FINANCIAL PROCEDURES

The Fourth ACP-EEC Convention (LOME IV), Article 221(g) states that: "Development finance cooperation shall: (g) be carried out with a minimum of administrative formalities using simple and rational procedures so that projects and programmes may be implemented rapidly and efficiently;" The ACP-EEC cooperation is implemented through a five-yearly allocation of funds, known as the -European Development Fund (EDF). Some of these resources are managed by the European Investment Bank (EIS), but most by the Commission. This User Guide relates only to resources managed by the Commission. The User Guide lists and explains in simple terms the procedures for the financial management of the European Development Fund under the Fourth Lome Convention. It is intended for use by those concerned with the financial aspects of the proposal, preparation and management of all development cooperation activities covered by the EDF. There are three levels of authority for operation of the EDF. The highest level is the Fourth ACP-EEC Convention (LOME IV) and the Council Decision on the Association of the Overseas Countries and Territories with the EC (91/482/EEC). At the second level, it is supported by the Internal Agreement on the financing and administration of Community Aid under the Fourth ACP-EEC Convention (91/401/EEC), the General Regulations and General Conditions required under Articles 305 and 306 of the Lome IV Convention, and contained in Decision 3/90 of the ACP-EEC Council of Ministers of 29 Match 1990 and the Financial Regulation of 29 July 1991 applicable to development finance cooperation under the Fourth ACP-EEC Convention (Council decision 91/491/EEC). At the third level, comprehensive rules for the application of this legislation are set out in the Manual of Instructions. All of these documents should be kept to hand by any person concerned with the operation of the EDF. For convenient quick reference for day-to-day operations and training purposes, the essential elements of the three levels of authority are summarized in the Project Cycle Management Manual (which covers all aspects of project management), the User's Guide to Tenders and Contracts and this User Guide. The User Guide makes full reference to the three levels of authority which should be consulted for further details. The User Guide deals solely with the financial aspects of the project cycle, is complementary to the Project Cycle Management Manual (integrated approach and logical framework). It should always be remembered that financial management is not an end in itself, but a tool which, properly used, contributes to the timely and effective implementation of projects. It therefore has a key service role within the logical framework of the project cycle (see section 2.7 Means and costs, 5.1 physical and non-physical inputs, 5.4 costs and financing plan and 6.6 economic and financial factors/analysis of sustainability).