|JM 99/4 |
JOINT MEETING OF THE
Rome, 15 September 1999
REGIONAL DIMENSIONS TO BUDGETING
1. Regional estimates of FAO's budget are routinely provided in Annex I to each Programme of Work and Budget. However, they are not well explained in the document and sometimes may not be well understood. This has resulted in Regional groups or even Regional Conferences making requests for information particularly on resource allocations and expenditures by region which the Secretariat was unable to accommodate. The purpose of this document is to describe the regional "dimensions" of FAO's budget and clarify how estimates are developed, what they mean and what implementation reporting is feasible.
2. Annex I of each PWB contains a summary of the entire budget broken down by programme and region.1 The figures on the first table of the Annex (Annex I/1 - copy attached) represent the breakdown of the total use of resources from all sources, including the Regular Programme Appropriation, Other Income and Trust Funds. Thus, for example, the figure for Africa in 2000-01 is shown as US$ 244 232 000.
3. The table shown on the page referenced Annex I/2 (copy attached) takes the same figures and breaks them down by Sources of Funds and Region. Here, the total for Africa is broken down as follows:
The present document examines each of the rows in this table and explains how the budgetary figures are derived, how the accounting systems treat each amount and what implementation reporting is currently or may, in the future be feasible.
4. As is evident from the title, the amount of US$ 84.2 million shown under this heading relates to the budgets allotted to Headquarters (HQ) units. The page referenced Annex I/3 shows the amount broken down by programme (e.g. 212 Crops, or 244 Forest Programmes Coordination and Information). Thus, for example, the figure of US$ 366 000 is the amount attributed to the African region under programme 244.
5. This amount is determined by each HQ unit, as it assesses the regional "dimensions" of its programmes. For each programme entity, the responsible HQ unit is required to indicate the proportion of each entity's inputs/outputs which can be considered to be targeted at or of benefit either to particular regions or to the "Global" or "Inter Regional" categories.
6. It needs to be recognised that this is a forecasting exercise, whereby the technical units concerned provide their best judgement in the form of a percentage allocation. For example, the continuing programme activity 244P2 Support to Initiatives in the Follow-up to UNCED includes a component which is to Facilitate National Forest Programmes. One of the planned outputs is direct advice to Members in the form of technical, institutional and policy support for the implementation of effective national forest programmes. In this case, the Forestry Department attributed percentages for this particular component among the four regions, as shown in the table. As a consequence, the amount of US$ 366 000 shown for HQ Regular Programme activities directed towards Africa under Programme 244 in Annex I/3 consists of the sum of all such allocations and includes the amount of US$163 000 shown in the lower-level table.
7. The accounting system of FAO records transactions by four attributes: the source of funds, the object of expenditure, the organizational unit incurring the expenditure and the programme purpose (i.e. in this case, these could be Regular Programme funding, consultant costs, incurred by FODA against programme entity 244P2). The accounting system does not contemplate a fifth attribute for eventual identification of the regional or national beneficiary of the expenditure. Furthermore, the inclusion of such an attribute (not even envisaged under Oracle) is problematic in that it would require many transactions to be split many times. Where staff costs are involved, the concerned staff member would need to record time not only by programme entity but also by country and region. Such an approach is not recommended, as the additional staff workload involved in collecting the data along with the extra load on the system would not be warranted by the output - essentially a statistical measure of inputs presumed to reflect the benefit for specific regions.
8. While wholesale accounting for costs associated to the geographical location of the beneficiaries is not considered to be a viable proposition, regional reporting of implementation by HQ units can undoubtedly be enhanced. Thus, using the same example as above, the relevant HQ unit would have data on which countries were provided with technical, institutional and policy support for the implementation of their national forest programmes in the past biennium. It is therefore, possible for the ex-post-facto implementation report to provide a summary of the activities undertaken and the outputs produced to the benefit of regions. The word "summary" is used as there is a massive amount of detail involved and full reporting would not improve transparency or understanding. There is a need to identify the level at which such reporting would be both feasible and useful to the concerned Bodies.
9. The amount of US$ 28.0 million shown under this heading relates to the budgets allotted to the regional and sub-regional offices in Africa. The page referenced Annex I/3 shows the amount broken down by programme (e.g. 212 Crops or 244 Forest Programmes Coordination and Information). Thus, for example, the figure of US$ 136 000 is the amount attributed to the African region under programme 244 by the Regional Office for Africa (RAF) and Sub-regional Office for Southern and Eastern Africa (SAFR).
10. The determination of this amount is much simpler than that for HQ as it is assumed that all resources assigned to the concerned regional and sub-regional offices are for the direct benefit of that region. Therefore, in this example, the figure in this column equals the budgets of RAF and SAFR.
11. As these offices are organizational units as understood by the accounting system, complete data is available on actual expenditures incurred against the pre-established budgets for these offices.
12. Regional Office contributions are being more and more specifically identified in the budgetary preparation process. This can now be seen on the FAO Website, where is it possible to select those outputs which are being produced with contributions from particular regional structures. Implementation reporting will include output by output reporting as is currently the case.
13. As is also evident from the title, the amount of US$ 22.8 million shown under this heading relates to the budgets held by OCD on behalf of the FAOR Offices in Africa. The page referenced as Annex I/3 shows the amount allocated entirely to Major Programme 3.4 FAO Representatives. Thus, for example, the figure of US$ 22 670 000 is the amount attributed to the African region under Major Programme 3.4.
14. This is also a straightforward case in that it is assumed that all resources assigned to country offices in Africa are clearly for the direct benefit of the region. Therefore, this column equals the budget assigned to the country offices in Africa.
15. As these offices are organizational units as understood by the accounting systems, complete data is available on actual expenditures against the pre-established budget for the offices in Africa, and can be provided on a regional basis.
16. Given the nature of activities in the country offices, implementation reporting against a pre-determined activity-level programme of work is not practicable. Instead, a system of regular internal reporting is followed. Summary reporting at regional level would be feasible.
17. As part of the process of budgetary preparation, PBE develops a forecast of likely extra-budgetary resources in the forthcoming biennium. While it is emphasized that this is not a budget but rather a forecast or planning assumption, it is essential for a number of reasons, including the need to forecast and plan for support cost income and to develop estimates by programme. The technique used to develop the forecast is both "top down" and "bottom up" - "top down" because overall trends in field programme delivery and latest data on approvals guide the total figure, whereas a detailed examination of the budgets for future years of existing projects and of the contents of the pipeline system allow the overall figure to be broken down with reasonable accuracy between programmes, organizational units and recipient countries or regions, depending upon the nature of the project.
18. It should be noted that the implementation responsibility for these resources will be spread between the HQ and the Regional Offices. Most country level technical assistance projects are, in fact, operated by the Regional Offices whereas, projects which are recognised as being in direct support of Regular Programme normative activities are operated by the relevant technical units in HQ.
19. Each project is treated as a "programme entity" in the accounting system, thus enabling the essential project by project reporting required by donors.
20. This form of accounting allows the aggregation of summary level reporting of expenditures to support a summary implementation report in regional and programme terms.
21. This is essentially an information document for the Programme and Finance Committees. No specific decision or action is sought as the purpose of the document as stated at the outset is to clarify what is meant by the regional dimensions of FAO's budget. The Secretariat recognises that behind misunderstandings that may have arisen with this aspect, there is an underlying need for more meaningful implementation reporting to Regional Conferences. The Committees may be assured that the Secretariat will work towards meeting this end.
1. Until 1998-99, this annex was included in the document. For 2000-01, it is posted on FAO's Website http://www.fao.org/pwb