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  • BASELINE AND BASELINE PLUS DUE DILIGENCE OPERATIONAL PROCEDURES May 2019

  • Due diligence operational procedures 2

    CONTENTS

    INTRODUCTION 3

    BASELINE DUE DILIGENCE ASSESSMENTS 4 How to conduct a baseline due diligence assessment 4

    Using the due diligence assessment tool 5

    Record keeping 6

    Risks Identified in the Due Diligence Assessment 6

    Criteria 1: Individual or Entity Details 6

    Criteria 2: Past performance 9

    Criteria 7: Fraud control 11

    Criteria 8: Anti-Corruption 14

    Criterion 9: Sanctions lists 16

    Criterion 10: Counter terrorism 17

    Criterion 11: Integrity systems check 19

    Criterion 14: Child protection 22

    Criteria 18 - Transparency 25

    Criteria 19 – Branding 27

    Criteria 17 - Environmental Protection Safeguards 29

    Criteria 20. National Interest 31

    Submitting a due diligence assessment for approval 32

    Attachment A – Information Guide – due diligence baseline assessment 33

    Attachment B: Multilateral Baseline Assessment Information Guide 36

  • Due diligence operational procedures 3

    INTRODUCTION

    These Due Diligence Operational Procedures support the Due Diligence Framework (Framework) to provide an aid risk assessment tool that assesses potential delivery partner’s ability to deliver in line with the policy and legislative requirements of the Australian aid program. It responds to the Australian aid program’s reliance on partnerships and third party delivery mechanisms by better informing partner engagement.

    This document outlines the processes required to undertake a baseline or baseline plus due diligence assessment. Key risks identified in the due diligence process need to be assessed, documented and monitored in line with the Aid Programming Guide, Chapter 7 Aid Risk Management.

    GUIDING PRINCIPLES Assessments should align with the guiding principles of the Framework these are:

    • Proportionality – the scope and depth of assessments are proportional to the risk and value of the proposal.

    • Minimum baseline assessment – a minimum set of assessment criteria applies regardless of risk or value. Additional assessment criteria may be applied on a proportional basis.

    • Evidenced based assessment - assessments will be based on the best available and most current, objective and verifiable information and where appropriate will draw on third party assessments.

    • Validity – assessments will remain valid for three years.

    • Centralised coordination and storage – centralised coordination and storage of assessments enables a repository of information available for DFAT.

    • Delegate responsibility – the financial delegate remains responsible for ensuring appropriate due diligence activities have been undertaken, and will determine if any extra due diligence activities are required.

    http://dfatintranet.titan.satin.lo/managing-aid/other-aid-management-risk-policies/due-diligence/Documents/due-diligence-framework.DOCX http://dfatintranet.titan.satin.lo/managing-aid/aid-programming-guide/Pages/chapter-7.aspx

  • Due diligence operational procedures 4

    BASELINE DUE DILIGENCE ASSESSMENTS This guide contains guidance on 12 criteria including, eight baseline criteria and the two additional required criteria for private sector organisations and multilateral organisations as shown in the diagram below. If there is a high or very high safeguard risk for environment or displacement then the relevant additional criteria should be assessed to ensure that the provider has systems in place to manage the safeguard.

    *These are the mandatory Baseline Due Diligence assessment Criteria. **In addition to the eight baseline criteria 2 additional criteria required for a Baseline for private sector entities. # In Addition to the eight baseline Criteria, 2 Additional criteria apply for a Baseline for a multilateral organisation A Comprehensive Due Diligence Assessment addresses all 20 criteria. @if there is a high or very high safeguard risks for the environment or displacement safeguard the relevant criteria should be assessed.

    HOW TO CONDUCT A BASELINE DUE DILIGENCE ASSESSMENT Baseline Due Diligence Assessments consist of three stages: information collection, information consideration, and a pragmatic evaluation of evidence obtained. Assessments should always be evidence based and not subjective. As assessments are based on the best available evidence at the time if there are any substantial changes to an entity or individual’s circumstances a new due diligence assessment is required to be undertaken.

