Development of Standard Financial Procedural and Fiscal Responsibility Regulations for the Local Governments

USAID Public Financial Management (PFM) Project

Terms of Reference for Short-Term Technical Consultant

1. Background

Deloitte Consulting and WSP, together with Georgia State University and the Niti Foundation are implementing a five-year USAID funded Public Financial Management Program (USAID PFM) whose purpose is to provide technical assistance and strengthen Public Financial Management (PFM) functions, performance, and accountability of targeted agencies at the federal, provincial, and local levels of government, and to provide targeted assistance to the Government of Nepal (GON) aimed at strengthening national PFM institutions and systems to sustainably advance PFM.

The project commenced in October 2022 and will run for a five-year period to October 2027. The major stakeholders of the project are selected Federal Agencies including Ministry of Finance (MOF), Ministry of Federal Affairs and General Administration (MOFAGA), Financial Comptroller General’s Office (FCGO), PEFA Secretariat, National Natural Resources and Fiscal Commission (NNRFC), National Planning Commission (NPC), Office of the Prime Minister and Council of Minsters (OPMCM), Public Procurement Monitoring Office (PPMO), Provincial Governments of Madhesh and Lumbini Province, and Local Governments located in these two provinces.

The objectives of the Project are to provide technical assistance and strengthen PFM functions, performance, and transparency and accountability of targeted agencies at the federal, provincial, and local levels of government, and to provide targeted assistance to the GON aimed at strengthening national PFM institutions and systems to sustainably advance PFM. The Project’s two objectives and key activities are:

In general, the expected outcomes of the Project are to enhance transparency and accountability by accomplishing:

• Selected PFM related laws or policies or regulations or standards or norms or guidelines or tools or manuals developed.
• Selected local governments have increased their own resource revenue.
• Elected and Government officials trained on public financial management system.
• Selected PFM institutions, governments and agencies adopted improved public financial management system.
• Selected local governments have improved gender-responsive budgeting. 
• Coordination mechanisms for coordination are established.
• Standardized training modules in the PFM disciplines are developed.

2. Purpose

The purpose of this assignment is to engage a short-term consultant to work with the concerned Government of Nepal (GON) Counterpartsand the USAID PFM Project to develop a standard Financial Procedure and Fiscal Responsibility Regulations forthe Local Governments (LGs) to regulate and manage financial procedural and fiscal responsibility related functions.  This is in order to assist the LGs for operating and managing treasury, budget formulation, budget release and expenditure, accounting and reporting of financial transactions, internal control, making local financial management system accountable, transparent, result-oriented, and responsible by managing audit and other financial compliances.

(Please note that the ToR is subject to change slightly per the Government Counterpart’s requirements which will be informed to the applicants prior to selection)

3. Rationale

Fiscal federalism is an integral part of a comprehensive federal system of governance. Even a subnational government cannot effectively fulfill public fiscal accountability without a strong and strengthened fiscal federalism. The functions of financial management such as revenue collection, expenditure management, accounting, reporting, and auditing require laws and regulations on financial procedures and matters. Therefore, after the adoption of a federal system of governance, GON enacted the Financial Procedures and Fiscal Responsibility Act 2076 to fulfill the aforementioned necessity. Section 61 of the Act states that when enacting laws related to financial procedures,the provincial and local government have to abide by the broader provision of the Act in a way that does not contradict it. According to the authority given by section 65 of the same Act, GON has issued the Financial Procedures and Fiscal Responsibility Rules 2077. Similarly, to make the provision regarding the role, authority and responsibility of revenue collection and intergovernmental revenue sharing, GON has enacted the Intergovernmental Fiscal Management Act 2074 which also provides for organized revenue sharing between the three tiers of government. In the same way, various provisions have been made from section 54 to 68 of the Local Government Operations Act 2074 regarding authority and responsibility of the local government that can be taken into consideration when formulating the proposed Rule.

