7 April 13, 2016 Meeting of CGIAR ...
CGIAR/Transition Meeting.2/7 April 13, 2016 Meeting of CGIAR Centers and Funders on the CGIAR System Rome, Italy May 2-4, 2016
Outline of Financial Framework Agreement
Note: This draft assumes that the oversight responsibilities of the System Organization will remain as they are under the current CGIAR Fund with the System Organization having oversight only of those activities that are financed through the CGIAR Trust Fund, with the exception of that funding which is channelled directly from the Funders to the Centers through the CGIAR Trust Fund (hereinafter referred to as “Designated Funding“). Therefore, all references to funding in this document should be understood to mean funds provided through the CGIAR Trust Fund except for the Designated Funding. The scope of oversight responsibilities under the new CGIAR System will be further discussed and is expected to be finalized at the meeting of Centers and Funders in May 2016. The relevant provisions of this Outline will be revised accordingly following such final decision.
A. Background 1. The Financial Framework Agreement is a new agreement to be entered into between the CGIAR System Organization and each Center to govern all future funding provided from January 2017 through the CGIAR Trust Fund to Centers to implement CGIAR Research, except in relation to Designated Funding. This Agreement is intended to replace the Program Implementation Agreement format as well as the numerous downstream agreements between Centers. It would set out the terms and conditions in respect of receiving funding and implementing CGIAR Research relevant to a Centers in its role as a Lead Center or as a Collaborating Center as appropriate. 1 2 2.
The Agreement would be composed of three parts: (i)
the main body setting out the general terms and conditions governing all CGIAR Research and applicable to all Centers irrespective of role;
(ii)
the annexes which would contain the terms relevant to a Center, as appropriate, depending on whether the Center is serving as the Lead Center or a Collaborating Center; and
(iii)
the Letters of Notification of Approved CGIAR Research Proposal, Letters of Annual Allocation of Funding and Letters of Commitment, which would confirm the System Organization’s approval of a CGIAR Research proposal, provide for an annual allocation of funds and commit funding respectively.
B. Proposed Principal Provisions: Introduction 3. The Funders and the System Organization acknowledge that the CGIAR Charter (as may be amended from time to time) sets out the specific terms governing the internal organization of the System Organization. The functions of the System Organization, in particular in respect to the division of responsibilities between the System Council and the System Administrative Office, are as set out in the Charter. The System Organization shall act consistent with the Charter. Indicative Funding 4. Following System Council approval of a CGIAR Research proposal, the System Organization shall send a Letter of Notification of Approved CGIAR Research Proposal to the Centers participating in the CGIAR Research, whether as Lead Center or as Collaborating Center, informing the Recipient of the approval of a CGIAR Research proposal and the endorsement of the multi-year Indicative Funding amount. The final approved CGIAR Research proposal shall be attached as a Schedule to such letter. The Indicative Funding provides a basis for planning and does not constitute an obligation, liability or commitment of the System Organization to make available any amount to the Recipient. The Agreement is not meant to address the process for developing CGIAR Research proposals. These will be as set out in guidelines developed by the System Council from time to time. 2 The contracting mechanism is independent of how the funds physically flow. 1
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Annual Allocation 3 5. Subject to funding availability and implementation of the CGIAR Research and based on the approved guidelines and criteria for prioritization and annual allocation of funds, the System Organization will approve Annual Allocations to fund the CGIAR Research. Following each approval of an Annual Allocation, the System Organization shall issue a Letter of Annual Allocation to the Recipient reflecting the approved Annual Allocation for that Recipient and including additional Program Terms, if any, (e.g. terms related to the provision of additional funding or new requirements that have been adopted by the System Council). Unless the Recipient notifies the System Organization of any disagreements with the Letter of Commitment within thirty calendar days of receipt, the Recipient shall be deemed to have accepted the terms of such letters. Commitment and Disbursement 6. Once the trustee of the CGIAR Trust Fund has confirmed to the System Organization the availability of applicable funds in the CGIAR Trust Fund, the System Organization shall issue a Letter of Commitment for such funds to the Recipient, confirming the disbursement amounts and the schedule of disbursement. Use of Funding 7. The funding transferred to the Recipient under this Agreement shall be used for the purposes for which they have been provided. 8. Recipient shall promptly inform the System Organization of any unforeseen or extraordinary conditions that may materially interfere or threaten to interfere with any CGIAR Research or with the Recipient’s obligations under this Agreement. 9. Any interest earned by the Recipient on the funding transferred to the Recipient shall be accounted for and used solely for the applicable CGIAR Research. Policies 4 10. Recipient shall comply with and carry out its obligations under this Agreement in accordance with all applicable CGIAR System policies, procedures and guidelines.
