Harmonized Approach to Cash Transfers (HACT)

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Home
Financial Resources Management
Financial Management and Implementation Modalities
Harmonized Approach to Cash Transfers (HACT)
Harmonized Approach to Cash Transfers (HACT)

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Inventory Management
- Inventory Management
Cash Banking and Investment
Financial Closure of Development Projects and Trust Funds
Financial Management and Implementation Modalities
Financial Operations Management
- Corporate Operations and Information Management
- Statutory Financial Reporting
Pipeline and Revenue Management
Expense Management
Resource Planning and Cost Recovery
Working with External Auditors
- Working with External Auditors

Focal Point

Adam Phillion, Catherine Muli, Kanesh Babu Letchumanan

Effective Date

01/01/2021

Planned Review Date

02/06/2026

Version

4.0

Latest updates

July 09, 2024 -

The following clarification and editorial updates have been implemented:

HACT policy: A clarification sentence has been added at the end of para. 40 (g) regarding postponement of assurance activities due to reasons beyond the control of the partner and the office.
HACT Tables: All text references of ‘medium’ risk have been adjusted to ‘moderate’ risk in line with the HACT policy.
Annexes A-D: All text references of ‘adjusted risk rating’ have been amended to ‘partner

July 09, 2024 -

The following clarification and editorial updates have been implemented:

HACT policy: A clarification sentence has been added at the end of para. 40 (g) regarding postponement of assurance activities due to reasons beyond the control of the partner and the office.
HACT Tables: All text references of ‘medium’ risk have been adjusted to ‘moderate’ risk in line with the HACT policy.
Annexes A-D: All text references of ‘adjusted risk rating’ have been amended to ‘partner risk rating’ in line with the HACT policy.

June 02, 2023 -

The summary of key changes which takes immediate effect and their implication on UNDP Offices are:
1. Updates to reflect UNDP's transition to its new cloud-based management platform Quantum in January 2023, replacing its previous ATLAS system;
2. Guidance provided with regards to migration of HACT Platform from SharePoint to the cloud-based Quantum+ (Salesforce) including new system approval for macro assessment, micro assessment, assurance; activities, engagement of High-Risk Partners and revision of Partner Risk Rating which have been added in para 22, para 27, para 40, para 6(d), and para 7 respectively;
3. Change of terminology reflected in para 7 from Adjusted Risk Rating to Partner Risk Rating to refine description of the term and align with process in the HACT platform.

September 28, 2021 -

The updated HACT POPP is now available. The summary of the key changes and their implication on UNDP Offices are:
1- Clarity has been added in para 23 (h) for macro assessment where UNDP is the sole agency that requires the assessment;
2- Guidance has been added for micro assessment that expires mid-programme cycle where discretion of the Office is required in the case if the project is expected to end in a short period of time. This is indicated in para 27 (n);
3- Standardized templates have been made available to document the significant issues and action plan arising from micro assessment and assurance activities. Regional bureaus are required to review the documentation of the significant issues and action plan arising from micro assessment and assurance activities for Partners with expected cash transfers of greater than or equal to $1 million per annum, and in the case of central bureaus and independent units implementing developing project, the review shall be performed by the Head of Office or his/her designate. This is indicated in para 27 (t) and para 40 (l);
4- Additional guidance have been added for downward revision of Partner adjusted risk rating in para 7;
5- A standardized template has been made available to document the High Risk Partner Approval Template in para 6 (f);