All the local governments have to issue the proposed Financial Procedures and Fiscal Responsibility Rules under the boarder provision of the Act in order to effectively manage the financial management activities such as the operation of Local Consolidated Account, budget formulation, budget release and expenditure management, accounting and reporting, internal control and auditing etc. The proposed Rule can contribute to making the financial management of the LGs more accountable, transparent, rule-based as well as result-oriented. The proposed Financial Procedures and Fiscal Responsibility Rule is not only required to abide by the provision of Financial Procedure and Fiscal Responsibility Act operational, but also to operationalize the provision made in the Intergovernmental Fiscal Management Act and the Local Government Operation Act effectively. The proposed Rule basically intends to address the procedures and matters of financial management of LGs such as operation of LGs’ Consolidated Account and preparation of report, estimation of revenue and budget, budget release, accounting, budget expenditure and financial control, procedure regarding advances and its clearance, financial indemnity, periodic financial statement and reporting, internal control and auditing, management and clearance of irregularities, maintenance and record keeping of assets etc. Therefore, in order to efficiently and effectively manage the abovementioned functions of financial management of LGs and to address the issues therein, the proposed Financial Procedures and Fiscal Responsibility Rule is in need of urgent formulation so that the financial management of the LGs can  be efficient, effective, transparent and result-oriented by lessening the fiduciary risk.

4. Methodology

The methodology to be undertaken for this assignment shall be as follows:

i. Consultation meetings with concerned officials of the Office of the Auditor General (OAG), MOFAGA, FCGO, selected District Treasury Comptroller Offices (DTCOs), Provincial Ministry of Finance, Provincial Treasury Comptroller Offices (PTCOs), selected LGs, Inter-Local Government PFM Coordination Committees (ILGPFMCCs) and others.

ii. Collection of relevant data, information, and views from concerned agencies through primary sources such as questionnaires, interviews and secondary sourcesi.e., published documents through appropriate sources.The consultant should prepare the minutes of meeting / interview and include the photographs of consultation meetings.

iii. Triangulate the collected data, information, views, feedback with the consultation meetings and published materials collected from the concerned sources as well as validation workshops with concerned officials or representatives of federal, provincial and local governments, professional institutions,and development partners.

5. Tasks

This work assignment is to develop standard Financial Procedure and Fiscal Responsibility Regulations for the LGs. The Consultant shall carry out the following tasks to achieve the objective:

i. Review and understand the financial rights and duties of LGs related to resource mobilization, allocation, expenditure management, accounting and auditing and the financial procedures that must be followed.

ii. Review the Constitution of Nepal, Financial Procedure and Fiscal Responsibility Act 2076 and Rules 2077 and other related Act and Rules such as Local Government Operation Act 2074, Intergovernmental Financial Management Act 2074.

iii. Identify the areas that are to be addressed by the proposed rules, such as related to resource mobilization, budgeting, expenditure management, accounting, reporting, auditing, assets management and maintenance etc.

iv. Conduct consultative meetings and discussions with the officials of LGs and other relevant government entities, and professional entities.

v. Consult concerned federal government officials to understand the experiences of the implementation of the Financial Procedures and Fiscal Responsibility Act and Rules.

vi. Prepare a draft report for comments and suggestions from the concerned Government Counterpart and USAID PFM Project.

vii. Manage and conduct workshops in order to validate, qualify, and finalize the developed Regulations; and 

viii. Develop and submit the concluding Financial Procedure and Fiscal Responsibility Regulations in the form of a Final Report incorporating the comments from the concerned Government Counterparts and USAID PFM Project and/or as stated in the deliverables.

