FINANCIAL MANAGEMENT AND REPORTING

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LIBERIA NEX/NGO GUIDELIENS









FINANCIAL MANAGEMENT AND REPORTING



-

Financial Accountabilities

-

Systems of Fund Transfer

-

Fund Disbursement

-

Accounting System

-

Financial Reporting



Financial accountability


The

implementing partners are responsible for the management of all UNDP resources

allocated to a nationally executed programme or project. In this capacity, implementing
partners are accountable to UNDP for the entirety of UNDP programming resources under
their management.


The
implementing partners

are

responsible for maintaining a s
ound accounting system that
contains records and controls sufficient to ensure the accuracy and reliability of programme or
project financial information and reporting. The accounting system must also ensure that the
receipt and disbursement of UNDP funds
is properly identified and that budgetary categories
approved are not exceeded.




The system of accounting and/or record keeping must track the advances received and
disbursed, expenditure records by

implementing agents

and direct payments made by UNDP.
The accounting system that is maintained by the

executing agent

must also be kept current.


The executing agent

must maintain an inventory recording the acquisition and disposition of
property and equipment used. This inventory contains information on all
property and
equipment, whether purchased directly by the

executing agent

from funds advanced to it by
UNDP or purchased by others (
implementing agent, contractor)

on behalf of the

executing
agent
.


The UNDP country office must maintain an internal control

system designed to ensure that the
UNDP county office could adequately monitor the financial activity and budget of a programme
or project within the scope of her/his responsibilities.

The UNDP Resident Representative is
accountable to the UNDP Administra
tor and is responsible for the financial monitoring of
programme and projects, for ensuring proper use of UNDP funds and for providing advances
of funds based on appropriate financial reporting.


10.2

Advances of funds


The UNDP country office makes advanc
es of funds to the designated institution only on
receipt of a completed and signed financial report. The financial report contains both a report
of the current period’s expenditures and a request an advance of the next period. Advances
are made for a thre
e
-
month period or less, depending on the needs of the programme or
project. The frequency is agreed on between the
implementing partners

and the UNDP
country office at the outset of the programme or project. The
implementing partners

requests
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an advance of

funds on the basis of the
work plan and its corresponding budget
. The
request is documented in the financial report and specifies the cash required under two
headings, as follows:


(a)
Outstanding obligations
: the costs of inputs that have been contracted

for but for which
payment has not yet been made. Only obligations that will be paid in the next period are
included;



(b)
Planned expenditures
: the costs of new inputs that will be procured and paid for during
the next period.


Advances of funds are norm
ally made in the local currency. Any request for advances in
currencies not available to the UNDP country office must be forwarded to the Treasury
Section at UNDP headquarters.


The key steps in requesting and making an advance of funds are:


(a) The desig
nated institution sends the request for the advance to the UNDP country office
in the standard financial report format. To ensure efficient use of UNDP resources, the
request must reflect a realistic forecast of expenditures for the next period, in line wi
th the
programme or project work plan;



(b) The UNDP country office verifies that resources are available and uses the work plan to
verify that the amount requested does not exceed the expenditures that may reasonably be
expected during the next period. I
t also verifies the use of funds for the previous period and
whether progress is being made towards the achievement of the expected results;


(c) The UNDP country office pays the advance of funds into the programme or project bank
account of the
implementi
ng partners
.



(d) The
implementing partners

disburses funds against the advance and records the
transactions in its accounting system;


(e) The designated institution prepares the financial report, showing the actual expenditures
for the period covered by

the report. The
implementing partners

makes the request for
advance for the next period, repeating step (a).



Bank account
. The
implementing partners

operate a separate bank account in order to
receive and disburse UNDP funds. The
implementing partners

h
ave to provide the separate
bank account title and number to the UNDP country office at the outset of the programme or
project.



Unused advances
. At the end of a programme or project, the
implementing partner returns

any unused advances to the UNDP coun
try office.



Any interest earned on the programme or project bank account from the advances is
recorded as miscellaneous income.


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The following special procedures apply for projects with budgets of less than $150,000 and
duration of less than one year,

(a) The UNDP country office may provide the advance of
funds to the
implementing partners

in a single installment at the start of the project. This
disbursement is recorded as expenditure against the approved account, (b) The
implementing partners

must se
nd a final financial report marked “Project previously expended
on (date)” to the UNDP country office, showing the amount advanced and the expenditure by
budget sub
-
line. Any significant changes from the original budget and remaining funds must
be adjusted
.




To facilitate transfer of UNDP funds, the following procedures shall be followed under the
NEX modality:


Summary of Fund Transfer Procedures


AGENCY

FLOW OF FUNDS

REQUIREMENTS

TRIGGER FOR
FUND TRANSFER

1.

Executing
Agency
(EA)


Direct from UNDP
-
CO to
the
institution upon
receipt of request
for direct payment
from EA


Separate accounting
and reporting on UNDP
funds

Approved Quarterly
WP; Financial
Forecast to UNDP
-
CO

2.

UN Agency
as
Implementin
g Agency


Direct from the
UNDP HQ
(Treasury Section
to the UN
Agency)

Separate accounting
and reporting on UNDP
funds

Initial: Approved
Quarterly WP,
Financial Forecast,
approved Letter of
Agreement with the
UN Agency


Subsequent:
Quarterly Project
Delivery Report to
UNDP
-
CO within
30 days from end
of quarter



Dire
ct payments


UNDP may be requested by an executing agent to make direct payments to other parties for
goods and services provided to the programme or project. When UNDP makes a payment on
behalf of an executing agent, the latter must forward to the UNDP c
ountry office a standard
form “Request for direct payment”, duly completed and signed by the executing agent. The
implementing partners keeps original documents. Documentation of payment by the country
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office (vouchers, copies of cheques, and other docume
nts) must be made available to the
implementing partners by UNDP.





