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Financial Management

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The financial management process encompasses the financial and operational management of UNDP’s implementation of Global Fund programmes, and is structured as follows:

  1. Grant-making and signing
  2. Grant implementation
  3. Sub-recipient management
  4. Grant reporting
  5. Grant closure

This section is primarily intended to serve as a guide for UNDP Country Offices (COs) that are acting as interim Principal Recipient (PR) to Global Fund grants and for those COs who have signed a Financing Agreement to provide technical support to recipients of Global Fund funding (e.g. Principal Recipient, Sub-recipient). This section also contains guidance for UNDP COs that are recipients of Country Coordinating Mechanism (CCM) funding.

Financial management processes are directly associated with other substantive areas of the Manual. Appropriate links to these sections, and to other UNDP and Global Fund documentation, are provided throughout. Global fund projects adhere to UNDP’s Financial Regulations and Rules and UNDP's  Internal Control Framework in all instances. In addition, the Global Fund Operational Policy Manual is an important reference tool.

Grant-Making and Signing

The Grant Confirmation is the legal instrument which forms the basis of the contractual obligation between the Global Fund and the PR. During the grant-making process, the Country Coordinating Mechanism (CCM) and the Global Fund work with the PR to develop, among other documents:

The overall funding process is summarized in the Global Fund’s Applying for Funding section.

Please refer to the Legal Framework section of the Manual for a detailed analysis of relevant legal agreements.

Prepare and Negotiate Work Plan and Budget with the Global Fund

The Global Fund’s allocation-based funding model uses a modular approach and costing dimension that enhances the linkage between programmatic and financial information. Interventions and activities are defined in the modular approach and the cost groupings and cost inputs in the costing dimension (budgetary framework). This approach provides applicants and implementers with a standardized costing dimension that allows for resource allocation, the setting of realistic goals for each defined period of the grant life cycle, strengthened tracking of budget versus expenditure data and the alignment/harmonization of partners and country data systems. Each module is linked to a specific disease and each intervention is linked to a module. Refer to the Global Fund Guidelines for Grant Budgeting and the Modular Framework Handbook for further guidance.

Global Fund budgeting principles can be summarized as follows:

Detailed guidelines area available in the Global Fund Guidelines for Grant Budgeting.

Prepare Funding Request

The initial step in the funding process is the development of a funding request for a disease component by all stakeholders, in the context of the CCM governance mechanisms. In preparation for the development of the funding request, the applicant chooses a proposed start date for the implementation period of the new funding request. The applicant will need to be aware of the upper limit for grant-making, taking into account the funding forecast available at the start date of this period. 

Initial “best estimate” budgets by intervention are the minimum requirements for the submission of the funding request. The budget at the funding request stage is not detailed, but it serves to provide the strategic investment and intervention choices. It should be based on both realistic requirements to meet targets and the total amount of grant funds available.

The following are the key information requirements for budgets at this stage:

It may be more convenient to prepare a more detailed budget at the funding request stage, which can then be consolidated into an intervention-based budget for submission to the Global Fund (for example, in cases where the latest historical costs of certain known activities in an intervention are already available).

Please see here for detailed information on the budget approval process.

The diagram below provides a summary of the stages of the budgeting process for the funding request.

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Prepare and Finalize a Global Fund Budget during Grant-Making

Once a funding request is recommended for grant making, the nominated Principal Recipient (PR) is required to develop a detailed budget using the full modular approach and costing dimension. Each PR must submit a detailed budget for review and approval, as indicated in the diagram below.

Practice Pointer
As a general principle, in developing a Global Fund work plan and budget, the PR must ensure a strong link between these documents, the performance framework (PF), and the health products management template (HPMT). It is recommended that the PR have a near-finalized PF before developing the budget, to ensure that appropriate levels of funding are allocated to achieve PF objectives/activities and corresponding targets.

NOTE: under Grant Cycle 7 (GC7) – 2023-2025 GF Allocation Period – the Detailed Budget template comprises two worksheets – one for health products (Detailed Budget – Health Products for Cost Groupings 4, 5, 6, and 7) and another for non-health products (Detailed Budget – Non-Health Products for all Cost Groupings except 4, 5, 6, and 7). Depending on the type of portfolio (High Impact, Core, Focused), the Global Fund Country Team will confirm whether a HPMT is required and, in such cases, the HPMT must be finalized first, and then the data copied/pasted into the Detailed Budget – HP worksheet of the DB template. The HPMT includes a Detailed Budget worksheet that includes all required information and is structured to mimic the Detailed Budget – HP worksheet. The PR will not be able to edit the information in the Detailed Budget – HP worksheet. When an HPMT is not required, the Detailed Budget – Non-HP worksheet is used exclusively for all budget lines across all cost groupings.

In addition, the PR is encouraged to design the work plan and annual budget (with detailed cash forecasting for each quarter). It is also recommended that the Country Office (or a grant designing team) should take the following into account in the template:

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Transition between Allocation Utilization Periods

The grant allocation can be used for activities that were budgeted, approved and completed during the grant implementation period associated with the country’s allocation – regardless of whether the payment for such activities has occurred. The following principles apply:

  1. Financial commitments are current contractual obligations to pay a specified amount of cash against goods and services already received, but for which the related payment has not yet been made (all or partial). Financial commitments existing at the end of a grant implementation period can be paid from that period’s allocation (via available cash balance or a disbursement from the Global Fund) and must be liquidated no later than six months after the end of the grant Implementation Period (unless otherwise approved in writing by the Global Fund).
  2. Financial obligations are current contractual obligations to pay an agreed amount of cash (i.e., as per signed contract and/or purchase order) to a third party for the provision of goods/services at a certain point of time in the future, i.e., the goods or services are yet to be received. Financial obligations existing at the end of an implementation period cannot be paid from that period’s allocation and must be transferred and included in the budget of a new grant or an extension, to be covered by funds from the next allocation.

Therefore, all financial commitments existing at the end of the current Allocation Utilization Period will be paid from the current allocation, while financial obligations existing at the end of the current Allocation Utilization Period will be funded from the next implementation period allocation. These amounts will need to be considered in the negotiation of the next grant and included in the budgeting and programmatic planning for the next allocation utilization period.

In certain cases, payments relating to goods and/or services delivered after the end of an Allocation Utilization Period may be considered financial commitments to be funded from that Allocation Utilization Period, where the following three criteria are met:

Six months after the start of the new Implementation Period2, Principal Recipients will be required to report3 the final available cash balance from the previous allocation period (after all financial commitments are fully paid). Any unliquidated commitment remaining at the end of the six-month period will be considered closed by the Global Fund unless otherwise approved in writing by the Global Fund.

Upon the signing or modification of grant confirmation, final in-country cash balance amounts may be deducted from the grant funds amount of the new grant as stipulated in the grant confirmation. Consequently, in-country cash balances from the previous Implementation Period may be deducted from the future funding (disbursement) decisions of the Global Fund.

For grants in closure or already closed prior to the allocation period, the Principal Recipient is required to reimburse the cash balance directly to the Global Fund, unless otherwise approved in writing by the Global Fund.

Detailed guidance on transition from the old to the new allocation funding and relevant budgeting and reporting requirements is available in Global Fund Guidelines for Grant Budgeting, Global Fund Operational Guidance for Grant Budgeting and in the Global Fund Operational Policy Manual (Section 3: Implementation Period Reconciliation and Grant Closure).

Foreign exchange

Budgets of Global Fund grants are either finalized in Euros (€) or US dollars (US$), depending on the new funding model allocation currency choice, considering the payment currency for each budget line. The allocation currency should be requested by the applicant no later than 30 days after the issuance of the allocation letter to the country. Global Fund grant budgets should be prepared using the different currency denominations of each budget line (i.e., the currencies in which the budget item will be invoiced or charged) converted, where applicable, to the currency of the Grant Confirmation at an appropriate exchange rate.

Any inflation factor should take account of the currency denomination of the budget item (local currency-denominated items may require a different rate of inflation to foreign currency-denominated items). The relationship between the two variables—exchange rate and inflation rate—should be described in the general budget assumptions.

The exchange rate used in the budget should be that which, based on available evidence, reflects the best estimate of the rate at which the PR will exchange their grant currency into local currency over the term of the grant. The method and/or references used should be fully disclosed in the general budget assumptions. The exchange rate may be budgeted at different rates over the term of the budget, provided that assumptions behind the rates are disclosed. No exchange rate “contingencies” may be included in the budget. If the country’s exchange rate is fixed or managed by the domestic authorities, the budget should follow the given official fixed rates.

Taxes

Global Fund funding is made available based on the principle that grant funds are exempt from relevant taxation imposed by the host country concerned. The required tax exemption for Global Fund purposes mainly includes (but is not limited to): (a) customs duties, import duties, taxes or fiscal charges of equal effect levied or otherwise imposed on the “Health Products” imported into the host country under the Grant Confirmation  or any related contract (collectively “Custom/Import Duties”) and (b) VAT levied or otherwise imposed on the goods and services purchased using grant funds.

The obligation of the host country to provide tax exemption is mandatory and applies to the Global Fund programmes implemented partially or wholly by any Principal Recipient (PR) or Sub-recipient (SR) that is not a “Government Entity.” In administering the tax exemption, if needed, the PR should ensure an adequate follow-up of taxes paid and recovered at SR level.

The budget submitted to the Global Fund should be net of taxes on applicable unit costs. When tax exemption is obtained on a reimbursement basis (i.e., the PR must pay the taxes first and then claim reimbursement), the first year’s budget may include a provision related to the cash flow needs if required. This should be requested in the budget and supported by precise cash flow forecasts related to tax payment and recoveries. If the UNDP CO operates on a VAT reimbursement basis based on local legislation, UNDP CO shall try to ensure through coordination with the government of the Host Country and the CCM or, as the case may be, the relevant Regional Coordination Mechanism (RCM) or Regional Office (RO) and otherwise that the relevant Grant Agreement and the assistance financed thereunder shall be free from taxes and duties imposed under laws in effect in the Host Country.

Costs

Allowances for salary incentives, top-ups, travel per diems and transportation costs are not paid from grant funds unless provided for in the funding request and grant agreement. If such schemes are indispensable for service delivery, applicants should include a valid funding rationale for such incentives as part of the funding request. The assumptions tabs in the Global Fund budget template are used for this justification.

Shared costs

Shared costs are expenses that can be allocated to two or more funding sources (government, the Global Fund, other donors etc.) or different Global Fund grants based on shared benefits and administrative efficiency. These costs are allowed when they are:

The apportionment method must be clearly stipulated in the budget assumptions.

Budgeting for Project Management Unit (PMU) and other staff costs

The Global Fund budget template contains three types of assumption tabs:

  1. Travel-Related Cost grouping of cost-inputs;
  2. Human Resources grouping of cost inputs; and
  3. All others.

The related assumption tab is used for each detailed unit cost.

Staff costs are calculated and budgeted as follows:

Note that all information related to the procurement of health products – i.e., the list of health products, unit costs, quantities, and associated procurement and supply management (PSM)-related costs – are captured in the Health Product Management section of the Manual.

Practice Pointer
All relevant common services costs such as common premises (shared office costs, PMU that are collocated with UNDP Country Office), security costs, common communication costs, or medical facilities (UN dispensary) must also be included in the budget.

Cost recovery

In preparing the budget, the Principal Recipient (PR) should include all relevant direct costs and indirect overhead costs.

The PR is responsible for negotiating any indirect and overhead costs to be charged by Sub-recipients (SRs) and other implementing entities. If such entities are international nongovernmental organizations (NGOs), the relevant indirect cost recovery policies on SR costs apply. Local NGOs should include all charges as direct costs.

When formulating Global Fund budgets, UNDP policy is adhered to with respect to cost recovery. UNDP distinguishes between two types of costs in the implementation of its activities. These are:

  1. Costs that are in addition to direct project costs, representing the costs to the organization that are not directly attributable to specific projects or services, but are necessary to fund the corporate structures, management and oversight costs of the organization. These costs are recovered by charging a cost recovery rate, known as General Management Support (GMS) fee; and
  2. Direct Project Costs (formerly known as DPC, currently renamed Delivery Enabling Services, DES) - direct costs of programme, administrative and operational support activities, that are part of the project input.

General Management Support

GMS is defined as indirect costs incurred by an organization as a function and in support of its activities, projects and programmes. The key feature of these costs is that they cannot be traced unequivocally to specific activities, project or programmes.

Based on the exceptional approval of UNDP’s Executive Board for existing corporate framework agreements, the GMS rate between the Global Fund and UNDP is 7 percent.  The agreed percentage fee for GMS between UNDP and the Global Fund is corporately agreed, and as it is Executive Board legislated, it is non-negotiable. GMS is to be categorized as overhead and included as a budget line for all grants. This GMS rate is applicable for the Principal Recipient role and when UNDP is providing technical support to a Global Fund Principal Recipient or Sub-recipient through a Financing Agreement. Any deviations to the GMS rate must be approved by the BMS Director prior to any negotiations with the donor. Refer to UNDP Programme and Operations Policies and Procedures (POPP) on Resource Planning and Cost Recovery for detailed guidance on GMS, and in case of specific queries, reach out to the GFPHST Finance Team or Programme Team.

Direct Project Costs (or delivery enabling services)

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Detailed budgeting guidance

Detailed budgeting instructions can be obtained from the Global Fund Operational Guidance for Grant Budgeting under the following areas:

  1. Human resources, including salaries, allowances and accrued severance entitlements;
  2. Travel-related costs;
  3. External professional services;
  4. Pharmaceutical, non-pharmaceutical health products and health equipment;
  5. Infrastructure and non-health equipment;
  6. Communication material and publications;
  7. Management fees and indirect cost recovery; and
  8. Living support to client/target population (Microloans and micro grants; cash incentives).

Budget approval

The funding request budget and the detailed budget prepared for the grant-making process should be uploaded to the Global Fund’s online platform [the latest platform is Grant Operating System (GOS)].

A standardized detailed budget (DB) template is extracted from the Global Fund’s GOS in Excel, with prepopulated data. The level of detail included in the DB Template shall differ depending on the stage of the application, i.e., whether the application is at funding request or grant-making stage.

The summary budget is automatically produced in the DB template for all stages of the budgeting mechanism (e.g., funding request, grant-making, reprogramming). The summary budget reflects the costs of each intervention (modular approach) and cost grouping using standard budget classifications provided in the costing dimension (cost inputs/cost grouping).

To ensure efficient and timely review and approval, when submitting a budget for approval the Principal Recipient (PR) should include all unit cost assumptions and upload all relevant supporting documents. The estimated time for the review and approval of the detailed budget submitted by the PR is 30 to 90 days, depending on the stage of the process. Additional clarifications and/or budgets that do not comply with Global Fund principles could lead to additional delays in the approval process.

Once approved, the budget is captured in Global Fund systems as the official approved budget and used as the basis for financial reporting unless it is modified through the grant agreement after any material budget adjustments. This is also the “baseline budget” and all budget adjustments will be compared against this version for the establishment of materiality thresholds.

Secure Banking Arrangements

UNDP uses only two bank accounts (U.S. dollars (US$) and Euro) for receiving contributions from the Global Fund.

Prior to Board approval and/or signing of the Grant Confirmation, the Global Fund undertakes the process of bank verification and authentication by requesting the details of the bank account of the Principal Recipient (PR) into which the grant disbursements will be deposited. Country Offices (COs) should request bank account confirmation letters from the UNDP’s Global Fund Partnership and Health System (GFPHST) Finance team.

Contributions will be credited to the bank account identified on the Face Sheet. The Global Fund disburses funds directly to the PR and they should clearly reference the applicable Grant Number in all deposits.

Country Coordinating Mechanism (CCM) and Financing Agreement funding should also be deposited in the HQ Contributions Bank Account.

Project and Budget Formulation in Quantum

UNDP’s standard procedures as advised in UNDP Programme and Operations Policies and Procedures (POPP) - Project Design should be followed for Global Fund project and budget formulation. This includes guidance on how to ‘Formulate Programmes and Projects,’ ‘Select Responsible Parties and Grantees' and ‘Appraise and Approve.’ For more information on selecting Sub-recipients, please refer to the Sub-recipient Management section of this Manual.

It is important to remember that the term “Project” in UNDP policy represents the project document. Therefore, there may be one Project with multiple Outputs (“Projects” in Quantum). The budget control on budgets in Quantum (revenue, expenses, advances, etc.) is at the output level and NOT at the Project level.

Global Fund project/budget setup in Quantum should adhere to the following principles:

Practice Pointer
Quantum allows other donor funding, including UNDP core funding, to be combined with the Global Fund funding. However, it is NOT recommended to comingle multiple donor funding with the Global Fund grant project due to various reporting and closure requirements that are specific to the Global Fund.

In some cases, the Global Fund may request UNDP to act as the Fund Administrator for Global Fund resources that are managed by the National PR. For such cases the Fund Code is 30078 and the Donor Code is 000327 should be used.

Country Coordinating Mechanism (CCM) funding (Fund 30068 Donor 000327) should have a separate project and output from main grant funding (Fund 30078 Donor 000327).

All Financing Agreements, signed between UNDP and the national PR with funding from the Global Fund should be budgeted and funded using fund code 30085 and the respective Donor code of the respective Government.

The proposal and project are created in Quantum Project Management Module (for guidance refer to UNall Knowledge Bases>Quantum>Project & Portfolio Management

* UNDP as Principal Recipient (PR) assumes the role of Implementing Partner (Direct Implementation - DIM) and is reflected in Quantum, when creating the Project, Financial Plan and Award under the “Institution ID” field (Institution ID - 99999).

* Where UNDP serves as Responsible Party, it should be reflected in the Implementing Agent field in Atlas (Implementing Agent - 001981).

When UNDP is the PR, COs use a set of budget account codes in Quantum, which correspond to the nature of expenses of the respective activity of the Global Fund Detailed Budget.

When UNDP is the PR, COs use a set of budget account codes in Quantum, which correspond to the nature of expenses of the respective activity of the Global Fund Detailed Budget.

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Prepare and Negotiate Advance Payment Mechanism

The advance payment mechanism allows the Global Fund to approve a list of expenditures the Principal Recipient (PR) may incur before grant signing. Expenditures agreed to between the Global Fund and the PR during grant negotiations will be reimbursed when the Grant Agreement has been signed and the first disbursement has been released. The PR includes the approved grant making expenditures in the final grant budget.

To utilize the pre-allocation budget, a UNDP initiation plan shall be prepared and approved by the Local Project Appraisal Committee (LPAC), and a project established in Quantum (the same project to be used for grant implementation). Refer to section on Principal Recipient start-up for detailed guidance on pre-allocation budgets and UNDP initiation plan.

Pre-allocation activities must be funded from a Country Office (CO)’s own resources (such as Target for Resource assignment from the core (TRAC)) until subsequent reimbursement from the Global Fund. The project budget will thus initially include both sources on funding: UNDP fund code and Global Fund fund code. Upon receipt of Global Fund reimbursement, previously incurred expenses will be reversed in Quantum from the originally recorded fund code to the Global Fund fund code.

Procedures should be as follows:

  1. If possible, the reversals should be done per each transaction. If, however, too many transactions are involved, the option of a lump sum through one reversal could be considered, with the detail of all transactions maintained for reference.
  2. Any outstanding advances issued to Sub-recipients (SRs) should also be reversed by amending the initial invoice, unless otherwise instructed by OFM or GSSC.
  3. Once the expenditures and outstanding advances have been reversed, the CO/PR should then proceed to reverse/zero out the budget under the UNDP fund code.

