Indirect Management

As stated in the Financial Regulation, the Commission can implement its budget in the following ways:

  • Directly by its departments
  • Under shared management with Members States or
  • Indirectly, by entrusting budget implementation tasks to thirds parties and international organisations

Specifically, as ECHO does not intervene directly in the field, the implementation of its budget for humanitarian aid actions is the responsibility of the organizations through which DG ECHO’s support is channelled, namely NGOs FPA holders, International organsations and UN agencies.
Depending on the category of Partner with which DG ECHO works, the Financial Regulation sets different working modalities, known as “budget management modalities”.

For UN Agencies and Internationals Organizations, the set budget management modality is the indirect management.

This modality allows UN Agencies or International Organizations to be delegated of several budget implementation tasks that they should perform according to their own rules and procedures.
These tasks include also those ones that the Commission would normally carry out directly, if it were implementing the budget itself – namely procurement & award of grants, granting aid to final beneficiaries, etc.

Indirect management can only apply after an ex ante assessment of the UN agency or International Organizations internal rules and procedures, the so called Seven Pillars Review. This assessment concerns UN/IOs internal rules on:

  • Internal control
  • Accounting
  • External Audit
  • Award of Grants
  • Procurement
  • Financial Instruments
  • Sub-delegation

The result of this assessment is a report which will serve as a basis for the Commission in deciding whether to entrust the UN entity with the indirect management. The UN organisations may benefit of this budget management modality only if the outcome is satisfactory.
Furthermore, UN Agency which follow its own rules & procedures, must also respect the Principle of Equivalence so as to guarantee a level of protection of EU financial interests equivalent to the level of the Commission.

References & useful links

  • Financial Regulation Article 58 and 60