Disbursement Methods

Direct Payment Method


-

UNDP
-
CO shall review requests for direct payment on
a case
-
by
-
case basis

-

PMO shall ensure:


a.

Appropriateness of budget line against which
p
ayment shall be charged and availability of
resources/allocation in the project

b.

Enclosure of supplier’s billing or certification on
satisfactory delivery of services by the contractor
(certification also to cover compliance with technical
specifications)


(Refer to Request for Direct Payment form)


-

UNDP
-
CO shall:


a.

Review completeness of documentation

b.

Verify budget line and project budget



UNDP
-
CO shall furnish PMO a copy of supplier’s
receipt






Financial reporting


The three main reports are;
(a) Th
e financial report, (b) The combined delivery report and
(c) The expenditure statement from United Nations agencies (also called project delivery
reports or expenditure reports).


a)

The financial report:

The implementing agency must submit the Financial Rep
ort to
the UNDP country office not later than 15 days after the end of the quarter. The
Financial Report presents quarterly expenditures. The financial report is prepared by
the implementing agency in order to record the expenditures in the current period
against the advance of funds received and request an advance of funds for the next
period in line with the programme or project work plan and corresponding budget. The
implementing agency must submit the financial report to the UNDP country office each
tim
e a request for advance is made. The review of the financial report by the DEX unit
PMO Consults with
UNDP
-
CO on Request

PMO submits request
for Direct Payment to
UNDP
-
CO

UNDP
-
CO reviews
documentation and pays
supplier/contractor on
behalf of UNDP

UNDP
-
CO notifies
PMO on payment made

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in the UNDP should be linked to the substantive reporting on progress towards results
and to monitoring. The review of the financial report, verifies that resources are
ava
ilable and uses the work plan to verify that the amount requested does not exceed
the expenditures that may reasonably be expected during the next period. The officer
also verifies the use of funds for the previous period and whether progress is being
made

towards the achievement of the expected results. The UNDP country office
records the expenditures into its records and uses the financial report to prepare the
combined delivery. For the final period of the programme or project, the implementing
agency ce
rtifies “FINAL” on the financial report. Refer to Annex of the financial report
form and Instructions on how to prepare the Financial Report are provided in annex
and Instructions for the financial report.


The submission by the
implementing agency

of

the Financial Report at least every
quarter is mandatory. If the UNDP country office does not receive the Financial
Report from the
implementing agency

within 15 days of the end of the quarter, it
ensures follow up with the
implementing agency
.
If an adv
ance is outstanding for
two quarters and either the Financial Report are not received or the Financial
Report reflects no spending against the advance, the UNDP Resident
Representative must follow up with the
implementing agency
. The programme
or project
implementation strategy must be reviewed to decide on measures to be
taken to solve any difficulties with execution or implementation. The UNDP Resident
Representative also informs UNDP headquarters (Country Programme Accounting) of
all decisions taken.


b)

T
he combined delivery report (CDR): The combined delivery report summarizes all
programme or project expenditures at the end of each quarter, for the periods ending
31 March, 30 June, 30 September, and 31 December. The CDR comprises the
disbursements of; i.

The implementing agency, from advances of funds; ii. The UNDP
country office, as direct payments or for country office support services to national
execution; iii. UNDP headquarters as direct payments; iv. Other UNDP country offices
as direct payments; v.

United Nations agencies under national execution; and vi.
United Nations agencies under NGO execution.


The key steps for processing a combined delivery report (CDR) are: i. The UNDP
country office verifies that expenditure reported by the executing and

implementing
agents is correctly entered in UNDP accounting records. ii. To ensure the accuracy
and completeness of the CDR, data relating to advances and direct payments
maintained in the accounting records must be reconciled with the data processed and
maintained by the implementing agencies. iii. The UNDP country office also checks
the payments made through Headquarters and other country offices against the report
submitted by Headquarters. iv. The UNDP country office sends the CDR to the
designated ins
titution. The designated institution verifies and certifies the report within
30 days of receipt, and returns it to the country office. If there are discrepancies, in the
records of the UNDP country office and the designated institution, the parties must
c
onsult each other and agree on corrective action
.

v. For the final period of the
programme or project, the designated institution certifies “FINAL” on the combined
delivery report.


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The year
-
end report constitutes the official record of expenditure for th
e past year.
The annual mandatory PSD or project budget revision must reflect the figures of the
report. The
implementing agency

arranges for the year
-
end report to be audited
promptly to facilitate the completion of the audit by the deadline of 30 April.


c)

The project delivery report: United Nations agencies undertaking activities under
national execution must report their expenditures

every quarter with a project delivery
report. This report is made in accordance with the schedule of expected advances in
t
he letter of agreement established between the designated institution and the United
Nations agency. The report shows the expenditures by component and budget sub
-
line. The report is submitted to the designated institution through the UNDP country
office n
ot later than 30 days after the end of each quarter.


10.5

Recording of transactions at UNDP headquarters


To keep track of advances under national execution and NGO execution, the Country
Programme Accounting Unit establishes an operating fund account

(OFA) for each
programme or project. The OFA records; (a) The advances of funds made to the designated
institution; (b) The disbursements made by the implementing agency out of the advances.



