Property Issues

In accordance with the Grant Regulations, UNDP retains ultimate responsibility for all assets acquired with grant funds, regardless of the actual entity undertaking the procurement (i.e. UNDP or, in exceptional cases, a Sub-recipient (SR)) and managing the assets. Hence, although SRs are accountable to UNDP for their own conduct, as well as for all acts and omissions of Sub-sub-recipients (SSRs), UNDP must proactively monitor SRs’ processes, including their management of SSRs and asset management practices. 

Asset procurement, management and handover are guided by the UNDP Programme and Operations Policies and Procedures (POPP) as agreed with the Global Fund. Further information can be found in the financial management section of the Manual.

a. Procurement of assets for Sub-recipients

Where assets are procured by UNDP for use by an SR, the latter, in consultation with UNDP, must develop the specifications and/or terms of reference for those assets.  Once these specifications and/or terms of reference are approved by UNDP, UNDP procures the assets in accordance with the POPP, and makes all payments for them directly with grant funds to the selected contractor or contractors.  

Once the assets are procured, UNDP as a PR retains responsibility for them. This means, for example, that where UNDP procures assets on behalf of a government SR and conditionally transfers title to those assets to that SR, UNDP must comply with Art. 19 of the Grant Regulations, which requires it to ensure that all assets are used for programme activities, unless specifically agreed otherwise with the Global Fund. If Art. 19 is violated, the Global Fund may request a refund from UNDP, in accordance with Art. 8 of the Grant Regulations.

b. Transfer of assets during grant implementation

Since UNDP is fully accountable for the assets produced with grant funds, during the project UNDP should retain ultimate ownership to all goods and other property financed by the Global Fund. During project implementation, all equipment and materials must be devoted to the programme. Assets may be handed over to the SRs by using one of the following modalities:

1. Transfer of custody to government SRs. Where an asset is procured by UNDP, and remains legally owned by UNDP, but is in use by the government SR, UNDP has established formal procedures to record the responsibilities of the custodian of the asset. A standard Memorandum of Acceptance of Custody should be signed prior to the handover of the asset to the government SR.
2. Conditional transfer of title to government SRs. In addition to the above, UNDP has established formal procedures for conditional transfer of title to assets to government SRs. A standard Agreement of Conditional Transfer of Title should be signed prior to the handover of the assets in question to the government SR.

As a general rule, neither custody of, nor title to, the assets should be transferred to civil society organizations serving as SRs. Where such transfer is necessary or desirable, the Legal Office (LO) and the UNDP Global Fund/Health Implementation Support Team should be consulted. Likewise, where further transfer of assets to SSRs appears necessary, advice of the LO and the UNDP Global Fund/Health Implementation Support Team should be sought.

The SR is responsible for the proper custody, maintenance and care of the assets transferred to them.  UNDP policies require that SRs obtain appropriate insurance in amounts agreed upon with UNDP for the protection of such equipment and materials during implementation of the project. The cost of the insurance should be incorporated into the project budget.

The overall responsibility for use of the asset and reporting to the Global Fund, however, remains with UNDP.

Particular attention needs to be paid to the transfer of the custodianship of vehicles. For example, a vehicle that it not primarily in use by UNDP, should not use UNDP number plates or UNDP logo. In some countries, lack of availability of number plates has delayed asset transfer. In addition, in some countries there may be tax (including VAT) issues that are triggered by the transfer of custodianship. Thorough planning at the outset of the procurement, registration and custodianship should reveal the relative merits of the transfer and determine the best course of action. Asset management practices should follow guidance from UNDP POPP.

c. Asset handover at grant closure

At the end of the programme, UNDP transfers and/or disposes of the remaining property according to its rules and in consultation with the Global Fund (see Art. 19 of the Grant Regulations). Although the Global Fund’s approval is not required for such transfer and/or disposal, it is considered best practice to seek its agreement, as well as the endorsement of the Country Coordinating Mechanism (CCM), Regional Coordinating Mechanism (RCM) or Regional Oversight Mechanism (ROM) (as the case may be), on the transfer of assets to the national SRs at the end of the programme.  Further guidance is available in the financial management section of the Manual.

When a grant is approaching its end date, or the grant is transitioning to a different PR, UNDP must prepare a grant closure plan or transition plan (referred to here as “the plan”). The issues arising in either case (i.e. closure or transition) are very similar and the responsibilities of UNDP as PR are the same..

1. It is important for UNDP to proactively plan for the end of the grant. In this context, it is useful to engage with the relevant national programme even if a different entity will serve as PR under a new grant. 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 guardian. Before submission to the Global Fund, the list of assets must be reconciled with the accounting records and a verification exercise completed.
2. 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 selecting the proposed recipients of the assets.
3. This plan will be reviewed by the Global Fund and must be approved by it before the assets can be transferred as described in the Plan.
4. Once the plan has been approved, UNDP should begin the process of formally transferring the assets to a SR or an incoming PR, in line with the POPP and in accordance with the standard Agreement for Transfer of Title from UNDP.