a. Direct Costs.
Costs that can be attributed to and directly and solely benefit a
particular activity or project with a high degree of accuracy.
b. Indirect Costs.
Costs that are incurred for a common purpose which cannot be easily
attributed to a particular activity or project.
c. Project Support
Costs. Costs incurred for the purpose of providing services necessary to
carry out the activities directly linked to a particular project or
program. These are typically administrative costs for support that
directly benefits a particular project or program.
d. The budget for
every project of the General Secretariat funded all or in part by
specific funds and trust funds shall include all the Direct Costs, an
estimate of the administrative Project Support Costs required to execute
the project, and a line item for recovery of Indirect Costs, and it
shall indicate their source of financing.
e. The General
Secretariat shall establish the rate for Indirect Cost Recovery (ICR)
for projects funded by the Specific Funds and Trust Funds. The General
Secretariat shall submit an annual report to the CAAP regarding ICR
resources. The report shall contain any information that may be
requested by the CAAP and all information that the General Secretariat
considers useful for planning the use of the ICR resources, including:
i. A budget execution report by Secretariat;
ii. The balance and financial flow affecting the Indirect Cost Recovery
Reserve Subfund (ICRRS); and
iii. A projection of ICR for the ongoing fiscal year.
f. The General Secretariat will collect the ICR based on the direct
costs and project support costs as they have been incurred.
g. Contributions to projects of less than $50,000 will incorporate a
fixed percentage for ICR equivalent to 13% of the amount of the
contribution, charged upon receipt of the contribution, in lieu of the
percentage referred to in subsection e of this article. Said percentage
will be distributed as follows: 7% to the Indirect Cost Recovery Fund
and 6% divided equally among each of the cost centers defined in
subsection h of this article.
h. Cost Centers.
For purposes of recovering Project Support Costs, the General
Secretariat, through the Secretariat for Administration and Finance
(SAF), will establish cost centers in each of its units that provide
services to projects. Each cost center includes the costs associated
with a group of activities common to a service type. Each cost center
will have one or more cost distribution factors (workload counts) to
facilitate the fair distribution of costs incurred by the service
provider unit attributable to individual projects. The General
Secretariat, through the SAF, will review the cost centers annually, or
more frequently when necessary, to ensure each cost center includes only
costs associated with providing the defined services.
i. The General
Secretariat, through the SAF, will be accountable for posting
information regarding the cost centers, including a description of the
services provided and costs included, on the Organization's website.
j. All cost
centers shall be assigned to the Fund for Project Support Costs (FPSC).
This fund will be established independently and parallel to the FICR
defined under paragraph n below. The General Secretariat shall issue its
operational rules.
i. The resources
derived from the recovery of project support costs must be deposited in
the account of each Cost Center and may only be executed to support the
cost center’s defined activities, except as described in ii and iii of
this paragraph. ii. In the event that at the end of the fiscal year the
total amount of the recovery in the Fund for Project Support Costs
exceeds by 25% the amount of the actual costs of providing integrated
services, the dollar amount in excess of that percentage will be
transferred to the sub-fund of Regular Fund Reserve
iii. The SAF may relocate resources recovered by the cost centers among
them, as deemed necessary to address extraordinary situations in the
management of its services.
k. The General
Secretariat may recover from trust funds a reasonable amount for the
cost of administering those funds and for the fiduciary services
provided by the General Secretariat, as established in the pertinent
trust documents and applicable law. In implementing this provision for
any year for a particular trust fund, the General Secretariat shall seek
first to recover those costs from the income earned by that fund in that
year, to maximize the objective of preserving fund capital.
l. Contributions to the Regular Fund for the cost
of technical supervision and administrative support to the programs
shall be made by the OAS Cooperation and Development Fund OAS/DCF. The
contribution shall equal the same percentage established for the ICR
rate under paragraph e of this article, and the basis for its
calculation will be the total net amount of the OAS/DCF’s funds
programmed for execution in the Organization’s fiscal year.