6. Deliverables

The Consultant shall submit the following reports:

i. Submit an Inception Report with detailed work plan in English language within 10 days of signing the agreement.

ii. Submit the First Draft Report in Nepali within 40 days after signing of the agreement.

iii. Conduct Validation workshops / meetings within 10 days of the submission of the First Draft Report, utilizing presentations and/or other methods to facilitate discussion. Nepali materials shall be used to facilitate clear discussions.

iv. Submit the Final Report in Nepali within 60 days of the signing of the agreement incorporating the comments / suggestions received from the workshops/meetings.

v. Summary Consultant's Work Completion Report describing actions taken to fulfill the above deliverables and provide observations/recommendations for any additional next steps in the process of rolling out of the Guidelines/manuals in English.

All deliverables shall be submitted in editable Microsoft documents, in electronic format. The final report shall also be provided in at least two hard copies and PDF format.

7. Period of Performance:

The duration of this assignment will before 60 days.  The expected start date is May 08, 2023 with a completion date of July 31, 2023.

8. Technical Directions/Supervision:

i. The Consultant will work under the direction and supervision of the Objective 1 Lead (Lead PFM Expert).

ii. The ProjectCOP and DCOP will also monitor the Consultant’s work as and when required.

iii. The Consultant shall carry out her/his tasks in close collaboration and coordination with the concerned Government Counterparts and the Project team.

All deliverables required hereunder will be reviewed and approved by the COP/DCOP and Objective 1 Lead (Lead PFM Expert)

9. Required Qualifications and Experience of the Consultant:

The Consultant should at a minimum have the following qualifications:

• Master’s degree in business administration or public Administration and a Bachelor’s degree in law.
• A minimum of 15 years of professional experience in the field of public financial management preferably in planning, budgeting, accounting and auditing or related field.
• Good communication skills (oral and written) in Nepali and English languages.
• Good report writing skills.
• Have completed at-least two project study/assessment experience in PFM field.
• Proficiency in Microsoft Office software (Word, Excel, PowerPoint, etc.); and
• Ability to work in a multi-cultural environment and exhibit good inter-personal skills.

10. Facilities/Utilities and Logistics to be provided:

The Consultant shall be expected to spend time at the selected government entities, Project Office and from home.  As deemed necessary, the Project will provide working space, internet connection, printing and photocopy facilities as required to complete the assignment. The consultant must provide her/his own computer, including Microsoft Office software to produce compatible documents for review.

All the required field visits, consultative meetings and workshops shall be arranged in coordination with the concerned Government, whereas logistics and allowances shall be managed by the Project.

11. Contractual Amount and Payment Terms:

This will be a fixed price assignment awarded in Nepali Rupees. Payments shall be made in Nepali Rupees in the following manner.

• 25 percent payment upon submission and acceptance of the inception report, including a detailed work plan for the assignment; (Deliverable 1)
• 40 percent payment upon submission of first draft Guidelines/Manuals which is ready to be presented at validation workshop; (Deliverable 2), and
• 35 percent payment after completion of the validation workshop, submission and acceptance of final report (Guidelines/Manuals for Audit Irregularities Settlement for Local Governments) and the Consultants’ Work Completion Report (Deliverables 3, 4and 5).

Travel costs, including the number of trips and length of trips should be estimated. Travel will be arranged and approved in advance by the Project, and actual costs will be reimbursed based on the Project’s standard practices and rates for hotel, per diem, and other billable costs (e.g., meeting costs).

Workshop costs shall be borne directly by the Project. Necessary arrangements for workshop costs (To Be Decided/Determined) if necessary, will be arranged by the project.

12. Application Instructions:

Only individual consultants will be considered for this opportunity.

Interested and qualified individuals should email the following documents to recruitment@pfm-nepal.com with subject line “TOR-OBJ1-2023-03Development of Standard Financial Procedural and Fiscal Responsibility Regulations for the Local Governments.”

(a) Cover letter

(b) Recent CV 

(c) Dates of availability 

(d) Contact information of three professional reference, and

(e) Sample report of previous two assignments 

(f) Daily rate.  A biodata form may be asked of the successful candidate in order to verify the daily rate.

Application deadline: May 4, 2023

Only shortlisted candidates will be contacted. The organization reserves the right to reject any/all applications without assigning any reason.