Special Law for the Management, Allocation, Execution, Liquidation and Accounting of Public Funds

This Law is of public order and mandatory compliance. Its purpose is to establish the norms relating to the management, allocation, execution, liquidation, and rendering of accounts of public funds that are allocated for projects of a social nature, community projects, and social programs, through the various Public Institutions of the Central Government and/or Decentralized Institutions, Municipal Corporations, National Congress, Non-Governmental Organizations, Trusts, entities or organs of private law auxiliary to Public Administration, and any Natural or Juridical Person that within their functions or purposes the execution of projects and programs of a social nature, community, infrastructure, infrastructure equipment, goods and public services of primary necessity, and all types of social assistance whose recipients are aimed at improving the living conditions of citizens in communities, as well as addressing urgent needs thereof.

This Law is mandatory and of binding application. Subject to its provisions are Public Institutions of the Central Government and/or Decentralized Institutions, Municipal Corporations, National Congress, Non-Governmental Organizations, Trusts, and any Natural or Juridical Person to whom public funds are allocated for the objectives indicated in the preceding Article. The process of management, administration, execution, and liquidation of funds indicated in this Law is independent or autonomous from public funds that, by direct budgetary allocation, are established in the annual budget of revenues and expenditures of the Republic.

For the purposes of this Law, the following terms are understood as:

• 1)

  Public Official: Any person who holds a position in the Public Administration, permanent or temporary, paid or honorary, or who holds a public function or provides a Public Service.

• 2)

  Deputy: Citizen designated through direct election conducted by the people to become their representative in the Legislative Branch, whose principal function is to exercise exclusively the legislative function.

• 3)

  Community Projects: Activities that are carried out to solve a problem or mitigate a deficit suffered by members of a certain social group.

• 4)

  Social Programs: Initiatives aimed at improving the living conditions of the population, oriented toward society as a whole or at least an important sector that has certain unmet needs.

• 5)

  Social Projects: Those actions or ideas that are interrelated and carried out in a coordinated manner with the intention of achieving a goal, which culminate once the objective is achieved.

• 6)

  Infrastructure Projects: All infrastructure work that includes construction and improvement of works to improve the transport of goods and persons or the provision of public services such as roads, building, aqueducts, social electrification, and others whether or not it has physical existence.

• 7)

  Infrastructure Equipment: All acquisition of equipment, furniture, and supplies whose amount does not exceed the amount established for private auctions for the acquisition of supplies of goods and services in the General Budget of Income and Expenditure of the Republic for the corresponding Fiscal Year.

• 8)

  Social Assistance: Actions of assistance, aid, or support aimed at improving the social welfare of citizens due to personal, family, or social situations, which may be monetary or in kind.

• 9)

  Manager: Any Public Official and/or Deputy who requests the allocation of public funds to execute projects, develop programs, or deliver social assistance in communities.

• 10)

  Beneficiary: Natural or juridical person who obtains a benefit or advantage from the projects, assistance, or social works managed in accordance with this Law.

• 11)

  Executor: Any natural or juridical person who receives and administers the funds and in the execution thereof develops the project for which they were awarded.

• 12)

  Allocation of Funds: The expenditure or delivery by SEFIN, through accreditation in the single enabled account, of the approved funds.

• 13)

  Financial Liquidation Report: The detailed and organized document signed by the executor, reporting on the budgetary executions that have occurred with the disbursed funds, in order to determine the total cost of the execution of the work, project, or assistance, supported by the documentation that substantiates the liquidation. The liquidation may also be made through audits conducted by audit firms authorized by the National Banking and Insurance Commission (CNBS) to audit financial institutions.

• 14)

  SEFIN: Secretary of State in the Office of Finance.

The funds subject to this Law may only be administered by Honduran citizens who reside in Honduras. The resources must be deposited in institutions domiciled in the country. The Collegiate Bodies that administer these funds must have a majority of Honduran citizens residing in the country, and the beneficiaries of their programs must be Honduran citizens or legal residents in the country.