The UNDP country office may not close a programme or project f
inancially unless there is a
zero balance in the OFA as shown on the OFA statement prepared by the Country
Programme Accounting Unit.


Payments made by the UNDP country office or by UNDP headquarters on behalf of the
designated institution are not treated
as advances of funds. Accordingly, they are not
recorded in the operating fund account. These direct payments are recorded as
disbursements by budget account.


Expenditures reported by United Nations agencies for a nationally managed programme or
projects
are recorded as expenditures also by budget account.


10.6
Petty Cash


10.6.1.
Use of petty cash

To the extend possible, payments must be made by cheque or bank transfer. However, if it is
not practical or possible to make payment by cheque for minor items
, payments may be
made from a petty cash fund up to the local currency equivalent of USD 50.00 per individual
payment. Payments of advances, salaries, overtime and allowances must not be made from
petty cash.


Establishment of the petty cash fund

The level

of the petty cash fund must be determined based on the estimated local petty cash
disbursement for one month, rounded off to a round figure in local currency. However, the
sum must not exceed equivalent of US$ 500.



Operation of the petty cash fund

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Upo
n establishment of the fund, a cheque must be drawn on the local currency bank account
for the exact amount of the fund. The cheque must be issued in the name of the petty cash
custodian.


(a)

The amount drawn must be deposited in a steel cash box, which can b
e locked. The box,
together with the keys, must be given against a written receipt into the custody of the
petty cash custodian.

(b)

Written instructions must be given to the petty cash custodian concerning the physical
arrangements necessary to ensure the saf
ekeeping of the petty cash funds and the types
of expenditure, which may be paid from the petty cash funds. Prior to payment, the
custodian must refer to the committing (certifying) officer any proposed payments, which
do not clearly fall within the origin
al instructions. If approved, the certifying officer will
initial the petty cash voucher.


(c)

Receipts of cash other than replenishment to petty cash must not be deposited in the
petty cash fund.


(d)

The petty cash box must be locked in the office safe after wor
king hours. The duplicate
key to the box must be kept in a sealed envelope in the office safe of the project or
programme and the custodian of the petty cash must sign on the sealed envelope.
Surprise verifications must be made from time to time to ensure

that these instructions
are adhered to. These verifications should be documented to provide an audit trail.


Recording of petty cash during the month


(a)

The petty cash custodian showing all petty cash transactions must keep a separate cash
book. All payment
s must be clearly described in the Petty Cash Book and recorded when
effected.


(b)

When submitting the request for replenishment, the custodian must submit the original of
the Petty Cash Book to be attached as supporting documentation for the replenishment.
P
etty cash voucher must be retained by the custodian and properly filed.


(c)

For the purposes of the monthly accounts, the petty cash will be regarded as a pending
account entitled "Petty cash”. The recording of transaction in the petty cash account is as
foll
ows:


I.


Establishment or increase of the approved petty cash level.

The amount of cash drawn from the bank to establish or increase the approved petty
cash impress level must be entered in the petty cash ledger as a payment and
recorded as a debit in the P
etty Cash account.


II.

Recording payments during the month

Each payment made during the month is not recorded in the Petty Cash account as a
credit. It is only recorded as credit in the petty cash book as a memorandum until the
replenishment is made.


III.

Replen
ishment of petty cash expenditures

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When the replenishment of the petty cash is being recorded in the Country Office
Accounting System, the individual transactions shall be debited to the respective
projects/budget lines expenditure and credit to cash at

bank account.



Clearance of petty cash

All petty cash on hand at 31 December, or, as applicable, the last business day of the year,
must be deposited in the project’s bank account, so that it may be included in the year
-
end
bank balance and the un reple
nished petty cash payments should be debited to the
respective budget line as expenditure and credited to the petty cash account to show a NIL
balance as of 31 December (At the period end). The petty cash fund may be re
-
established
on 2 January of the foll
owing year.



Financial Report




Financial Report

FR01


To be used by institutions implementing UNDP projects starting end of first
quarter 2004





(a)

Designated Institution:


_____________________________________

(b)

Programme/Project number

___________
__________________________

Programme/Project title

_____________________________________

(c)

For the period:




_______________ to
__________________

(d)

Currency:




_____________________________________


(I)

(II)

(III)




Item

Chart o
f Account

Amount

(f) Opening Balance:



(g) Advanced Received:



(h) Available Funds:


(f) + (g)

Detail Expenditures:

Account

Fund

Donor


Project ID



Activity ID




Budget Description





Activity ID




Budget Description





Activity ID




Budget Description





(i) Total Expenditures



(j) Closing Balance:


(h)


⡩F

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(l) Planned Expenditures:



(m) Total Requirements:


(k) + (l)

(n) Advance Requested:


(m)


(j)








Designated institution appr
oval/signature:


Country office approval/signature:


Title: [
Name and title of authorized official
]


Title: [
Resident Representative
]


Date:







Date:


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Instruction for the Financial
Report

Introduction

The new Financial Report (FR) shall be used by inst
itutions who receive advances of funds
from UNDP in order to help them manage budgets and expenditures. Its main features are
similar to those of the Financial Report used in previous procedures:



It incorporates the Request for Advance.



It requires only su
mmarized reporting over a given period rather than month
-
by
-
month
reporting.



Advances of funds are requested in a lump sum based on the agreed work plan.


The Financial Report (FR) presents several modifications to accommodate the changes
deriving from th
e ERP implementation:




It reflects the new structure oriented towards outputs budgeting, and the reporting is
therefore made against activities



Expenditures are recorded based on the new Chart of Account (COA)


The FR, including the request for advance, is

submitted at the end of the quarter. The UNDP
country office must provide the advance within two weeks of receipt of the FR. Each UNDP
country office and institution should discuss how to manage this change during the
transitional period.



The calculatio
n of exchange gains and losses to UNDP is now automated with the ERP,
therefore the submission of a second table in US dollars is no longer required. When the
advance is given, the local currency amount is set in US dollars at the exchange rate in
effect.
All expenditures made from that advance during the quarter will be recorded at that
rate. At the end of the quarter, any outstanding advances are revalued at the exchange rate
in effect at the end of the quarter and gains or losses calculated.


The instit
ution should begin using the new Financial Report as soon as the first revision in
PeopleSoft has been approved (i.e. no later than 15 March 2004), and stop using the
previous format.
The institution must submit the Financial Report as soon as possible aft
er
the end of the quarter/period to ensure that the next advance may be provided on a timely
basis. The FR must be submitted to the UNDP country office no later than 15 days after the
end of the quarter. The institution must submit the Financial Report to
the UNDP country
office whenever a new advance is required, and for every calendar quarter as a minimum.
More frequent reporting is encouraged if agreed to by the UNDP country office and the
institution.


The template for the Financial Report is available

in Microsoft Word from Country Offices
Finance Unit, and on the UNDP Portal

.

Instructions for the institution

How to fill out the top of the FR



Field (a) : Fill in the name of the institution



Field (b) : Fill in the title and number of the programme or p
roject.



Field (c) : Fill in the period for which expenditures are being reported. The period can be
the quarter or a different period if advances are made on a more frequent basis.

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Field (d) : Fill in the currency in which the advance from UNDP is requeste
d. If the
institution receives advances in more than one currency for the same programme/project,
complete the form for each advance.



Field (f) “Opening balance” : Fill in the local currency amount of the advance outstanding
at the beginning of the perio
d. It
must
agree with the Closing Balance of the last Financial
Report. For new programmes or projects, this amount will be zero (See Requesting an
Initial Advance below).



Field (g) “Advance received” : Fill in the local currency amount of the advance rece
ived
this period. Only one advance received is recorded for each Financial Report.



Field (h) “Available funds “: This is the sum of (f) Opening Balance and (g) Advance
Received.



Expenditures by Activity/Budget Description: Based on its accounting books, th
e
institution records the total expenditures against budget description under each activity for
the period. This includes all expenditures incurred since the last Financial Report to the
date of the end of the period. For projects which started prior to 20
04, budget lines are
translated in PeopleSoft to Budget Description. Expenditures must be recorded according
to the fields indicated under the new Chart of Accounts.



Field (i) “Total expenditures” : Add up all the expenditures by activity/budget category
recorded above.



Field (j) “Closing balance”: Calculate (h) Available Funds minus (i) Total Expenditures.



Field (k) “Outstanding obligations”: Record here all expenditures that the institution has a
legal obligation to pay but that have not yet been paid at

the end of the period. This will
include any contract amounts to be



paid for service rendered, any goods ordered and/or received, invoices not paid, that will
be paid in the next quarter.



Field (l) “Planned expenditures”: Record here all cash expenditures

planned for the next
quarter/period according to the latest project work plan. Do not include expenditures
already reflected in (k) Outstanding Obligations.



Field (m) “Total requirements” : This is the sum of (k) Outstanding Obligations and (l)
Planned ex
penditures.



Field (n) “Advance requested”: This is the amount of funds needed for the next
quarter/period. It consists of (m) Total Requirements minus (j) Closing Balance. After
review and approval, the UNDP country office will provide this amount as advan
ce to the
institution through a cheque/bank draft/wire transfer.


The authorized official of the institution must sign and date the Financial Report before
sending it to the UNDP country office.


Requesting an initial advance

When the institution wants to
request an initial advance for a new project, it fills out the top of
the report and fields (l) Planned Expenditure, (m) Total Requirements, Closing Balance (put
zero), and (n) Advance Requested of the Financial Report. All other lines and columns are
left

blank.


Instructions for the UNDP Country Office

Upon receipt of the Financial Report, the UNDP country office performs the following steps.



Ensure that the Opening Balance agrees with the Closing Balance in the last Financial
Report;

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Verify that the Adva
nce Received agrees with the UNDP country office records;



Validate the arithmetic of the report;



Check the reasonableness of the Outstanding Obligations, Planned Expenditures and
Advance Requested to the project budget, work plans and other documentation
a
vailable;



Prepare and provide advances to the government executing agent using Pre
-
payment
process in PeopleSoft; and



Sign and date the Country office approval/signature.
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Combined Delivery Report (CDR)

UNITED NATIONS DEVELOPMENT PROGRAMME

COMBINED DEL
IVERY REPORT

PERIOD ENDED_______________


CURRENCY IN USD


Comp.

