, the cost involved etc.). The Travel Authorization Request shall be submitted for approval to the ED, after prior approval of traveler‟s superior and authorization of the DAF, who thus certifies for the availability of funds to cover the travel costs.

Upon the approval, the ED will issue a Travel Order indicating the purpose, destination and period of the travel, as well as the amount of travel advances. This Travel Order shall be forwarded to the Human Resources and Administrative Officer (HRAO), who will make appropriate travel arrangements in line with the Government Decision no. 836 of June 24th, 2001 as amended. The HRAO shall also check whether the travel days have been included in the timesheet of the employee.

DAF shall send to the Fiscal Agent a copy of the Travel Order and of the Travel Authorization Request, indicating the name of the traveler and the amounts of advances to be paid.


Travel Advances

In case of local travels, the travel advance amount will be paid as indicated in the request (cash, transfer, as approved by DAF) in national currency only. In case of foreign travels, the advance will be paid in USD or Moldovan lei. The advance provided shall be accounted for in national currency, as well as in the currency of payment, as per the NBM official rate on the day of providing the advance. The Fiscal Agent will make the corresponding entries into the AAS.

Travel advances must be cleared before a next travel advance is authorized; under no circumstances, the Fiscal Agent will issue any travel advance to the traveler who has got an outstanding travel advance to be settled.

Accounting for Travel

Travel expenses reimbursed to travelers include:

Fares (tickets, fuel)

Lodging / Hotel

Daily subsistence allowances (DSAs) / Per diems

Other related costs (vehicle maintenance, transit visas etc.)

All travel expenses, except for the DSAs, shall be documented as provided for in the Government Decision no. 836 of June 24th, 2002 as amended.

Within five (5) calendar days after return from the trip, the MCA Moldova traveler must complete and submit to his/her superior a Travel Advance Settlement Form. This form shall be completed in the currency of the advance and it will also cover the costs incurred in foreign currency (as appropriate) and recalculated in the currency of the advance. The exchange rates applied will be indicated in the receipts provided by the exchange offices and attached to the Travel Advance Settlement Form, along with other supporting documents for the incurred expenses.

The Travel Advance Settlement Form (with supporting documents attached) shall be checked by the FBO, endorsed by DAF and approved by the ED. Once approved by ED, the DAF shall submit the package of documents to the Fiscal Agent to be accounted for and for final settlement.

The Fiscal Agent shall perform the verification that the Travel Advance Settlement Form is adequately completed and all the supporting documents are attached and shall settle the advance amount of the traveler. The amount of the advance not covered by supporting documents shall be refunded in national currency or in the currency of the advance at the official rate of NBM on the day of refund.

If the traveler travels without receiving an advance, he/she would claim the travel related expenses in the national currency, the funds being transferred to the account of the traveler at the exchange rates indicated in the counterfoils provided by the exchange offices. Otherwise, the expenses will be recalculated based on the official exchange rate of the National Bank of Moldova on the day preceding the travel departure.

Cancellation of Travel

If local or foreign travel, which has been approved and funded, is cancelled, all allowances received must be refunded to the Fiscal Agent within five (5) days from the date of cancellation. The unused amount shall be reimbursed in cash or deducted from his/her salary to be paid in the current month.


Daily Subsistence Allowance

MCA Moldova travelers shall be entitled to payment of DSAs for the trips as follows:

for local trips, the DSAs established by the Government Decision no. 836 of June 24th, 2002 as amended shall apply;

for foreign trips, except for USA, the US State Department rates posted on the website www.state.gov shall apply;

for trips to the USA the rates as published on the website www.gsa.gov shall apply.

For the departure and return days, the MCA Moldova travelers‟ DSAs shall be paid fifty per cent (50%) of the applicable rates to cover en route expenses.

Lodging Costs

MCA Moldova travelers shall be entitled to recover lodging costs upon the presentation of the supporting documents. MCA Moldova shall not refund the cost of deluxe hotel rooms. In cases of externally sponsored travels, the MCA Moldova travelers shall not be compensated for accommodation expenses.

Transportation Costs

Transportation costs shall only be repaid based on the supporting documents as follows:

Air – boarding pass, flight ticket;

Rail – ticket (receipt);

Motor (taxi, bus, tram, tube) – ticket (receipt).

If the traveler uses his/her personal car for business trips, MCA Moldova shall only cover the cost of fuel for the mileage traveled. The traveler shall draft a note indicating the mileage traveled and the fuel consumption and submit it to the ED for approval. All the aforementioned documents shall be attached to the Travel Advance Settlement Form.

MCA Moldova shall refund the traveler‟s expenses related to taxi connection from the airport to the lodging place and backwards, as per the supporting documents (receipts).

Miscellaneous Costs

Other travel-related costs such as internet connection, use of landlines or mobile phone services, visas and other incidental travel costs shall only be reimbursable when relevant supporting documents are provided by the traveler.

