Standard 13: Effective financial management during project implementation.

• Primary responsible: Project managerIn the case of a project with a Chief of Party (or Project Director), PMs reporting to the CoP or the DCoP will likely be the primary responsible. The CoP would likely be involved in working with partners to resolve any significant or sensitive financial management issues. (PM)
  • The PM serves as the primary liaison to the sub-recipient for advances and liquidations, performs the first-level review, and works with sub-recipients and CRS finance to correct errors.

• Others involved: Finance manager (FM) or other designated finance staff; country representative (CR) or designate
  • The FM or other designated finance staff processes advances and liquidations, and supports sub-recipients as needed to correct errors and improve the accuracy of liquidation reports;
  • The CR or designate approves advances and liquidations and supports the PM (and Chief of Party, as applicable) as needed in addressing sensitive financial management issues with sub-recipients. See the Project Financial Management Roles and Responsibilities Matrix and example Liquidation Process Map.

• Following the first project advance, advances should be issued within 15 calendar days from receipt of the partner’s liquidation report (see Subrecipient Financial Management Policy).

All aspects of the implementation of this key action are guided by CRS’ Subrecipient Financial Management Policy (SRFMP).

Follow these steps to ensure timely advances and constructive review of partner liquidation reportsA liquidation report is a financial report containing the prescribed information submitted by a subrecipient to account for expenses it incurred against a CRS project. :

1. The PM makes sure that the partner submits its cash forecasts/requests for funds within the timeframes established in the sub-recipient agreement.
2. After the partner submits the cash forecast, the PM:

• Reviews the forecast and if needed works with the partner to adjust the forecast based on balances from previous advances or any questioned or disallowed costs in the partner liquidation report.
• Ensures that a Payment Request Form (PRF) is prepared, approved and processed immediately after finalizing the cash request, in accordance with existing advance/liquidation policies (see “Policies and procedures”).

3. The PM follows up with partners as needed to make sure they submit liquidation reports at the frequency defined in the SRFMP and documented in the sub-recipient agreement.

Engage senior management to address problems with the timeliness or accuracy of sub-recipient liquidation reports: If a partner does not liquidate an advance in a timely manner or consistently submits inaccurate reports, the PM/Chief of Party (CoP) and FM work with the CR to take appropriate action per the SRFMP, and to communicate the same to the partner.

4. The PM completes the first review of the sub-recipient liquidation report (see Step-by-Step Guide for Review of Partner Liquidation Reports) within five working days of receiving the liquidation report from the partner, notes and concerns or deficiencies, and forwards the report to finance. The PM’s review includes the following:

• Checking expenses reported compared to activities implemented and reported
• Comparing expenses reported to the approved sub-recipient budget

5. The designated finance staff conducts a second review within five working days of receiving the liquidation report from the PM. The finance review includes:

• Checking the accuracy of liquidation calculations
• Reviewing supporting documentation (when required by the SRFMP), including for alignment with accounting principles and local law.
• Communicating any additional concerns or deficiencies to the PM.

Recognize the positive: While it’s important to identify issues that require correction, the PM and finance staff should also recognize partner efforts to improve their liquidation reports based on CRS feedback. CRS should also recognize partners who consistently submit timely and accurate liquidation reports. The PM or finance can share one partner’s good liquidation practices with others, as appropriate.

6. The PM prepares consolidated written feedback on the liquidation report, including appreciative feedback, and shares with the partner.

• Depending on the nature of the feedback, CRS may request a formal meeting with the partner to discuss the report and any support CRS can provide to address issues (see Talking Points for Report Review Meetings with Partners (coming soon)).
• Typically, the PM (or CoP, as applicable to the project management structure) contacts the partner to set up meetings of this type. However, if the nature of CRS’ feedback or the CRS-partner relationship is particularly sensitive, the PM/CoP consults with the head of programming about the best approach. The PM or CoP may request support from the CR as needed in setting up and conducting these meetings.
• TIP: Consider using a standard format to provide liquidation report feedback. A standard template or format can be helpful in ensuring that feedback on liquidation reports is clear, constructive, and complete, and shared in a consistent way across partners and liquidations. See an example format under “Tools and Templates.”

7. As needed, the PM and finance staff support the partner to resolve issues related to any questioned or unsupported costs within an agreed timeframe.
8. Once the partner has made any necessary corrections to the liquidation report, the PM and finance indicate their approval by signing the liquidation report.
9. Finance processes the liquidation per the “Funds Disbursed to Subrecipients” procedure and the SRFMP for any unsupported, questioned, or disallowed costs, and files the liquidation documentation. The PM also prepares a Payment Request Form (PRF) based on the partner’s cash needs for the upcoming period, after adjusting for any balance or unsupported or questioned costs (see Step 2). The payment request should be approved per the CP’s approval matrix.