[8]
m. During Budget
execution, periodic deductions shall be made based on the amount of
obligations of the OAS/DCF in accordance with the established levels,
and those deductions shall be paid to the Regular Fund.[9]
n. All income from
indirect cost recovery (ICR) shall be assigned to the Fund for Indirect
Cost Recovery (FICR). The FICR shall include two Subfunds: the ICR
Operations Subfund (ICROS) and the ICR Reserve Subfund (ICRRS). The FICR
shall be subject to the following guidelines:
i. The General
Secretariat shall submit to the Permanent Council a proposed budget for
use of the ICR resources, which shall be an integral part of the
proposed Program-Budget. This proposal shall be based on projected
revenue equivalent to 90% of the average ICR obtained in the three years
immediately preceding the year in which the Program-Budget is adopted
and shall be applied to the subsequent year. The average shall be
reviewed every year in adopting the Program-Budget of the Organization
and the General Assembly shall also adopt the ICR budget. If the revenue
from ICR collected in the corresponding fiscal year is less than the
executed budget, and to the extent that funds are available in the
ICRRS, the General Secretariat may transfer from the ICRRS to the ICROS
an amount equal to the difference between the executed budget and the
ICR revenue collected in the current fiscal year. If revenue collected
is more than the executed budget, the surplus shall be deposited in the
ICRRS.
ii. Every year the CAAP shall evaluate the ICRRS level to determine
whether transferring funds from the ICRRS to the Reserve Subfund of the
Regular Fund is justified. In such event, the Permanent Council shall
approve the amount or percentage to be transferred. Likewise, the
Permanent Council may authorize the financing, charged to the ICRRS, of
strategic projects or initiatives not contemplated in the
program-budget, with the prior opinion of the CAAP.
iii. The ICRRS resources shall be invested in the same way as other
funds of the Organization, pursuant to Article 85 of these General
Standards.
o. The following
funds shall be exempt from the recovery of Indirect Costs and other
reimbursement requirements under this article:
A. FONDEM
(Inter-American Emergency Aid Fund);
B. All Specific Funds and Trust Funds administered by the General
Secretariat and designated by the Permanent Council as Humanitarian
Funds, prior opinion of the CAAP.
C. The Capital Fund for OAS Fellowship, Scholarship, and Training
Programs;
D. The Leo S. Rowe Pan American Fund;
E. The OAS Medical Benefits Trust Fund;
F. The Rowe Memorial Benefit Fund;
G. The OAS Retirement and Pension Fund;
H. The OAS Tax Reimbursement Fund.
I. Pass-through contributions (those contributions received from Member
States or permanent observer states for the full execution by a
receiving entity that has common interest with the General Secretariat,
where full execution responsibility lays on the receiving entity) where
the receiving entity incurs the indirect costs of the amount
passed-through;
J. Contributions in support of the holding of all General Assembly and
ministerial meetings;
K. Membership fees paid to the General Secretariat within the framework
of the Inter-American Telecommunication Commission and the
Inter-American Committee on Ports; and
L. Other funds established.
Article 87. Revolving
Funds. The
Secretary General, in order to be able to determine operating costs, may
account for internal operations originating from execution of the
program-budget by the mechanism known as a revolving fund, provided the
General Assembly gives prior approval to its purpose.
Article 88. Acceptance of
Inheritances, Gifts, and Bequests.
The Secretary General may accept on behalf of the Organization,
inheritances, gifts, or bequests for uses consistent with the purposes of the
Organization, advising the Permanent Council thereof.
Article 89. Effective
Period and Scope of the Program-Budget.
The program-budget is annual, and the fiscal period runs from January 1
through December 31.
The organs, agencies, and entities of the Organization whose expenses
are to be included in the program-budget of the Organization shall be subject
to the provisions of Chapter IV and the subsequent chapters of the General
Standards.
All activities to be financed through the Regular Fund and the OAS/DCF
shall be reflected in the proposed program-budget.
The activities of the specific and trust funds shall be included in the
program-budget to the extent that this is feasible.