3 Center representatives on the legal working group proposed incorporating into the Annual Allocation and Commitment and Disbursement provisions a pre-agreed timeline for informing Centers of the allocation and commitment amounts of funding to facilitate the annual planning of research activities. 4 Center representatives on the legal working group proposed including text that Recipient should only be obligated to comply with any newly approved policy, procedure or guideline once adequate funding has been provided.
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Program Oversight and Assurance 11. Recipient to implement, monitor performance and assure accountability for the CGIAR Research in accordance with its rules, regulations, governance procedures and applicable policies, procedures and guidelines, including system-wide policies, procedures and guidelines. 12. Recipient may partner or subcontract with Program Participants for the implementation of the CGIAR Research. Recipient shall require any Program Participants to operate in accordance with this Agreement. 13. Recipient agrees that the System Organization shall oversee the implementation of and use of funding for CGIAR Research based on annual system-level programmatic and financial reports, including Center reports submitted under the performance management system for CGIAR Research and aggregated programmatic and financial reports prepared by the System Administrative Office drawing on information contained in the performance management system. 14. Recipient shall (i) maintain books, records, documents and other evidence in accordance with applicable accounting policies and procedures to sufficiently substantiate, in a manner reasonably satisfactory to the System Council, financial data relating to the CGIAR Research. Records must be maintained for at least [3] years after the termination of the specific CGIAR Research; (ii) permit designated representatives of the System Organization to examine such records and provide to the System Organization all such information concerning such records as may be reasonably requested. For the purposes of this section, the System Organization shall also inform the Recipient of such obligations in a timely manner at least [45] days in advance. 15. Recipient agrees that the System Organization has the right to commission evaluations of Recipient in accordance with the evaluation framework for CGIAR Research that includes periodic evaluations of CGIAR Research and periodic external independent governance and management reviews of the Centers. If the costs of such evaluations have not been approved as part of the CGIAR Research, the System Organization shall pay the fees and expenses relating to such evaluations. For the purposes of this section, the System Organization shall also inform the Recipient of such obligations in a timely manner at least [90] days in advance. 16. Recipient agrees the System Organization and any Funder reserves the right to request separate audited financial statements or reports for portions of CGIAR Research financed with funding provided by the System Organization. The cost of any such separate audited financial statements or reports shall be paid by the requesting System Organization or Funder, as the case may be. 17. Recipient agrees the System Organization may conduct an audit following consultation and agreement with the Recipient of a Recipient or CGIAR Research by its own authorized representatives or agents to verify financial management systems of the Recipient and to add value to the implementation CGIAR Research by improving system-wide operations, particularly with respect to governance, risk management and internal controls. 18. If there is suspected misuse of funding, Recipient agrees the System Organization may conduct an investigation into the use of the Funding provided by the System Organization. 19. If there is any material [defined as having a significant impact on the agreed upon implementation of the project] misuse of funding identified through such audit or investigation, the System Organization reserves the right to be reimbursed by the Recipient for up to 100% of the reasonable costs incurred in the investigation by the System Organization to be determined on a case-by-case basis depending on the facts 3
and circumstances relating to such misuse. In the absence of misuse of Funding, the System Organization will meet the full costs of an audit or investigation of system-wide risk.
Reporting 20. Recipient shall provide to the System Organization unaudited financial reports, prepared in accordance with applicable policies and procedures for CGIAR Research (regardless of funding source) on a quarterly basis. 21. Recipient shall provide to the System Organization annual financial statements that have been audited by independent auditors in accordance with applicable policies and procedures and that are accompanied by auditors’ opinions. 22. Recipient shall provide annual programmatic reports and any reporting required to be submitted under the performance management system. Continuing Representations and Undertakings 23. This Agreement shall include customary continuing representations and undertakings, such as, capacity to enter into agreement; activities and research are conducted under sound standards, no illegal activity, etc.
