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Functional Areas

• Functional Areas
  • Legal Framework
    • Project Document
    • The Grant Agreement
      • UNDP-Global Fund Grant Regulations
      • Grant Confirmation
      • Grant Confirmation: Face Sheet
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      • Grant Confirmation: Conditions Precedent (CP)
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      • Grant Confirmation: Schedule 1, Summary Budget
    • Implementation Letters and Performance Letters
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    • Signing Legal Agreements and Requests for Disbursement
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      • Property Issues
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      • Conflict of Interest and Anti-corruption Measures
      • Anti-terrorism Requirements
      • Payment of Incentives to Government Staff
    • Legal Framework for Other UNDP Support Roles
  • Health Product Management
    • Overview: Health Product Management
      • Transit
      • Scope
      • Guiding Principles for Procurement of Health Products
    • Product Selection
    • Quantification and Forecasting
    • Supply Planning of Health Products
    • Sourcing & Regulatory Aspects
      • Development of List of Health Products
      • Development of the Health Procurement Action Plan (HPAP)
      • Health Procurement Architecture
      • Local Procurement of health products
      • International freight, transit requirements and use of INCOTERMS
    • Financial Management
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      • Import duties and VAT/sales tax
    • Monitoring and Evaluation
      • Differentiation Approach
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      • Performance Framework
      • M AND E Plan
    • M&E Components of Grant Making
      • M & E Plan
      • M&E in the PR Capacity Assessment Tool (CAT)
    • M&E Components of grant reporting
      • Progress Update/Disbursement Request
  • Sub-recipient Management
    • Sub-recipient Management in Grant Lifecycle
    • Selecting Sub-recipients
    • Capacity Assessment and Approval Process
      • Assessing Sub-recipient Capacity
      • Value for Money and Approval Process
      • UNDP Country Office Review
    • Engaging Sub-recipients
      • The Sub-recipient Agreement
      • Induction Workshop
      • Procurement by Sub-recipients
      • Sub-sub-recipient Engagement
      • Renewal of Sub-recipient Agreements
      • Termination of Sub-recipient Agreements
    • Managing Sub-recipients
      • Managing partnership with Sub-recipients
      • Cycle of Sub-recipient Monitoring
      • SR Reporting
      • Ongoing Monitoring of Sub-recipient Activities
      • Sub-recipient Performance Management
      • Managing Risks Related to Sub-recipients
    • Sub-recipient Audit
      • Sub-recipient Audit Approach
      • Sub-recipient Audit Criteria
      • Sub-recipient Audit Process
      • Sub-recipient Audit Follow-up
  • Capacity Development
    • Interim Principal Recipient of Global Fund Grants
    • A Strategic Approach to Capacity Development
    • Resilience and Sustainability
    • Legal and Policy Enabling Environment
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    • Transition
      • Transition Strategy
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    • Capacity Development Results – Evidence From Country Experiences
    • Capacity development and Transition Planning Process
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  • Risk Management
    • Introduction to Risk Management 
      • Risk Management in International Development
    • Global Fund Risk Management
      • Global Fund Operational Risk Management
      • Global Fund Requirements for Risk Management at Implementer Level
      • Global Fund Local Risk Management Related Policies
    • Risk management in UNDP
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    • Risk Management in UNDP-managed Global Fund Grants
      • Establishing the Context
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      • Monitoring and Review
    • Risk Management in High Risk Environments
      • UNDP Corporate Policies
      • Risk management for UNDP Global Fund portfolio in high-risk environments
    • Common Risks Identified in Global Fund Programmes
  • Audit and Investigations
    • Principal Recipient Audit Approach
      • Budgeting for Principal Recipient Audit
      • Principal Recipient Audit Process
      • Principal Recipient Audit Follow-up
    • Audit of Country Coordinating Mechanism Funding
    • Sub-recipient Audit
    • Ad hoc Site Visits
    • Office of Audit and Investigations (OAI) Investigations
    • Global Fund Office of the Inspector General (OIG) Investigations and Audits
  • Human Rights, key Populations and Gender
    • Background
      • Overview
      • Human Rights
      • Key Populations
      • Gender
    • UNDP’s Work on Human Rights, Key Populations and Gender 
    • Integrating Human Rights, Key Populations and Gender in the Grant Lifecycle
      • National Strategic Plans (NSPs)
      • Country dialogue and funding request development 
      • Grant-Making
      • Grant Implementation 
      • Access to Medicines
  • Human Resources
    • HR During Start-up
    • HR During Grant Implementation
    • HR During Grant Closure
    • GPN ExpRes Roster
    • UN Volunteers

Project Lifecycle

• Funding Request
• Principal Recipient (Pr) Start-up
• Grant-Making and Signing
• Grant Implementation
• Grant Reporting
• Grant Closure

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Audit and Investigations

Principal Recipient Audit

Principal Recipient Audit Approach

Audits of UNDP are guided by the so-called ‘single audit’ principle, whereby any review of UNDP activities by an external authority, including any governmental authority, is precluded, instead a) the United Nations Board of Auditors (UN BoA) retains the exclusive right to carry out external audit of the accounts, books and statements of UNDP; and b) the Office of Audit and Investigations (OAI) retains the exclusive right to carry out internal audit of the accounts, books and statements of UNDP. 

The purpose of the ‘single audit’ principle is to avoid that UNDP operations, transactions and books are audited more than once by more than one party. To this effect, the UN BoA and OAI coordinate their audit activities to avoid any possible duplication of efforts and no other entity, external or internal, has the authority to audit UNDP activities. 

In addition, in countries falling under the Global Fund’s Additional Safeguards Policy (ASP) [1]., the Global Fund may request a special purpose audit on the use of Global Fund resources. In such cases, UNDP must (1) secure the appointment of a mutually agreed independent auditor; and (2) prepare mutually agreed audit terms of reference which reflect, as necessary, circumstances giving rise to the Global Fund’s request for said audit. The cost of such special purpose audit are charged to the grant budget. The Global Fund’s request for a special purpose audit is handled in conformity with the working arrangements agreed between the independent oversight offices of the PR and the Global Fund (See Article 7b(ii) of the Grant Regulations).

Each year, guided by a risk-based audit approach, OAI determines the list of UNDP Country Offices (COs) that are serving as Global Fund interim PR, which will be audited in the following year. The list is submitted to the UNDP Administrator for approval and shared with the Global Fund Secretariat and the Office of the Inspector General (OIG) of the Global Fund.

In accordance with UNDP Executive Board Decision 2012/18, as of 1 December 2012, UNDP publishes on its audit public disclosure website all UNDP audit reports within 30 calendar days after they are internally issued to UNDP management.

Practice Pointer

The Project Management Unit (PMU) should appoint an audit focal point to cover both the CO and Sub-recipient (SR) audits. It is important that the focal point is granted access to CARDS system.

[1] The Additional Safeguard Policy (ASP) is a risk management tool applied on the basis of risks identified in countries where a grant or group of grants is/are being implemented. The ASP comes into effect when the systems to ensure accountability over the use of Global Fund resources are notably weak and assets would be exposed to an unacceptable level of risk if additional measures were not applied.

Budgeting for Principal Recipient Audit

The audits that are carried out by the Office of Audit and Investigations (OAI) cover only the Principal Recipient (PR) activities as managed by a given UNDP Country Office (CO)

Practice Pointer

Should a Country Office have a Financing Agreement (FA) to provide technical support to national partners then the activities will be included in the audit of the Country Office and not part of the UNDP PR OAI audit. Therefore, there should be no audit costs included in the programme budget for a FA. Effective 19 September 2017, UNDP and the Global Fund agreed to a tailored audit cost recovery process, in alignment with OAI’s risk-based approach to audit, as formalized in the Framework Agreement.

The process agreed with the Global Fund is as follows:

1. Budgeting – COs managing Global Fund grants are advised to budget for the OAI audit costs as follows:
   • High risk countries should budget for the audit costs of US$85,000 once in two (2) years. For high risk countries the timing of the budget should take into account the date the last OAI audit report for Global Fund programmes was issued.  For example, if a high risk country was last audited in 2023, they should make a provision for a budget in 2025.
   • Medium risk countries should budget audit costs of US$85,000 once in three to four (3-4) years.
   • Low risk countries should budget audit costs of US$85,000 once in four to five (4-5) years.
   • In all cases, should a country not be audited in a particular year, then they should re-phase the audit budget to the following year until an OAI audit takes place and payment is made. 
   • The risk ratings per country are updated by OAI every year in Quarter 4.  
   • The risk ratings will be communicated by the UNDP Global Fund Partnership and Health Systems Team (GFPHST) to the concerned COs and RSC.
   • New Countries should use the previous year’s country risk rating to guide them in terms of the frequency of the OAI audits and should budget accordingly.
   • For countries with more than one grant agreement the costs should be apportioned across the respective grant budgets (including C19RM), based on the total signed grant amounts.
   • The audit costs are planned and budgeted under the account for “Professional Services” (74100).
   • In the event there is an ‘unsatisfactory’ OAI audit rating, there will be a follow-up audit in the subsequent year as per UNDP guidelines. The CO or RSC should, therefore, request a budget reallocation to cover the costs of the follow-up audit.
   • In Quarter 1 of the last year of the Implementation Period, UNDP will review the utilization of the audit costs and agree with the Global Fund on reprogramming of the savings, if any.
   • For the active grants that do not have a budget line for OAI audits, COs or RSCs shall submit a request to the Global Fund for the budget reallocation of savings to include the audit costs in the respective grant budgets and the cash forecast for the annual Disbursement Request.
2. OAI’s annual Global Fund audit plan – In December of each year, the GFPHST will share with the Global Fund and the COs, the OAI annual audit plan for the subsequent year and a proposal for the distribution of audit costs for the respective countries. For all grants selected for audit the CO should include audit costs in the cash forecast for the annual Disbursement Request. 
3. Upon the issuance of a draft audit report by OAI, the US$85,000 for audit costs will be charged to the respective grants through a Zero Dollar Invoice (ZDI) (expense account 74110 “Audit fees” with the full COA in the GL and PPM segments), with a prorating of the cost (based on the signed amounts of active grants (including C19RM) for countries with more than one grant. The audit fees collected should be credited to the UNDP Global Fund Partnership and Health Systems Team (GFPHST) Income Account 54025 (Reimbursement for Management Services) with COA in the GL segment only as follows:,              

Principal Recipient Audit Process

Below is a brief overview of the key steps of the audit of UNDP-managed Global Fund projects by the Office of Audit and Investigations (OAI):

1. OAI sends an interoffice memorandum to Country Office (CO) senior management, notifying of the upcoming audit and detailing the dates of audit field work, the OAI audit team and the period of the audit.

Practice Pointer

The UNDP Global Fund Partnership and Health Systems Team (GFPHST) has developed an audit checklist to guide the CO/Project Management Units (PMU) in the preparation process for an OAI audit of a Global Fund funded programme. The PMU should complete the audit checklist as a team, in coordination with the rest of the CO, with the PMU Manager/Coordinator assigning focal points for each of the following audit areas: * Governance and strategic management * Programme management / monitoring and evaluation * Sub-recipient management * Procurement, supply management and quality assurance * Financial management.