Budget
Line




Description


E X P E N D I T U R E

Govt./NEX

UNDP
CO

Other CO

UNDP HQ

Implementing agency

TOTAL



Certified by:_________________________________



approved by:________
______________________




Accountant









Project Director





___________________________________


Audit Certificatio
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Request For Direct Payment

RDP01


To be used by projects executed by National Agencies or NGOs




To:


UNDP Country Office

[Agenc
y to complete]

From:


[Requesting Agency to
complete]

Attn:


UNDP Resident
Representative

[Agency to complete]

Authorizing
Officer:

[requesting Agency to
complete]

FAX


Country Office fax number

[Agency to complete]


Signature:


Cc


Request Date
:



Subject:



Request for Direct Payment to be made by UNDP

In accordance with the activities as defined in the Annual Work Plan (APW), we hereby
request UNDP to make the following direct payment to the payee below


Project Title and
Number


Total Amount


Purpose of
Payment

Short description

Payee:


(please provide as
much details as
possible)


Name:

Address:

Invoice n.: Contract n.:

Due date: [one time date or recurrent monthly date]

Payment mode requested: Cheque/Transfer

B
lanket payment for monthly salaries/personnel: from dd/mm/yy to
dd/mm/yy

For Bank Transfer only

Bank Name:

Account n.:


Cost distribution

Project ID

Activity

Donor

Fund

Budget Account

Curr/Amount








Certification
: The authorized official hereby cer
tifies:



That this payment has not previously been made;



That this payment is in accordance with the Annual Work Plan (AWP);



That this payment is covered by funds available in the project budget;



That this payment is for goods and services that have bee
n delivered to the
satisfaction of the requesting agency;

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Those copies of invoices and other supporting documentation will be available for
audit verification.





Supporting Documentation for Direct Payment


Transactions


Payment of monthly salaries and

benefits
for NPPP or support personnel






Payments to consultants





DSA and Travel




Procurement of supplies, services or
equipment (including fuel, maintenance
charges, repairs, insurance, etc)



Contracts for services





Translation or editing





Communication (phone and fax)

Required Supporting Documents
1


Request for Direct Payment (RDP), submitted
monthly, certifying actual work (full month or
partial month). A blanket RDP may be made for
monthly payments for long
-
term personnel.
Relevant docum
entation and contract should be
on file with DEX Unit.


RDP, Consultant’s invoice and copies of tickets,
certified by the PM for actual work done.
Relevant contract should be on file with DEX
Unit.


RDP, Completed approved Travel Authorization
and claim fo
rm with ticket stubs and receipts for
miscellaneous expenses


RDP, Invoice, three quotations from supplies,
recommendations/justification for selection




RDP for full installment payment, certifying work
done according to contract provisions. Copy of
Purc
hase Order. Relevant contract should be on
the file with the Finance Section.


RDP, Translator’s or Editor’s invoice stating
agreed upon with UNDP
-
CO rate per page,
number of pages and type of translation or
editing


RDP, Service provider’s notice




1

All supporting docume
ntation should be accompanied by a completed Request for Direct Payment Form




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Petty

Cash Ledger


Project Number and Title ______________________________________






For the month of ________ ______


Date

Reference No.

Payee

Purpose

Received

Paid

Balanc
e

B/L

Opening Balance








10/1








10/2








10/3








[month/receipt
#]


TOTAL:






Summary

B/L

Amount





TOTAL

Certified by











Approved

__________________









____________________

Petty Cash Custodian










National Project Director


The following type of expenses cannot be paid from Petty Cash: Sala
ries, DSAs, Advance payments to vendors, Stationary

Timing of replenishment: once in a month upon submission of the report for the previous amount the replenishment is for amoun
t of
the report submitted.


NB: This is not a standard format; it is also poss
ible to use other format.
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INPUT MOBILIZATION

PROCUREMENT OF SERVICES/WORKS AND GOODS



-

Background on Procurement

-

Procurement Process

-

Shipping and Issuance



Background on Procurement


The use of rules and procedures is addressed at the time of programme
or project
formulation, based on key considerations for execution. As a principle, government policies,
procedures and rules governing procurement of services/works and goods will be used, while
respecting the principles of UNDP regulations and rules. Alte
rnatively, if UNDP support
services are required, UNDP rules and procedures will be followed.


General principles on procurement


All procurement, in all cases and situations will apply and follow and observe the principles
of:



Competitiveness,



Integrity,



Fairness,



Transparency,



Best value for money,



UNDP best interest,



Cost effective, economy and efficiency.


Generally, procurement is executed through the establishment of a Contract.


A
Contract or Sub
-
contract
is an agreement between two entities to ca
rry out specific
activities, or to provide specific goods or services. I
t incorporates "general conditions" which
are attached as an Annex to the contract document. The contract is used for all entities
which are private or public and which compete with pr
ivate entities.


A
Memorandum of Agreement

is likewise a "contractual document," but without separate
general conditions. It is used, particularly in the case of sub
-
units of Government Ministries
and Municipalities, when their services are sought in acc
ordance with specific objectives or
requirements in the PRODOC.



The
Purchase Order (PO)

is the most important document in the procurement process for
goods. The standard UNDP form of the PO is always accompanied with UNDP General
Conditions for Purchase

Order. It constitutes the legal agreement for the sale of equipment
by the seller to the project authorities.

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The Advisory Committee on Procurement (ACP)


The Advisory Committee on Procurement (ACP) has been established to review and render
written advi
ce to the Assistant Administrator, Bureau of Management, in his capacity as Chief
Procurement Officer (CPO) of UNDP, on UNDP’s procurement actions in respect of the
following categories:


a)

Proposed contract which involve commitments to a contractor in respe
ct of a single
requisition for a specific project or purpose, or a series of requisitions relating to the
same specific project or purpose, totaling USD100,000 or more in a calendar year
(January


December).

b)

Proposed contracts or series of related contrac
ts which involve income to UNDP of
USD100,000 or more; and any contacts relating to activities where the annual income
therefrom when aggregated with the estimated annual income from any other contract
or contracts already made with the same purchaser in t
he same year amounts to
USD100,000 or more, provided that contractual arrangements resulting from the
recommendations of the UNDP Property Survey Board shall not be referred to the
ACP.

c)

Any contract amendments or series of amendments which in aggregate hav
e a value
of USD100,000 or more or which would increase the amount of the contract as
previously recommended by the Committee by more than 20 per cent, whichever is
less.

d)

Proposed contracts of any value which could reasonably lead to a series of related
co
ntracts the total of which may be USD 100,000 or more; and

e)

The Assistant Administrator, BOM, may refer such other matters relating to
procurement as to the Committee.


Contracts, Assets and Procurements Committee (CAP)


The Contracts, Assets and Procuremen
ts Committee is established at every UNDP Country
Office, to render written advice to the Resident Representative on the following procurement
actions:


a)

Proposed contracts of any value that could reasonably lead to a series of related
contracts, the total
of which may be USD 30,000 to USD 99,999.

b)


Any contract amendment, or series of amendments, which in aggregate either has a
value between USD 30,000 to USD 99,999 or which would increase the amount of an
already approved contract, as previously recommended

by the Committee, by more
than 20 percent, whichever is less.

c)

The Resident Representative may refer such matters relating to procurement as to the
Committee. This may, if the Resident Representative/Director of the Bureau or Office
so decides, include con
tracts or series of contracts totaling less than USD 30,000 as
well as those totaling USD 100,000 or more, the latter for which final approval
authority rests with the ACP.


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Submission to the CAP


The submitting UNDP official shall monitor the preparatio
n all documentation related to the
procurement of goods or services. The CAP will require, as a minimum, the following
documentation:




Completed submission form containing the minimum information necessary for a
reasonable assessment to be made, and



Copy o
f the Request for Quotation/or Invitation to Bid (ITB) or Request for Proposals
(RFP).


Steps in the Procurement and Contracting Cycle


The stages in the procurement cycle are:

1)

Preparation of technical specifications/TOR, selection of vendor/supplier/serv
ice provider
and purchase or contracting;

2)

Delivery or provision of services, if contracting, receipt and payment;

3)

Inventory control and management; and

4)

Transfer or disposal of equipment. The procedures for each of these stages are
described below.


Tho
ugh the same principles are to be applied both for preparation of a Purchase Order and a
Contract for Services, the following outline is divided into two separate “check
-
lists” to be
followed by projects.

The procurement process generally involves three ph
ases:


The
Preparation Phase
, whereby the requirements for the contract are defined and
provisions for funding are ensured;

The
Selection Phase
, whereby qualified entities: a) are identified; b) are solicited for
proposals or bids and selected or selecte
d on basis of justifications for directly negotiated
contracts; and c) negotiate and sign a contract/agreement or PO; and

The
Administration Phase
, which involves monitoring the progress of the
contract/agreement/PO, delivery & customs Clearing arrangemen
ts, Receipt and Delivery
Inspection Report, addressing claims, and evaluating the final product, inventory actions,
making payments.



Procurement process

Preparation Phase


UNDP/Project authorities must ensure that the proposed contract activity is provid
ed for in
the PRODOC as well as in the project work and financial plan (WFP) and Procurement Plan
(for goods), after being approved by UNDP Development Advisor, will be monitored by the
project authorities and UNDP, who are responsible to ensure that:



Pr
oposed items for international and local purchases are in accordance with the Project
Document and the project WFP;

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Estimated costs of equipment and supplies to be purchased, are within the budget
line(s) for the current budget year.


Requests for ad
-
hoc p
rocurement of equipment, which are not included in the Procurement
Plan must be submitted to UNDP for expeditious approval.


Terms of Reference


The TOR is a document of critical importance, and thus, should be as clear and precise, as
the type of assign
ment will allow. It eventually becomes an integral part of the contract. The
TORs should be prepared preferably by project management and included in Requests for
Proposals to invited entities to inform them of the contract requirements. The TOR also
prov
ides the basis for evaluation once the contract is completed. Clear and precise TORs
limit the chances of disputes and claims over the contract later.


TOR attached to the Request for Proposal, should include these elements:



Detail all tasks the contracto
r must perform, and specify coordination requirements,



Specify the data that must be submitted for approval,



Also define the schedules for initial submission and the review/approval time required,



Describe all the standards the contractor must fulfill that

are applicable to the project,



If applicable, a detailed list of all data services, which will be provided to the contractor by
you for his use in performing the contract.


Specifications


Specifications are used normally for procuring goods or works. Spe
cifications must fully
and completely state the requirements. They should be generic (neutral) in nature to
maximize the competition. The specifications may be stated as 'hybrid' or combination of
one or more of the following types:



Functional
: Which defi
nes the function or duty to be performed. This concentrates on
what a product is to do. This type of approach is less interested in materials and
dimensions.



Performance
: This concentrates on the performance required of an item. To assure the
quality, a re
ference to concerned product standards (International i.e. ISO or National)
and environmental requirements such as energy
-
star rating, recycled materials, etc
should be made.



Design Requirements
: This calls for providing exact dimensions, materials or
char
acteristics. It should be noted that there are many situations where design
specifications can cut out competition unnecessarily because of differences in
engineering practices. For dimensions, the metric system should be used.



Selection Phase


Identific
ation of entities


Prospective entities are identified for a short list or for a negotiated contract through a UNDP
roster of entities, through open advertisement in business and development publications,
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through recommendations received from other UNDP of
fices or recipient governments, as
well as through direct contact from interested entities.


Some of the tools which can be used for these purposes are:



IAPSO web site (
www.iapso.org

).



Other UN organizations,



Foreign
Embassies in the country,



Other procurement related websites,



Yellow Pages for local suppliers,



Trade publications, directories, suppliers catalogues and professional journals,



The Shortlist


For contracts less than $30,000, no formal short list is requi
red; however, it is recommended
that a short list be drawn up for all expected contracts, unless there is justification for a
waiver of competitive bids/proposals.


The short list must be prepared for all contracts of $30,000 or more, unless a negotiated
c
ontract/waiver situation applies.


For procurement actions estimated valued from US$ 30,000 to US$ 99,999 a minimum of 5
firms should be short
-
listed.


For procurement actions estimated valued at US$ 100,000 or more, 5 to 7 firms (6 to 12 in
case of good
s) should be short
-
listed. However, more than these minimum numbers of firms
should be used where achieving appropriate competitiveness may so require.


The short list is prepared on the basis of the following criteria indicated in
.



Whenever the purchas
e is complex or very large, or it is difficult to identify suppliers for a
short list, advertisements may be placed in Development Business or other appropriate
international publications.



UNDP RR must approve the shortlist prior to issuance of any solic
itation (ITB or RFP)


Solicitations


Once the short list is prepared, either a "proposal" or a "bid" from the short
-
listed entities is
solicited. The modality depends upon the nature of what is being sought.


In general, a
Request for Proposals (RFP)

is us
ed for purchase services/works or complex
goods when you are not sure of the functional specifications and wish to seek proposals.

A RFP leads to the selection of the proposal that is more responsive to the specified
requirements, including price and othe
r factors. Where appropriate, a RFP may indicate that
negotiation may be undertaken with respects to one or more proposals prior to the award of
the contract. This method is recommended for all contracts exceeding USD 100,000. An RFP
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may also be used for p
urchase of equipment when specifications cannot be precise. Through
the RFP, UNDP seeks the qualified contractor who is most responsive to the needs of UNDP
and the activity concerned, while at the same time meets the considerations for economy
and efficie
ncy. The proposal containing the lowest price, therefore, is not determinative for
the award of the contract.

The RFP is a package of information sent to short
-
listed entities to enable them to submit
responsive proposals. The RFP includes:




The cover Le
tter of Invitation, which should highlight any special conditions or criteria;



The TOR;



General Terms and Conditions for Professional Services or Works;



UNCITRAL Conciliation and Arbitration Rules.


An
Invitation to Bid
is normally used whenever the entity

is to provide its cost requirements
to meet precise specifications sought by UNDP. This is normally the case when UNDP buys
goods. It may also apply in works contracts, though the norm is for proposals in those cases
as well. Either by open advertising or

by inviting bids from a short list of qualified bidders,
UNDP seeks to procure for the lowest price meeting specifications.



P
P
u
u
r
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c
h
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a
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s
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e
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s
s


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3
0
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,
,
0
0
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At least three responsive quotations or proformas are required for all con
tracts exceeding
$1,000, in order to demonstrate the competitiveness of the process.


Written contracts or written purchase orders shall be used for every purchase from a single
supplier for an aggregate amount of at least starting from $2,500 for one or
more items.


The outlined purchasing process is as follows:


Preparation of technical specifications, approved by the Project Director.



Preparation of a shortlist with 3 to 6 possible potential suppliers.



In establishing shortlists, it is advisable to u
se rosters of suppliers.



Invitation of possible suppliers to quote prices.



Reception of quotations within a deadline set by Project/UNDP.



Project, evaluates bids, comparing prices, delivery dates, guarantees, etc. according to
criteria established previou
sly.



Award of contract to the best offer. Project may ask the UNDP Contracts, Assets and
Procurements Committee to submit a recommendation for award.



UNDP places purchase order.



Supplier's acceptance of the purchase order.



Delivery of equipment or supplie
s. The PMO certifies receipt and acceptance of goods.



The PMO receives official invoice and sends the invoice and receipt report to UNDP, for
payment. It must be agreed that full payment will be subject to receipt and acceptance of
goods.



Payment to supp
lier.



Registry in Project's Property Ledger for Goods and Equipment.



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P
P
u
u
r
r
c
c
h
h
a
a
s
s
e
e
s
s


o
o
f
f


$
$
3
3
0
0
,
,
0
0
0
0
0
0


o
o
r
r


m
m
o
o
r
r
e
e


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b
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t


l
l
e
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s
s
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t
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h
a
a
n
n


$
$
1
1
0
0
0
0
,
,
0
0
0
0
0
0



Preparation of technical specifications, approved by the project authorities, or the person
on whom he has delegated authority.



Prep
aration of a short list with 6 to 12 possible suppliers. Competitive international and
national suppliers must be included, seeking fairness. It is advisable to have a roster of
registered suppliers.



Invitations To Bid (ITB) is sent to all of the companie
s on the shortlist.



Receipt of bids, submitted in a sealed envelope, within a deadline set by Project/UNDP.



On the specified bid opening date, the bids are opened in the presence of at least one
witness and immediately draws a Bid Opening Report is prepar
ed. The report lists the
invited bidders, those who responded, declined and those who did not reply at all and
records the total bid of each bidder in the dollar equivalent (if the bid is made in a foreign
currency).



Project evaluates bids according to cri
teria established previously.



Appropriate documentation for submission to UNDP's Contracts, Assets and
Procurements Committee, accompanied with the shortlist, bid analysis and
recommendation for award, is prepared.



UNDP's Contracts, Assets and Procurement
s Committee make a recommendation for
award. If the Resident Representative does not concur with the recommendation he/she
must justify his decision in writing and start a new bidding process.



