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Final Liquidation of Advances to the Imprest Account

10.22 All advances to the imprest account are to be liquidated by ADB's share of eligible expenditures incurred on or before the loan closing date.

10.23 Advances are normally liquidated without replenishment during the 6-month period prior to the loan closing date in order to ensure (i) refund of advance is zero or a minimal amount, and (ii) the borrower can obtain supporting documentation for clearing the outstanding advances before the end of the winding-up period (Sections 10.17-10.21).

Refund of Advance

10.24 Any unliquidated balance of the advance to the imprest account must be promptly refunded to ADB (Sections 4.18 and 4.20-4.22). Refund of imprest advance is normally in the currency of the imprest account. If the currency of the imprest account (e.g., US dollars) is different from the currency of loan account (e.g., special drawing right [SDR]), exchange difference between the amount charged to the loan account when the advance was originally made and the equivalent amount at the time of refund are absorbed in the borrower's loan account.

10.25 ADB applies the current value of the refund. As refund of imprest advance is normally in the currency of the imprest account (e.g., US dollars), if advance to the imprest account is further exchanged to another currency (e.g., a local currency) in order to pay expenditures in that currency, exchange difference between the date of currency exchange and the date of refund is borne by the borrower. If such exchange difference is to be borne by the borrower through absorption into its loan account, it should be agreed with ADB.[1]

Use of Sub-Account(s) under the Imprest Account

10.26 In some cases, project funds flow requires bank accounts (the "sub-account[s]" hereafter)[2] opened in the name of an IA, unit, provincial government, village, or other entity (collectively "IA" hereafter), which receives advance from the imprest account, to meet project expenditures incurred by the IA. The sub-account is normally a separate bank account opened for the exclusive use of the project, unless otherwise approved by ADB.

10.27 The borrower should ensure the following matters for using the sub-account(s):

• there is a clearly defined need for the sub-account(s);

• the borrower, EA, and IA must have sufficient administrative and accounting capabilities to establish adequate internal control, accounting, and auditing procedures to ensure proper use and operation of the sub-account(s); and

• there is treatment of foreign exchange differences.

10.28 The use of sub-account(s) should be described in the PAM. The currency of the sub-account(s) may be a local currency. If, during project implementation, the borrower finds it necessary to use the sub-account(s), the request for using the sub-account(s) should be sent to ADB for approval (Sections 4.13-4.14).

10.29 The borrower, EA, and IA should ensure that every liquidation and replenishment of each sub-account is supported by (i) the statement of account (bank statement) prepared by the bank where the sub-account is maintained, and (ii) a sub-account reconciliation statement (Appendix 10D) reconciling the above-mentioned bank statement against the sub-account's records. These supporting documents should be retained by the borrower, EA, and/or IA, as appropriate, and be made available to ADB upon request.

  • [1] This may be documented in the PAM or in an appropriate ADB approval (Sections 4.13-4.14).
  • [2] Formerly called second generation imprest account (SGIA). The use of the SGIA, if so stipulated in a loan agreement, is not superseded by the revision of the handbook. The sub-account(s) should be distinguished from "petty cash," which is a small amount (normally not exceeding US$1,000 equivalent) of funds held in the same office in the form of cash for the purpose of covering petty expenses, and is not the sub-account.
 
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