Output-Based Financial Reporting: Linking Financial Data with Monitoring & Evaluation Data

OBFR links financial data with monitoring and evaluation (M&E) data to provide a detailed understanding of how programs turn resources into outputs, such as health services. The OBFR process begins with a discussion around the objectives of the programs, with a view to drilling down to a clear description of who the program beneficiaries are and what they receive. Beneficiaries could be orphans and vulnerable children, pregnant women, or local non-governmental organizations. Next, there is a thorough review of both financial and M&E data along with program work plans and objectives. The financial review focuses on collecting expenditure information and categorizing that information into labor, supplies, overheads, and miscellaneous expenses. OBFR differs from basic M&E reporting not only by including costs, but also by increasing the specificity and detail provided on program outputs. The process takes time and effort to verify that the correct question is asked at the outset to obtain useful, actionable answers. OBFR demonstrates that "What is the unit cost?" is rarely the right question, and instead, there are countless "right" questions, depending on the country context, program needs, donor and government priorities, and other factors. In Mozambique, Health Systems 20/20 applied OBFR to cost community-based care (CBC) for people living with HIV (PLHIV) and orphans and vulnerable children (OVC). Site visits and key informant interviews were conducted with eight of USAID's CBC partners across four provinces, and each partner's expenditure and M&E reports were reviewed. The unit cost for delivering one home-based care (HBC) visit ranged from $1.95 to $16.91, and one visit to an orphan or vulnerable child ranged from $0.55 to $16.74. CBC program structure and size varied widely across partners and drove costs variations. OBFR has been implemented in several countries, including Mozambique, Ethiopia, and Tanzania. The approach has been used to identify variations in unit costs and their causes across select partners, to increase efficiency of the use of limited resources available for CBC services. In Ethiopia, OBFR was used to support decision-making around the standardization of peer education models by providing evidence on cost, process, and implementation variations across models. The OBFR process involves six steps: describing the service, defining the unit of service, determining the average number of units delivered, determining the average number of units that each person received, identifying the inputs required to deliver the service, and determining the price and quantity of inputs required to produce and deliver the service. The outputs from these steps are combined to obtain a service unit cost indicator. OBFR has been found to be a useful tool for understanding the true cost of providing health services and for making informed decisions about program design and implementation. It has been used to identify opportunities to increase efficiency of the use of limited resources available for CBC services and to support decision-making around the standardization of peer education models.