1.The Policies in This Section Focus on the Following Types of Agreements

Non-core contributions

1.The policies in this section focus on the following types of agreements:

1. Programme Country Government Cost Sharing
2. Third Party Cost Sharing
3. European Union (EU) Agreements
4. Trust Funds

Revenue Recognition

2.Revenue recognition is the process of recording revenue in the General Ledger (GL) accounts for eventual reporting in the financial statements of UNDP. While under the International Public Sector Account Standards (IPSAS) revenue may be recorded before cash is received; spending can only take place after cash is deposited into the UNDP bank accounts.

Programme Country Government Cost Sharing

3.This is the modality by which a programme country government allocates some of its own resources (which may include the proceeds of a loan from an International Financial Institution and from other sources channeled through the government's budget) towards a UNDP programme or project. In this context, "the Government" can be the national government as well as any of its branches at the central or local level duly authorized to enter into agreements with UNDP.

4.The signed Project Document [or the Country Programme Action Plan (CPAP) and Annual Work Plan], together with a schedule of payments and a budget reflecting the cost-sharing elements, constitutes the legal agreement between UNDP and the programme country government. However, at the government’s request, an additional financing agreement may be concluded, using the standard text in the Model UNDP Programme Country Government Cost-Sharing Agreement.

5.The signed project document, or the CPAP and AWP, together with a schedule of payments and a budget reflecting the cost-sharing elements, constitutes the binding agreement between UNDP and the programme country government. The standard agreement for financial contributions from programme country governments (government cost-sharing) should also be signed with the programme country government.

Recognition of revenue on government cost sharing

6.Government cost sharing revenue will only be recorded in the general ledger after funds are received in UNDP’s bank account and NOT upon signature of the project documents. Third Party Cost Sharing

7.Donor governments and other donors contribute funds to UNDP programmes and projects. While those funds are usually co-mingled with UNDP regular resources, there are many instances where a donor or a group of donors cover the full costs of a programme or project, without UNDP having to contribute any of its own resources, as 100% cost-sharing.

8.A contribution agreement is a requirement. Different standard UNDP agreements apply and must be used depending on the category of donors: donor governments, UN agencies, private sector entities, foundations etc. In addition, donor-specific third-party cost-sharing agreements have been negotiated with a number of donors.

9.Standard UNDP agreements apply except when donor-specific third-party cost-sharing agreements have been negotiated and approved by the Legal Office, Bureau for Management Services.

Recognition of revenue on standard third party cost sharing

10.A standard third party cost sharing agreement enters into force upon signature of the donor and UNDP. Revenue will be recognized only upon the signature of agreement by both parties. All instalments will be recognized as revenue based on dates in the schedule of payments of the agreement. Where the agreement’s entry into force is upon signature and first deposit (i.e. the first payment from the donor), revenue will only be recognized after signature and first deposit.

11.For multi-year contributions, revenue is recognised based on the dates in the schedule of payments in the agreement. The schedule of payments is an indication of the intended period to which the funds relate.

12.Funds received prior to signature and entry into force of an agreement must be recognized as a liability (deferred income) and recognized as revenue in accordance with the revenue recognition policy when the donor agreement is signed.

13.In order to accommodate particular financial and legal requirements, some donor-specific contribution/grant agreements have been negotiated. Any deviation from the standard agreements must be cleared with headquarters.

14.Recognition of the revenue depends on the clause in the signed agreement. “Entry into effect” clauses of such non-standard cost sharing agreements could be that, in certain cases, the agreement is conditional upon prior parliamentary approval. In such instances, revenue must only be recognized after parliamentary approval is obtained. Non-standard clauses that are included in an agreement can have an impact on revenue recognition under IPSAS and these should be reviewed and cleared by the Legal Office, Bureau for Management Services before creating any non-standard agreement.

EU Agreements

15.Please refer to Resource Mobilization Toolkitfor detailed guidance on EU funding.

16.These procedures refer to “EU”, as funds may originate from the EU but the remittances, contracts, monitoring and reporting may rest with the EU.

17.The EU does not fully release its final contributions for a project before it officially approves the final report. This arrangement requires UNDP to pre-finance a maximum of 20%, or the final agreed percentage, from other funding sources. It is important to note that according to the Financial and Administrative Framework Agreement (FAFA) points 7.1.1 and 7.1.2, the EU could pre-finance from 80% to 95%.

18.Taking into account FAFA special and general conditions governing EU funding, revenue will be recognised for pre-financing part of the agreed contract on signature and based on the dates of the schedule of payments. The balance of the payment will be recognized when approval of final report is obtained from the donor. Any report will be deemed approved 45 days after receipt, accompanied by a request for payment, if the Commission has not reacted.

19.Interest refunded to the EU

There are instances where interest is due to be refunded to the EU according the signed donor agreement and the EU deducts such interest from the final installment. Refer to the procedures below under the EU section for the steps to follow.

Trust Funds

20.Trust Funds partnership are formalized through standard co-financing agreements applicable to Open, Thematic and Closed Trust Funds, available here.

1. Standard agreements formalizing working arrangements of trust funds enter into force upon signature, or signature and first deposit made by the donor to UNDP.
2. Revenue will be recognised upon signature of the agreement between the donor and UNDP, or signature and first deposit, depending on the “entry into force” provision of the agreement. Subsequent installments will be recognised as revenue in accordance with dates in the schedule of payments of the agreement.
3. For multi-year contributions, revenue is recognised in the relevant financial period based on the dates in the schedule of payments in the agreement. The schedule of payments is an indication of the intended period to which the funds relate.
4. Funds received prior to an agreement entering into force must be recognized as a liability (deferred income) and subsequently recognized as revenue in accordance with the revenue recognition policy after the donor agreement enters into force.

United Nations Volunteers (UNV)

21.UNV receives non-core contributions via Trust Fund and Cost Sharing agreements. Policies and Procedures for such non- core contributions are described under the sections on Trust Funds and Cost Sharing and fully apply to these contributions.

22.Listed below are other types of contributions received by UNV and their treatment under IPSAS:

UNV’s Special Voluntary Fund:

23.The Special Voluntary Fund (SVF) is a special purpose fund made up of voluntary contributions, contributions from other governmental, intergovernmental or non-governmental sources and related interest earnings and miscellaneous income. The resources are co-mingled, are untied, and are treated as core resources. As a result, SVF contributions will be recorded as revenue upon receipt of cash.

Full Funding:

24.Under Full Funding, donors provide the total costs required to support individual UN Volunteer assignments. While a few donors guarantee long-term support for full funding, contributions usually have to be negotiated on an annual basis. Contributions may sometimes be received based on a set schedule but are often tied to specific recruitment of volunteers. In order to formalize these arrangements, UNV has been using a modified cost sharing agreement template containing all mandatory clauses. Revenue will be recorded based on the schedule of payments in each agreement which is tied to the timing of volunteer recruitment.

Key Information On Revenue Management Processes

25.The Global Shared Service Centre (GSSU)

The Global Shared Service Centre (GSSU) will be responsible for recording the revenue for the following non-core contributions:

1. Programme country government cost sharing
2. Third party cost sharing agreements
3. EU Agreements
4. Trust funds

26.The Contracts Module

The Contracts Module in Atlas will be used for the recording of contributions. Information will be entered relating to the agreement and the necessary accounting information to ensure that revenue is recorded in the General Ledger and reflected correctly in UNDP accounts. The Contracts Module is set up to ensure all IPSAS conditions relating to agreements have been identified by the GSSU and appropriately entered.

The GSSU will also flag all non-standard agreements for follow-up by Partnerships Bureau. Key information to be entered by the GSSU will be as follows:

General information / Includes all the general information relating to the agreement
Accounting
distribution / Includes all the chart of account information relating to the revenue and accounts receivable
Milestones / Milestones are the triggers that are set-up in the Contracts Module for revenue recognition and are dependent on type of agreement and interpretation of relevant IPSAS policy
Billing plan / Billing plan includes the milestones that need to be achieved to create the billing and create the
Accounts Receivable entries in the General Ledger
Revenue plan / Revenue plan includes the milestones that must be achieved to create the revenue entries
Amendments / Amendments can be made to original contracts that have already been entered in the Contracts
Module using the amendment function

27.The Document Management System (DMS)

The Document Management System is a system which provides COs/Business Units the ability to upload all agreements and any necessary supporting documents.

Negotiating and Signing Agreements

28.Each Country Office (CO) and Business Unit (BU) will negotiate and sign agreements with donors

29.When agreements are negotiated; the following points should be noted

1. All agreements should include a schedule of payments with specific dates and amount
2. The UNDP bank account provided in the agreement should be of the same currency as the contributions in the donor agreement (Contact the HQ Treasury Contributions Unit for bank account information)
3. The agreement should include UNDP references to facilitate timely identification of the purpose of the funds. These references include operating unit, project name or code (if available), deposit number (e.g. 1st deposit, 2nd deposit, last deposit etc.), and donor name. Donors should be requested to include this information in the remittance advice for easier identification of deposits in UNDP bank accounts. This information should be abbreviated to fall within the character limit imposed by banks for information provided in remittance advices.
4. Include donor references for donor reporting purposes. Where donors would like a donor reference indicated in the donor reports, they should include the reference in the donor agreement and then the information will be entered from the cover sheet by the GSSU into Atlas under “Customer General Information for donor reporting purposes”. Donors should also provide an email address to be used by UNDP to submit Cash Receipt Vouchers (CRVs) upon receipt of funds.
5. COs/Business Units should request donors to send an email to Treasury Contributions Unit () upon remittance of contributions, notifying UNDP of the amount, remittance date, operating unit, project name or code (if available), deposit number (e.g. 1st deposit, 2nd deposit, last deposit etc.) and donor name and donor reference

30.After the agreement has been signed, the respective program officer should set up the project and the budget In Atlas on a timely basis. The project information should be available before any information is submitted to the GSSU, as the information is required for entry into the Contracts Module. Note that this is not applicable to Open Trust Funds and Thematic Trust Funds, with the exception of any cost sharing and country window component, as revenue to these funds are recorded at the fund level

Upload Of Agreements to The Document Management System (DMS)

31.The signed agreement must be scanned and uploaded to the DMS by HQ or country office finance staff for submission to the GSSU within a week of the agreement being signed. Management should assign responsibilities to relevant finance staff for submission of agreements to GSSU. Approval of the agreements on the DMS should be done by staff with an Approver Function on Atlas.

32.An electronic cover sheet with the following information must be uploaded to the DMS together with the signed agreement:

Donor Name / Name of the donor in the agreement
Donor Code / Atlas donor code for each donor
Donor Reference / In certain cases agreements may include a donor reference; if this does exist, it should be included in this field
Currency / This is the currency in which payments are to be made as stated in the schedule of payments in the agreement
Atlas Contract Reference / This field can be IGNORED by business units. The information on this field will be entered by GSSU.
Operating Unit / The respective Operating Unit to which the agreement relates.
Add or Amend / This is where the scanned PDF file should be uploaded. Please ensure that documents are clear and legible and include all pages of the signed agreements. Include any amendments that should accompany this agreement.
Contract / For Government Cost Sharing Agreements: Please include only the Signed Page of the Project Document which contains the project information and the page that contains the schedule of payments/budgeted amounts. DO NOT include the entire Project Document.
Agreements / Where possible, donor agreements should be saved in the following format:
Example: Cost sharing agreement signed between Honduras and
Denmark on 10 July 2011
Format of file: HND_DEN_CS_0711
(Government Cost Sharing =GSC; Trust Funds =TF; Third Party Cost
Sharing =CS; Joint Programming =JP; Letter of Arrangements =LOA)
Chart of Account / Users should indicate the relevant Chart of Account information for each project that is included in the Agreement. Click on ‘Add additional Projects’ if there is more than one project.
Agreement type: / Select the agreement type from the dropdown list
Non-standard agreements: / If changes were made to the standard templates, or this is a donor specific agreement, this should be indicated as a non-standard agreement.
DRM Clearance: / If clearance was obtained from DRM for these non-standard agreements, include the date that clearance was obtained
Agreement Start / Include these dates if included in the agreement
Date/End Date
Schedule of payments: / Some agreements contain more than one project. Users should allocate the schedule of payment to all projects based on the allocation agreed with the donor for the specific schedule of payment. To add an additional project click on ‘Insert Item’. To add an additional schedule of payments, click on ‘Add additional Payments’
Schedules of payments should be revised to reflect any subsequent amendments that have been negotiated and agreed with the donor after the original agreement was signed.
Deposit information / Users should enter any deposit information relating to the following:
First deposits for agreements that are binding upon signature AND first deposit;
Deposits for Government Cost Sharing;
Click on ‘Add Additional Deposits’ as further deposits are received.
Contact / Users should enter the contact information for country office staff who will be contacted if any follow-up information or clarification is required with respect to the agreement
Information
Report submission / Include the date the report was submitted. If the report is still to be approved, the estimated date of approval can be entered. Once the report has been approved, include the date and upload the report with confirmation from the EU/EC that the report has been approved.
Additional information / This page can be used where a CO/Business Unit may want to include some additional information or comments. There is also an option to upload a file if necessary.

33.The following documents should be uploaded to the DMS:

1. Third party cost sharing agreements
2. All agreements signed at COs and Business Units for the commitment of funds
3. Relevant pages of the Project Documents for Government Cost Sharing
4. Trust Fund agreements signed at HQ will be uploaded by HQ Business Units
5. Trust fund agreements signed at COs should be uploaded by the CO
6. Steering Committee minutes, where UNDP acts as a PUNO under Joint Programming
7. Letters of agreements between UNDP and donors that are signed at country offices.

Common Service Agreements SHOULD NOT be uploaded to the DMS.