2. At the start of the audit work, an entry meeting is scheduled between OAI and the CO/PMU. The purpose of the meeting is to explain in greater detail the engagement, the tentative work plan for the mission, and to listen to any additional concerns or areas of emphasis that management may wish to bring to the attention of the OAI audit team. OAI also reaches out to the Global Fund and in-country stakeholder (i.e. CCM leadership, Sub-recipients).
3. Absent very specific circumstances, audit field work is completed within the timeframe detailed in the interoffice memorandum.
4. An exit meeting is scheduled between OAI and the CO/PMU to discuss key audit findings.

Practice Pointer

There is no need to wait for the final audit report to be issued to take action to address the audit findings and recommendations. The CO/PMU should act as soon as the audit observations are discussed and agreed with the auditors during the exit meeting.

5. OAI shares the draft audit report for CO management to provide its comments and action plan for addressing the OAI audit recommendation

Practice Pointer

It is important for the CO/PMU to complete a thorough review of the draft audit report. When reviewing OAI’s audit findings and recommendations, it is critical to assess whether the recommended actions are reasonable and achievable. The response to the draft OAI report should be shared with the UNDP Global Fund Partnership and Health Systems Team (GFPHST) before being finalized.

How well do you know the audit process? Test your knowledge with this OAI PR audit scenario exercise for PMUs.

Principal Recipient Audit Follow-up

Country Office Follow-up on Audit Recommendations

The Programme Management Unit (PMU), in coordination with the Country Office (CO), should be proactive in addressing the Office of Audit and Investigations (OAI) audit findings and recommendations and ensure that the actions taken are reflected in a timely manner in the Comprehensive Audit and Recommendation Database System (CARDS). The designated audit focal point should follow-up on the fulfilment of the audit recommendations, which should be included in the Project Management Unit (PMU)’s work plan.  The designated audit focal point should also follow-up with the OAI audit focal point to ensure a timely review of the CO’s entries in CARDS.

Audit recommendations are expected to be implemented as soon as possible and within a period not exceeding 18 months. The duration of 18 months is calculated from the date the audit report is issued by OAI. In effect, this means that the CO has more than 18 months for implementation since, in most cases, it is aware of the audit recommendations well before the final audit report is issued by OAI.

A recommendation that is still “in progress” or “not implemented” after 18 months or more of the audit report issuance is considered a long outstanding recommendation and is reported to the UNDP’s Executive Board, i.e. included in the OAI annual report to the Executive Board. The outstanding recommendation will also receive a “penalty/reduction” when the implementation rate is calculated in CARDS. A recommendation that is implemented within six months after the audit report is issued, on the other hand, will receive a “bonus” (increment) when the implementation rate is calculated in CARDS. If a recommendation is implemented between six and 18 months, there is no increment nor penalty. 

It is important to note that the implementation status of an audit recommendation is based on the OAI assessment of its status and not by the update provided by the CO. The CO should accordingly ensure a timely review of its entries submitted in CARDS by OAI.

Global Oversight and Resources

The UNDP Global Fund Partnership and Health Systems Team (GFPHST) uses the UNDP OAI’s audit findings and recommendations to tailor its support, tools and guidance to COs acting as interim PR for Global Fund funded programmes. The Team monitors the fulfilment of audit recommendations on a bi-monthly basis and, where required, it is available to provide additional support. OAI issues, on an annual basis, a consolidated Principal Recipient audit report of OAI audits of UNDP-managed projects financed by the Global Fund. As part of a robust risk management approach, COs should review the consolidated report to identify recurring issues and OAI’s recommendations to address them. As with all UNDP audit reports, the consolidated report is made available on UNDP’s audit public disclosure website within 30 calendar days after it is internally issued to UNDP management.

Audit of Country Coordinating Mechanism Funding

When UNDP is interim Principal Recipient (PR) of Global Fund projects and also the Country Coordinating Mechanism (CCM) funding recipient, the UNDP Office of Audit and Investigations (OAI) includes the CCM funding in the scope of the Global Fund audits. For countries where UNDP is not the interim PR, but is the CCM funding recipient, the expenditures will be included in the audit of the Country Office.