    To support the assessment a range of evidence may be considered. This may include (but is not limited to) the following:

    • Information already held by the Australian aid program and DFAT • Information requested from the individual or entity • Robust information already in the public domain such as published information or online information (e.g. annual reports, published financial statements)

    Organisational Capacity

    1. * Entity Details

    2.* Past Performance

    3.Technical / Operational

    capacity

    4. Financial Viability

    5. Results & Performance Management

    6. Value for Money

    Risk Management

    7. * Fraud Control

    8. * Anti-Corruption

    9.* Sanctions Lists

    10.* Counter Terrorism

    11.* Integrity Systems Check

    12. Risk Management

    13. Fiduciary Risk

    Safeguards

    14. * Child Protection

    [email protected] Displacement and Resettlement

    16. **@Environmental Safeguards

    Policy requirements

    17. #Transparency

    18. #Branding

    19. Disability

    20. **National Interest

    (includes Reputation and Social Responsibility)

  • Due diligence operational procedures 5

    • Original and/or certified original documentation (or original sighted) • Verifiable information reported to other government agencies, departments and third party assessments

    • Verbal information from individuals and third parties

    Note: Verbal information recorded in ARMS must include the date, time, name and position of person spoken to, as well as questions asked and answers provided.

    Assessing officers use their professional judgement to determine if an individual or entity satisfies each assessment criteria based on the evidence gathered. Assessing Officers may choose to seek further information from any source that may provide information relevant to the assessment. Attachment A contains a summary of information that may be considered when undertaking a baseline assessment or baseline plus – private entity. Attachment B contains a summary of information that may be considered when undertaking a baseline plus – Multilateral assessment.

    Assessing officers are to return original documents using secure postage or other appropriate measures.

    Outcomes and proposed risk treatment options (if any) contained in a Baseline Assessment Report can be shared with individuals or entities prior to the delegate signing off on the assessment. To streamline the process of obtaining information from the individual or entity being assessed, DFAT assessing officers are required to forward copies of the following (five) documents to the individual or entity being assessed at the commencement of the assessment:

    • DFAT Fraud Policy Statement • Baseline Assessment Information Guide (summary of what information DFAT requires from implementing partners at Attachment A)

    • Due Diligence Fraud and Anti-Corruption Acknowledgement form (Note: multilateral organisations are not expected to sign this form)

    • Child Protection Policy, and • Separate Child Protection Code of Conduct form (to be signed by individuals)

    For further assistance, contact the Aid Risk Management and Safeguards Section on [email protected]

    USING THE DUE DILIGENCE ASSESSMENT TOOL Due Diligence assessments should be conducted using the Assurance & Risk Management System (ARMS). Logins to this system can be obtained by emailing [email protected] ARMS can be accessed at: https://erm2.protecht.com.au/dfat/. This guide will take you through how to conduct a due diligence assessment not through how to use ARMS. Instructions for using ARMS can be found in the task cards on the due diligence page on the Intranet. These can be used in conjunction with this guide until you are familiar with the system. The tab numbers in ARMS match the criteria number for ease of use.

    http://dfat.gov.au/about-us/publications/Pages/fraud-policy-statement.aspx http://dfat.gov.au/about-us/publications/Pages/fraud-policy-statement.aspx http://dfatintranet.titan.satin.lo/managing-aid/other-aid-management-risk-policies/due-diligence/Documents/DFAT%20Due%20Diligence%20Fraud%20and%20Anti%20Corruption%20Acknowledgement%20form.docx http://dfatintranet.titan.satin.lo/managing-aid/other-aid-management-risk-policies/due-diligence/Documents/DFAT%20Due%20Diligence%20Fraud%20and%20Anti%20Corruption%20Acknowledgement%20form.docx http://dfatintranet.titan.satin.lo/managing-aid/other-aid-management-risk-policies/Documents/child-protection/child-protection-policy-2017.pdf http://dfatintranet.titan.satin.lo/managing-aid/other-aid-management-risk-policies/due-diligence/Documents/DFAT%20Due%20Diligence%20Child%20Protection%20Code%20of%20Conduct%20form.docx http://dfatintranet.titan.satin.lo/managing-aid/other-aid-managemen