Prohibited Use of Funding 24. This Agreement shall include provisions on prohibited use of funding, such as, funding shall not be used for illegal purposes.
Termination / Suspension 25. If either party determines that the other party is not complying with any material terms or conditions of this Agreement or that any material activities implementing the CGIAR Research is not progressing efficiently or effectively, or that such activities are failing to reach planned indicators or results in a manner that merits corrective action, either party may notify the other of its view with recommendations for improvement with regard to the CGIAR Research or with a request that corrective measures are designed to address shortcomings. 26. In the case of the System Organization making such requests, if the Recipient does not address any such material shortcomings within a reasonable timeframe (no less than 45 days) to the satisfaction of the System Organization, the System Organization shall consult with the relevant Center and the Centers Consultative Group on measures to resolve the issue and a possible course of action. If no resolution is found within 30 days, the System Organization shall have the right to suspend or terminate this Agreement and to discontinue making further disbursements. 27. In the case of the Recipient making such request, if the System Organization does not address any such material shortcomings to the satisfaction of the Recipient within reasonable timeframe (no less than 45 days), the Recipient has the right to request a consultation with the System Organization and the Centers
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Consultative Group on the matter. If no resolution is found within 30 days, the Recipient shall have the right to suspend or terminate performance under this Agreement. 28.
The Parties may suspend or terminate this Agreement by mutual agreement.
Refunds 29. Upon completion of any CGIAR Research or upon termination of this Agreement, Recipient shall promptly refund or otherwise return to the CGIAR Trust Fund any funding that remains unexpended or uncommitted unless agreed otherwise with the System Organization. 30. If the System Organization determines, following consultation with the Recipient, that any funds have been used in a manner inconsistent with the provisions of this Agreement, the Recipient shall, upon notice from the System Organization, promptly refund such amount to the CGIAR Trust Fund. Such refunded amount may be apportioned to other CGIAR Research or may be returned to Funders on a pro rata basis. No Liability 31. None of the Funders, the System Council, the Trustee or the System Organization shall be responsible for the activities of any person or third party engaged by the Recipient with use of the funding or as a result of this Agreement or any sub-agreement; nor will the Funders, the System Council, the Trustee or the System Organization be liable for any costs incurred by Recipient in terminating the engagement of any such person. Insurance 5 32. Whenever relevant and possible, the Recipient shall carry reasonable liability insurance in connection with the activities of the CGIAR Research in light of the insurance available, and the activities being undertaken by Recipient. [Indemnity 33. [Each Party][Recipient] shall defend and indemnify the [other Party] [System Organization] and its present and former officers, directors, employees and agents, and hold it and them harmless from and against any losses, costs, claims, expenses, liabilities, demands, damages and fees incurred by it and them (including reasonable fees of counsel) arising from any claim, action or dispute brought in connection with their respective roles, responsibilities and undertakings related to the implementation of this Agreement (including the CGIAR Research or funding committed and/or provided under this Agreement).]
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Payment of insurance fees as direct or indirect costs should be as set out in the CGIAR financial rules and regulations.
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C. Other standard provisions a) Modifications (must be by mutual agreement and in writing). b) Order of precedence (among conflicting provisions or elements of the agreement) c) Notices d) Process to deal with Changes (for example Force Majeure). e) Intellectual Property (Recipient owns resulting IP which shall be managed in accordance with the CGIAR IA Principles). f) Term of the Agreement (period of performance and potential extension). g) Governing Law h) Dispute Resolution (with time limits for each phase)
D. Annexes Annex 1:
Definitions
Annex 2a:
Provisions applicable to Center when acting as Collaborating Center
Additional responsibilities of Collaborating Center in implementing the CGIAR Research to include programmatic and financial reporting responsibilities, such as providing Lead Center with required reporting information in a timely manner and making available books and records to Lead Center as necessary to conduct any audit or evaluation. Annex 2b:
Provisions applicable to Center when acting as Lead Center
Additional responsibilities of Lead Center in managing and implementing the CGIAR research to include programmatic and financial reporting responsibilities and oversight. For example, Lead Center shall prepare and provide to the System Organization annual CGIAR Research reports of income and expenditure by category, supported by the supplementary schedules to each Center’s audited financial statements. Annex 3:
Form of Letter of Notification of Approved CGIAR Research Proposal
Annex 4:
Form of Letter of Annual Allocation
Annex 5:
Form of Letter of Commitment
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Outline of Financial Framework Agreement
Note: This draft assumes that the oversight responsibilities of the System Organization will remain as they are under the current CGIAR Fund with the System Organization having oversight only of those activities that are financed through the CGIAR Trust Fund, with the exception of that funding which is channelled directly from the Funders to the Centers through the CGIAR Trust Fund (hereinafter referred to as “Designated Funding“). Therefore, all references to funding in this document should be understood to mean funds provided through the CGIAR Trust Fund except for the Designated Funding. The scope of oversight responsibilities under the new CGIAR System will be further discussed and is expected to be finalized at the meeting of Centers and Funders in May 2016. The relevant provisions of this Outline will be revised accordingly following such final decision.