11.2 Vehicle Use

The MCA Moldova staff shall only use vehicles for official business, after authorization given by the ED/DED. Therefore, it is not intended to provide MCA Moldova staff with transport from home to office and backwards. Only employees who will be authorized in writing by the ED/DED shall be entitled to drive MCA Moldova vehicles when necessary.

For the good management of the MCA Moldova vehicles the following rules have to be circulated and duly observed:

All MCA Moldova vehicles shall be insured and shall have log books which will have to be inspected by the FBA once a month to ensure proper and consistent use of vehicles.

http://www.state.gov/

http://www.gsa.gov/


All drivers of MCA Moldova vehicles shall have valid driving licenses.

All MCA Moldova vehicles shall be parked at the approved car parking and shall immediately be parked after working hours.

All MCA Moldova vehicles shall be serviced and repaired at the authorized dealer/service center and fuelled at the designated filling station after obtaining relevant approval from ED/DED.

All fuel requisitions (receipts) shall be submitted to the FBA who will be responsible for monitoring of the mileage travelled by each vehicle, to ensure the maximum degree of efficiency and safety and for the preventive maintenance activities for vehicles, based on log books and shall be the custodian of all spare keys.

All accidents involving MCA Moldova vehicles shall be immediately reported by the person driving the vehicle to the Police and within twelve (12) hours of such an accident to the Insurance Company.

Drivers must maintain the vehicles in good working condition to ensure the maximum degree of efficiency and safety.

It is strictly prohibited to carry fuel in MCA Moldova vehicles other than in its tank and smoking in vehicles is strictly prohibited.

Fines incurred through improper parking, violation of traffic rules or if found guilty in a traffic case will be the responsibility of the employee who was driving the vehicle.

All MCA Moldova vehicles will be required to refuel at the designated fuel stations of the selected fuel supplier. For vehicles that are travelling outside the country, drivers will only be allowed to refuel at widely known brand fuel stations (e.g. Lukoil, Shell, BP, OMV, etc) and obtain reimbursement of fuel cost, along with other travel expenses.

The DAF will be responsible for the development of the MCA Moldova Schedule of Consumption by Each Type of Vehicle, which shall be approved by the ED.

The Fiscal Agent will account for and expense the fuel consumed based on the accurate and duly approved documents, as per the provisions of the section “Procedures to be Followed while Using the Fuel Cards System” of the Vehicle Use Procedure (see Procedure Manual).

12. Public Outreach Funds and Representation Costs

Public Outreach Funds and Representation Costs (“POF”) shall only be incurred in furtherance of the Compact and shall be used to host official receptions, lunches, dinners, and similar events, and to otherwise extend official courtesies to the stakeholders of MCA Moldova.

Generally, such events may include: official reception of delegations, organization of public and media events and high-level meetings in furtherance of the Compact, translation services contracted by MCA Moldova for such events, as well as other similar activities deemed necessary by the EC and in the best interest of MCA Moldova Program Implementation. POF shall also include the costs of official protocol events, such as procurement of souvenirs for the official delegations travelling abroad and for those visiting the Republic of Moldova.

According to the MCC Guidebook, POF shall not be used to pay for the cost of meals and refreshments for MCA Moldova employees in connection with regular working meetings, as well as for purely social events intended primarily for the entertainment or benefit of MCA


Moldova officials and employees, their families, or personal guests. Likewise, Compact funds cannot be used to purchase alcoholic beverages.

The use of the funds shall be monitored closely to ensure that expenditures made for official events are consistent with the policy objectives of the Compact, are within amounts clearly budgeted for these purposes in the DFP, and are not prohibited by any other law, rule or regulation.

Expenditures for POF shall be in accordance with provisions in the FAP and MCC Cost Principles for Accountable Entities. However, justification for expenditures related to activities, such as security, strategic information, etc. will be justified only by a memorandum certified by the ED.

The Fiscal Agent shall make payments and reimbursements related to POF in accordance with the FAP upon receiving an approved and documented request for payment as per provisions of the section “Documentation of Public Outreach Event Use” of the Public Outreach Funds and Representation Costs Procedure (see Procedure Manual).

13. Petty Cash

General

MCA Moldova shall perform most of the payments via CPS or bank transfers. However, in specific cases it may be necessary for the MCA Moldova to use cash for small, non-recurring expenses. MCA Moldova shall establish a petty cash fund to serve this purpose, which will be held both in local currency and US Dollar denominations.

The cash transactions shall be carried out by the Fiscal Agent at its quarters. The person appointed by the FA as a Cashier (the Accountant) shall bear full responsibility for the integrity of the petty cash fund, as defined per a Funds Accountability Contract. The cash shall be kept in a lockable strong box. Only the designated Cashier and the Senior Accountant Specialist (acting as Chief Accountant for the petty cash management purposes) shall have the access to the keys to that box.

