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Budgeting of Financial Management Systems

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Budgeting

Financial Management Systems for Health

Purpose

  • Effective budgeting and forecasting enables the resources to be allocated and planned to achieve programmatic and financial objectives
  • Facilitates tracking of expenditures against a forecast, providing a feedback mechanism

Budgeting is a process usually undertaken before the beginning of the financial year, to create a plan or estimate of the expected incomes and expenditures in the upcoming financial year. The budgeting process is usually a collaborative process, enabling budget assumptions to be agreed and stated.

It can also provide an opportunity to agree resource allocations, recognise efficiencies as well as identify practical ways managerial and other incentives can be managed to serve the strategic goals of the organisation.

Forecasting can assist in preparing cashflow forecasts, asset purchases as well as a ‘sensitivity analysis’; understanding the areas where a small percentage change can have significant overall impact.

UNDP’s Offer

UNDP has assisted health programmes to improve budgeting and forecasting systems in Africa, Asia and the Caribbean.

  • UNDP works with Ministries of Health to
    • utilise existing national budget systems and procedures
    • prepare budgets for health programmes
  • UNDP provides technical support to budget and cost national strategic plans, including identifying available resources as well as critical gaps
  • Demonstrates a clear linkage between
    • national health strategies,
    • disease programmes and
    • financial budgets and forecasts
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  • UNDP has worked with CSOs and Governments to
    • design and implement robust budgeting systems supported by a systematic approach for cost allocation and cost recoveries
    • develop manuals, guidelines and standard operating procedures (SOPs) to conduct a meaningful variance analysis as well as, where appropriate, feed into remedial actions
    • establish clear policies for project specific costs for the following
      • salary scales suitable for attracting and retaining critical project staff
      • travel and subsistence
      • standardised training costs
      • vehicle usage and costings
      • consulting fees and scale rates
  • UNDP has used innovative approaches to tailor existing IT systems and technologies which interface with existing systems to provide easy to use, budget input and forecasting
  • UNDP has developed a capacity assessment tool which helps to identify areas for strengthening in budgeting and forecasting for health systems
  • UNDP works with Government Health Systems and projects, as well as Civil Society Organisations to development milestones and indicators, including training needs to measure improvements in effective budgeting and forecasting
The Global Fund requires each grant to have detailed budget in a prescribed format. UNDP has a core team with strong familiarity with the templates, as well as being fully conversant with the Global Fund Budgeting Guidelines. UNDP is able to mobilise a team of strong finance professionals to support budget development.

Suggested indicators

UNDP has utilised clear indicators to monitor improvements in budgeting and forecasting

  • An approved budget is in place
  • Integration of planning and budgeting processes
  • Budgets are integrated with programmatic and financial results
  • 100% Budgeting guidelines and procedures are available, in all Head Office and Regional Finance Departments
  • 100% Budgets are developed on an activity basis and adopt a bottom up approach
  • The budgeting cycle for the health system is aligned to wider Government or Institutional timelines
  • Disbursements requests supported by cash forecasts completed correctly and submitted timely