Grant Implementation

Revenue Management

UNDP’s revenue management policies and procedures with respect to non-core resources are summarized below. These policies ensure that revenue is recorded, receivables are raised, and the handling of cash and receipts and the application of income is consistent, timely and accurate.

Refer to the following guidelines:

The process with respect to the Global Fund is detailed in the next sections. The same process would also apply to CCMs, FAs and Fund Administrators.

Global Fund Funding Decisions and Disbursements

The annual funding decision (AFD) and disbursement processes are critical grant management functions of the Global Fund. These processes allow the Global Fund to commit and disburse approved grant funds appropriately and take action to ensure grants continue to achieve maximum impact. There are two main objectives: 

A. Decide on Annual Funding: Determine and commit the amount of funding that will be disbursed to the grant over the next 12 months of implementation1 (plus a buffer period, up to 6 months), considering implementation performance, issues, and risks; and 

B. Disburse Funds: Disburse funds committed through the AFD to the Principal Recipient (PR), or third party on behalf of the PR, for the payment of goods and/or services.

The AFD and disbursement processes ensure:

  1. grant funds are used for agreed objectives and outputs in an accountable manner whereby known or new risks are minimized and mitigated; 
  2. AFDs consider grant and PR performance to ensure PRs focus on results and timely grant implementation;
  3. AFDs are well documented and justified; and
  4. Disbursements are released on time to implementers and third parties to ensure the continuation of grant activities.

The processes of submitting the cash disbursement requests and the GF’s internal process of determining the AFDs can be found in the Global Fund Operational Policy Manual: Make Annual Funding and Disbursement Decisions.

Process Metrics for Annual Funding Decisions and Disbursements 

UNDP and the Global Fund are expected to meet the following key performance indicators:  

[1] Budget utilization is reported annually for Focused portfolios. 

[2] The amount committed under the AFD does not include centralized commitments and disbursements. 

[3] All references to “days” in this document shall mean calendar days, unless otherwise stated. 

Disbursements

A disbursement is the actual transfer of cash from the Global Fund to the Principal Recipient (PR) (in the currency(ies) of the signed Grant Confirmation) for the payment of goods and services. The disbursement schedule and forecasted amounts will be established by the Global Fund Country Teams as an integral part of the annual funding decision process.

The Global Fund Country Teams are responsible for ongoing grant monitoring and determining if circumstances have changed between the time of the AFD and the scheduled disbursements. Any changes to the originally approved dates and/or amounts for payees are completed through an approval workflow. Any such changes must be within the overall AFD.

A Disbursement Notification Letter is sent from the Global Fund Country Team to the PR to inform them of the disbursement. The Global Fund should clearly reference the applicable Grant Number in all disbursements. The Global Fund Country Team should provide additional contextual information to the PR if the relevant disbursement amount differs from what was originally approved in the annual funding decision. Upon receipt, UNDP Country Offices should submit promptly a request for a deposit application in UNall with the Notification of Grant Disbursement and Management Letter, if applicable.

For Country Coordinating Mechanism (CCM) funds (fund 30068 and donor code 00327),  the Agreement is processed as a Global Fund Financing Agreement that will be submitted via UNall, indicating the start and end date. The CO is also required to provide a Schedule of Payment with dates or the best estimate dates of disbursement by the Global Fund if Schedule of Payment is not available.

For CCM agreements, the Global Fund makes cash transfers to cover the annual budgets of CCM secretariat considering the unspent cash balances from the previous reporting period. This is communicated to country offices and CCM via email by the Global Fund, hence, COs should ensure prompt submission of a deposit application request in UNall.

For Financing Agreements, it is recommended to have the payment schedules in the agreement. Upon notification from the donor on transfer of resources, the CO should submit a UNall case for a deposit application.

For further guidance please refer to the Global Fund Operational Policy Manual on Annual Funding Decisions and Disbursements

Revenue Management Processes

  1. The Principal Recipient (PR) negotiates an agreement with Global Fund, the donor, and incorporates a performance framework and summary budget. Once both parties agree, the Global Fund Grant Confirmation  is signed.
  2. A designated Revenue Focal Point of UNDP Country Office  (CO) will upload the signed face sheet of the active Global Fund Grant Confirmation,  budget summary, performance framework and the first page (only) of the email from the Global Fund which has the Notification Letter attached to it thru UNall within 7 days of the last signature date. The Global Shared Service Centre (GSSC) will process this after ensuring that the correct Chart of Accounts information has been included in the Confirmation, as well as the total amount outstanding at the date of uploading the document.
  3. The GSSC will input the information from the Agreements into the Contracts Module where the accounting entries will be generated once the Letter of Notification has been received. Business units will be able to access reports with detailed information of all contracts created in the contract module and accounting entries processed.
  4. UNDP will submit a Progress Update/Disbursement Request (PU/DR) to the Global Fund to initiate the disbursement of funds.
  5. Once the PU/DR has been received and approved, a DR Notification Letter is received by UNDP from the Global Fund. This is immediately uploaded into the DMS by the Revenue Focal Point for the GSSC to trigger the accounting entries in the Contract Module as follows:
    • DR Unbilled Accounts Receivables
    • CR Revenue
    • When the billing process starts based on the milestones achieved and the cash flow forecast, the following accounting entries will be triggered:
      • CR Unbilled Accounts Payable
      • DR Accounts Receivables
  6. Once the Notification of Grant Disbursement letter has been processed by the GSSC, they will send an email advising the CO of the Atlas Contract Reference number and the Accounts Receivable (AR) Item ID created. This information will be used by the GSSC when applying Global Fund disbursements.
  7. When the funds are received, cash is applied by Contribution Unit/Treasury and the accounting entries are as follows:
    • DR Cash/Bank
    • CR Cash Control
    • On application of the Funds to Accounts Receivable:
      • DR Cash Control Account
      • CR Accounts Receivable Once the GSSC has processed the disbursement, they will create a Contract Reference number that will be entered into the Deposit/Disbursement Information section of the DMS. This reference number can be used by the Country Offices to look up the AR item ID in the Contracts Module.
  8. A query UN_IPSAS_RM_CA_PST_AR_ITEM_SUM is available in Atlas, which identifies the A/R Item ID based on the Contract number created for the Notification of Disbursements processed by the GSSC. Other Atlas revenue reports:
    • The report Unapplied Contributions (UN Reports > Financial Management Reports > Revenue Management Reports > Unapplied Contributions shows contributions that have been received but not yet applied.
    • The query UN_IPSAS_RM_APPLIED_DEPOSITS provides details of the deposits and AR items, and the projects to which they were applied. (Select a Tree “RM_CA_OP” and click on icon “Add to Node Selection List.”)
  9. Any amendments to agreements must be communicated to the GSSC as soon as possible. The amended agreement (e.g. Implementation Letters) must be uploaded to the DMS for the GSSC to update the Contracts Module and process any corresponding accounting entries.
  10. The following procedures should be adhered to at each period end:
    • Check that all Confirmations  have been uploaded into the DMS.
    • Check that any amendments to Confirmation have been updated in the Contracts module by the GSSC.
    • Follow up with donors on outstanding amounts where applicable.
    • Ensure timely application of all unapplied deposits at year-end.
    • Review funds received in advance account and verify accuracy and completeness.
Practice Pointer
Although the Global Fund has procedures for direct payments to suppliers, these were primarily designed for the benefit of national entities that do not have the same international financial structures in place as UNDP. UNDP does NOT use the Global Fund’s direct payment procedures for payments to Sub-recipients (SRs) or suppliers. Should the Global Fund and/or Local Fund Agent (LFA) request this modality of payment, the request should be referred to the UNDP Global Fund/Health Implementation Support Team.

Interest Revenue

Article 3(b) of the UNDP-Global Fund Grant Regulations states, “Any interest or other earnings on funds disbursed by the Global Fund to the Principal Recipient under this [Grant Confirmation] Agreement shall be used for Program purposes, unless the Global Fund agrees otherwise in writing.”   In this respect, Country Offices (COs) should seek approval from the Global Fund for the use of interest or any other earnings and to ensure that such income is used for agreed programme activities.

Interest generated on Global Fund resources (except CCM and FA projects) is calculated by the Office of Financial Management (OFM) at year-end. The interest revenue is posted to the respective Global Fund projects in the current year at year-end in account ‘53045’ (Allocated Interest Income) and Donor ‘00327’ (Global Fund). (Note: Any adjustment or transfer of interest in subsequent years is recorded through GL account 51035.)

Interest recordings can be identified using the Account Activity Analysis (AAA) and Cash Balance Report. Interest earned for Global Fund projects must be reflected in the next Disbursement Request and Progress Update Report.

Interest earned in SR bank accounts is reported in the Funding Authorization and Certification of Expenditures (FACE) and recorded as per UNDP POPP procedures on Direct Cash Transfers and Reimbursements, step 1 :

“Any interest earned in bank accounts from advances provided by UNDP must be distinctly itemized on the FACE forms.  For traceability and reconciliation purposes, the earned interest needs to be reported on the Combined Delivery Report (CDR), which is the official document used by auditors and government counterparts. However, the use of revenue account (5xxxx) will prevent the earned interest to be reflected in CDR reports. As a result, offices should record this earned interest through Zero Dollar Invoice (ZDI):

The UNDP programme and finance team should ensure that the bank statement(s) are verified for evidence of the earned interest during assurance activities (audit or spot check).”

Practice Pointer
While, in order to be accounted in CDR, bank interest on SR bank accounts should be reported as credit to expenditure account 74510 instead of revenue accounts 5xxxx, the amount of interest earned on SR bank accounts should be reported to the Global Fund as other income in the PUDR section “SR_Cash Reconciliation_3”, in column “(5) Other income during the current financial reporting period”.

Other Revenue

Global Fund guidelines indicate that budgets should include not only costs for programme activities, but also take into consideration any relevant income generated through activities and on programme assets. Thus, all revenue-generating activities such as social marketing or sale of assets are to be addressed in the budget and reflected as revenue in all Global Fund reporting.

Social marketing - proceeds are recorded as Miscellaneous income by the Country Office (CO) under GL Account 55090, Fund Code 30078 and Donor 00327 (the Global Fund).

Disposal of assets - proceeds are recorded in GL account 55070.

Country offices should submit the deposit application requests in UNall.

Expenses Management

Under UNDP’s expense policy, expenses are recognized and recorded when goods and services are received by UNDP. A corresponding liability to pay is created at the time of recognition. The following categories of transactions are classified as expense: 

Refer to UNDP Programme and Operations Policies and Procedures (POPP) on Expense Management for detailed policies and procedures, including the following subject areas:

Prepayments

A prepayment is used when a supplier requires partial or full payment for goods or services prior to the delivery/provision of the goods or services. Examples would include one-off transactions for individual contracts, refundable deposits, construction works and long-term agreements (LTAs) for health products.

When paid, prepayments reflect as amounts due to UNDP and are recorded in the asset account 16065 (Prepaid Voucher Modality). As the goods or services are provided, the prepaid asset balance must be reduced and an expense recorded for the amount of goods or services received by UNDP. This is achieved by receipting and vouchering against the relevant Purchase Order (PO) and offsetting the prepayment against the Accounts Payable (AP) PO voucher. Such offsets need to be communicated to the vendor. Accounting procedures in Atlas/Quantum are as follows:

For transactions such as rent, maintenance and service contracts, and insurance premiums, where contracts are annual and amounts are relatively stable from month to month and from year to year, it is not necessary to raise a prepayment, even though payment will be made prior to receiving the services. These items can be processed via a regular PO with immediate receipting for the value of the prepayment required. At year end, the Office of Financial Resource Management (OFM) will provide necessary guidance for any adjustments needed to reallocate expenses to prepaid assets, depending on materiality.

In addition, the following payments should not be treated as prepayments: security deposits; staff advances; non-refundable deposits; and advances to Sub-recipients.

Further guidance regarding prepayments can be found in the UNDP Programme and Operations Policies and Procedures (POPP) on Prepayments

An additional guidance note focusing on the procedures for processing prepayments to the United Nations Children’s Fund (UNICEF) under the LTA for the procurement of health products for Global Fund projects managed by UNDP where prepayment is required in full, are available also with the GFPHST. For more information please check the Health Product Management section of the Manual.

UNDP Inventory management

UNDP inventory policy requires qualified inventories to be recognized as assets until consumed or distributed. The balance of such inventories must be physically counted, valued, recognized and reported as assets at the end of each reporting quarter. The determination of items to be included in inventory is based on ownership and control of the inventories. The physical location or custody of the inventories are factors to be considered in determining control (i.e., whether they are stored on UNDP premises or managed by UNDP personnel). UNDP must recognize the inventories if UNDP undertakes any of the following responsibilities:

  1. Controls access to and distribution of the inventory items;
  2. Administers a programme requiring distribution of the inventory items (as opposed to situations where the inventory items are purchased solely for immediate shipment to a local government/implementing partner; or
  3. Bears the risks of loss, theft, damage, spoilage, etc.

Undistributed inventory over which UNDP has direct control and access, administers distribution or bears the risk of loss, theft, damage, etc. is reportable in UNDP’s financial statements. To satisfy the reporting requirement, Country Offices (COs) are required to count inventory and supplies at the end of each quarter and submit a certification of this to the UNDP Office of Financial Management (OFM) by the prescribed deadline. Detailed guidance for the physical count of inventory end is communicated by OFM for the second quarter and year-end financial closure. OFM then posts accounting adjustments for crediting expenses and debiting inventory account 14602 at the end of the reporting period (to capture the closing balances). These adjustments (as opening balances) are reversed at the start of the next quarter at a general ledger level without impacting the project expenses and resources in Quantum since 2023.

Inventory in transit is enroute goods purchased that are in the ownership of UNDP but in the possession of the carrier. The inventory in transit that is owned by UNDP (based on INCOTERMS 2020) must be recorded as inventories. Therefore, it is very important to determine the ownership of inventory items in transit based on respective INCOTERMS 2020.

For example, for FCA Incoterms (short for “Free Carrier”), the title of goods passes to UNDP when the supplier delivers the goods to the carrier nominated by UNDP. In this case UNDP should recognize the inventory while in transit.

Refer to: UNDP Programme and Operations Policies and Procedures (POPP) on Inventory Management

Practice Pointer
Property, Plant and Equipment (PP&E) items, which are capitalized in UNDP books, are not to be considered inventory. As indicated under Asset Management (above), assets that are delivered to and are to be used and controlled by Sub-recipients (SRs)/Government are expensed. The only exception would be those assets procured using non-UNDP catalogue (i.e., to be expensed) but are temporarily held by UNDP as of the reporting date, waiting to be distributed to the SRs/Government. Such asset-like items must be included/reported as inventory items.

Global Fund inventory

For the purpose of the Global Fund grants, examples of inventory are health products such as pharmaceuticals, medical consumables, and medical equipment. UNDP Country Offices (COs) are required to count and report Global Fund inventory items only in cases where complete control over the Global Fund inventory is exercised until final distribution to the beneficiaries. In these cases, UNDP manages the complete logistics of inventory management either directly or through contracted third parties. The UNDP Global Fund Partnership and Health Systems Team (GFPHST) reviews country arrangements and will confirm where inventory recognition is required.

There are different practices in exercising control over Global Fund inventories until they are finally distributed to the beneficiaries. The Country Offices might be required to count and report Global Fund inventory items, i.e., where UNDP is deemed to have full control over inventory in accordance with UNDP’s inventory policy and year end guidelines on financial year closure.

Important:  if arrangements have changed in other countries (resulting in UNDP’s control over inventory), it will be the responsibility of the CO to inform the GFPHST, count the inventory and submit the required reports. If there are any questions, COs should contact their respective OFM/Finance Business Advisor (FBA) Manager with the GFPHST in copy.

It is expected that all undistributed health products in the following scenarios should be reported as inventory at the end of a quarter if one or more of the control criteria are met:

The relationships UNDP has with Sub-recipients (SRs) and Agents vary but the following underlying concepts should be used as a guide:

Global Fund-specific count procedures:

The standard file-naming convention for the inventory count reports differentiates submission type between Global Fund and Non-Global Fund projects.

For Global Fund projects, medical items are bought centrally by the Copenhagen office. As such, column 22 (Valuation) should be the same as column 18 (cost). If the medical items are not bought centrally, then valuation must be estimated and documented.

Budget Revision

UNDP Programme and Operations Policies and Procedures (POPP) are followed for budget revisions. It is imperative to note, however, that specific Global Fund requirements must also be adhered to.

The purpose of the revision is to make substantive or financial adjustments and improvements to the project budget. A project document may be revised at any time by agreement among the signatories to the document with no impact on project budget.

A formal change in the design of the project is called a substantive revision. Substantive revisions are made in response to changes in the development context or to correct flaws in the design that emerge during implementation. Substantive revisions may be made at any time during the life of the project.

Based on the year-end combined delivery report, the multi-year work plan shall be revised as needed to ensure a realistic plan for the provision of inputs and the achievement of results. In Quantum, the budget amounts that were budgeted for but not spent in prior years should be re-allocated to current or future years. Within the year, in the interest of sound financial management, budgets must be kept up to date and aligned with agreed plans to accurately assess progress and performance. The total multi-year budget should not exceed the total approved detailed budget of the Global Fund.

Refer to the following guidance:

UNDP Programme and Operations Policies and Procedures (POPP) on Implementing a Project.

Global Fund

Global Fund policies and procedures are documented in:

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Reprogramming and Sub-recipient Budget Reallocations

Reprogramming

Reprogramming is the process of changing the scope and/or scale of goals and objectives and/or key interventions of a Global Fund supported program. These programmatic changes should be reflected in changes to the Grant Confirmation, potentially including the performance indicators, targets, health products management template (HPMT), and the budget.

Reprogramming may be initiated by either the Country Coordinating Mechanism (CCM) and/or Principal Recipient (PR) or suggested by the Global Fund Secretariat and managed in consultation with CCM, PR(s) and technical partners. All reprogramming requests shall be endorsed by the CCM, and the Global Fund Country Team may require a Local Fund Agent (LFA) review of the request.

Reprogramming of a grant may be proposed at any time during the grant implementation.

A reprogramming request is classified as either “material” or “non-material” (Please refer to Global Fund Budgeting Guidelines Section on Budget Revisions – Grant Implementation). A reprogramming is considered material and should be referred to the Technical Review Panel (TRP) for review when:

Non-material  reprogramming requests fall outside the definition of materiality described above and are reviewed and approved by the Secretariat.

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Project Management and Update in Quantum

UNDP Programme and Operations Policies and Procedures are followed for project management and project update in Atlas/Quantum. Please refer to POPP on Project  management/Implement for further guidance.

Sub-recipient Management

This section of the Manual focuses on financial and operational management of Sub-recipients (SRs), particularly regarding cash transfer modalities. Programmatic, legal and substantive guidance relating to SR management is detailed throughout the Manual but particularly in the following sections: SR management, Legal framework, Procurement and supply management (PSM), Monitoring and evaluation (M&E), and Audit and investigations.