MCA Moldova petty cash fund shall be replenished via transfers from bank accounts and from the unused advances refunded by the imprest holders. The use of forms related to petty cash transactions shall be in compliance with the provisions of the section “Use of the Petty Cash Forms” of the Petty Cash Procedure (see Procedure Manual).

Petty Cash Count and Reconciliation

As per the audit principles, the petty cash funds shall be subjected to physical examinations on a regular monthly basis as well as unannounced in order to ensure their integrity. The physical examination of cash shall only be done provided that there is any cash on hand. Any discrepancy in the petty cash fund shall be immediately brought to the attention of the DAF.

Fiscal Agent shall perform a reconciliation of the petty cash on hand to the cash recorded into the Automated Accounting System on a monthly basis. The report on this activity shall be included in the monthly financial reports submitted by the Fiscal Agent to MCA Moldova.

14. Reporting


The FA shall produce monthly, quarterly, annual reports, and ad-hoc reports for the use of MCA Moldova, MCC and Ministry of Finance. MCA Moldova together with the FA shall develop an internal procedure that specifies what financial or non-financial information shall


be disclosed to the MCC, legislature and/or general public. Quarterly Financial Reports may also be required for funding under 609g and Compact Implementation Funding.

The bank shall provide the following monthly reports to MCA Moldova and the FA:

Cash balance of the Permitted Bank Account(s);

A transaction report.

The International Treasury System shall provide access to the following daily and monthly reports to MCA Moldova and the FA:

Payment Report;

Reject Report.

The MCC Financial Services Provider will provide the following reports to MCA Moldova and the FA:

US Treasury Government On-Line (“GOL”) Report that details each ITS transaction payment settlement (on a monthly and weekly basis);

MCC accounting reports breaking down expenditures by Project/Activity upon request.

14.2 Reports

The FA shall provide the following reports to MCA Moldova:

Monthly Reports

Cash Flow Statement;

Certification of reconciliation between MCA Moldova accounting records and bank account statements (in MDL and USD);

Interest accrued on Local (MDL) and Special (USD) Accounts;

Exchange rate summary;

Certification of reconciliation between MCA Moldova accounting records and ITS and SPS;

Statement of commitments and payments versus MYFP;

Statement of commitments and payments versus QFP;

Statement of commitments by source of funding recorded during the month;

Commitments history statement;

Statement of payments by source of funding recorded during the month;

Payments history statement;

30 day invoice payment tracking record. Notes shall be provided for any deviations;

Travel imprest report;

Travel ledger.

Monthly progress report detailing the tasks performed by the Fiscal Agent during the month (see Amendment #1 to the Fiscal Agent Agreement).

Quarterly Reports

Quarterly Financial Reports, including the status of funds report;

Detailed Financial Plan;

Balance for the quarter;

Analysis of Moldova‟s State Budget Execution Report to monitor the Government‟s budgeted resource allocations related to the MCA Moldova targeted activities;

Performance Report detailing the tasks performed by the Fiscal Agent during the quarter (see Fiscal Agent Agreement);

Data Call Report to MCC (see Annex IV. Development of Quarterly Data Call).


Annual Reports

The Annual Performance Report is provided thirty (30) days after the end of the contract year.

14.3 Schedule, Destination, and Publication of Reports

Report Report

Responsibility Submission

Date Report

Recipient

Publication

Monthly Reports

Cash Flow Statement

Fiscal Agent 14 calendar days after month-end

MCA Moldova

No

Bank Reconciliation


MCA Moldova

No

Interest Accrued on local and

special accounts


MCA Moldova

No

Exchange rate summary


MCA Moldova

No

ITS and SPS Reconciliation


MCA Moldova

No

Commitments and payments versus

MYFP


MCA Moldova

No

Commitments and payments versus

QFP


MCA Moldova

No

Commitments by source or funding recorded during

the month


MCA Moldova

No

Commitments history


MCA Moldova

No

Payments by source or funding recorded during

the month


MCA Moldova &

MCC No

Payments history statement


MCA Moldova

No

30 day invoice payment tracking

record Fiscal Agent

14 calendar days after month-end

MCA Moldova

No

Travel imprest report


MCA Moldova

No


Travel ledger Fiscal Agent 14 calendar days after month-end

MCA Moldova

No

Monthly progress report

Fiscal Agent

14 calendar days after contract

month-end

MCA Moldova

No

Bank Cash Balance

Bank


Fiscal Agent No

Transaction Report

Bank


Fiscal Agent No

US Treasury Report

MCC Financial Service Provider


MCA Moldova &

Fiscal Agent No

MCC Accounting Report

MCC Financial Service Provider


MCA Moldova &

Fiscal Agent

No

Quarterly Reports

Quarterly Financial Reports

MCA Moldova with FA

Assistance

20 calendar days before beginning of

next calendar quarter

MCA Moldova SC

& MCC No

Detailed Financial Plan

MCA Moldova with FA

Assistance

20 calendar days before beginning of

next calendar quarter

MCA Moldova SC

& MCC No

Balance Fiscal Agent 20 calendar days after

quarter-end

MCA Moldova

No

Budget Execution Report

MCA Moldova with FA

Assistance

20 calendar days after

quarter-end

MCC No

Performance Report

Fiscal Agent 14 calendar days after

quarter-end

MCA Moldova

No

MCC Data Calls: 1. In-House Invoice Form 2. Work in Progress Form 3. Retentions Form 4. Advance Payment Form

