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):

• When the interest is reported as earned by the partner (but has not been remitted to UNDP):  Debit account 16005 (NEX Advances) and Credit account 74510 (Bank Charges) with the total amount of interest reported by the partner for a specific reporting period.
• When the interest is refunded to UNDP or utilized by the partner to cover project expenses:   Debit the related Cash account 4xxxx) for refund; OR Debit Expenses (7xxxx) when the funds have been utilized; and Credit the NEX Advance account (16005)

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”.