A. Background 1. The Financial Framework Agreement is a new agreement to be entered into between the CGIAR System Organization and each Center to govern all future funding provided from January 2017 through the CGIAR Trust Fund to Centers to implement CGIAR Research, except in relation to Designated Funding. This Agreement is intended to replace the Program Implementation Agreement format as well as the numerous downstream agreements between Centers. It would set out the terms and conditions in respect of receiving funding and implementing CGIAR Research relevant to a Centers in its role as a Lead Center or as a Collaborating Center as appropriate. 1 2 2.
The Agreement would be composed of three parts: (i)
the main body setting out the general terms and conditions governing all CGIAR Research and applicable to all Centers irrespective of role;
(ii)
the annexes which would contain the terms relevant to a Center, as appropriate, depending on whether the Center is serving as the Lead Center or a Collaborating Center; and
(iii)
the Letters of Notification of Approved CGIAR Research Proposal, Letters of Annual Allocation of Funding and Letters of Commitment, which would confirm the System Organization’s approval of a CGIAR Research proposal, provide for an annual allocation of funds and commit funding respectively.
B. Proposed Principal Provisions: Introduction 3. The Funders and the System Organization acknowledge that the CGIAR Charter (as may be amended from time to time) sets out the specific terms governing the internal organization of the System Organization. The functions of the System Organization, in particular in respect to the division of responsibilities between the System Council and the System Administrative Office, are as set out in the Charter. The System Organization shall act consistent with the Charter. Indicative Funding 4. Following System Council approval of a CGIAR Research proposal, the System Organization shall send a Letter of Notification of Approved CGIAR Research Proposal to the Centers participating in the CGIAR Research, whether as Lead Center or as Collaborating Center, informing the Recipient of the approval of a CGIAR Research proposal and the endorsement of the multi-year Indicative Funding amount. The final approved CGIAR Research proposal shall be attached as a Schedule to such letter. The Indicative Funding provides a basis for planning and does not constitute an obligation, liability or commitment of the System Organization to make available any amount to the Recipient. The Agreement is not meant to address the process for developing CGIAR Research proposals. These will be as set out in guidelines developed by the System Council from time to time. 2 The contracting mechanism is independent of how the funds physically flow. 1
1
Annual Allocation 3 5. Subject to funding availability and implementation of the CGIAR Research and based on the approved guidelines and criteria for prioritization and annual allocation of funds, the System Organization will approve Annual Allocations to fund the CGIAR Research. Following each approval of an Annual Allocation, the System Organization shall issue a Letter of Annual Allocation to the Recipient reflecting the approved Annual Allocation for that Recipient and including additional Program Terms, if any, (e.g. terms related to the provision of additional funding or new requirements that have been adopted by the System Council). Unless the Recipient notifies the System Organization of any disagreements with the Letter of Commitment within thirty calendar days of receipt, the Recipient shall be deemed to have accepted the terms of such letters. Commitment and Disbursement 6. Once the trustee of the CGIAR Trust Fund has confirmed to the System Organization the availability of applicable funds in the CGIAR Trust Fund, the System Organization shall issue a Letter of Commitment for such funds to the Recipient, confirming the disbursement amounts and the schedule of disbursement. Use of Funding 7. The funding transferred to the Recipient under this Agreement shall be used for the purposes for which they have been provided. 8. Recipient shall promptly inform the System Organization of any unforeseen or extraordinary conditions that may materially interfere or threaten to interfere with any CGIAR Research or with the Recipient’s obligations under this Agreement. 9. Any interest earned by the Recipient on the funding transferred to the Recipient shall be accounted for and used solely for the applicable CGIAR Research. Policies 4 10. Recipient shall comply with and carry out its obligations under this Agreement in accordance with all applicable CGIAR System policies, procedures and guidelines.
3 Center representatives on the legal working group proposed incorporating into the Annual Allocation and Commitment and Disbursement provisions a pre-agreed timeline for informing Centers of the allocation and commitment amounts of funding to facilitate the annual planning of research activities. 4 Center representatives on the legal working group proposed including text that Recipient should only be obligated to comply with any newly approved policy, procedure or guideline once adequate funding has been provided.
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Program Oversight and Assurance 11. Recipient to implement, monitor performance and assure accountability for the CGIAR Research in accordance with its rules, regulations, governance procedures and applicable policies, procedures and guidelines, including system-wide policies, procedures and guidelines. 12. Recipient may partner or subcontract with Program Participants for the implementation of the CGIAR Research. Recipient shall require any Program Participants to operate in accordance with this Agreement. 13. Recipient agrees that the System Organization shall oversee the implementation of and use of funding for CGIAR Research based on annual system-level programmatic and financial reports, including Center reports submitted under the performance management system for CGIAR Research and aggregated programmatic and financial reports prepared by the System Administrative Office drawing on information contained in the performance management system. 14. Recipient shall (i) maintain books, records, documents and other evidence in accordance with applicable accounting policies and procedures to sufficiently substantiate, in a manner reasonably satisfactory to the System Council, financial data relating to the CGIAR Research. Records must be maintained for at least [3] years after the termination of the specific CGIAR Research; (ii) permit designated representatives of the System Organization to examine such records and provide to the System Organization all such information concerning such records as may be reasonably requested. For the purposes of this section, the System Organization shall also inform the Recipient of such obligations in a timely manner at least [45] days in advance. 15. Recipient agrees that the System Organization has the right to commission evaluations of Recipient in accordance with the evaluation framework for CGIAR Research that includes periodic evaluations of CGIAR Research and periodic external independent governance and management reviews of the Centers. If the costs of such evaluations have not been approved as part of the CGIAR Research, the System Organization shall pay the fees and expenses relating to such evaluations. For the purposes of this section, the System Organization shall also inform the Recipient of such obligations in a timely manner at least [90] days in advance. 16. Recipient agrees the System Organization and any Funder reserves the right to request separate audited financial statements or reports for portions of CGIAR Research financed with funding provided by the System Organization. The cost of any such separate audited financial statements or reports shall be paid by the requesting System Organization or Funder, as the case may be. 17. Recipient agrees the System Organization may conduct an audit following consultation and agreement with the Recipient of a Recipient or CGIAR Research by its own authorized representatives or agents to verify financial management systems of the Recipient and to add value to the implementation CGIAR Research by improving system-wide operations, particularly with respect to governance, risk management and internal controls. 18. If there is suspected misuse of funding, Recipient agrees the System Organization may conduct an investigation into the use of the Funding provided by the System Organization. 19. If there is any material [defined as having a significant impact on the agreed upon implementation of the project] misuse of funding identified through such audit or investigation, the System Organization reserves the right to be reimbursed by the Recipient for up to 100% of the reasonable costs incurred in the investigation by the System Organization to be determined on a case-by-case basis depending on the facts 3
and circumstances relating to such misuse. In the absence of misuse of Funding, the System Organization will meet the full costs of an audit or investigation of system-wide risk.
Reporting 20. Recipient shall provide to the System Organization unaudited financial reports, prepared in accordance with applicable policies and procedures for CGIAR Research (regardless of funding source) on a quarterly basis. 21. Recipient shall provide to the System Organization annual financial statements that have been audited by independent auditors in accordance with applicable policies and procedures and that are accompanied by auditors’ opinions. 22. Recipient shall provide annual programmatic reports and any reporting required to be submitted under the performance management system. Continuing Representations and Undertakings 23. This Agreement shall include customary continuing representations and undertakings, such as, capacity to enter into agreement; activities and research are conducted under sound standards, no illegal activity, etc.
Prohibited Use of Funding 24. This Agreement shall include provisions on prohibited use of funding, such as, funding shall not be used for illegal purposes.
Termination / Suspension 25. If either party determines that the other party is not complying with any material terms or conditions of this Agreement or that any material activities implementing the CGIAR Research is not progressing efficiently or effectively, or that such activities are failing to reach planned indicators or results in a manner that merits corrective action, either party may notify the other of its view with recommendations for improvement with regard to the CGIAR Research or with a request that corrective measures are designed to address shortcomings. 26. In the case of the System Organization making such requests, if the Recipient does not address any such material shortcomings within a reasonable timeframe (no less than 45 days) to the satisfaction of the System Organization, the System Organization shall consult with the relevant Center and the Centers Consultative Group on measures to resolve the issue and a possible course of action. If no resolution is found within 30 days, the System Organization shall have the right to suspend or terminate this Agreement and to discontinue making further disbursements. 27. In the case of the Recipient making such request, if the System Organization does not address any such material shortcomings to the satisfaction of the Recipient within reasonable timeframe (no less than 45 days), the Recipient has the right to request a consultation with the System Organization and the Centers
4
Consultative Group on the matter. If no resolution is found within 30 days, the Recipient shall have the right to suspend or terminate performance under this Agreement. 28.
The Parties may suspend or terminate this Agreement by mutual agreement.
Refunds 29. Upon completion of any CGIAR Research or upon termination of this Agreement, Recipient shall promptly refund or otherwise return to the CGIAR Trust Fund any funding that remains unexpended or uncommitted unless agreed otherwise with the System Organization. 30. If the System Organization determines, following consultation with the Recipient, that any funds have been used in a manner inconsistent with the provisions of this Agreement, the Recipient shall, upon notice from the System Organization, promptly refund such amount to the CGIAR Trust Fund. Such refunded amount may be apportioned to other CGIAR Research or may be returned to Funders on a pro rata basis. No Liability 31. None of the Funders, the System Council, the Trustee or the System Organization shall be responsible for the activities of any person or third party engaged by the Recipient with use of the funding or as a result of this Agreement or any sub-agreement; nor will the Funders, the System Council, the Trustee or the System Organization be liable for any costs incurred by Recipient in terminating the engagement of any such person. Insurance 5 32. Whenever relevant and possible, the Recipient shall carry reasonable liability insurance in connection with the activities of the CGIAR Research in light of the insurance available, and the activities being undertaken by Recipient. [Indemnity 33. [Each Party][Recipient] shall defend and indemnify the [other Party] [System Organization] and its present and former officers, directors, employees and agents, and hold it and them harmless from and against any losses, costs, claims, expenses, liabilities, demands, damages and fees incurred by it and them (including reasonable fees of counsel) arising from any claim, action or dispute brought in connection with their respective roles, responsibilities and undertakings related to the implementation of this Agreement (including the CGIAR Research or funding committed and/or provided under this Agreement).]
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Payment of insurance fees as direct or indirect costs should be as set out in the CGIAR financial rules and regulations.
5
C. Other standard provisions a) Modifications (must be by mutual agreement and in writing). b) Order of precedence (among conflicting provisions or elements of the agreement) c) Notices d) Process to deal with Changes (for example Force Majeure). e) Intellectual Property (Recipient owns resulting IP which shall be managed in accordance with the CGIAR IA Principles). f) Term of the Agreement (period of performance and potential extension). g) Governing Law h) Dispute Resolution (with time limits for each phase)
D. Annexes Annex 1:
Definitions
Annex 2a:
Provisions applicable to Center when acting as Collaborating Center
Additional responsibilities of Collaborating Center in implementing the CGIAR Research to include programmatic and financial reporting responsibilities, such as providing Lead Center with required reporting information in a timely manner and making available books and records to Lead Center as necessary to conduct any audit or evaluation. Annex 2b:
Provisions applicable to Center when acting as Lead Center
Additional responsibilities of Lead Center in managing and implementing the CGIAR research to include programmatic and financial reporting responsibilities and oversight. For example, Lead Center shall prepare and provide to the System Organization annual CGIAR Research reports of income and expenditure by category, supported by the supplementary schedules to each Center’s audited financial statements. Annex 3:
Form of Letter of Notification of Approved CGIAR Research Proposal
Annex 4:
Form of Letter of Annual Allocation
Annex 5:
Form of Letter of Commitment
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