Fiscal Agent with DAF and

Project Directors

10 calendar days after

quarter-end

MCA Moldova & MCC

No

Annual Reports


Annual Performance

Report Fiscal Agent

30 calendar days after end

of contract year

MCA Moldova &MCC

No

Reports for Ministry of Finance and Local Authorities

Information regarding the cash

balances of PIU from investment projects, grants

and external credits located in

accounts of commercial banks


MCA Moldova

& Ministry of Finance

No

Express Report regarding the receiving and

using of foreign grants, credits and other sources for

projects implementation,

financed by external funds


MCA Moldova


No

Information regarding the execution of

budget expenditure of MCA Moldova

PIU‟s Programs.


MCA Moldova


No

Monthly report of Credit/Grant

disbursement. Fiscal Agent


MCA Moldova


No

Monthly report on labor


MCA Moldova

& Statistical Department

No

Annual report on labor health and

safety Fiscal Agent

30 calendar days after year-end

MCA Moldova


No

Annual report on professional

development of staff

Fiscal Agent 30 calendar days after year-end

MCA Moldova


No

Annual report on the number and

the payroll Fiscal Agent

30 calendar days after year-end

MCA Moldova


No


Annual report on types of

employees and personnel

fluctuations


MCA Moldova


No

Monthly withhold tax


MCA Moldova

& State Tax Inspectorate

No

Quarterly medical insurance


quarter-end

MCA Moldova


No

Annual information on

payroll and withholding taxes


MCA Moldova


No

Quarterly social fund


quarter-end

MCA Moldova

& Social Fund

No

Annual REV Fiscal Agent 25 calendar days after year-end

MCA Moldova

& Social Fund

No

Within the prescribed number of days after each fiscal period the financial reports for that period shall be published on MCA Moldova‟s website or otherwise made publicly available.

14.4 Retention of Records

The FA shall retain the electronic and paper records of all transactions of the project. Records subject to this policy include all paper and electronic documents, and pertain to any activity of the FA conducted under the terms of the Fiscal Agent Agreement, including communication, contracts or financial transactions. After each annual audit the documentation (hard copies and copies of the electronic version of AAS to date) will be delivered by FA to MCA Moldova for storage and archiving purposes. Records shall be retained by the FA for a period of five years following the termination date of the Compact or the Fiscal Agent Agreement to which it is a party, whichever is earlier. If the Fiscal Agent Agreement is terminated before the termination of the Compact, the FA shall retain copies of all records but shall transfer the originals of all records to the succeeding FA according to the Procedure established by MCA Moldova.

15. Audits & Reporting on Misuse of MCA Moldova Funds or Assets

MCA Moldova shall ensure that authorized representatives of MCC, the Office of Inspector General for MCC, the U.S. Government Accountability Office, or any auditor contemplated in a Compact Document, are afforded (i) the opportunity to audit or inspect activities financed with MCC Funding, the utilization of goods and services financed by MCC Funding, and books, records and other documents relating to this Compact, and (ii) access to


relevant employees and agents of the Government and any other entity receiving amounts of MCC Funding.

15.1 Audit Plans

MCA Moldova, with the assistance of the FA, shall prepare an Audit Plan no later than sixty (60) calendar days before the end of each period to be audited. The Audit Plan shall designate the entities (MCA Moldova and Covered Providers) to be audited, as outlined in the MCC Guidelines for Financial Audits Contracted by Foreign Recipients (MCC Audit Guidelines), as well as the timing of an audit.

Audits shall be conducted on a semi-annual basis for the periods ending 30 June and 31 December. The first audit shall cover the period from October 07, 2009 to December 31, 2011.

15.2 Procuring Auditors

MCA Moldova shall use a competitive process to select an appropriate auditor from a list of auditors approved by the MCC Inspector General. The Statement of Work included in all bidding and contract documents shall conform to the Statement of Work provided in the Audit Guidelines.

After the initial audit, MCA Moldova shall enter into an appropriate number of contracts with qualified auditors to conduct the subsequent audits identified in the Audit Plan.

15.3 Types of Audits and Reviews

The financial audit shall be to assure that the financial statements of the MCC program present fairly the financial position of the program and in accordance with generally accepted accounting standards.

The compliance audit shall be to assure that all financial management procedures and all accounting procedures are being followed by MCA Moldova, the FA, and all Project Director implementing the MCC program. This includes compliance with the Fiscal Agent and Procurement Agent Agreements, as appropriate.

MCA Moldova shall conduct, or cause to be conducted, such performance reviews, data quality reviews, or program evaluations during the Compact Term in accordance with the Monitoring & Evaluation Plan or as otherwise agreed in writing by the Parties.

15.4 Audit Reports and Findings

MCA Moldova shall furnish, or use its best efforts to cause to be furnished, to MCC an audit report in a form satisfactory to MCC for each audit required by Section 3.8 of the Compact, other than audits arranged for by MCC, no later than ninety (90) calendar days after the end of the period under audit, or such other time as may be agreed by the Parties.

Upon receipt of any findings by an auditor, the audit findings will be discussed with MCA Moldova‟s Senior Management and modifications agreed upon to be made to the audit findings by the Auditor. Thereafter revised audit findings shall be submitted to MCA Moldova. The ED shall prepare a written response and submit it to MCA Moldova‟s SC for approval, prior to submission to MCC. Timing of these actions shall be done to assure that the written response is provided to MCC within thirty (30) calendar days of the finding.

MCA Moldova shall use its best efforts to ensure that Covered Providers take, where necessary, appropriate and timely corrective actions in response to audits; consider whether a Covered Provider‟s audit necessitates adjustment of its own records: and, require each such Covered Provider to permit independent auditors to have access to its records and financial statements as necessary.


15.5 Steps in the Financial Audit Process

1. An Audit Plan is prepared by DAF, with assistance by the FA, and approved by MCC. The Audit Plan should be submitted to MCC within calendar 60 days before the next Audit period.

2. The first audit period will be October 07, 2009 to December 31, 2011

3. The procurement of the Auditor takes place or the Option Period on an existing audit contract is exercised. A firm must be on the approved auditor lists: http://www.usaid.gov/oig/public/mcc/resources/mcc_auditors_lists.htm.

4. The Financial Audit must be completed within 90 calendar days after the end of the audit period:

a. The Auditor has 3 deliverables: Planning Document, Draft Audit Report, and Final Audit Report. Each deliverable must be approved by the MCC Office of the Inspector General before payment;

b. The Auditor must conduct:

i. An Entrance Meeting with all responsible persons involved in the audit process;

ii. An Exit Interview after the completion of fieldwork to discuss its preliminary audit findings and allow the MCA Moldova and the FA/PA to correct and clarify any misunderstandings that may have arisen during fieldwork, and to request formal, written comments for inclusion into the Draft Audit Report;

iii. An Exit Meeting to discuss the Draft Audit Report with the MCA Moldova, FA and PA.

c. The Auditor submits the Draft Audit Report and then Final Audit Report to MCC Office of the Inspector General (“OIG”);

d. The Office of Inspector General will send the Approved Final Audit Report to MCA Moldova ED. The letter usually states that the OIG would like to see a corrective action plan on the findings. It‟s not an approved Final Audit Report until the OIG sends it to MCA Moldova officially;;

e. At that point, MCC will work with the DAF to develop a corrective action plan;

f. A copy of the Final Audit Report and Corrective Action Plan should be sent to MCA Moldova Steering Committee.

g. The final audit report will be published on the MCA Moldova website.

15.6 Reporting on misuse of MCA Moldova‟s Funds or Assets

It shall be the policy of MCA Moldova to use the USAID Office of Inspector General HOTLINE as a mechanism to report instances of waste, fraud or abuse of MCA Moldova‟s funds or assets. Employees, contractors, consultants, and the public may report such instances via telephone, email, or mail. For details see MCA Moldova “Whistleblower Policy” (Procedure Manual).


16. Internal Control Procedures

MCA Moldova shall adopt the following expanded internal control procedures with prior approval from MCC, to provide insurance of accomplishing objectives, in term of reliability of financial reporting, compliance with laws and regulations, and effectiveness and efficiency of operations. These internal control mechanisms shall include the following procedures:

Development of Quarterly Disbursement Request and Reporting Package

Commitments and Payments Control

CPS Reconciliation

Automated Accounting System Security

Vendor Invoice

Payment

Bank Guarantees

Taxes

Personnel and Payroll

Assets Management

Travel and Vehicle Use

Public Outreach Funds and Representation Costs

Petty Cash

Development of Quarterly Data Calls

Whistleblower Policy

IT Security

In case of elaboration of new procedures not mentioned above, these procedures will be considered a component part of the procedures list until the next modification of FAP.

17. Review of the Fiscal Accountability Plan

The Fiscal Accountability Plan shall be revised on at least a semiannual basis and where necessary and updated by mutual agreement among MCA Moldova and the Fiscal Agent.

All updates to the FAP should be submitted to MCC for approval within thirty (30) calendar days after any semi-annual revision. This policy applies regardless of the nature of the MCC Grant.


Annex I: Chart of Accounts


Annex I: Chart of Accounts

Chart of accounts – Accounts

Segment Description

Account Prjt Act Ss-Act 1 RECEIPTS

Funds from MCC

10 0 Acc. group Funds from MCC

100 0 0 Account Compact funding

101 0 0 Account CIF funding

102 0 0 Account 609 (g) grants

Interest earned

15 0 Acc. group Interest earned

151 0 0 Account Interest earned special account (US$)

152 0 0 Account Interest earned local account (MDL)

Accrued interest bank receivables

16 0 Acc. group Accrued interest bank receivables

161 0 0 Account Interest accrued US$ acc receivables

162 0 0 Account Interest accrued MDL acc receivables

Other Receipts

17 0 Acc. group Other Receipts

171 0 0 Account Disposal of fixed assets

172 0 0 Account Other items

2 COMPACT RECEIVABLES & PAYABLES

Compact receivables

20 0 Acc. group Compact receivables

200 1 0 Account Road Rehabilitation Project

200 2 0 Account Transition to High Value Agriculture (THVA) Project

200 3 0 Account Monitoring & Evaluation

200 4 0 Account Program Management and Oversight

Compact payables

21 0 Acc. group Compact payables



210 3 0 Account Monitoring & Evaluation

210 4 0 Account Program Management and Oversight

22 0 Acc. group Performance Guarantee



3 COMPACT EXPENSES

1 Road Rehabilitation Project

30 1.1. Acc. group M2 Sarateni-Drochia Junction

300 1.1. 1 Account Construction Works

300 1.1. 2 Account Construction Supervision

300 1.1. 3 Account Implementing Entity Support [SRA]


300 1.1. 4 Account Other Expenses

30 1.2. Acc. group M2 Drochia Junction - Otaci Studies

300 1.2. 1 Account Feasibility Study, ESIA & Detailed Design

300 1.2. 2 Account Resettlement Action Plan & Update to ESIA

2 Transition to High Value Agriculture Project

30 2.1. Acc. group Rehabilitation of CIS (CISRA)

300 2.1. 1 Account Detailed Design and Resettlement Action Plan Dev-mnt

300 2.1. 2 Account Construction Works

300 2.1. 3 Account Construction Supervision

300 2.1. 4 Account Water Users„ Association Start-up Support

300 2.1. 5 Account IE Support / PIM

300 2.1. 6 Account Resettlement Action Plan Implementation

30 2.2. Acc. group Irrigation Sector Reform [ISRA]

300 2.2. 1 Account Irrigation Sector Reform

30 2.3. Acc. group Access to Agricultural Finance [AAF]

300 2.3. 1 Account AAF Credit Fund

300 2.3. 2 Account Investment Development Services and Public Outreach

30 2.4. Acc. group Growing High Value Agriculture Sales [GHS]

300 2.4. 1 Account Growing High Value Agriculture Sales

3 Monitoring and Evaluation [M&E]

30 3.1. Acc. group Studies & Surveys

300 3.1. 1 Account CIS Farm Survey

300 3.1. 2 Account AAF Survey

300 3.1. 3 Account GHS (Value Chain) Survey

30 3.2. Acc. group Capacity Building

300 3.2. 1 Account MCA Staff

300 3.2. 2 Account IEs Support

300 3.2. 3 Account Database, Hardware, Software & Training (MIS)

