SUPORT MATERIALS

A. Review the contractual conditions established with the funder to check whether there are agreed procedures to address the problem, whether there are restrictions on adjustments to specific items, or in terms of proportionality to the remaining items. If positive, follow the agreed procedures. If negative, proceed with the following steps.

B. Identify items that can be readjusted / relocated. This happens when certain budget lines have been overestimated and are expected not to be used. If positive, report the situation to the funder, presenting the amounts, explaining the
causes and requesting authorization for the relocation. If there are no surplus items, proceed to the next step.

C. Check the adequacy of the budget deficit in the budget line for “Contingencies”,“Unforeseen costs” or any other of the same nature, if any, which should always occur. The forecast of unforeseen events is usually acceptable by the financiers with variable percentages within 5% to 10% on the total budget. Exceptionally they may be higher or lower, depending on the risks of the project, negotiable before the signature of the contract. If positive, report the situation to the funder, presenting the amounts, explaining the causes and requesting authorization for the relocation. If not, proceed to the next step.

D. If the previous solutions do not apply it means that the total budget is insufficient. In this case, seek for other sources of funding, if exclusive rights of the funder were not agreed. If this is not feasible, report to the funder as soon as possible in
order to discuss a solution that may be in order of preference:
a. Increase in funding;
b. Decrease in project results / final products;
c. Support the deficit with own funds

IMPORTANT – In the event that the project is audited in the future, all correspondence with the funder, as well as all studies, analyses and calculations carried out internally, should be kept in a file, to be submitted to the auditors in due course.

Budgets are often drawn up on the basis of previous experience of similar projects, due to constraints related to lack of time, or financial resources for greater accuracy in their preparation, or because they are outdated in time, due to the delay in the award, or any other reason.
If this is acceptable, because sometimes it is inevitable, it is no longer acceptable to continue with the contractual commitment without a prior review of the budget.
Therefore, before any contractual commitment has been made, the estimation of the budget must be optimized, together with the creative team as follows:

a. Quantify the necessary material and human resources and any outsourcing of part of the project or services;
b. Carry out an appropriate risk assessment of the project, aiming a duly estimation of the budget line "Contingencies"
c. Make a study of the market where the project will be implemented, to assess properly the prices of goods and services to be used in the project, as well as the remuneration of any human resources to be contracted locally;
d. Depending on the results of the previous procedures, adjust with the creative team the limits for the use of resources, based on the revised budget, where there is eventually a need to readjust the creative model and / or;
e. Adjust the budget with the funder. Eventually, adjustments between budget lines without changing the total budget is easy to negotiate and avoids future defaults. The total budget is more difficult to negotiate, mainly if a tender has awarded the project. However, when duly substantiated, it is not impossible.
However, a budget is always an estimate and everything can happen. It is normal that there are estimates that fail, for various reasons, impossible to predict, or unlikely to
happen. Under these circumstances, it is always advisable to assure force majeure clauses in the financing contract.

The lack or deficiency of supporting documentation to evidence expenses is frequent in projects implemented in countryside, outside of the cities, in places that do not
have a formal trade. In this event, it is recommended that a meeting with the local authority should be arranged at the beginning of the implementation of the project. During this meeting, the following matters should be discussed:

– Information about the work that will be carried out;
– Resources that are intended to be acquired there;
– Gather information on the usual prices charged in the local for the necessary resources;
– Get advice on local customs that should be respected by project staff
– Request cooperation to confirm the reasonableness of the payments that will be made, for which there is no possibility to obtain a commercial invoice/receipt.
A minute of this meeting should be written to be signed by the local authority, containing the conditions presented by him for the provision of this service.

Therefore, internal documents should be provided to evidence the payment, which should contain the following information:
– Date
– Beneficiary’s name and signature
– Description of the purchased good or service
– Amount paid
– Signature of two witnesses
– Signature of local authority

The auditors who must have been appointed at the beginning of the project must be informed in advance of this procedure and their approval must be obtained.
Alternatively, auditors should provide any other viable solution to the matter.