The public sector and non-governmental organisations (NGOs) alike are expected to manage the money they receive – whether it be in the form of taxpayer funds, donations, endowments or other grants and benefits – in a sustainable and responsible manner, while providing comprehensive and transparent reports to donors on the targeted and efficient use of that money.
Given that good governance is vital to the use and management of public and private funds, the focus of interest is increasingly being placed on auditing the application of funds, as well as assessing the impacts achieved by their application.
Companies are also increasingly identifying corporate citizenship as a component of their business strategy, and are faced with the challenge of accounting not only for the proper application of funds of sponsored projects, but also for the results of those projects - on the outcome and the impact level.
Whenever there is substantial physical distance between the donors of funds and those responsible for applying those funds, or when projects are conducted in occasionally unstable environments, as the case may be for development and similar projects, a systematic audit of the use of funds can help to avoid their improper use or to limit potential damages. Such damages can take the form of embezzled funds, insufficient results or even tarnish the reputation of the relevant donor.
At PwC, our many years of experience in a broad range of sectors and regions, our linguistic and inter-cultural expertise and knowledge of the formal requirements set out by various donor entities (such as the EU or the World Bank) enable us to offer our clients tailored solutions in the areas of accountability reporting and performance review.
This includes not only advising on the development of efficient frameworks or the establishment of appropriate preventative systems, but also conducting a final evaluation to assess the effects achieved through the intervention. This enables us to promote the necessary and desired transparency with respect to the use of the funds applied and the results of the project, for donors as well as the public.
In the performance of its audit, attestation and consulting activities in this area, PwC can draw on many years of experience with institutions – primarily the institutions of the German federal government, the EU, NGOs and the relevant project organisations engaged by them. We offer a wide variety of specific services in the field of audit of application of funds and analyses of project results to provide you efficient and on-target support for your formal requirements and individual challenges.
Project planning and development of monitoring systems
One primary key for the subsequent success of a project is laid out during the project planning and development stages. The Logical Framework Approach (LFA), developed in the 1960s by USAID, is a tool used for systematic and objectives-oriented planning that has been adopted and applied by a wide number of organisations, or used on less linear project approaches. Starting with a comprehensive analysis of the stakeholders and problems, the sequence of the project's impacts are defined and planned. A logframe matrix is used to define the parameters of the project, i.e., the resources used (input), the results directly accomplished (output), the intended effects (outcome) and the desired medium- to long-term changes achieved (impact), as well as to identify the (generally project-external) assumptions underpinning the success of the project. This forms the foundation on which a monitoring system can be developed to quantitatively and qualitatively measure the performance, results and impacts of the project, as well as any additional changes, and to monitor the development of risks.
PwC provides assistance in planning and developing projects and programmes, and in designing monitoring systems. This includes conducting studies and analyses (e.g., target group, stakeholder and problem analyses) and developing a logframe matrix and an accompanying monitoring system aimed at providing users with meaningful benchmarks by which to measure the performance, results and impacts of the project.
Development and audit of internal control systems
Above and beyond adequately planning the project to be implemented, the project organisation itself must meet certain requirements in order to ensure the proper use of funds. This means not only having the staff and financial resources necessary for project execution, but also having an internal control system in place that meets basic standards such as requiring and ensuring compliance with the dual-control principle.
PwC audits, e.g., on behalf of donors, whether the recipient of funds has an adequate internal control system to monitor the use of funds. In addition, we assist in developing an internal control system and defining the relevant responsibilities.
Development and audit of internal control systems
In order to ensure efficient project execution, the project organisation or business unit generally must observe a variety of guidelines and standards, both internal (e.g., organisational instructions, process descriptions) and external (e.g., ANBest-P, VOL/A). This ranges from planning the project in compliance with the guidelines and standards, to the awarding of orders, internal monitoring – including monitoring the use of funds – and disbursing project funds in line with guidelines and standards, all the way to reporting to the project principal and to donors.
When performing an application of funds audit, PwC reviews whether the project organisation or the responsible business unit has duly observed and complied with the relevant guidelines and standards when planning and executing the project, whether the disbursements made were rendered in accordance with the agreements, regulations and arrangements agreed between the donor and the relevant recipient of funds, and whether expenditures can be aligned with the corresponding documents. If so desired, we will also perform a physical, on-site audit, made possible through the experience, broad language skills and, if necessary, the involvement of our colleagues within our international network.
Moreover, we can provide you with assistance in properly presenting and accounting for funds in accordance with the requirements set by the principal.
Dr. Gisela Kramer
Tel: +49 69 9585-5862
Partner, Öffentlicher Sektor Leader
Tel: +49 211 981-2639