30 3.3. Acc. group Data Quality Review

300 3.3. 1 Account External Review & Support Enhancement

30 3.4. Acc. group Evaluation

300 3.4. 1 Account Mid-Term Evaluations

300 3.4. 2 Account Final Project Evaluations

300 3.4. 3 Account SPS Assessment

30 3.5. Acc. group Public Outreach for M&E

300 3.5. 1 Account Public Outreach for M&E

4 Program Management and Oversight

30 4.1. Acc. group MCA-Moldova

300 4.1. 1 Account Personnel Salaries and Benefits

300 4.1. 2 Account Administrative Expenses

300 4.1. 3 Account Transportation/Travel Expenses

300 4.1. 4 Account Office Furniture, Equipment & Capital Expenses

300 4.1. 5 Account Outreach & Communications

300 4.1. 6 Account Training & Capacity Building

300 4.1. 7 Account Bank Fees


300 4.1. 8 Account Miscellaneous Administrative Expenses

30 4.2. Acc.group Fiscal Agent and Procurement Agent

300 4.2. 1 Account Fiscal Agent

300 4.2. 2 Account Procurement Agent

30 4.3. Acc. group Audit

300 4.3. 1 Account Audit

4 BANK ACCOUNTS

Special account US$

41 0 Acc. group Special account US$

410 0 XXX Account Special account US$

Local account MDL

42 0 Acc. group Local account MDL

420 0 XXX Account Local account MDL

Accrued interest

43 0 Acc. group Accrued interest transferred to the treasury

431 0 XXX Account Interest transferred to US treasury - special acc $

432 0 XXX Account Interest transferred to US treasury - local acc MDL

5 TRAVEL ADVANCE & PETTY CASH

Travel advance

51 0 Acc. group Travel advance

510 0 XXX account Travel advance

Petty Cash advance

52 0 Acc. group Petty Cash

520 1 XXX Account Petty cash MCA Moldova


Annex II: Signature Regulation


Annex II: Signature regulation

MCC EC/SC ED DED DAF ProcD PD

Notes 1 2 3 3 3 3+4

Budgets above the sub-activity level X X X A X

Budgets at the sub-activity level and below

X A X

Short-term approval of invoices exceeding budget

X A X X

QFR, Disbursement Requests & Procurement Plan

X X/X X A

Hiring and Removal of Key Personnel X X X A

Staff Bonus Payments X X A X

Contracts over USD 25,000 X A A

Contracts at or under USD 25,000 X A A

Contracts at or under USD 2,000 X A A

Personnel Actions related to Directors and above

X X X

Personnel Actions related to staff below Directors

X A X X

Petty Cash Transactions X A X

Purchase Requests over USD 25,000 X A X X A

Purchase Requests under or at USD 25,000

X A X X A

Delivery – Acceptance Report for Goods, Works and Services/GRN

X A A A A

Disposal of Fixed Assets X A X A

Travel regulation A

Approval of invoices X A X X X

Travel Advances X A X A

Vehicle use X X A A

X = required approval A = Alternate Approval: Individual can approve if one MCA Moldova staff Required Approver (marked with X) is not available (i.e. the Alternate may not approve for MCC or the SC)

Notes:

1) MCA Moldova SC may utilize a fast-track process to provide its approval.

2) Project Directors may only sign for actions in areas for which they are responsible.


Annex III: MCA Moldova Common Payment System (CPS) Codes


Annex III: MCA Moldova Common Payment System (CPS) Codes

MCA Moldova COMMON PAYMENT SYSTEM (CPS) CODES

MCC Funding Source

Compact Implementation Funding (CIF) CIF

Compact Compact

Project Name

Project I - Road Rehabilitation ROAD REHAB

Activity Name

1.1. M2 Sarateni – Drochia Junction 0327

1.2. Drochia Junction – Otaci Studies 0328

Project Name

Project II – Transition to High Value Agriculture (THVA) HVA

Activity Name

2.1. Rehabilitation of Centralized Irrigation Systems (CIS) 0329

2.2. Irrigation Sector Reform (ISR) 0330

2.3. Access to Agricultural Finance (AAF) 0331

2.4. Growing High Value Agriculture Sales (GHS) 0332

Project Name

Monitoring and Evaluation (M&E) MON & EVAL

Activity Name

3.1. Monitoring and Evaluation 0016

Project Name

Program Management and Oversight PGM ADMIN

Activity Name

4.1. Program Administration (MCA Moldova) 0017

4.2. Fiscal Agent and Procurement Agent 0059

4.3. Audit 0031

For Local Accounts use NA for Project Name

For Local Accounts use NA for Activity Name


Annex IV: Development of Quarterly Data Calls


Annex IV. Development of Quarterly Data Calls

This procedure outlines the process of obtaining, recording and reporting as per advance payments and accruals on a quarterly basis covering all MCC funds.

General Provisions

MCA Moldova shall submit to MCC on a quarterly basis the detailed information on accruals and advances for all sources of funds: 609(g), CIF, and Compact which is summarized in the Data Call Report. This report identifies the estimated accruals and advances paid during the current quarter as well as the updated information on amounts amortized from previously reported advances. This report will not impact MCA-Moldova‟s Fund Accountability Statement and are not intended to change the modified cash basis of accounting used by MCA-Moldova.

The estimated accruals include the following categories of expenses:

Category 1:

the amount of invoices received for the work performed by the last day of the current quarter and for which no Payment Request Form has been transmitted to National Business Center (NBC) prior to the last day of the quarter.

Category 2:

the estimated amount of work performed prior to the last day of quarter, without submission of an invoice for that work;

the value of goods in transit;

the estimated amount of services provided under a fixed-price contract prior to the last day of the quarter for each deliverable in progress;

the amount of services provided based on the Procurement Plan when the actual cost of those has not been determined.

MCA-Moldova receives some funding directly to the permitted accounts for its current local needs. These funds are requested via the CPS under a Project or Activity budget code of “NA/NA”. MCC receives accrual estimates for these expenses in the QFR under Schedule C, column 2a and 4a. There will be no changes to the Schedule C; therefore MCA-Moldova will not provide other data for these funds As the accruals are estimates and as such may be different from actual expenditures, MCA-Moldova will document any material differences between accruals and actual expenditures in order to understand the source of the deviation and report the latter through validation reports sent to MCC.

Category 3:

the amount withheld from the approved invoices consistent with the MCC Program Procurement Guidelines according to contract terms – Retentions.

The advance payments will include information of new advances paid as well as the updated information on amortized amounts from the previously reported advances. The information on accruals and advances shall be submitted to MCC no later than 10 calendar days after the end of the current quarter which are reflected into 4 spreadsheets:

1. In-House Invoice Form – reflects the first category of accruals (see Annex A);

2. Work in Progress Form – reflects the second category of accruals (see Annex B);

3. Retentions Form – reflects the third category of accruals (see Annex C);

4. Advance Payment Form – reflects the updated information on advances (see Annex D).


TIMELINE FOR PREPARING THE DATA CALL REPORT

The Fiscal Agent – Senior Payments and Tax Specialist is responsible for summarizing the report on accruals and advance payments. In order to provide accurate information of such expenses, SPTS will work closely with the DAF and Project Directors. All information shall be estimated by the Project Directors with the support of SPTS and filled in the Accruals Spreadsheet (see Annex E) and Advances Spreadsheet (see Annex F) accordingly.

Fiscal Agent‟s SPTS shall present the report to the DAF for approval. Upon approval, it shall be submitted by DAF to MCC as detailed in the table below.

No. Action to be undertaken

Category of

accruals and

spreadsheet

Deadline Responsible

person (s)

I. Gathering of Information

1. Project Directors estimate the

invoices received through the last

day of the quarter which was not

submitted to the FA

First category,

Annex E

Not later than 3

calendar days

after the end of

the quarter

Project/Technical

Directors and DAF

2. Fiscal Agent estimates the invoiced

amount for the performed work for

which the Payment Request Form

has not been submitted to the

National Business Center as follows:

a) consult the 30-day prompt

payment report for the accrual

period and to determine the unpaid

invoices

First category,

Annex E

Not later than 3

calendar days

after the end of

the quarter

Fiscal Agent - SPTS

3. Project Directors estimate the value

of works, services performed prior to

the end of the quarter not invoiced

yet as follows:

a) based on periodic progress

reports on MCA large work

contracts

b) based on the status of all

small works contracts and

purchase orders

The copies of all estimating notes

should be kept for the

documentation purposes.

Second

category,

Annex E

Not later than 3

calendar days

after the end of

the quarter

Project/Technical

Directors and DAF

4. Based on contracts Project Directors

& DAF estimate the unpaid value of

goods in transit

Second

category,

Annex E

Not later than 3

calendar days

after the end of

the quarter

Project/Technical

Directors and DAF

5. Fiscal Agent reviews the amounts of

the accumulated retentions to be

released upon compliance with the

contractor‟s obligations under the

contracts. For these purposes FA

will examine the accounting system,

where all retention transactions are

recorded and the documentation

received from the provider with the

Third category,

Annex E

Not later than 3

calendar days

after the end of

the quarter

SPTS



Category of

accruals and

spreadsheet


person (s)

invoice. This allows a contract-by-

contract determination of:

a) outstanding balance of retentions

withheld as of the close of the

previous period

b) the retentions withheld during the

current period

c) the cumulative retentions withheld

from the contract

6. Fiscal Agent reviews all paid

advances during the reported period

and the updated information on

amortized amounts from the

previously reported advances. For

these purposes FA shall examine

the AAS, where all advance

transactions are recorded and the

advance status of the contract at the

close of the previous period. This

allows contract-by-contract

determination of:

a) advance amount initially provided

by MCA

b) the cumulative liquidated advance

amounts to date at the beginning of

the period

c) new advance made to vendors

during the current quarter

d) the advance amount liquidated

during the current period

e) total outstanding advances

remaining to cover

Advances,

Annex F

No later than 3

calendar days

after the end of

the quarter

SPTS

II. Filling the data in the forms

7. Project Directors summarize all data

into the corresponding

spreadsheets, complete all report‟s

form and submit it to the FA

Not later than 5

calendar days

after the end of

the quarter

Project/Technical

Directors and DAF

III. Verification and preparation of the draft report

8. Fiscal Agent reviews the

spreadsheets presented by Project

Directors for reasonableness,

accuracy and completeness

Not later than 6

calendar days

after the end of

the quarter

SPTS

9. Fiscal Agent completes the reports

and submits it to the DAF

Not later than 7

calendar days

after the end of

the quarter

SPTS

IV. Approval of the report and its submission to MCC

10. DAF performs the verification that Not later than 8 DAF



Category of

accruals and

spreadsheet


person (s)

accruals are comprehensive and

fully reflect all activities as part of

Compact Implementation

calendar days

after the end of

the quarter

11. DAF approves the report and

submits it to the MCC

Not later than 10

calendar days

after the end of

the quarter

DAF


Annex A: In-House Invoice Form - US Dollars


Annex B: Work in Progress Form (Estimates) - US Dollars


Annex C: Retentions Form (Estimates) - US Dollars


Annex D: Advance Payment Form - US Dollars


Annex E: Accruals Spreadsheet - US Dollars



Annex F: Advances Spreadsheet - US Dollars