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CONSIDERING,
That
Administrative Memorandum No. 84 established the framework to decentralize
among program managers the authority and responsibility to establish and
record obligations.
That
the annual 1997 review by the External Auditors of unliquidated
obligations revealed several cases which were not in compliance with
Article 95 (then Article 94) of the General Standards, observed that
"in some areas, the General Secretariat continues to refine its
policy," and recommended that the Secretariat for Management provide
training and further instruction on the obligation process and conduct
compliance checks.
That
as part of the Secretariat for Management's program of activities to
comply with the recommendations of the Board of Auditors and to complete
the refinement of its policies, the Assistant Secretary for Management
promulgated Administrative Memorandum No. 86 on May 28, 1998.
That
there is a need to modify Administrative Memorandum No. 86 as a result of
the subsequent introduction of the Oracle system, modifications to the
General Standards and Statute of the Special Multilateral Fund of the
Inter-American Council for Integral Development ("FEMCIDI"), the
creation of the Inter-American Agency for Cooperation and Development, and
the reorganization of the Secretariat for Management under Executive Order
99-3.
DECISION:
Pursuant
to the decision of the Secretary General, Administrative Memorandum No. 86
is hereby modified as stated below:
I.
PURPOSES
The
purposes of this Administrative Memorandum are as follows:
1. To provide expanded
guidelines and definitions regarding financial obligations;
2.
To reiterate the requirement that all obligations must be based
upon firm commitments when they are approved and recorded in the General
Ledger accounts of the General Secretariat;
3.
To emphasize that all obligations must observe strict adherence to
the criteria established in the General Standards;
4.
To clarify the role and responsibilities of the Department of
Management Analysis, Planning and Support Services (DMAPSS) in the
obligation review process; and
5.
To review and reiterate pertinent policies and procedures with
respect to the funding, authorization, and recording of obligations.
II.
ARTICLE 95 OF THE GENERAL STANDARDS
Article
95 of the General Standards states:
Appropriations shall
be available to meet the obligations incurred during the year for which
they were approved. However, and only to the extent necessary to liquidate
obligations pending at the close of the year for which they were approved,
the appropriations mentioned may be extended, but not beyond December 31
of the following year, on which date they shall expire irrevocably.
In the case of
FEMCIDI, in accordance with its Statutes, resources from voluntary
contributions made by the member states shall be appropriated and
obligated prior to December 31 of the year in which the contributions are
received, and the obligations shall be liquidated prior to December 31 of
the following year.
For the purpose of
this article, obligations shall be understood as those arising from any
agreement, contract, purchase order, or other document concluded with a
natural or legal person under which the General Secretariat is legally
obligated to disburse funds to the corresponding natural or legal person
in order to execute approved activities in keeping with the provisions of
the Charter, the resolutions of the General Assembly, and the General
Standards. The obligations shall be recorded on the date on which the
commitment becomes legally binding.
III.
ADDITIONAL DEFINITIONS AND GUIDELINES FOR OBLIGATIONS
1. For purposes of
applying the definition of an "obligation" under Article 95 of
the General Standards
a.
An obligation is a written purchase order, contract, or other
legally binding agreement with or commitment to another person, natural or
legal, to obtain goods, information, an interest in real estate, financial
instruments, securities, intellectual property rights, other rights, and
services in exchange for payment with financial resources of the OAS. All
financial obligations require the disbursement of financial resources.
b.
An obligation may also be contained in or arise out of a written
letter of understanding, memorandum of understanding, or other legally
binding agreement with or commitment to:
i)
Another organ of the Organization of American States that is a
legal person;
ii)
A Member State;
iii)
Permanent Observer State and any other State;
iv)
An agency of any State;
v)
Another public international organization.
vi)
A Non-governmental Organization ("NGO").
c.
An obligation is NOT an agreement, contract, or memorandum of
understanding with a unit or other unincorporated dependency of the
General Secretariat which does not have its own independent legal
personality.
2. For purposes of this
Administrative Memorandum:
a.
The "Dependencies" of the General Secretariat include
executive secretariats, units, departments, offices, divisions and offices
with functions and responsibilities similar to those of departments, and
the secretariats staffed by General Secretariat personnel and serving as
secretariats to the Specialized Organizations and other entities, organs,
and agencies established under the final paragraph of Article 53 of the
Charter.
b.
"Managers" include: program managers as duly assigned in
accordance with their job descriptions or otherwise designated by the
appropriate authority; the Secretary General and the Assistant Secretary
General; the Director General of the IACD; Chiefs of Staff in the Office
of the Secretary General and of the Assistant Secretary General; Assistant
and Executive Secretaries, Executive Coordinators; Directors; Division
Chiefs of the IACD; the Secretaries of the OAS Administrative Tribunal and
of the Inter�American Juridical Committee.
3.
The terms of Article 95 of the General Standards cited in Part II
above govern the expiration of obligations for the Regular Fund and for
FEMCIDI. In the case of FEMCIDI, however, the expiration date of an
obligation may be modified by a change in the calendar for project
execution approved by the IACD Management Board under Article 17 of the
FEMCIDI Statute. Specific Fund resources are available when received and
they may be obligated as permitted under the terms and conditions of the
instruments that established the corresponding Specific Fund.
4.
Obligations shall be recorded (or caused to be recorded in the case
of obligations under object 1) by the responsible managers on the Oracle
system or as otherwise directed by DMAPSS. They must be backed by
appropriations in the approved program budget, FEMCIDI, or in the Specific
Funds. Managers are responsible for the contents and accuracy as well as
for the maintenance of supporting documentation for each obligation
recorded or caused to be recorded by the dependency or program they
administer.
5.
The following are examples of the supporting obligation documents
acceptable by object major:
Object
major
Example
1. Overtime
- slip signed by the director of the area for work performed;
2. Non-recurring
personnel expenses (such as training, moving, repatriation and recruitment
travel for staff members.
3. Fellowships
- Written offer and acceptance by the grantee, invoice from an airline, or
from an educational institution;
4. Purchase
order, copy of airline invoice;
5. In-house
work order issued and/or copy of a purchase order issued to an outsider;
6 &7 Copy
of purchase order issued to a third party;
8. Copy
of a signed performance contract ("CPR") with contracted party;
and
9. Purchase
orders for common services procured by the General Secretariat under
binding contract with an outside supplier.
6.
Obligations are normally established to cover expenses during the
fiscal year in which they are made. Obligations may be for non-discretionary,
discretionary and technical cooperation expenses, as defined as follows:
a. "Non
discretionary expenses" are those that cover the costs of maintaining
the basic infrastructure of the General Secretariat. They include, but are
not limited to: rent, utilities, communications -long distance telephone
calls, postage, network, internet, couriers- cleaning services, insurance,
and photocopies.
b. "Discretionary
expenses" are those such as the purchase of office furniture and
equipment, overtime, subscriptions to periodicals, travel and some
services for conferences and meetings.
c. "Technical
cooperation expenses" are those for the acquisition of goods and
services directly related to services to the member states, such as:
training, scholarships, contracts with experts providing consulting
services, travel, purchase of technical equipment.
7. All obligations must
have a beginning and an end date.
8.
All obligations must be backed by a corresponding appropriation and
allotment from either the Regular Fund, from the Special Multilateral Fund
of the Inter-American Council for Integral Development ("FEMCIDI"),
or from a Specific Fund.
9.
A fraudulent obligation is an obligation recorded or caused to be
recorded by a staff member who knows or should have known, through the
exercise of ordinary care, that the obligation was not supported by the
corresponding appropriation or allotment. Any intentional or negligent
conduct which leads to the recording of a fraudulent obligation
constitutes misconduct punishable under Chapter XI of the Staff Rules.
IV.
DMAPSS' GENERAL RESPONSIBILITIES WITH RESPECT TO THE OBLIGATION
REVIEW PROCESS
1.
DMAPSS is responsible for monitoring the obligation review process
and for verifying that all obligations are executed against the
corresponding appropriations in the approved Program Budget and in
accordance with the other pertinent resolutions of the political bodies.
2.
DMAPSS is ultimately responsible for the recording of obligations
for personnel under Object 1 of the Program Budget and directly controls
the recording process for the entire General Secretariat.
3.
DMAPSS' staff is responsible for advising and assisting all areas
of the General Secretariat on the process of recording, reviewing, and
maintaining obligations in accordance with the General Standards and other
applicable rules and regulations of the General Secretariat.
4.
The other functions and responsibilities of the Department of
Management Analysis, Planning and Support Services are set out in
Executive Order No. 99-3.
V.
THE OBLIGATION REVIEW PROCESS
1.
For each quarter, every dependency of the General Secretariat
shall, within two weeks of the end of that quarter, submit to DMAPPS a
report indicating the status of obligations that have not been fully
expended in the 180 day period since they were made, together with a
justification for continuing that obligation beyond that period. DMAPSS
shall cancel any obligations not appropriate justified in those reports,
and the dependency shall be responsible for promptly notifying the Office
of Procurement Services that the obligation has been canceled so that the
purchase orders issued with respect to those canceled obligations are
rescinded.
2.
Every dependency is responsible for performing more frequent
reviews of its obligations toward the end of the fiscal year. There should
be at least one review on December 15th and another on or before December
31st.
3.
In coordination with the General Secretariat's dependencies, DMAPSS
shall perform random quarterly reviews of obligations recorded during the
budget execution progress. The primary purpose of those reviews is to
insure quality control of the obligation review process carried out by
those dependencies. In conducting those reviews, DMAPSS shall:
a.
Verify that obligations comply with established rules, regulations
and procedures; and
b.
Provide assistance in the form of budget analysis and in
rescheduling or reprogramming obligations.
4.
Within five working days following the completion of its quality
review of a dependency of the General Secretariat, DMAPSS shall report its
conclusions to the Assistant Secretary for Management and to the Director
of that dependency. Within thirty days thereafter, DMAPSS shall convey the
results of each quality review to the subject dependency, including any
recommendations for improvement or remedial action required.
VI.
ENTRY INTO FORCE
This
Revised Administrative Memorandum shall enter into force on the date of
its signature and supersedes all inconsistent provisions in prior
administrative memoranda on the obligations review process.
James
R. Harding
Assistant Secretary for Management
Date: August 1, 2000
Original: English
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