Sub-recipient Audit

Sub-Recipients (SRs) are audited based on the criteria detailed in the Office of Audit and Investigations (OAI) Call Letter for Harmonized Approach to Cash Transfers (HACT) Audit Plans, which is issued annually. The SR audit approach for Global Fund projects includes financial audit as well as audit of SR internal control and systems. While SR audits are coordinated centrally by the UNDP Global Fund Partnership and Health Systems Team (GFPHST), COs are advised to designate a focal point to ensure a timely and successful process.

For more information, please see the following section(s) of the Manual: Sub-recipient Management

Ad hoc Site Visits

Pursuant to Article 7(e) of the Grant Regulations, UNDP allows authorized representatives of the Global Fund and its agents ad hoc access to sites related to operations financed by Global Fund grants. Usually, site visits are conducted by the Local Fund Agent (LFA). The same procedures apply, regardless of whether the Global Fund, the LFA or another agent visits the site.

The ad hoc site visits are not audits. Country Offices (COs) are not permitted to provide Global Fund representatives or its agents, including the LFA, with any financial or programmatic documents or records during the visit. UNDP and UN agencies that act as Sub-recipients (SRs) can, and should, make available relevant financial and programmatic information drawn from their accounts and records (e.g. progress reports and expenditure reports). However, they should not provide access to the underlying documents or records.

However, non-UN-agency SRs (civil society organizations (CSOs) and government entities) can provide programmatic records and certain supporting documents to the LFA.

The Global Fund must provide reasonable notice of when visits will occur. If the Global Fund wants to look at numerous programmatic records, the SR must be given time to respond to the request. If sufficient time has not been given, this should be noted in writing to the Global Fund.

If a Global Fund request for an ad hoc site visit is received, UNDP Global Fund Partnership and Health Systems Team (GFPHST) and the Office of Audit and Investigations (OAI) should be consulted on how to proceed.

Office of Audit and Investigations (OAI) Investigations

The Office of Audit and Investigation (OAI) provides UNDP with independent and internal oversight that is designed to improve the effectiveness and efficiency of UNDP’s operations in achieving its development goals and objectives through the provision of internal audit and related advisory services, and investigation services. OAI’s Investigations Section has the mandate to investigate reports of alleged wrongdoing involving UNDP staff members and allegations of fraud and corruption against UNDP, whether committed by UNDP staff members or other persons, parties or entities, where the wrongdoing is to the detriment of UNDP. This includes SRs of Global Fund-financed projects under UNDP implementation. OAI is the sole office in UNDP mandated to conduct such investigations.

UNDP takes all reports of alleged wrongdoing seriously. In accordance with UNDP’s corporate policies, OAI is the principal channel to receive allegations.

More information on OAI investigations is available here.

Global Fund Office of the Inspector General (OIG) Investigations and Audits

OIG investigations

Global Fund grants are subject to external assurance and investigation work by the Global Fund Office of the Inspector General (OIG). However, OIG does not have the mandate to investigate UNDP and its resources, and the OIG and the UNDP Office of Audit and Investigations (OAI) have separately agreed on a set of arrangements for cooperation and coordination in terms of investigations. Consequently, if notification of an OIG investigation is received from the Global Fund, the Country Office (CO) should urgently consult with the UNDP Global Fund Partnership and Health Systems Team (GFPHST) and OAI on how to proceed.

OIG audits

OIG does not have audit authority over UNDP.  As in the case of investigations, arrangements have separately been agreed between OIG and OAI for cooperation and coordination in terms of audit activities.

Should a UNDP CO where UNDP is PR receive notification of an OIG audit, please contact the UNDP Global Fund Partnership and Health Systems Team (GFPHST) and OAI for urgent consultation on how to proceed. The focal point in the GFPHST is Joseph Serutoke, Deputy Manager (joseph[dot]serutoke[at]undp[dot]org)