XVII.5.1 Introduction to Finance in the Field

 

Introduction

10.         This text provides an introduction to finance in the field in the context of emergencies. It introduces the principles and policies that guide the processing of financial resources in support of the smooth functioning of the WHO response. The guidance summarizes the general accounting and financial principles that remain paramount during an emergency and the place of WHO's no regrets policy with regard to those principles. Any exception to WHO financial rules and regulations should be based on the pre-approved waivers in the SOPs for emergencies or from specific exceptional derogations provided by the relevant authorities.

I. General accounting and financial principles

20.         Financial transactions in emergency contexts continue to abide by accounting and financial principles:

• Accounting policies: Accounts are maintained in accordance with the IPSAS (International Public Sector Accounting Standards).
• Accrual basis: WHO follows the accrual basis of accounting. Under the accrual basis, the effects of transactions and other events are recognized when they occur (and not only when cash or its equivalent is received or paid).
• Going concern: WHO financial statements are prepared on a going concern basis, meaning that WHO will continue operating for the foreseeable future.
• Understandability: An essential quality of the information provided in financial statements is that it is readily understandable by users.
• Relevance: Provided financial information must be useful, timely and consider materiality. Financial information must be relevant to the decision-making needs of the users of financial reports. 
• Reliability: Information has the quality of reliability when it is free from material error and bias and can be depended upon by users when it is faithfully represented, neutral, exhibits prudence and is complete.
• Consistent
• Comparable
• Verifiable

For further information, see XII.1.1 General accounting and financial principles (who.int).

30.         In addition, financial transactions in emergency settings need to abide by the five Value for Money (VfM) dimensions:

• Economy – keeping inputs (human and financial resources) as lean as possible;
• Efficiency – using those inputs to obtain or "buy" as much output as possible;
• Effectiveness – keeping the quality of the Organization's output as high as possible to have the most significant possible impact;
• Equity – taking into consideration the extent to which outputs benefit and ensure coverage of the most vulnerable and hard-to-reach populations;
• Ethics – ensuring that all inputs, outputs and outcomes uphold the fundamental ethical principles of respect, goodwill, justice and not causing harm.

Accounting records

40.         As with accounting principles, accounting records must be maintained through emergencies:

• No financial transaction may be made without supporting documents giving all the details necessary to explain the transaction. Any waivers used should also be motivated when relevant.
• Journal vouchers: Journal​ vouchers are needed to transfer funds from one account to another as part of regular accounting operations. Direct adjustments to the sub-ledgers are always the preferred method of adjustment to ensure reconciliation and drill-down capability between the general ledger and the sub-ledgers. Any journal vouchers needed after the trial balance has been handed to the External Auditor are considered closure vouchers and signed off by the Director of Accounts. Records of all closure vouchers are made available to the External Auditor.
  
• Expenditure batches: As part of regular accounting operations, expenditure batches are generally needed to transfer expenditure from one PATEO to another or to a GL account.

For further information, see XII.1.3 Accounting records (who.int)

II. Emergency Response Framework

50.         The Emergency Response Framework (ERF) is internal WHO guidance on how the Organization manages the assessment, grading, and response to public health events in support of Member States and affected communities.

60. WHO's eManual defines the standard operating procedures (SOPs) activated only during graded emergencies. They provide guidance on managerial, operational, administrative, and financial measures. Outside graded emergencies, emergency SOPs can only be activated to investigate unverified signals or as part of early warning or early action.

WHO's no regrets policy

70.         At the onset of all emergencies, this policy affirms that it is better to err on the side of over-resourcing critical functions rather than risk failure by under-resourcing.

80.         The policy applies to any expenditure incurred during the first three months of a graded emergency.

90.         The no-regrets policy does not imply a waiver of compliance requirements or operational risk management processes. All expenditures must be documented and justified at the time. It is also a good practice to justify the public health contribution of interventions when available.

100.       The related procedures for accountability and documentation remain in place, as described in the emergency SOPs and summarized below.

Direct Financial Cooperation (DFC)

Expenditure Type 511

110.       It is important to note the following with regard to DFCs:

• Internal and external auditors can conduct missions in WHO Country Offices, including for DFCs, in the scope of their audits.
• Regional Compliance/Regional Budget and Finance Unit and/or HQ can perform post-facto assurance activities.
• DFCs SHOULD NOT BE USED TO FUND SALARIES.
• Note that DFC Implementing Partners must retain all supporting documents for a period of five years and make them available to WHO when requested for verification purposes.

Please note that FIN.SOP.XVI.004 Risk Assessment and Assurance Activities for WHO Grants (DFC & GLOA) and Direct Implementation (DI) provides guidance on WHO's requirements for global assurance activities (related to Direct Financial Cooperation, Grant Letter of Agreement and Direct Implementation).

For detailed information on DFC, please consult  FIN.SOP.XVI001 -Direct financial cooperation.​

Direct Implementation (DI)

Direct Implementation (DI) is used when WHO makes payments to personnel hired by the government to implement activities and a standard Direct Financial Cooperation (DFC) contract cannot be used (either due to a lack of government capacity or because WHO implements an activity directly in collaboration with the government). In this case, the WCO pays the end recipients directly, and no funds are transferred to the MOH.

Expenditure Type 527

* For Staff Advances

• If the DI Operational Advances are up to US$ 20,000, approval by WR is required.
• If the DI Operational Advances exceed US$ 20,000, Director BOS's approval is required.
• It is important to note that NO NEW advances can be issued to an individual with an outstanding prior advance.

Use of DFC(s) & DI(s)

120.       The main difference is that when a DFC is signed, the WHO transfers the funds to the MOH (or other governmental entity), and the MOH implements the related activities. With DI, WHO implements the activities. Similar activities can be implemented under both modalities.​

130. Below are examples of uses of DFCs and DIs.

For detailed information on DI, please consult FIN.SOP.XVI.002 Direct Implementation.​