UNDP as Principal Recipient (PR) for Global Fund grants assumes the role of Implementing Partner (IP) through Direct Implementation (DIM). DIM is the modality whereby UNDP as IP takes on full responsibility and accountability for the effective use of UNDP resources and the delivery of outputs, as set forth in the project document. UNDP may identify a Responsible Party (RP) to carry out activities within a DIM project (SR for Global Fund Grants).

A RP is defined as an entity selected to act on behalf of UNDP based on a written agreement or contract to purchase goods or provide services using the project budget. In addition, the RP may manage the use of these goods and services to carry out project activities and produce outputs. All RPs are directly accountable to UNDP in accordance with the terms of their agreement or contract with UNDP. 

The RP may follow its own procedures only to the extent that they do not contravene the principles of the UNDP Financial Regulations and Rules of UNDP. Where the financial governance of the RP does not provide the required guidance to ensure best value for money, fairness, integrity, transparency, and effective international competition, that of UNDP shall apply. Please refer to Refer to the UNDP Programme and Operations Policies and Procedures (POPP) on Direct Implementation.

The SR is contracted by the PR of the grant to assist in implementing programme activities. The PR is responsible for the oversight of implementation by the SR. SRs often play a pivotal role in the implementation of programme activities, the management of grant resources and the timely achievement of grant results. The SR’s specific role in performance-based funding is that, for periodic disbursements, the SR provides the PR with progress updates on the implementation of those activities for which it is responsible. SRs serve as RPs (Implementing Agent code in Quantum) for the UNDP project/budget.

It is important to distinguish between SRs and other entities that provide services for a project. The Global Fund provides the following guidance on this issue:

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Harmonized Approach to Cash Transfer (HACT)

The Harmonized Approach to Cash Transfer (HACT) dictates policies and procedures for capacity assessment, cash transfer modality, audit, assurance and monitoring. HACT applies to government and civil society organization/non-governmental organization (CSO/NGO) participation in UNDP projects. At this time, UNDP-managed Global Fund projects are exempt from HACT, and capacity assessments are performed instead.

Before an entity can be engaged as Responsible Party (RP) on a UNDP project, a capacity assessment of that entity is performed. The following are key considerations for capacity assessment:

The partner’s technical, managerial, administrative and financial capacities should be reassessed throughout the life of the project (preferably on an annual basis).

The HACT macro- and micro-assessments are the basis for selection of the cash transfer modality used for each IP or RP and the level of assurance activities used. The level of risk can differ from institution to institution, and the UNDP office should effectively and efficiently manage this risk for each national institution by:

For each institution the level of risk may change over time, and this may require appropriate changes in options for cash transfer modality, and audit and monitoring procedures. Sub-recipient (SR) capacity assessment is addressed in detail in the SR management section of the Manual. 

HACT offers three cash transfer modalities: 

Depending on SRs’ capacity, it is possible to use all modalities in the same project, for different activities and/or inputs. However, this is not recommended due to this approach’s inherent complexity.

Please refer to POPP on Harmonized Approach to Cash Transfers (HACT)

Direct Cash Transfers

The FACE form supports several important functions:

Please refer to the UNDP Programme and Operations Policies and Procedures (POPP) on Direct Cash Transfers and Reimbursements.

Practice Pointer
If the UNDP Country Office (CO) considers that the advance modality is not being used correctly by the IP or RP, it can discontinue this practice and manage all project payments through Direct Payments.

Procedures for advances to government or civil society organization (CSO) Sub-recipients (SRs)

Practice Pointer
UNDP has a responsibility to accept appropriate cash advance requests and reported expenses that are consistent with the annual work plan (AWP) and UNDP POPP Financial Regulations and Rules, therefore, to reject improper advance requests or expenses. If subsequent information becomes available that questions the appropriateness of expenses recorded, these too should be rejected. Refer to POPP on Direct Cash Transfers and Reimbursements - Rejection of Advance Requests or Expenses.
  • After FACE verification and approval, expenses should be recorded through a standard invoice, debiting expense accounts 7xxxx with the split by budget lines/tasks. The standard invoice should be applied against a prepayment invoice for the credit against account 16005. Application of prepayment should be done with the same accounting date as expenditure invoice lines.
  • After FACE verification and approval, advances should be issued to Govt/CSO SRs charging account 16005 and the corresponding chart field combination (Operating Unit – Fund – Department – Responsible Party – Donor). Advances should be processed through a prepayment invoice (non-purchase order (PO) that reserves the funds advanced to the project (the payee is the SR, never an SR employee). A tick should be put in the prepayment invoice to allow application against the prepayment invoice. In the prepayment invoice, there is no need to split a total amount of prepayment by budget lines/tasks, the full amount can be posted under one budget line/task related to SR
Practice Pointer
AP standard invoice for settlement of SR advances can either have a zero net amount and be not paid (in case there is sufficient balance of SR advances to be applied against) or can have an amount dur for payment (in case there is sufficient balance of SR advances to be applied against). In standard invoice, the accounting and budget date must be the same (i.e., period in which expenditures incurred or current processing date if previous month’s AP is closed). The invoice and Expenditure Item date should be equal to last date of reporting period (for Q2 and Q4 please use 29 June and 30 Dec).

Please refer to:

Detailed Steps in Verification and Monitoring of SR Financial Reports and Records

Sub-recipient (SR) funding is provided based on performance, which includes project management and financial performance. SRs must keep up-to-date and accurate records and documents supporting expenses made within the SR agreement, and the approved work plan and budget.

Common errors in SR reporting include:

Eligible expenses are:

Ineligible expenses include goods and services that are:

Financial reporting (FACE) will include the following:

Minimum supporting documents for workshop/training include:

Minimum supporting documents for M&E visits include:

Minimum supporting documents for salary payments include:

Minimum supporting documents for local procurement include the ones listed below. For local procurement of health products, prior approval is required from the UNDP Global Fund Partnership and Health Systems Team (GFPHST).

The Monthly Financial Data Verification Of SR/SSRs checklist should be completed and signed. Outstanding or unresolved/disputed items should be escalated to the CO management as soon as possible or captured in risk register if the issues may lead to financial risks on grant performance.

Practice Pointer
In situations of extreme volatility or exceptional local market conditions, Country Offices (COs) should ask UNDP for Treasury-specific advice on risk mitigation measures for a particular operating environment. Procedures can include, but are not limited to:
  • Use of the direct payment modality to minimize currency risk associated with disbursing advances to SRs/Implementing Partners (IPs) in local currency.
  • Monthly advances (rather than quarterly) to reduce the exposure between the time the advance is issued and the date the SR/IP spends the funds. As the local currency loses value at a high rate, funds disbursed at the beginning of the quarter would lose value before they could be used in the second and third month, negatively impacting the SR/IPs in meeting their targets.
  • The SR advance balances should be kept minimal and the recording of the SR/IP FACE should be done using the monthly UN Operational Rate of Exchange (UNORE) (as opposed to the UNORE at the end of the quarter) to minimize unrealized exchange losses incurred on revaluation of SR advance balances.

Disbursement of SR advances in hard currency requires prior approval from the UNDP Treasurer.

COs should consult UNDP Crisis offer on the special measures that can be activated, depending on the country situation.


Reimbursements

This modality may be agreed to in cases where the Sub-recipient (SR) has sufficient resources to pre-finance activities.

In addition, should the balance of a quarterly advance given to a SR be insufficient to meet urgent commitments and expenses in support of activities agreed in the annual work plan, the SR can proceed with such payments with its own funds upon consultation with UNDP, and subsequently request UNDP for reimbursement.

The request for reimbursement can be made:

Procedures

Please refer to:

Direct Payments

Under the direct payment modality, the Sub-recipient (SR) or Sub-sub-recipient (SSR) is solely responsible for procurement but requests UNDP through FACE to make the disbursement directly to vendors. In this arrangement, UNDP is undertaking only the fiduciary function (accounting and banking services, and the disbursement function) on behalf of the SR/SRR. Nevertheless, in conducting its micro-assessment and other assurance activities, the UNDP office should ensure it has reasonable confidence that the SR/SSR is conducting procurement to standards compatible with UNDP’s own. The SR/SSR’s technical, managerial, administrative and financial capacities should be reassessed throughout the life of the project (preferably on an annual basis).

If UNDP deems that a greater level of oversight is necessary and wishes to monitor project activities on a transactional basis, backing documentation (i.e., copies of invoices, purchase orders (POs), quotations and goods received notes) should be requested from the SR/SSR for submission with the FACE form.

UNDP has a responsibility to accept appropriate requests for direct payments that are consistent with the annual work plan (AWP) and UNDP’s Financial Regulations and Rules (FRRs) and, therefore, to reject requests for improper direct payments. If subsequent information becomes available that questions the appropriateness of direct payments already made, these too should be rejected. Please refer to UNDP Programme and Operations Policies and Procedures (POPP) on Direct Payments.

Procedures:

Please refer to POPP on Direct Payments.

UN Agencies

When a UN agency undertakes project activities as either Sub-recipient (SR)or Responsible Party (RP) through a UN to UN agreement, the Office of Financial Management (OFM)/Treasury pre-funds these activities directly to the agency, in accordance with the schedule of advances in the letter of agreement with the UN agency. This funding is recorded as an advance in UNDP’s accounts (account 16015). UN agencies report their project expenses on quarterly Project Delivery Reports (PDRs). Advances provided to UN agencies and expenses reported on the PDR are recorded in a Project Clearing Account (PCA). This forms the basis of the inter-agency balance due to/from the UN agency in respect of UNDP projects. The Harmonized Approach to Cash Transfers (HACT) framework does not apply to cash transfers under agency implementation.

PDR system

Advances:

  1. World Health Organization (WHO) local office sends its quarterly report and disbursement request to UNDP Country Office (CO).
  2. UNDP CO reviews and clears the amount in the disbursement request.
  3. WHO focal point in charge of GF projects should request advances from UNDP/HQ through WHO’s Headquarters (HQ focal person Ms. Irene Ilevbare<ilevbare@who.org.
  4. The practice is that WHO HQ collates requests for advances (for the quarter) from their focal persons and sends the consolidated request to UNDP HQ Finance (OFM) prior to the beginning of the quarter. Upon receipt of the request, it takes about two working days for UNDP HQ to process and remit the funds to WHO HQ. Once advances are received from OFM, WHO Treasury will allocate the required amount against the individual project and advise their respective colleagues of the availability of funds and to proceed with the implementation of the activities.
  5. For the first disbursement request, the CO should also contact the Global Shared Service Centre (GSSC) with their request for the transfer of funds to WHO and share the signed Sub-recipient (SR) agreement.
  6. GSSC will raise a voucher using account 16015 for advances issued centrally and this is charged at the Fund level.

Reporting: 

  1. WHO will report expenses via Project Delivery Reports (PDRs). This is in addition to providing UNDP CO with the financial report and transaction details. To settle the advances and book the expenditures in the projects, the WHO local office focal point should contact Ms. Irene Ilevbare < ilevbare at who dot org> (WHO HQ focal point) and <financialreporting at who dot int>, who will coordinate all PDRs reporting to UNDP HQ. WHO HQ is required to submit the PDRs to UNDP HQ no later than 15 days after the closure of the quarter.
  2. GSSC and OFM are in charge of the settlement of advances. Advances will be liquidated upon recognition of expenditure after the PDRs are successfully posted in Quantum. The CO is required to review and validate the expenditures submitted by WHO in UNEX prior to OFM posting to Quantum.
  1. Programme Officers are responsible for all expenses in respect of their project portfolios, including the monitoring of project expenses in UNEX.
  2. PDR expenses may be rejected at any time if subsequent information becomes available that questions the appropriateness of expenses previously accepted and recorded in Atlas/Quantum.

For more information on reporting through the PDR, please refer to UNDP POPP Agency Implementation Finances.

Where a UN agency serves as SR and does not use the PDR system:

UN entities serving as SRs can request a further advance upon commitment of 80 percent of the previous advance. Commitments are confirmed by open Purchase Orders (PO) for which delivery of the goods/services is to be made in the near future. UNDP should consider the following criteria for commitments when deciding on further advances:

  1. The commitment should be supported by a valid contract;
  2. Contracts for goods and services should be included in commitments only when delivery is expected within the period for which an advance is being requested; and 
  3. The timeframe for delivery of goods and services to be provided should be reasonable.

Documentation that can be shared with the Local Fund Agent (LFA)

With respect to cash transfer modalities, the following documents can be shared with the LFA:

It is NOT permissible to share support documentation for UNDP or other UN financial information, including: invoices paid by UNDP or any other UN agency; cost estimates; quotations; contracts of employment and résumés/CVs; contracts for goods and services; delivery notes signed with a UN agency, clearing documents and bills of lading;  an attendance list where workshop/training participants have signed for attendance allowance or per diems (paid by UN); or payment vouchers or supplier invoices for UN. Where UNDP has undertaken the procurement of health products, no final invoice or delivery notes may be provided as supporting documentation.

Grant Reporting

The Principal Recipient (PR) is required to provide the Global Fund with periodic reports concerning all funds and activities financed by the grant. Reports should be channelled through the Local Fund Agent (LFA), and copies given to the Country Coordinating Mechanism (CCM) (with the exception of the Cash Balance Report (CBR)); see below). This section of the Manual will focus on financial reporting. Guidance on overall grant reporting, including programmatic reporting is available in the Grant Reporting section of the Manual.

Global Fund policy

Exchange rate

The exchange rate to be used to report expenditures in annual financial reporting should ideally be actual exchange rates applicable on the date of payments of expenditure if known and practical, or the annual/period average exchange rate, using an official or published verifiable rate consistent with the budgeting approach and country norms.

The UN Operational Rate of Exchange (UNORE) as captured in Quantum fulfils Global Fund requirements. For grants that are denominated in Euros, the expenditures in Quantum in US dollars ($) should be translated into the reporting currency using the UNORE prevailing as of the accounting date. Assets and liabilities (cash balances and advance balances) should be translated into reporting currency using the UNORE as of reporting date.

Eligible and ineligible expenditures

Under Global Fund grants, expenditures incurred by implementers are classified as “eligible” or “ineligible.” The initial classification is usually done by the LFA and/or assurance providers (i.e., the Office of the Inspector General (OIG), internal and external auditors, country teams), with the final classification of the expenditure confirmed by the Global Fund.

Eligible expenditures are those that have been validated by the Global Fund Secretariat and/or assurance providers based on credible documentary evidence that they were in line with the Global Fund-approved budget and used solely for programme purposes consistent with the terms and conditions of the grant agreement. Eligible expenditures are:

  1. incurred during the implementation period as stipulated in the grant agreement;
  2. in line with the Global Fund-approved detailed budget; and/or
  3. pre-approved in writing by the Global Fund prior to the expenditure being incurred.

The Implementors should comply with competitive and transparent procurement/tendering processes and the appropriate application of the relevant financial and procurement procedures. Expenditures incurred as part of approved close-out plans are considered eligible subject to the application of the grant regulations and the relevant financial/procurement procedures.

Ineligible expenditures are those expenses incurred which have been found not compliant with the signed Grant Confirmation and/or the appropriate financial and procurement procedures of the implementer/grant. The non-exhaustive list of expenditures that could potentially be classified as ineligible by the Global Fund may include:

When expenditures are initially classified as ineligible by the LFA and/or assurance providers, the Global Fund at its discretion may request additional justification from the PR and/or directly seek reimbursement from the PR. In the event the Global Fund decides to seek additional justification on ineligible expenditures, the PR has 30 days from the date of the official notification by the Global Fund (through a performance letter or a notification letter) to provide the relevant justification with appropriate supporting documents for review by the Global Fund (copying the LFA).

Upon receipt and review of the additional justification and supporting documentation, the Global Fund may fully or partially reclassify the expenditure as eligible for funding or may confirm ineligibility. If the expenditure is confirmed as ineligible, a refund request will be communicated for the amount considered as ineligible in the grant currency, using the exchange rate applicable on the date of the original expenditure transaction or the date of first notification of ineligibility. The amount should be fully refunded by the PR directly to the grant bank account (unless specified otherwise by the Global Fund) within 60 days of notification of the reimbursement request.

Financial reporting

PR Reporting Requirements are regulated as per the Global Fund Operational Policy Manual.

The PR reports information collected on grant delivery and PR operations to the Global Fund Secretariat and CCM to enable assessment of progress and drive decision-making. The quality and timeliness of PR reporting is a critical part of evaluating PR performance.   

Table 1 presents the standard reporting requirements. Portfolios categorized as Challenging Operating Environments1 can request for flexibilities in PU/DR submission timelines. Grants applying Payment for Results arrangements, particularly those with Results-Based Financing2, use a fit-for-purpose reporting approach.

Annual reporting:

Annual Reporting

Global Fund Financial Management Guidelines (under Financial Reporting) and the Global Fund Operational Policy Manual (Operational Policy Note: Oversee Implementation and Monitor performance) specify the principles for Global Fund financial reporting.

The Global Fund does not require reporting of activity-level details. At the time of reporting, based on expenditure entry and classifications, implementers should be able to consolidate and report expenditure as per the Global Fund’s classifications for module/interventions and cost grouping/cost inputs by implementers.

In order to align the grant start dates with the selected annual reporting cycle, the first and last reporting periods of the grant could be longer or shorter than 12 months. The first period of the grant can be as short as six months or as long as 18 months. The Global Fund, at its discretion, may allow Principal Recipients (PRs) to combine the first and second period annual reports when the first period in shorter than 6 months.

The report covers in-country expenditures and variance analysis against the approved activity plan and funding for PRs and Sub-recipients (SRs). The figures in the annual financial reporting must be fully aligned and reconciled to the PR’s financial statements.

The financial information reported should include the approved budgets, expenditures and variance analysis by (a) modules and interventions; (b) cost grouping and cost inputs; and (c) implementers (PRs and SRs). The total budget and expenditure amounts across all three breakdowns should be the same.

The reporting by implementing entity should include both the name and the type of implementing entity. This reporting should be done on the PR and SR levels (it is not necessary to report on the Sub-sub-recipient (SSR) level).

Financial information should be reported for the current grant cycle year and cumulatively from the beginning of the implementation period. Reporting should cover the entire grant implementation period budget and expenditure information.

The annual financial reporting will be used to explain all variances from the most recent approved budget for each module/intervention and cost grouping/cost input. Detailed variance analysis for expenditures is required for variances that are +/-5 percent (below 95 percent and above 105 percent) of the official approved budget for the specific intervention, or the agreed granularity of reporting using the modular approach costing dimension under the differentiated reporting requirement.  All adjustments to PR and SR expenditures in annual financial reports that have already been reported and approved (prior period annual financial reporting) should be made in the current reporting period and explained in the variance analysis of the most current reporting cycle.

Progress Update/Disbursement Request

The Progress Update/Disbursement Request (PU/DR) provides the following:

In preparation for each reporting cycle, the Global Fund directly shares with each PR a prepopulated PU/DR template.

The prepopulated templates include the following financial sections:

The CO should check the accuracy and completeness of the prepopulated financial information. Special attention should be given to the following: budget amounts for the reporting, cumulative and forecasting periods indicated in PUDR sections “Total Expenditure”, and “Forecast and Disbursements.”

The budget amounts in the prepopulated template should correspond to the latest Global Fund Detailed Summary Budget officially approved through the Implementation Letter (IL) (or as per Grant Agreement if the Global Fund Detailed Budget has not been officially updated through IL).

Tax Reporting

The Global Fund requires a mandatory tax exemption in countries where it supports programmes, so that expenditures within grants are made free of any country taxes or tariffs.  All grant agreements include a mandatory tax exemption provision. If taxes are levied or paid, host countries are required to refund such tax amounts. In this regard, the Global Fund requires annual tax reporting by Principal Recipients (PRs) and provides a reporting template to be completed and submitted by Country Offices (COs) within PUDR.

The purpose of the Tax Report is to collect information for import duties, VAT related to goods and services (including commodities and other health products) and any other taxes paid from Global Fund grants in every reporting period.

For detailed guidance on completing the financial sections of the PU/DR, please refer to the following:

Grant Closure

Complete guidance for Global Fund grant closure, where UNDP is acting as Principal Recipient (PR), can be found in the grant closure section of this Manual. Reference should also be made to:;;

In summary, the grant closure process begins six months before the end of the implementation period, with the submission of a close-out plan and budget by the PR. The grant’s final funding decision is approved by the Global Fund at the same time as the close-out plan. Following the last disbursement, the grant is placed in Global Fund financial closure. Once all closure documentation has been submitted, the grant is placed in final administrative closure and is de-activated from all Global Fund systems.

Global Fund Grant Closure follows one of three cases:

  1. Closure due to consolidation;
  2. Closure due to a change in PR; or
  3. Closure due to “transition” from Global Fund financing (Global Fund funding is discontinued).

The Country Teams and the PR can discuss whether the grant merits a full or a differentiated approach to closure.

The closure stages and a summary of the closure steps for each stage is set out in the framework below as per the paragraph 5 of the Global Fund OPN – Implementation Period reconciliation and Grant Closure. The steps will vary depending on the type of closure.

Step-by-step Process for Grant Closure (Consolidation)

The steps below detail the process for grant closure due to consolidation:

  1. Closure of existing grants should be planned as a part of grant-making. No separate closure plan and budget is required. Once the new Grant Confirmation is signed, the old grant is considered financially closed.
  2. The Principal Recipient (PR) should complete an inventory of non-cash assets under the closing grant that are not consumed as of the grant end date and will be transferred into the new grant. In these instances, the PR shall maintain ownership over the assets, but in conducting the inventory, will have clear documentation of the assets to be managed under the new grant. The timing for completion of this activity should be discussed and agreed between the Global Fund Country Team and the PR.
  3. The PR should complete a list of outstanding commitments and liabilities as of the grant end date, which will be accounted for and paid under the new grant. UNDP Country Offices (COs) should ensure that General Management Support (GMS) is charged on all outstanding commitments and liabilities (and on all undepreciated assets, inventory, prepayments and estimated liquidation advances/expenses).
  4. The CO should rapidly determine in-country cash balances, including at Sub-recipient (SR) level, prepayment and other advance balances with procurement agents and service providers, and undisbursed funds under the closing grant. These will be transferred to the new grant after setting aside funds required to settle outstanding commitments and liabilities under the closing grant.
  5. The Global Fund administratively closes the grant when it has completed the review and approved the required reports.

The PR should submit the following report(s) on the progress towards programme objectives and targets from the last Progress Update date until the day before the new grant start date for the constituent grant(s) no later than 60 days after the end of the reporting period agreed for the constituent grant(s):

  1. Final Progress Update (“PU”) for the IP;
  2. Final Tax Report for the IP;
  3. Audit Report; and
  4. Financial Closure Report

Audit Report: The PR should submit audit report(s) for the constituent grant(s) covering the audit of financial statement(s) up to the last day before new grant agreement start date, as per the timeline agreed upon in the original constituent grant agreement(s). However, if the financial statement of the constituent grant(s) to be audited covers less than six months, these periods can be audited with the first audit for the grant.

Inventory: The PR should complete an inventory of non-cash assets under the closing grant that will be transferred to and managed under the new grant.

Step-by-step Process for Grant Closure (Change in PR or end of Global Fund Funding)

The steps below detail the closure process when UNDP transfers the role of Principal Recipient (PR) to another entity, or when Global Fund funding is discontinued (i.e., countries that become ineligible): 

  1. Global Fund issues Notification Letter ‘Guidance on Grant Closure.’
  2. Preparation and submission of grant Close-out plan and Budget.
    • In preparing the actual grant Close-out Plan and Budget, the PR must account for all assets. Funds required for closure (i.e., clearing outstanding commitments and liabilities and other closure activities) must be determined.
    • All remaining health products with valid shelf life as well as equipment and infrastructure in working condition as of the grant end date must be accounted for by the PR, and the transfer of assets agreed with the Global Fund. Specifically, disposition for the following asset types must be provided:
      • Cash assets - All Global Fund grants undergoing grant closure must return all unspent grant funds to the Global Fund. These include any unspent grant funds disbursed to the Country Office (CO), cash held by the Sub-recipients (SRs) and Sub-Sub-recipients (SSRs) (including interest, exchange rate gains, tax refunds and any other savings after eligible liabilities are settled), advances to SRs (in CO books), and all proceeds from social marketing and other revenue-generating activities).
      • Health products - when there is stock remaining after the grant closure date, the CO should provide information on the use and distribution of the health products.
      • Non-cash assets - The CO should list all non-cash assets purchased under the grant and indicate in the plan its proposal for their use, transfer or sale. This includes assets purchased directly by UNDP and held by UNDP.  These remaining non-cash assets should be used for similar purposes as during the life of the Global Fund grant. Following the program ending date, the CO has three options for use of these non-cash assets: PR to retain ownership; transfer ownership to another entity (for example, a new PR, government ministry, or non-governmental organization); or sell the assets.
    • The plan should include a comprehensive list of assets acquired under UNDP’s Grant Agreement with the Global Fund, including their location, technical specifications, purchase value, actual conditions, and the custodian. Before submission to the Global Fund, the list of assets must be reconciled with the accounting records, and a verification exercise completed.
    • The plan should also propose the steps for disposal of the assets. Particular consideration should be given to cases where local tax regulations impose a significant tax burden on a receiving entity to which assets are transferred. The plan should clearly outline the rationale for the proposed recipients of the assets.
    • Estimated cash balance - The CO is asked to provide an estimated cash balance as of the program ending date. When estimating this figure, the CO is encouraged to provide a conservative estimate to ensure that it will cover all grant closure activities over the period. Any remaining cash will be returned to the Global Fund.
  3. Global Fund approval of grant Close-out Plan. The Global Fund’s Implementation Letter will list the reporting documents that the CO is expected to submit to the Global Fund by the date detailed in the letter, including:
    • Final Progress Update - The PR should submit report(s) on the progress towards programme objectives and targets from the last Progress Update date until the grant end date.
    • Final Annual Financial Reporting (AFR) - The PR should submit AFR(s) covering the period from the last submitted AFR up to the grant end date, no later than 60 days after the end of the reporting period.
    • Final Cash Statement – The Final Cash Statement includes all programme revenues and expenditures from the date of the beginning of the last quarter of the programme to the grant closure date. All revenue generated from grant funds (for example, interest, foreign exchange gains, tax refunds, proceeds from social marketing) must be treated and accounted for as income in this Final Cash Statement. This is equivalent to the UNDP Certified Financial Statement and is prepared by the Office of Finance and Resource Management (OFM).
    • Final Grant Report –from the program start date to the grant closure date. The letter will also include Information relating to any potential refund of Global Fund monies back to the Global Fund.
  4. Implementation of Close-out Plan and completion of final Global Fund requirements (grant closure period).
    • The CO ensures implementation of the approved Close-out plan and Budget. No disbursements will be made to the CO after the programme ending date, and any undisbursed funds will stay with the Global Fund. The Global Fund may disburse funds after the program end date only to finance closure activities for an unanticipated grant closure. All Global Fund grants undergoing grant closure must return all unspent grant funds to the Global Fund. These include any unspent grant funds disbursed to the CO, remaining cash balances held by the SRs and SSRs (including interest, exchange rate gains, tax refunds and any other savings after eligible liabilities are settled), advances to SRs, and all proceed from social marketing and other revenue-generating activities.
    • The CO should rapidly determine in-country cash balances, including at SR level, and undisbursed funds under the closing grant. These will be transferred to the Global Fund after setting aside funds required to settle outstanding commitments and liabilities under the closing grant.
    • The CO should follow up on any outstanding prepayment and advance balances with the service providers and ensure these are recovered.
    • Sub-recipient closures: The PR must ensure that the SRs complete activities and submit information (progress and financial reports, asset registers and inventory lists if applicable) in a timely manner so that the PR can comply with Global Fund grant closure requirements. The SRs should refund uncommitted cash balances as of grant end date to UNDP.
  5. Global Fund issues grant closure letter confirming that all grant closure requirements have been fulfilled by an outgoing PR. UNDP Country Offices need to upload the grant closure letter and other documents such as final financial closure reports in Quantum or UNall. In addition, the closure letters should be shared with BPPS/GFPHST.  

Procedures

The UNDP Project Closure Workbench should be used by COs for the project closure process (for both operational and financial closure). The workbench can be accessed in Atlas at Grants > Project Management > UNDP Project Closure Workbench. For guidance, refer to UNDP Project Closure Workbench Introduction/Guide.

Operational closure

A project is operationally completed when the last UNDP-financed inputs have been provided and related activities have been completed. Project status in Quantum (Project > Project Closure Workbench) will be set to ‘Operationally Closed’ (“C” in Quantum) after the last requisition and PO at GL level are posted. Further financial commitments (requisition or PO) cannot be made, nor expenses charged once the project is operationally closed. Only the liquidation of prior financial obligations, adjustments resulting from the clearing of SR or other advances, payment against existing purchase orders, depreciation and foreign exchange differences, and refunds/transfers to donors are allowed.

The Workbench gives a full summary of the project details and financial status. In order to be able to close the project operationally, all items in the Operational Closure Checklist must checked as YES. The “Save” button is available for the manager to capture the electronic signature. After approval, the “Operationally Closed” button becomes available. This lets the user go directly to the Output Status Page and change the Output from Ongoing (O) to Operationally Closed (C). Once the Output is Operationally Closed, the full list is greyed out (Locked).

Financial closure

The Workbench contains the Financial Closure Checklist, which captures all requirements of the POPP Financial Closure of Development Projects. The checklist provides balances in both transaction and base currency for all items requiring monitoring. In order to facilitate analysis, the checklist allows users to drill down to the details of each balance through online queries that can be accessed through the item hyperlink. The checklist automatically checks items with zero balance as YES. Any item with a balance or needing manual verification outside Atlas is automatically checked as NO.

Once the checklist is completed, the “Approved” button is available for the manager to capture the electronic signature. After approval, the “Financially Closed” button becomes available, allowing the user to go directly to the Output Status Page and change the Output from Operationally Closed (C) to Financially Closed (F). Once the Output is Financially Closed, the full list will be greyed out (Locked).

The workbench Financial Closure Checklist should be used as a guide for the closure, but manual verification as per the POPP Financial Closure of Development Projects is required by the CO to ensure that all the exceptions have been considered and resolved. Thus, before the status of a project is changed to financially closed, the CO must complete the POPP project completion check list and must ensure that projects have zero balances. This check list must be signed by the Resident Representative/Head of Office, or a senior official designated by the Resident Representative/Head of Office.

Closure Workbench and Checklist Steps

The Financial Closure Workbench and Checklist contain the following steps:

  1. No outstanding SR advances.
  2. No outstanding PDRs.
  3. No open purchase orders.
  4. No receipt accruals.
  5. No outstanding commitments
  6. No pending prepayments and other non-PO advances.
  7. All pre-financing activities have been recovered and/or reimbursed.
  8. No pending GMS or direct project costing.
  9. No pending GLJEs.
  10. No unapplied deposits or other unrecorded revenue.
  11. No outstanding accounts receivable to be received from donors per signed agreements.
  12. No AR direct journals in budget error or incomplete status.
  13. All interest income has been recorded.
  14. All assets are transferred or otherwise disposed of. Asset transfer letters/ documents are in place.
  15. Transferring or disposing of project assets and files in accordance with the approved close-out plan:
    • For closures due to consolidation: Where the grant is being closed but implementation continues with the same PR under a new grant number**, **the PR should focus on completing an inventory of non-cash assets under the closing grant that will be transferred into the new grant. In these instances, the PR shall maintain ownership over the assets, but in conducting the inventory, will have clear documentation of the assets to be managed under the new grant. The timing for completion of this activity should be discussed and agreed between the Country Team and the PR.
    • For closures due to PR change: When the implementation responsibilities are being transferred to another entity, the outgoing PR should complete an inventory of non-cash assets that will be transferred to the new PR. The outgoing PR must transfer all non-cash assets procured under the grant to the new PR using appropriate transfer or assignment agreements.
    • For closures due to transition from Global Fund financing: The country should undertake an inventory of non-cash assets procured under the grant (where relevant) and must seek approval of the Global Fund for the disposal or transfer of these non-cash assets to national entities to be used for the response to the three diseases.
    • The CO should begin the process of formally transferring the assets to an SR or an incoming PR in line with POPP guidelines and in accordance with the Transfer of Title to the assets from the UNDP form here in Annex 4 of UNDP GFPHST Guidance Note on Asset Management in the Context of Global Fund Grants.
    • Refer to the UNDP GFPHST Guidance Note on Asset Management in the Context of Global Fund Grants.
  16. Ensure all transactions for sale/transfer/donation/disposal etc. of assets have been processed and GMS charged.
  17. All items held as inventory should be distributed or transferred to recipient or returned to donor as specified in the donor agreement.
  18. All project petty cash is cleared.
  19. Project bank accounts (SR and UNDP) are fully reconciled and closed.
  20. All accrued employee benefits are fully accounted.
  21. There are no other pending liabilities.
  22. All balance sheet accounts in Quantum (General Ledger) have been cleared (zero balance). For advice, contact OFM/Finance Business Advisory (FBA) Teams. Please note the following:
    • accrual balances for employee benefits should be presented to OHR for clearance. These accruals were posted from 2012 and onwards and include accounts 23083 (End of service relo/repat), 23086 (Accrued Annual Leave Payable-ST) and 23087 (Accrued Home Leave –ST).
    • 18xxx series (PP&E accounts) should have zero balances after the disposal /transfer of the assets.
    • 21005 (Pending payments). The balance in this account comprises unpaid vouchers and system generated transactions. COs are requested to take action on the unpaid vouchers.
    • 21020 (Other Accounts Payable). System generated balances are dealt by OFM.
  23. The CDR for the previous quarter shows zero future expenses (commitments).
  24. Final Local Project Appraisal Committee (LPAC)/ steering committee minutes are available.
  25. All audit observations are closed with supporting documentation. All outstanding audit follow-up actions should also be closed in CARDS.
  26. The final CDR is reviewed and signed. Final report is submitted by SRs and SSRs.
  27. The unexpended balance for the project has been agreed to the general ledger.
  28. Consultations with donors on the disposition of unexpended cost sharing balances, where required by the contribution agreement, have taken place and are documented in writing.
    • The CO should refund all uncommitted and unspent funds following the grant closure date to the Global Fund no later than two months after the delivery of the UNDP Certified Financial Statement for the year of the grant closure.  The refund is to be paid into the bank account as detailed in the Implementation Letter.
    • The cash balances in the workbench checklist will be presented in detail by Fund and Donor.
    • For closures due to a change in PR or transitioning from Global Fund funding, CO refunds to the Global Fund unspent cash at PR level and SR/SSR level. Refer to POPP Refunds to Donors. The UNDP Global Fund Partnership and Health Systems Team (GFPHST) supports COs in confirming unspent cash balances and liaises with the Global Shared Services Centre (GSSC) to process the refund to the Global Fund.
    • Where there is a high estimated unspent balance, an interim refund is made to the Global Fund and then a final refund done in the year following after grant closure date.
  29. All refunds to donors have been transferred to Account 21030 (Pending Refunds to Donors) and the project balance is zero. The GSSC transfers funds from the project to the refund account 21030 and processes the refund from that account as per POPP.
  30. The GSSC is notified to close any associated contract in the contracts module.
  31. All donor reports, as established in the cost sharing agreement, were submitted and receipt acknowledged by the donor representative.

If other donors have participated in the project, their balances should be refunded to the donor(s) or transferred to another project with the permission of the donor. The contribution agreement with the donor will dictate the required action, including where donors permit UNDP to retain amounts below a set threshold. See POPP Refunds to Donors  or POPP Transfers where Unexpended Balances are Not Refunded.

Project status in Quantum is set to ‘Financially Closed’ (Awards>Project>Project Status - “F”). Once a project is marked financially closed, Quantum will prevent all further transactions against the project.

Upon financial closure of the respective projects (outputs), the associated Award/contract status should be changed to “Closed/Expired”.

Refer to POPP Financial Closure of Development Projects.

CCM Funding

Since the Country Coordinating Mechanism (CCM) generally has no legal personality and, as such, has no capacity to enter into binding agreements, it sometimes designates UNDP as an entity responsible for receiving and managing funds to support certain administrative costs incurred by it. In such cases, the Global Fund concludes an agreement with UNDP, using the standard terms and conditions for CCM Funding Agreement. The said standard terms and conditions also apply to regional coordinating mechanisms and steering committees. 

Guidelines for CCM Funding is available in GF Operational Policy Manual (section 1.5).  UNDP Country Office may consult with the UNDP Global Fund Partnership and Health Systems Team for guidance on budgeting and eligible costs for CCM funding.  The country offices advised to follow the eligibility criteria for operational costs (personnel and other expenses) and activities when preparing CCM annual budgets and processing payments for CCM. If there any items that are not clearly defined in the GF Operational Manual, the offices are advised to contact the focal points of the Global Fund.

All due processes for revenue recognition, cash deposits, Quantum budget entry and expense recording should follow UNDP’s policies and procedures.

Import duties and VAT/sales tax

UNDP is entitled to reimbursement of indirect taxes, such as sales tax and VAT, on important purchases. The policy of the United Nations, including UNDP, is that all purchases are “important,” as they are recurring and necessary for UNDP to carry out its official activities in the context of development projects. While governments in some countries have provided an outright exemption to indirect taxes, in most countries UNDP Country Offices (COs) may be required to pay taxes and seek reimbursement. COs should liaise with the Ministry of Foreign Affairs (or relevant Ministry) to ensure reimbursement. Any difficulties with respect to exemption from taxation or reimbursement of taxes should be addressed to respective Regional Bureau and the Director of the UNDP Office of Legal Services (OLS). Please refer to POPP on Payment and Taxes for further guidance

Article 4(a) of the UNDP-Global Fund Grant Regulations states that the Principal Recipient (PR) shall try to ensure through coordination with the Government of the Host Country and the Country Coordinating Mechanism (CCM) and otherwise that this Agreement and the assistance financed hereunder shall be free from taxes and duties imposed under law in effect in the Host Country. The PR shall assert all exemptions from taxes and duties to which it believes it, the Global Fund or the Grant is entitled.

CO/PRs should also support Sub-recipients (SRs) in requesting tax exemption from the respective Government authorities for goods and services procured with funds from the Global Fund and such documentation should be kept on file to prove that efforts were made to meet the provisions of this article and avoid liability for any import duties and VAT/sales tax not exempted or recovered from Government.

COs/PRs are required to maintain records throughout the year of any import duties and VAT/sales tax paid with grant funds and amounts recovered. Such records are necessary to support the annual grant tax reporting to the Global Fund and for audit purposes.