January 01, 2021 -

The updated HACT POPP is now available. The summary of the major changes and their implication on UNDP Offices are:
- Revision of the micro assessment threshold from $300k per programme cycle to $150k per annum (for partners already engaged in 2021 where the assessment cannot be performed because implementation is already underway, offices should upload a Note to File confirming the experience so far with the partner has not highlighted any risks that warrant a change in the implementation or cash transfer modality) and follow the prescriptive guidelines for non-assessed partners;
- The approved micro assessment and assurance activity plans (generated from the HACT SharePoint site) should be uploaded to the site semi-annually no later than end of February and end of July every year have been added in para 27 (m);
- Written approval of the Head of Office for cash transfers up to $150k issued to non-assessed partners who meet the threshold; written approval of the respective bureau for cash transfers exceeding $150k to none-assessed partners who meet the threshold have been added in para 27 (e);
- The frequency of submitting Assurance plans has been changed from annually to semi-annually, being no later than the end of February and July of every year, has been added in para 40 (a). This will ensure continuous monitoring and revision of assurance plans;
- Regarding spot checks, offices are now required to conduct the spot checks for Partners with actual expenditures incurred and reported exceeding $50,000 per year. This is indicated in para 6 and 40;
- Spot checks may be performed by qualified, experienced UNDP staff who are independent of the project for Partners below the micro assessment threshold ($150,000 per annum). However, the staff would need to obtain clearance in writing by their respective bureaus after confirmation of their experience, qualification and independence to the project;
- A revision to the frequency of audits has been added in para 6 and Table 2 where Partners that are risk rated “Low” and “Medium”, an internal control audit should be conducted at least once every other year if annual expenditure exceeds $200,000 per year. For Partners that are risk rated “Significant” and Unassessed Partners, financial audits should be conducted every year when expenditures exceed $200,000 per year. For Partners that are “High” risk rated, OFM’s written clearance is required to engage and issue cash transfers to the partner; otherwise DIM audit guidelines apply if Direct Implementation or Full Country Office Support to NIM is selected.

February 11, 2020 -

The HACT policy has been updated to reflect the following:

(1) The Micro Assessment Plan should be generated from the HACT monitoring platform and should be reviewed and approved annually (no later than sixty days after the start of the year) by the Head of Office and uploaded on the HACT platform. The plan should be used to schedule and track the completion of micro assessments.

(2) The Assurance plan should be generated from the HACT monitoring platform and it should be reviewed and approved annually (no later than sixty days after the start of the year) by the Head of Office and uploaded onto the HACT platform. The plan should be used for planning and tracking the completion of assurance activities.

March 19, 2019 -

The updated Harmonized Approach to Cash Transfers (HACT) policy, tables and annexes are now available in Spanish. To access these, click on the Spanish language tab. The tables are also available in the POPP templates library (document # POPP 11-2599), as are the annexes (document # POPP 11-2332).

March 19, 2019 -

The updated Harmonized Approach to Cash Transfers (HACT) policy, tables and annexes are now available in French. To access these, click on the French language tab.

December 04, 2018 -

The Harmonized Approach to Cash Transfers (HACT) procedures are now available in French. To view the procedure table, click on the French language tab.

May 11, 2018 -

The Harmonized Approach to Cash Transfers (HACT) policy was revised to reflect a $300,000 threshold per programme cycle for HACT micro assessments and mandatory spot checks which, depending on the assessment risk rating, determines the appropriate cash transfer modality. Below this amount, offices may select the most appropriate cash transfer modality, taking into consideration any known risk factors. For Partners below the threshold, HACT micro assessment and spot checks may be performed at the discretion of the office based on other risk considerations e.g. the office has no previous experience with the Partner or the operating environment is considered high risk. However, programmatic monitoring requirements as specified in the PPM still apply in such instances. With the new policy change, desk reviews no longer need to be performed.
This change is effective immediately and applies to all partners (except UN Agencies) and grant recipients who receive funds from UNDP for implementation of development activities. The revision replaces the current UNDP HACT policy which requires any partners for whom the estimated programme cycle funding is equal to or greater than 10% of total estimated programme cycle funding and partners representing at least 60% by value of programme cycle funding to be micro assessed by an independent third party service provider and desk reviews be performed for the remainder.

April 24, 2018 -

The HACT main procedures are now available in Spanish. These procedures are: (1) Macro Assessment; (2) Micro Assessment; (3) Cash transfers, disbursement and reporting, and (4) Assurance Activities planning and implementation. To access the procedures in Spanish, click on the Spanish language tab.

April 24, 2018 -

The FRM HACT Tables are now available in Spanish. Hyperlinks to the Tables are incorporated into the following procedures on the HACT policy page: Cash Transfers, Disbursement and Reporting: Step 2; Assurance Activities planning and implementation: Steps 2, 3 and 8. To access the procedures in Spanish, click on the Spanish language tab. The document is also available in the POPP library templates (document # POPP-11-2599).

April 24, 2018 -

The FRM HACT Annexes are now available in Spanish. Hyperlinks to the Annexes are incorporated into the following procedures on the HACT policy page: Assurance Activities planning and implementation: Steps 1 and 3. To access the procedures in Spanish, click on the Spanish language tab. The document is available in the POPP library templates (document # POPP-11-2332).

April 24, 2018 -

The 2014 UNDG HACT Framework is now available in Spanish. Hyperlinks to the Framework are incorporated into the following procedures on the HACT policy page: Macro Assessment: Steps 1-5; Micro Assessment: Steps 1-3; Assurance Activities planning and implementation: Step 8. To access the procedures in Spanish, click on the Spanish language tab. The document is available in the POPP library templates (document # POPP-11-2598).

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Relevant Regulations and Rules

UNDP Financial Regulations and Rules

Regulation 17.01 (a) (b) and (c), Regulation 17.03 (b), Regulation 16.04, Regulation 17.04, Rule 117.01 (a) and (b), Regulation 15.01

Policies

Main Policy

Harmonized Approach to Cash Transfers (HACT)

DOCX (712.91 KB)

View Download

Procedures

Main Procedures

1

Step

Solicit third party service provider for macro assessment.

Responsible Party

Office / UNCT

Template/Guideline

Explanatory Notes

RC is to advocate with government and major development partners for macro assessment.

See Appendix 1 Appendix 1 UNSDG HACT framework for TOR of service provider to be engaged.

2

Step

Conduct desk review research.

Responsible Party

Service Provider

Template/Guideline

Explanatory Notes

Key outputs are:

(1) PFM risk assessment and

(2) SAI capacity assessment

See Annex 1 and Annex 2 of Appendix I in page 50-54 of UNSDG HACT Framework for Macro assessment check list and risk consideration checklist respectively to be used.

3

Step

Review of results of macro assessment.

Responsible Party

Office

Template/Guideline

Explanatory Notes

The final macro assessment must be signed off by the Resident Coordinator on behalf of the UNCT.

See Annex 1 and Annex 2 of Appendix I in page 50-54 of UNSDG HACT Framework for Macro assessment check list and risk consideration checklist respectively to be used.

4

Step

Determine impact and implications of assessment on programme design.

Responsible Party

Office

Template/Guideline

Explanatory Notes

Each agency implementing the HACT framework is required to document its understanding of the assessment, recognition of the identified risks and understanding of the effects at country level that are specific to the agency, including programme design.

See Annex 1 and Annex 2 of Appendix I in page 50-54 of UNSDG HACT Framework for Macro assessment check list and risk consideration checklist respectively to be used.

5

Step

Document decisions and risks identified.

Responsible Party

Office

Template/Guideline

Explanatory Notes

A summary of the macro assessment should be incorporated into the Common Country Assessment.

See Annex 1 and Annex 2 of Appendix I in page 50-54 of UNSDG HACT Framework for Macro assessment check list and risk consideration checklist respectively to be used.

1

Step

Determine and prioritize which Partner require micro assessment.

Responsible Party

Office

Template/Guideline

Explanatory Notes

Micro Assessment should be carried out before programme funding is provided. Where two or more programmes have similar start dates, prioritization should be based on the assessed relative amount of risk to UNDP (funding quantum, and past experience with the Partner).

2

Step

Develop micro assessment plan.

Responsible Party

Office

Template/Guideline

Explanatory Notes

Final Micro Assessment Plan must be signed off by the Head of Office or his/her designate.
The relevant planning process should be completed in the HACT platform.

3

Step

Solicit third party service provider.

Responsible Party

Office

Template/Guideline

Explanatory Notes

UNDP office should consider Long Term Arrangements with one or more service providers for micro assessments. Global LTAs for service providers are available at HACT Long Term Agreements (LTAs).

See TOR of service provider for the micro assessment.

4

Step

Perform micro assessment.

Responsible Party

Service Provider

Template/Guideline

Revised Partner Capacity Micro Assessment

Download

Explanatory Notes

Key output are:

(1) An overall risk rating related to cash transfers to Partner.
(2) Significant issues of Partners

5

Step

Review results of micro assessment.

Responsible Party

Office

Template/Guideline

Explanatory Notes

Results of micro assessment shall be reviewed by Head of Office or his/her designate and remedial actions shall be discussed with the Partner.

The micro assessment report should be uploaded in the HACT Platform. Issues highlighted in the report including the action plan needs to be documented in the HACT Platform.

6

Step

Establish impacts and implications on AWP design.

Responsible Party

Office

Template/Guideline

Explanatory Notes

Office to assess the impact of the micro assessment and implications on AWP design

7

Step

Identify requirement for HACT assurance planning.

Responsible Party

Office

Template/Guideline

Explanatory Notes

Office to assess the impact of the micro assessment and implications on HACT assurance plan.

8

Step

Document Partner risks as appropriate.

Responsible Party

Office

Template/Guideline

Explanatory Notes

The specific risks identified in the micro assessment are also incorporated into country level risk management activities and logs, as appropriate.

1

Step

Finalize Partner Risk Rating.

Responsible Party

Office

Template/Guideline

HACT Tables

Download

Explanatory Notes

See Table 4 for triggers prompting review of Partner Risk Rating arising from spot checks
See Table 5 on triggers prompting a change of Partner Risk Rating arising from scheduled audits

2

Step

Determine the appropriate Cash Transfer Modality.

Responsible Party

Office

Template/Guideline

HACT Tables

Download

Explanatory Notes

See Table 3 Cash transfer modality for Partner based on adjusted risk rating.

3

Step

Review FACE form prior to disbursement and reporting.

Responsible Party

Office

Template/Guideline

Explanatory Notes

Refer to Direct Cash Transfers and Reimbursements procedure when using the standard FACE forms.

See Appendix VI of UNSDG HACT Framework for template of FACE form and Appendix VII for guidelines for completing FACE form.

1

Step

Review results of assessment conducted.

Responsible Party

Office

Template/Guideline

HACT Annexes A-D

Download

Explanatory Notes

In consultation with programme and operations team to consider additional variables in the assurance planning process.

See Annex D for the roles and responsibilities in implementing the HACT framework.

2

Step

Develop Assurance activity plan for Partners.

Responsible Party

Office

Template/Guideline

HACT Tables

Download

Explanatory Notes

The coverage, type and frequency of assurance activities is guided by the overall risk rating associated with the Partner, as determined through the micro assessment.
See Table 2 for UNDP specific guidelines assurance activities required for each Partner based on Partner risk rating.

3

Step

Approve Assurance activity plan.

Responsible Party

Office

Template/Guideline

HACT Annexes A-D

Download

Explanatory Notes

The final assurance activity plan must be signed off by the Head of Office or his/her designate.
See Annex A for additional UNDP specific guidance on the conduct of spot checks. See Annex B for additional guidance on internal control and financial audits.

4

Step

Solicit third party service provider for planned assurance activities.

Responsible Party

Office

Template/Guideline

Explanatory Notes

See Section 9.17 to Section 9.22 of the UNSDG HACT Framework for guidelines for Periodic-On-Site Reviews (spot checks).
See Section 9.23 to Section 9.26 of the UNSDG HACT Framework for guidelines for programmatic monitoring.
See Section 9.27 to Section 9.36 of the UNSDG HACT Framework for guidelines for Special and Scheduled audits (internal control and financial audits).
See UNSDG HACT Framework Appendix X for TOR of spot checks to be performed by third party providers, Appendix XI for sample management letter for spot checks.
See UNSDG HACT Framework Appendix XII for TOR of internal control audits to be conducted by third party providers and Appendix XIII for TOR of financial audits to be performed by third party service provider.

5

Step

Upload results of assurance activity conducted.

Responsible Party

Office

Template/Guideline

Explanatory Notes

Results of Partner Assurance Activities shall be reviewed by Head of Office or his/her designate and remedial actions shall be discussed with the Partner.

The reports of assurance activities should be uploaded in the HACT Platform. Issues highlighted in the report including the action plan needs to be documented in the HACT Platform.

6

Step

Conduct review of implementation of Assurance Plan.

Responsible Party

Office

Template/Guideline

Explanatory Notes

Specific instructions will be issued for procedures for updating results of implementation reviews on the HACT Platform.

7

Step

Follow up of findings of periodic on-site reviews (spot checks) and special and scheduled audits.

Responsible Party

Office

Template/Guideline

HACT Tables

Download

Explanatory Notes

See Table 4 for triggers prompting review of Partner Adjusted Risk Rating arising from spot checks.
See Table 5 on triggers prompting a change of Partner risk rating arising from scheduled audits.

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