Direct Cash Transfers

The FACE form supports several important functions:

• Request for funding authorization: The section “Requests/Authorizations” will be used by the Implementing Partner (IP)/Responsible Party (RP) to enter the amount of funds to be disbursed for use in the new reporting period. UNDP can accept, reject or modify the amount approved.
• Reporting of expenses: The section “Reporting” will be used by the IP/RP to report to UNDP on the expenses incurred in the reporting period. UNDP can accept, reject or request an amendment to the expenses reported.
• Certification of expenses: The section “Certification” will be used by the designated official from the IP/RP to certify the accuracy of the data and information provided.

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)

• The SR must have a good financial system of recording accounting transactions with appropriate filing of financial documentation on the project.
• The SR should open a separate bank account (with no access to credit, and not used for investments) for the Global Fund project at central and provincial levels. (An existing bank account under the name of the SR may be used only with approval of the UNDP Programme Officer)
  • Signatory Authority forms along with new bank account details to be submitted to UNDP prior to SR agreement signing. Bank account to operate with double signatures.
  • Strict control on the account, including monthly/quarterly bank reconciliation.
  • After the completion of the project, the account is closed and remaining funds reimbursed to UNDP.
• As per signed SR agreements, SRs must provide quarterly financial (FACE) and programmatic reports within 15 days after the end of each quarter unless otherwise agreed with UNDP. SRs should also submit a copy of the bank statement showing the closing cash balance for the relevant quarter. A reconciliation to the balance of cash funds available as shown in the FACE should be attached. In addition, SRs should submit details on transactions accounted in the FACE form as well as supporting documentation to support expenditures.

During FACE verification conducted by the CO, the CO should ensure that funds are used only for the activities and inputs stated in the annual work plan and should follow UNDP’s policies and procedures as referred to in the project document and SR agreement. UNDP allows for variations of not more than 10 percent of any budget line item, provided that the total budget is not exceeded.

• Advances to SRs shall only be made in local currency. Requests for non-local currency payments should be submitted to UNDP HQ Treasury for appropriate approval as per UNDP POPP.
• Advances to SRs should be issued on a quarterly basis for no more than three months of the approved budget (initial advance to cover project set-up cost). This modality requires close monitoring by the CO to verify the correct use of the advanced funds for achieving the work plan targets.
• An SR’s request for an advance for a project can be approved if at least 80 percent of the previous advance given and 100 percent of all earlier advances have been liquidated. SRs can request an advance as soon as 80 percent of a previous disbursement and 100 percent of all earlier disbursements are liquidated, even if that happens well before the end of the quarter. Reporting requirements remain the same, whether at quarter end or an earlier date. Please note the flexibility of 3% or $5,000 (whichever is lower) provided for 80% rule in the Guide for AP Invoice Processing (refer to page 13).
• Should an SR have outstanding advances over one year old, no new advances should be given to that SR for ANY projects it is implementing until the advance in question is liquidated.
• Based on the review/verification of the FACE report, UNDP will either:
  • Accept: sign and approve the FACE;
  • Request amendment to the FACE from the SR; or
  • Reject the FACE, keeping a copy on file, returning it to SR, giving reasons for rejection.

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 and, 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:

• UNDP POPP on Accounts Payable for guidance on AP vouchers and APJVs.
• UNDP POPP on Direct Cash Transfers and Reimbursements.