Public Funds subject to this Law must not be used for the following activities: personal expenses, purchase of sumptuary or luxury items, advertising or propaganda activities, granting of loans or matching funds for credits, monthly salaries or remuneration to employees that exceed the sum of three (3) current minimum wages, except when it involves qualified personnel whose salary by reason of their profession is higher, purchase of airline tickets or passages, except when it involves the transfer of a beneficiary for reasons of illness exceeding two (2) monthly minimum wages.

The following may not be beneficiaries: those who find themselves in any of the following circumstances:

• 1)

  Relatives within the fourth degree of consanguinity or second degree of affinity of the fund manager;

• 2)

  Deputies of the National Congress, their relatives, and their subordinates;

• 3)

  Directors of Non-Governmental Organizations;

• 4)

  Members and employees of Municipal Corporations;

• 5)

  Officials of the Central Government and/or Decentralized Government;

• 6)

  Any natural or juridical person that manages funds for social purposes; and,

• 7)

  Granting of loans or matching funds for credits to members of the governing bodies of the executors.

The allocation has the purpose of improving the quality of life of the population in the following areas:

• 1)

  Construction and improvement of infrastructure in schools; public health care centers; parks and plazas; sports courts and centers; streets and roads; clearing and cleaning of streets, roads, and ditches; markets; projects for drinking water, sewerage, and drainage boxes; electrification and public lighting;

• 2)

  Construction and improvement of housing, floors, roofs, cisterns, walls, latrines, fumigation against insects causing epidemic diseases;

• 3)

  Mitigation of diseases from natural disasters;

• 4)

  Execution of special programs of the State of Honduras;

• 5)

  Training for the strengthening of democracy, values, citizen coexistence, equity, human rights, and others;

• 6)

  Economic and infrastructure support to patronatos, churches, water boards, municipalities, rural savings boxes, and community associations;

• 7)

  Delivery of uniforms and educational and sports implements, supplies and furniture, food provisions; medications and economic assistance to vulnerable sectors.

• 8)

  Artistic, cultural, and national identity activities (muralism, art fairs, music, painting, museums, cultural centers, and others); and,

• 9)

  Seed capital for microenterprises. The Project must comply with the stages of formulation, execution, evaluation, and supervision.

Requests for fund allocation must be submitted to Public Institutions of the Central Government and/or Decentralized Institutions, Municipal Corporations, National Congress, with the following documents:

• 1)

  Request for funds and Project Profile, with execution schedule and disbursements;

• 2)

  Amount required;

• 3)

  Copy of personal documents and certification of their status as public official and/or managing Deputy;

• 4)

  Copy of documents to accredit the identity of the executor (natural or juridical person);

• 5)

  Certification from the Bank accrediting the special account enabled to receive public funds, which account must be used in a unique and exclusive manner for the execution of the project; and,

• 6)

  Others that are required in relation to the type of project. Once the projects have been identified and analyzed, the respective institution must resolve by approving or denying the request for funds for the execution of the requested projects. Once the execution of the projects or allocation of social assistance is approved, the disbursement of resources must proceed in the programmed manner. Notwithstanding, if at the beginning of the management of the projects or social assistance, these are no longer a priority for the community or group of persons to be benefited, prior authorization from the respective institution must result in reallocation to another social project or assistance, and the corresponding adjustments must be made for its respective liquidation, justifying the change in destination thereof.

For each disbursement, the interested party must present to the respective Institution, the request with the following documentation: 1) For the first disbursement, the following are required: a) Projection of the progress of the work or project or social assistance to be carried out with that disbursement; and, b) Receipt addressed to the respective Institution, for the amount of the disbursement. 2) For second or subsequent disbursements, the following are required: a) Financial liquidation report of the first disbursement and so on successively until completion. If there are surpluses from the final liquidation of the project, these must be reimbursed to the respective Institution.

Disbursements must be made by means of transfer carried out by the respective Institution, to the Single Account enabled by the executor, in accordance with the amounts or percentages established in the approval of the project. The respective Institution is empowered to request at any time additional information that it deems necessary from the beneficiary institutions.

