Financial Controls, Procurement & Value for Money

This Appendix sets out the proposed financial-management, procurement, expenditure-control, audit, reporting and value-for-money architecture for the One Big Change Kenya programme.

Its purpose is to establish how programme resources will be:

The framework applies first to the proposed 90-day Founding Implementation Programme and establishes the controls that would need to mature further before any Year 1 national programme is commissioned.

Two financial-control environments must be distinguished.

Where the relevant public entity procures the programme, the applicable Kenyan public-procurement framework applies. The current PPADA framework gives effect to the constitutional requirement for public procurement to operate through a system that is fair, equitable, transparent, competitive and cost-effective.

One Big Change's proposal will therefore be structured so that its:

can be converted into a formal procurement and contract-management structure if required.

The Government-facing programme should be capable of being translated into an identifiable procurement requirement. The procurement requirement should specify:

Following contract award, One Big Change will maintain its own Programme Procurement Plan. The plan should identify expected procurement such as:

For each planned procurement it should record:

The programme will maintain separation between critical financial functions. Where practicable, different people should undertake:

Before mobilisation, a formal Delegated Financial Authority Schedule will be approved. It should specify who can approve:

Authority should increase with seniority and transaction value.

The indicative founding budget is:

This budget remains subject to validation during contracting.

Finance will produce a monthly Budget Versus Actual report. The report should show:

Material unexplained variance should trigger review.

The programme should maintain a rolling cash-flow forecast covering at least:

Cash-flow pressure must not be solved by using restricted programme money for unrelated purposes.

The proposed founding payment structure remains:

The final contract may vary this schedule.

For example:

Financial milestones should therefore follow deliverables rather than activity counts wherever practical.

The final financial proposal should state clearly whether figures are:

The precise Kenyan tax treatment must be validated before contract signature by appropriately qualified Kenyan tax/accounting advisers.

The KSh 84.37 million figure should therefore not be represented as a final tax-inclusive contractual amount until this validation has occurred.

Before material payment to a supplier, the programme should normally hold:

Where appropriate, the programme should compare more than one credible supplier. Comparison may consider:

Lowest price alone does not necessarily represent best value.

For significant purchases, the programme should obtain reasonable evidence that cost is appropriate. This may include:

Where appropriate, payment should require matching:

Material discrepancies must be resolved before payment.

Professional or contracted services should be accepted against:

A consultant's invoice is not itself evidence that the work was delivered.

The proposed founding programme contains:

This is an average planning envelope but is not an automatic unrestricted transfer.

One founding school may require:

The portfolio budget must therefore remain needs-led rather than forcing equal expenditure.

Where practical, the programme may procure required goods/services directly rather than transferring cash to schools.

Where cash transfer is appropriate, additional controls should specify:

The lawful mechanism must be agreed before use.

Programme documents must distinguish between:

Ownership should never be inferred merely from physical possession.

Travel expenditure should require:

Travel should be consolidated where possible to reduce cost.

Expense claims should normally require:

Personal expenditure is not reimbursable merely because it occurred during programme travel.

Where a founding director receives a programme retainer:

• the programme role must be defined
• deliverables must be identifiable
• remuneration must relate to actual programme responsibility
• invoices/payroll treatment must be appropriate
• conflicts must be disclosed

Nobody is paid from Government programme funding simply because they hold equity, founder status or an advisory title.

Volunteer support may legitimately include reasonable:

Such expenditure should be recorded separately from employment compensation.

The founding budget includes:

The contingency is not an unallocated discretionary fund.

Contingency should not routinely finance:

• new programmes
• unrelated events
• unapproved hiring
• discretionary branding
• personal expenditure

Material scope change requires contractual and budget review.

A change to budget is not necessarily the same as a change to contract scope. Material changes involving:

must follow the relevant contractual/legal variation mechanism.

Procurement decisions must be protected from personal financial interests. One Big Change will maintain a corresponding internal Conflicts Register.

A Gifts and Hospitality Register should record material gifts offered or received. No gift should influence:

No One Big Change employee, director, adviser or intermediary should receive commission calculated specifically on their ability to improperly influence or secure a Government procurement decision.

Commercial incentives for legitimate private-sector Traction Partner mobilisation may be structured separately and transparently where lawful and appropriate.

Suspected fraud should trigger:

The programme will maintain clear procurement and expenditure files. One Big Change's own record-retention period will be aligned with:

Where the Government contract requires longer retention, that requirement will apply.

Financial records should be held in a controlled system. Typical files include:

The programme should operate a monthly close including:

Reports must distinguish:

This avoids overstating either Government expenditure or partner mobilisation.

Partner in-kind value must be based on a documented valuation method. It should distinguish:

Only properly verified contribution should be presented as realised mobilisation.

The founding programme should include an independent financial review or internal assurance process proportionate to its size. Review may test:

Where required by the contract or applicable law, the relevant public authority and authorised assurance bodies may require access to appropriate programme financial records. The contract should define:

Value for money is not simply: "Did we spend the entire budget?"

It asks whether resources were used to achieve the intended result appropriately. The programme will assess:

The founding phase should calculate:

These figures are especially important because they become the basis for Year 1 costing.

For each material school investment, the programme should ask:

What implementation barrier did this expenditure remove?

For example, it is not enough to state "KSh 800,000 spent on equipment." The programme should know:

• why the equipment was required
• whether it was used
• what implementation changed
• whether it can be maintained

At the December Decision Gate, Government should be able to ask:

The KSh 84.37 million founding programme should not be multiplied mechanically by 50.

The founding programme contains substantial one-off work including:

Year 1 also introduces new scale costs such as:

Therefore Year 1 should be costed from actual resource requirements rather than simple multiplication.

The founding programme must generate assumptions for:

These become the financial model for Year 1.

LocaeHubs must not become uncontrolled mini-budget centres. Before any Hub controls programme resources, Year 1 must establish:

Where appropriate, procurement may remain centrally or regionally managed rather than transferring cash to individual Hub Lead Schools.

Three different cost categories should be calculated separately:

Blending all three into one average will obscure the economics of the model.

If Year 1 proceeds, financial controls should also operate through gates.

Poor financial control at one stage should be capable of delaying the next expansion stage.

The working principle should be:

The final structure will depend on evidence and applicable procurement requirements.

The programme dashboard should show:

One Big Change will ensure its own programme-record retention supports the contracting entity's audit and contract-management obligations.

The Government/public entity retains responsibility for its own public procurement, public-finance and contract-management obligations.

Before moving to a possible KSh 1.75 billion national programme, Government should receive evidence that:

• the KSh 84.37 million founding programme was financially controlled
• audits/reviews were satisfactory or findings addressed
• school activation expenditure was traceable
• procurement files were complete
• conflicts were managed
• assets were recorded
• financial reporting was reliable
• unit costs are understood
• the Hub financial architecture is ready
• national procurement capacity exists
• the Year 1 budget is based on actual evidence

One Big Change Kenya will not measure financial success by the amount of money spent.

It will measure whether approved resources were converted into: