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1
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Step
Open bank account to receive advances. Note: The opening of a dedicated bank account for project/(s) is encouraged as a risk mitigation measure where deemed appropriate. However, where this option is not feasible or practical due to local regulations or other valid reasons, UNDP may permit the funds to be deposited in a central government bank account or bank account with funds from other sources provided the partner has a robust financial accounting system which accurately tracks funds provided by UNDP and is able to meet UNDP reporting requirements.
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Responsible Party
Partner
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Template/Guideline
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Explanatory Notes
Bank accounts opened by the Partners for advances should not be owned by UNDP or opened in UNDP’s name. UNDP offices should not make arrangements for opening or closing of project bank accounts operated by Partners, and UNDP staff should not be signatories on these accounts. The Partner is responsible and must implement strict controls including performing bank reconciliations at least monthly and must maintain supporting documents, in accordance with UNDP document retention policy, related to the utilization of funds provided by UNDP. 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): - 1. 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.
- 2. 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).
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2
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Step
Provide the UNDP office with a detailed record of authorized project personnel, including samples of their signatures.
At a minimum, include a principle signatory and an alternate.
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Responsible Party
Partner
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Template/Guideline
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Explanatory Notes
These authorities will have signed the annual work plan and UNDP offices should ensure FACE forms are signed by these designated officials. This record has to be kept in the UNDP office for internal control and assurance activities purposes.
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3
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Step
Keep project files and related records, and make necessary updates including:
- Bank account details
- List of authorized signatories with samples
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Responsible Party
UNDP Programme Officer
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Template/Guideline
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Explanatory Notes
Where a separate bank account is maintained by the Partner for receiving and tracking UNDP funds, UNDP offices should maintain up to date records of the bank account.
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4
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Step
Plan project activities in line with annual work plan for the next quarter
Establish availability of funds.
Review that funds requested are in line with the annual work plan.
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Responsible Party
Partner,
Project Director
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Template/Guideline
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Explanatory Notes
All payments against advance funds must be supported with purchase orders (for procurement reaching purchase order level), original quotations, invoices, goods received notes and original signed payment vouchers. All these documents must be kept by the Partner in their original forms and made available to the auditor and/or UNDP monitoring team when they request them during assurance activities (audits and spot checks etc) The amount requested must reflect a realistic forecast of funds needed for the period requested. A single advance must not exceed the realistic quarterly work plan which is ( Jan – Mar, April – June, July – Sept and Oct – Dec) of the accounting year). However, within the quarter, depending on the availability of funds and timing of receipt of contributions, more than one advance may be provided. A single advance must not provide funds that will be utilized over two quarters.
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5
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Step
Prepare, sign and submit FACE forms, including the ICE template, each time the project needs funds, and at least quarterly. Include a copy of the bank statement showing the closing cash balance for the relevant quarter. As necessary, include a reconciliation to the balance of cash funds available as shown in the FACE form. (The reconciliation does not apply if the Partner does not maintain a separate bank account for the project in question)
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Responsible Party
Partner
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Template/Guideline
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Explanatory Notes
FACE forms to liquidate advances should be submitted to UNDP no later than 15 days after the end of each quarter. Offices may agree to reasonable extensions to this deadline after consultation with OFM but any extension should take into account the need to have the expenditures recorded before the quarterly closure of financial ledgers in UNDP's Quantum system. UNDP offices should ensure FACE forms are signed by designated officials as indicated in the annual work plan.
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6
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Step
Verify FACE forms as submitted by the Partner. -Confirm that advance request is within available Quantum project budget and available resources.
-Confirm Quantum Distribution ( Operating Unit – Fund – Expenditure Department – Responsible Party – Donor) is the same in the annual work plan and Quantum project budget.
-Check Partner signature against sample in project agreed specimen signatures submitted by Partner
-Check that opening balance equals the closing balance of the last FACE form.
-Check the arithmetic accuracy of the FACE form.
-Determine that the reported expenses and requested advance are appropriate and necessary to achieve programme outcomes, within the period covered by the advance, as set out in the annual work plan, project budget and other available documentation. -Consider assurance activities (audit and spot checks) and existing assessment reports, and whether there are any grounds to withhold or reduce funding.
-Verify the following criteria has been met before approving an advance request: - Criteria I (partner and individual output): At least 80% of the previous advances to the output have been liquidated, and;
- Criteria II (partner and individual output): 100% of all earlier advances (i.e. advances before the latest previous advance) have been liquidated. This rule applies to outstanding advances preceding the last advance (penultimate advance), and;
- Criteria III (partner's aggregate outputs): for partners managing more than one output, the partner has no outstanding advances greater than 12 months on any particular output. All outputs managed by the partner should be taken into consideration in determining whether the partner has met criteria #3.
A Quantum AP invoice cannot be created unless all the above 3 criteria are met and for proper assessment of the rule, FACE forms liquidating previous advances must be processed prior to recording new advances included in the same FACE form. In the event of non-compliance, the CO should seek pre-approval from the Regional Bureau on the exception(s). Where the bureau exercises exceptional approval for new advances that do not meet these 3 criteria Offices must document these exceptions and archive it in the project file for audit trail
Ensure the Partner's complete vendor details including payments instructions are in Quantum and for any request to revise payment details, offices should follow established procedures for changes to vendor master data including procedures for review and approval.
Upon review and verification of the above, the UNDP Head of Office shall: - Accept: sign and approve the FACE form;
- Request the Partner to amend the FACE form for any errors or omissions and resubmit; or
- Reject the FACE form, keeping a copy on file; returning it to the Partner stating reasons for rejection.
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Responsible Party
UNDP Programme Officer
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Template/Guideline
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Explanatory Notes
Internal control check one of three Do not neglect programme issues including findings from audits, assurance activities and capacity assessments. This is not simply a bookkeeping process. The advances should only be made where the programme officer agrees this is appropriate and necessary to achieve the programme outcomes. The Quantum UN Account Analysis Report (General Account Analysis Report) can be used to monitor advance issued to partners Advances should be requested by the Partner and charged in Quantum to the corresponding donor/fund combination, depending on activities involving expense and their associated funding. In this way, the reservation of funds corresponding to advances will be recorded in the correct donor fund. Only approve and sign the FACE form if all requirements of this section are successfully met.
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7
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Step
Submit payment request and approved FACE form to GSSC for Payment.
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Responsible Party
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Template/Guideline
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Explanatory Notes
The UNDP Office should submit the request for payment together with the approved FACE form to GSSC.
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8
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Step
Raise a Quantum accounts payable (AP) prepayment invoice charging Advances account 16005 (NEX Advances) for advances or GL Expense account 7xxxx for reimbursement with the Partner (government department or other national institution) as the payee and the corresponding donor and fund combination. Ensure amount, currency, payee, account codes are consistent with the supporting FACE form. The FACE forms should be reviewed and approved by the UNDP programme officer who should ensure the appropriate distribution fields are reflected in the FACE form and in request to raise a prepayment invoice.
The Quantum AP module invoice with supporting FACE form needs to be shared to the approving manager for the second approval level.
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Responsible Party
UNDP office Finance Officer/GSSC Payables unit
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Template/Guideline
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Explanatory Notes
Never make vouchers payable to individual government or UN agency employees. The Partner should be the payee and ensure it matches the name on the recipient bank account.
Advances shall only be made in local currency. Requests for non-local currency payments should be submitted to UNDP HQ Treasury for appropriate approval in line with POPP. When the project document or the annual work plan have clearly identified activities and expenditures to be incurred in non-local currency, UNDP HQ Treasury Approval is not required. All such cases should be approved by the Head of the Office. Any unspent balance must be returned by the partner in the same currency in which the advance was received. Offices should submit to GSSC the necessary supporting documents related to non-local disbursement.
Supporting documents for reported expenditure should be verified during assurance activities (spot checks and audits). If expenditures are not adequately supported, the programme office should a) seek adequate explanation from the Partner, b) consider performing alternative procedures, c) corroborate explanations provided by the partner with other sources, d) consider performing additional assurance activities to verify there are no more occurrences, e) documented in a Note to File signed by the Head of Office or his/her designee how the issue has been addressed. Any unsupported/ unexplained expenses which have not been explained to the satisfaction of UNDP offices should be rejected and offices should ensure the expenses are not resubmitted in subsequent reports by the Partner.
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9
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Step
Approve payment after review of the AP invoice and supporting FACE form for accuracy, consistency (amount, currency, payee, account codes) and proper authorization.
Take into consideration any factors that would prevent UNDP from making payments e.g. fraud red flags and seek adequate explanation as appropriate
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Responsible Party
GSSC Payables unit
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Template/Guideline
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Explanatory Notes
Internal control check two of three
Approve Quantum accounts payable (AP) prepayment invoice in accordance with UNDP Office or GSSC payment approval thresholds.
For Budget Checking:
The voucher follows the same process as any other Quantum accounts payable (AP) prepayment invoice and disbursement (see POPP: Expense Management). All fields in the Quantum AP module Distribution in “Manage Distribution” including the Project Distribution segment (e.g. Project ID, Task ID, Responsible Party)
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10
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Step
Disburse funds. See POPP: Disbursing Funds.
Run the PayCycle for approved payments and send the payment details to the designated bank in accordance with the established SOP
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Responsible Party
GSSC Payments unit
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Template/Guideline
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Explanatory Notes
Internal control check three of three.
Note: Payments for national implementation projects shall only be made in local currency. Non-local currency payments shall only be made, after the necessary approval stipulated in paragraph 9 of the Direct Cash Transfers and Reimbursements policy is obtained.
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11
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Step
Liquidation of direct cash transfers (advances) based on FACE forms: * Review reported expenses on the FACE form for reasonableness and consistency with programme activities, annual work plan, project document and/or other related agreements with UNDP. Verify that progress is being made towards the achievement of expected results.
- Verify in Quantum that expenses have been disbursed and are reported in accordance with the provisions of the project budget and annual work plan and are consistent with project budget structure and chart of accounts (Project, Activity, Donor, Fund and Account). - Confirm that expenses are within available Quantum PPM budget, as well as available advance balances. * Ensure expense Distribution in Quantum AP module (Managed Distribution) matches the previously recorded advance Distribution. All fields in the Quantum AP module Distribution in “Manage Distribution” including the Project Distribution segment (e.g. Project ID, Task ID, Responsible Party). Ensure that expenses are in the same currency as related advances. Check the Partner signature for certification of expenses against the sample signature in project files. Based on the above verification and review steps: - Accept: sign and approve the FACE form;
- Request amendment to the FACE form from the Partner; or
Reject the FACE form, keeping a copy on file; return to the Partner with reasons for rejection.
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Responsible Party
UNDP Programme Officer
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Template/Guideline
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Explanatory Notes
First internal control approval
Upon receipt of FACE forms, the UNDP Programme Officer exercises UNDP's accountability by diligently undertaking all review and verification steps. The FACE form is only accepted (approved and signed) when reported expenses meet all of UNDP's requirements.
Useful Monitoring Reports:
The GL Account Analysis Report (PowerBI) and Quantum Project Budget Balance Report can be used to monitor the reported expenditures and budgets to Partners
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12
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Step
Recording of reported expenditures against the prepayment: The Partner uses a FACE form to report the expenses incurred from the cash advanced, after which a standard invoice is raised in Quantum AP module and applied against the prepayment invoice to recognise the expenditure. - Credit: Advance GL account 16005
- Debit: Expense accounts (7xxxx) in line with Quantum budget and signed annual work plan
For reimbursements that are reported after the closure of the pay cycle for the year. The excess expenditure reported above the prepayment amount will become payable on the standard invoice. If the excess expenditure is not paid by the year end, it will appear in Quantum as unpaid invoice, like any other unpaid invoice. Submit the Quantum AP module Invoice and supporting FACE form(s) to the approving manager.
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Responsible Party
GSSC Payables unit
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Template/Guideline
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Explanatory Notes
In Quantum accounts payable (AP) module, the standard invoice used to apply the prepayment liquidation will be paid if the reported expenditure exceeds the amount advanced to the partner. The funds are budget-checked (validated) for funds availability when the advance is made and recorded in account GL 16005 (NEX Advances), and when the expenditure is recorded. i.e., both the prepayment invoice and the standard invoice need to be validated.
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13
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Step
Approval of Quantum accounts payable (AP) standard invoice to record expenses:
Review Quantum Payable module standard invoice and ensure the voucher agrees to the FACE forms and that both are approved and signed by the programme officer. Verify consistency of amounts, currency and account codes.
Take into consideration any factors that would prevent UNDP from making payments e.g. fraud red flags and seek adequate explanation as appropriate. Ensure the payment is recorded in the period that the expenses were incurred by the partner and not when UNDP has signed off on the FACE form.
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Responsible Party
GSSC Payables unit
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Template/Guideline
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Explanatory Notes
Second and final internal control approval
The approving manager /officer approves the applied standard invoice in Quantum. The invoice will record expense, and only at this point is delivery (i.e. expense) recognized in Quantum.
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14
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Step
Receive funds and make disbursements
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Responsible Party
Partner,
Project Director
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Template/Guideline
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Explanatory Notes
The partner makes disbursements according to the annual work plan and keeps records of all transactions. When more funds are needed, the project director proceeds again from step 3
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15
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Step
Reconcile the cash funds available as stated on the FACE forms to: - Balance as stated in Quantum a/c 16005
- Project bank statement where a separate project bank account is used
- Sign the FACE forms to affirm a reconciliation review. Make these available for audit inspection.
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Responsible Party
UNDP Programme Officer
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Template/Guideline
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Explanatory Notes
Where there are errors in either the FACE form or Quantum, follow up promptly to resolve.
Make adjustments in Quantum accounts payable (AP) as required (see POPP: Expense Management).
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