The execution of the transferred funds is the direct responsibility of the executor to whom they have been allocated. The final liquidation of the project must be made by the executor before the respective Institution, accompanied by a liquidation report of the project or assistance and all necessary documents that accredit the execution of the project. These liquidations remain subject at all times to any type of review and audit by the Superior Court of Accounts (TSC), for the fulfillment of the obligations and attributions that by Law correspond to this entity.

The financial liquidation report must contain the following information:

• 1)

  Period covered by the execution;

• 2)

  Description of the project subject to liquidation;

• 3)

  Approved project budget;

• 4)

  Amount transferred;

• 5)

  Amount executed;

• 6)

  Execution plan and activity schedule; and,

• 7)

  Other information that the respective Institution deems convenient.

The Superior Court of Accounts (TSC), in compliance with Article 222 of the Constitution of the Republic, is the entity in charge of control and audit of resources allocated based on this Law to Public Institutions of the Central Government and/or Decentralized Institutions, Municipal Corporations, and the National Congress. For this purpose, it shall designate an internal auditor to each of the respective Institutions, whose function is the monitoring, supervision, and resolution of internal inquiries regarding the funds allocated for the purposes of this Law.

For the purpose of guaranteeing efficiency and effectiveness in the execution of the funds, the respective institution must establish the necessary control measures to make transparent the handling of resources.

The physical execution report must contain the following information:

• 1)

  Period covered by the physical execution report;

• 2)

  Number of persons who have already received the benefit of the program or number of persons projected to be benefited;

• 3)

  Detail of the executed projects;

• 4)

  Photographs reflecting their state before, during, and after the work was performed; and,

• 5)

  Other information that the respective Institution deems convenient, which includes: Department and Municipality where the Project was executed, list of beneficiaries if they are natural persons or designation of the community if it was a community project; in the case of a project, attaching photographs of progress, execution, or completion of the work if possible; in the case of assistance, presenting a list of beneficiaries; so that this audit entity may conduct a documentary and field audit and special investigation and verify the actual execution of the projects, the actual or material delivery of the assistance, or any other lawful use given to the public funds for the welfare of the population, to comply with and conclude this audit and special investigation. The Superior Court of Accounts (TSC) has a period of three (3) years from the publication of this Law. For compliance with the provisions of this Article, National Congress Board of Directors Resolution No. 006-2010, dated December 1, 2010, is applicable, regardless of the year of the management, disbursement, execution, or liquidation of the Project or assistance. During the period in which this audit and special investigation remain in force and until the Superior Court of Accounts (TSC) issues a final resolution, any other type of administrative, civil, or criminal action remains suspended, regardless of the stage in which it is found, in relation to the determination of any type of responsibility regarding the funds being audited. The Certificate of Solvency or Discharge issued by the Superior Court of Accounts (TSC) exempts from any type of responsibility of a civil, penal, or administrative nature in relation to the budgetary allocations or audited by said Court and produces such effect.

AUDIT AND SPECIAL INVESTIGATION. For the liquidation and accountability of funds granted to all types of Public Servants and/or Deputies to the National Congress, Non-Governmental Development Organizations (NGDO), Private Development Organizations (PDO's), Foundations, trusts, churches, water boards, municipalities and community associations; and in general all those natural or legal persons who in any capacity received or managed public funds, regardless of their origin, granted prior to the approval of this Law and that have been granted in non-prescribed years and that were intended for the execution of community projects or the delivery of different types of social assistance in the different departments, executed under the different contracting processes of the State or in accordance with the priority need identified in the community, as well as those outsourced or decentralized. Social Investment Expenses and those related to the Strengthening of Governance and Democracy, executed through public and private law institutions created to achieve effective political participation of citizens, intended for community projects, social programs and projects, minor infrastructure projects and their equipment; and all types of social assistance in the areas of health, education, food, job creation and others intended to improve the living conditions of citizens in communities, as well as to address urgent and priority needs of these; the Superior Court of Accounts (TSC) is ordered to proceed to carry out an audit and special investigation, for which the interested parties must present all corresponding documentation before the Superior Court of Accounts (TSC),

REGULARIZATION. After the audit and special investigation by the Superior Court of Accounts (TSC), ordered in the preceding Article, or ordinary or special financial or legal compliance audits and the Court determines that all or part of the executed funds have not been properly liquidated, it must issue a reasoned resolution, indicating the exact amount of economic damage caused to the State of what has not been cleared, to which a fine of two percent (2%) shall be applied on the total amount not cleared plus the interest determined by the Superior Court of Accounts (TSC), so that the amount plus the fine are deposited to the General Treasury of the Republic by the audited person, within a maximum period of four (4) years counted from the date of the resolution. Once such payment is made by the official, the Superior Court of Accounts (TSC) must issue the Certificate of Solvency which has the same effects. The Certificate of Solvency or Discharge issued by the Superior Court of Accounts (TSC) exempts from any type of responsibility of a civil, penal or administrative nature in relation to the budgetary allocations or audited. If at the end of the payment period imposed, the audited person has not obtained the Certificate of Solvency or Discharge issued by the Superior Court of Accounts (TSC), he is subject to administrative responsibility, civil responsibility, or the indication of penal responsibility must be determined as appropriate, notifying the corresponding authority accordingly. Against the resolutions that conclude the audit process, described in this Article and the preceding Article, issued by the Superior Court of Accounts (TSC), only the remedy of reconsideration, contemplated in the Administrative Procedure Law, is available, so that once resolved, the administrative instance is considered exhausted. The funds obtained from the payment of the two percent (2%) corresponding to the fine on the total amount not cleared plus the interest determined by the Superior Court of Accounts (TSC) shall go to a common fund that is destined for programs in the areas of health and education.

In order to achieve the purposes and objectives of this Law, a special budgetary allocation must be created in the budget of the respective institution for each fiscal year. With respect to the National Congress, this Law derives from Article 81-A of its Organic Law, contained in Decree No. 363-2013, requiring the approval of a budgetary allocation annually that shall form part of the budget of the National Congress.

A budgetary allocation of TWENTY MILLION LEMPIRAS (L.20,000,000.00) is assigned to the Superior Court of Accounts (TSC) for the fulfillment of the mission entrusted in this Law for the current Fiscal Year. For the following fiscal years, a special annual allocation must be assigned in the Budget of Income and Expenditures of the Republic.

The Superior Court of Accounts (TSC) shall issue the Regulations for this Law within thirty (30) days.

This Law may be amended or repealed through a vote of two-thirds (2/3) of the total Deputies of the National Congress.

This Law shall enter into force as of the day of its publication in the Official Journal "La Gaceta". Done in the city of Tegucigalpa, Municipality of the Central District, in the Session Hall of the National Congress, on the sixteenth day of the month of October of two thousand nineteen. ANTONIO CÉSAR RIVERA CALLEJAS PRESIDENT JOSÉ TOMÁS ZAMBRANO MOLINA SECRETARY SALVADOR VALERIANO PINEDA SECRETARY To the Executive Branch Therefore: Let it be executed. Tegucigalpa, M.D.C. October 17, 2019. JUAN ORLANDO HERNÁNDEZ ALVARADO PRESIDENT OF THE REPUBLIC THE SECRETARY OF STATE IN THE OFFICE OF THE PRESIDENCY. EBAL JAIR DIAZ LUPIAN Legislative Branch DECREE No. 115-2019 THE NATIONAL CONGRESS, CONSIDERING: That the Constitution of the Republic establishes in Article 189 that the Legislative Power is exercised by a Congress of Deputies elected by Direct Suffrage, which meet in Ordinary Sessions in the Capital of the Republic starting from January 25 until October 31 of each year, without prejudice to extraordinary sessions in the cases provided for in Article 190 of the same. CONSIDERING: That at present there are pending study and approval various decrees of general interest for the country, which make it necessary in an exceptional manner to extend the period of Ordinary Sessions of the National Congress, corresponding to the Second Legislature. CONSIDERING: That in accordance with the second paragraph of Article 189 of the Constitution of the Republic, Ordinary Sessions may be extended for as long as necessary. CONSIDERING: That in accordance with Article 205 Attribution 1) of the Constitution of the Republic, it corresponds to the National Congress: To create, decree, interpret, amend and repeal laws. THEREFORE; DECREES: