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Budget utilization or funds disbursement is the next step following on from the activityprogram planning and the budgeting stages. Once budget documents have been inalized and approved
for the iscal year, activitiesprograms are then implemented with reference to these and to the allocated funding levels. The mechanism for funds disbursement is based on the activities and
their budgets as set out in the Annual Budget Allocation Document DIPA.
CHAPTER IV IMPLEMENTATIONFUNDS
DISBURSEMENT
As planned grants are included in the planning process, the mechanism for their disbursement is the same as that for activitiesprograms funded by the government in the APBN.
Disbursement is conducted through the submission of a Payment Order SPM by the Proxy Budget User KPA to the State Treasury Service Ofice KPPN, which the KPPN then follows-
up with the issuance of a Funds Disbursement Order SP2D. Both the KPA and KPPN issue SPMs and SP2Ds respectively after running substantive and formal checks. This is done to conirm
the availability of funds for activitiessub-activities in the DIPA and relevant documentation for invoicing purposes e.g. Summary of Contract.
There are ive methods for the disbursement of grants, namely: • Transfer to the State General Treasury KUN account
• Direct Payments
Satker KPPN
Operating Bank
a. Check b. Issue SP2D
Disburse according to SP2D PP-SPM prepare SPM at
the request of PPK through SPP after checking
START
STOP
SPM
Figure 6. Planned Grants
SP2D
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• Special Account • Letter of Credit
• Advanced Payment
The COREMAP project disbursed grants in 2011 of IDR 21,522,181,512, out of a total budget of IDR 21,658,150,000, or 99.37.
A GEF grant TF053350-IND, reg. no. 70528801 managed by the World Bank that was provided from January 28, 2005 to December 31, 2011.
A Direct Grant that is ‘Off-Budget, Off-Treasury’.
For a direct grant that is ‘off-budget, off-treasury’, there is no way to verify payments for activity implementation. Thus, there will be no record of this in ministrygovernment agency inancial
reports.
KL, PA,
KPA
DJPb, Dit PKN
DJPU- Dit EAS
• Request for register number
• Request for opening account
permit
• Proposal of revised DIPA endorsement
DJPb- Dit PA
Figure 7. Direct-Grants
Figure 8. Direct-Grants
Donor of Ministry make Disbursement
No endorsement to KPPN
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A Direct Grant that is ‘On-Budget, Off-Treasury’.
Direct grant disbursement can be managed directly by the donor or an appointed contractor, or by the relevant ministrygovernment agency. Furthermore, the KPA shall request validation
from the KPPN by using a Direct Grant Validation Order SP2HL and a Record of Direct Grant in the Form of GoodsServicesSecurities MPHL-BJS.
Prior to disbursement, there is a procedure in place with regard to direct grants in cash that are received directly by a ministrygovernment agency, which is as follows:
• Register the grant with the Directorate General of Debt Management DJPU • Request a permit to open an account from the Directorate General of Treasury DJPb or
the Directorate of State Treasury Management Dit PKN
The procedure for a direct grant in the form of goodsservicessecurities received directly by a ministrygovernment agency is as follows:
• The SatkerKPA and the donor prepare Minutes of Handover BAST with regard to the
goodsservicessecurities • The PAKPA Budget UserProxy Budget User applies for grant registration to the DJPU
with reference to a grant agreement or equivalent document • The SatkerKPA requests validation from the DJPU or Directorate of Accounting Evaluation
and Settlement through the use of a Direct Grant in the Form of GoodsServicesSecurities Receipt Validation Order SP3HL-BJS
KL, PA,
KPA
DJPb, Dit PKN
DJPU- Dit EAS
• Request for register number
• Request for opening account
permit
• Proposal of revised DIPA endorsement
DJPb- Dit PA
Figure 10. Direct Grants Figure 9. Direct Grants
DonorMinistry make Disbursement
KPA request for endorsement of KPPN through SP2HL Cash
and MPHL-BJS Goods
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Direct grants can be received by the KPPN disbursement deadline in the current iscal year.
The Directorate of Coastal and Marine Affairs Satker received a direct grant in the form of cash in 2011 of IDR 435 million out of a total budget of IDR 1.4 billion. It then proceeded to
register the grant with the DJPU, request a permit to open an account, and revise the DIPA. The donor money was then credited into the account that had already been approved by the
Directorate of State Treasury Management, Directorate General of Treasury Dit PKN. After this, the Satker implemented its activities and disbursed its funds. Finally, it requested a validation
from the KPPN.
Currently, a direct grant can be provided through a Trust Fund in accordance with Presidential Decree No. 80 of 2011 as an elaboration on the provision in Article 47, Paragraph 2 of
Government Regulation No. 10 of 2011 on the Procedures for the Procurement of Foreign Loans and Receipt of Grants. The deinition of a ‘trust fund’ is donor funding that is managed by
a trustee for a speciic purpose. A trustee institution is established by the revelant minister after receiving approval from the Minister of Planning and Minister of Finance, and is led by a board
of trustees and a trust fund manager. The board of trustees constitutes a work unit Satker.
All funds are recorded in accordance with the APBN mechanism. The board of trustees is responsible for appointing both the program and trust fund management, authorizing payments,
and disbursing funds. The trust fund management is responsible for handling all relevant administrative and inancial matters and for making payments as directed by the board of trustees.
Members of the board of trustees can be selected from personnel from the ministryagency establishing the board, other related ministriesgovernment agencies, other parties relating to
the use of trust funds, or can be appointed by the donors. The board of trustees may appoint certain parties in accordance with the grant agreement to support the conduct of its duties. The
trust fund management may come from a ministrygovernment agency, a multilateral institution, a non-government organization, a state-owned enterprise andor a foreign inancial institution.
PA, KPA
DJPU- Dit EAS
Pemberi Hibah
• Prepare BAST • Request for
register number
• Endorsement of revenue through
SP2HL-BJS DJPU-
Dit EAS
Figure 11. Direct-Grants
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CONCLUSIONS
The funds disbursement mechanism that is currently in place accommodates planned grants through its provision of clear implementation procedures. One problem that was identiied was
related to the management of activities, where implementors were found to not be providing adequate support for the meeting of deadlines and targets.
For direct grants in cash, there is no funds disbursement mechanism in place, aside from the possibility of obtaining formal validation of the grant implementation. If a direct grant is then
not followed by a DIPA revision, there is the possibility that it will not be recorded in the government inancial system or will be classiied as ‘off-budget, off-treasury’, as is the case with
CTSPMPAG and JFPR.
Meanwhile, with regard to direct grants in the form of goodsservices, compared with direct grants in cash, there is a small possibility that they will not be included in the government
inancial system. To be included, a DIPA revision is not required, rather a validation of receipt of the grant must be requested from the Directorate General of Debt Management DJPU,
Directorate of Accounting Evaluation and Settlement.
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Accounting and reporting with regard to funds disbursement refers to Law No. 1 of 2004 on the State Treasury. This law is detailed in Government Regulation No. 8 of 2006 on the Financial and
Performance Reporting of Government Agencies. It is given more detail in Minister of Finance Regulation No. 171PMK.052007 on the National Government Accounting and Financial
Reporting System.
The national government accounting and inancial reporting system consists of two sub-systems, namely the State General Treasurer Accounting System SA-BUN and Government Agency
Accounting System SAI. The SA-BUN is used by the Ministry of Finance as the State General Treasurer while the SAI is used by ministriesgovernment agencies.
CHAPTER V ACCOUNTING AND REPORTING