Award of contract to the successful bidder, according to recom
mendation submitted by
UNDP's Contracts, Assets and Procurements Committee and the Resident
Representative's concurrence with the recommendation.



Project/UNDP places a purchasing order mentioning the date of the successful bid.



Supplier's acceptance of t
he purchase order.



Delivery of equipment or supplies. The Project Manager fills in the receipt report, to certify
that goods have been received, as established in the purchase order.



The Project submits official invoice and receipt report to UNDP for pay
ment.



Payment to supplier.



Registration in Project's Property Ledger for Goods and Equipment.


P
P
u
u
r
r
c
c
h
h
a
a
s
s
e
e
s
s


o
o
f
f


m
m
o
o
r
r
e
e


t
t
h
h
a
a
n
n


$
$
1
1
0
0
0
0
,
,
0
0
0
0
0
0


Procurement of goods or services valued at more than US$ 100,000 must be submitted to
OLPS for review by the ACP and obtain a
pproval by the CPO, before making any contractual
arrangements. This applies when any of the following cases occurs:





Proposed contracts which involve commitments to a single contractor in respect of a
single requisition for a specific project or purpose,

or a series of requisitions relating to the
same specific or purpose, totaling $100,000 or more in a calendar year (January
-

December);



Any contract amendment, or series of amendments, which in aggregate either has a
value of $100,000 or more or which w
ould increase the amount of the contract as
previously recommended by the Committee by more than 20 per cent, whichever is the
less;



Proposed contracts of any value which could reasonably lead to a series of related
contracts, the total of which may be $1
00,000 or more;


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Bid Evaluation

After opening and recording the bids, they are evaluated by the project authorities, who
prepare a Bid Analysis Report. When necessary, a specialized consultant may be engaged
to assist in the analysis of the bids. The eval
uation and analysis of the bids must be based
on the factors outlined in the ITB. Considerations of eligibility include:




Meeting technical specifications;



Timeliness;



Local service requirements;



Delivery of equipment;



Meeting other defined requiremen
ts; and



Being fully "qualified and responsive" pursuant to a background check


Rejection of Bids


Any and all bids may be rejected if it is in the interest of UNDP.


Rejection of bids must not be taken lightly. Fairness, transparency and maintenance of

adequate competition are always a priority. Bids may not be rejected on the basis of mere
expediency or caprice. Bids may be rejected during two phases of the procurement process:
the bid opening and the evaluation process.


The criteria for rejecting

bids during the bid opening includes:




Late bids


The
criteria for rejecting bids
during the evaluation normally includes:




Failure to confirm to technical specifications or to other ITB requirements;



Change in circumstances;



Failure of the bidder to
be qualified (eg., pursuant to a background check);


In the case that any or all bids are rejected, UNDP shall record the reasons for rejection and
shall make a determination whether to invite new bidding or to seek approval for a negotiated
contract.


Wai
ver of Competitive Bidding


ITB and RFP are not required when the intended contract is for a value of less than $30,000,
provided that the responsible officers have sought qualified and responsive entities and
determined that the price quotation for the se
rvices/goods is competitive.


There is a need to develop a short list of prospective entities;

Quotations should be sought in writing on the basis of supplied TOR or specifications, and
should indicate the time for responding in writing and period for keep
ing the quoted price
open. The process is less formal than the RFP, but it must be evidenced in the file.




For waiving of contracts of $30,000 or more see
.


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Direct Contracting

Direct contracting without competition may be used as an appropriate method unde
r the
following circumstances:

The value of the procurement is less than USD 2,500. However, the buyer needs to assess
that he/she is getting the best price.



There is no competitive market place for the requirement, such as where a monopoly
exists, where

legislation or government regulation, or where the requirement involves a
proprietary product or service fixes prices.



There has been a previous determination or there is a need to standardize the
requirement.



The proposed procurement contract is the re
sult of cooperation with other organizations
of the United Nations system.



Offers for identical requirements have been obtained competitively within the last twelve
months and the prices and conditions offered remain competitive.



A formal solicitation co
nducted within last 12 months has not produced satisfactory
results.



The proposed procurement contract is to purchase or lease real property.



There is a genuine exigency for the requirement.



The proposed procurement contract relates to obtaining service
s that cannot be
objectively evaluated.


A
A
w
w
a
a
r
r
d
d


o
o
f
f


C
C
o
o
n
n
t
t
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r
a
a
c
c
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t
s
s
/
/
P
P
O
O


v
v
a
a
l
l
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u
e
e
d
d


a
a
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t


l
l
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e
s
s
s
s


t
t
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h
a
a
n
n


$
$
1
1
0
0
0
0
,
,
0
0
0
0
0
0


Once the bids have been evaluated, the project authorities/UNDP CAP prepare(s) a
recommendation for award of contract for approval by the Resident Representative.

Contracts are awarded to the qualified (responsible) and the most responsive supplier
submitting the lowest bid.


When an informal Request for Quotations has been issued, contracts shall be awarded to the
qualified and responsive contractor submitting the

lowest offer.


When formal Invitations to Bid have been issued, contracts shall be awarded to the qualified
bidder whose bid conforms to the requirements set forth in the solicitation documentation and
offer lowest cost to UNDP. The term "lowest cost" ta
kes into account the cost associated with
payment schedule, operating and maintenance costs, or in short "life
-
cycle cost". In absence
of these costs, the contract should be awarded to the contractor offering lowest price.


When a formal Request for Propo
sals have been issued, the procurement contract shall be
awarded to the proposal whose technical offer meets the qualifying requirements and the
financial has the lowest bid.


The contract may be written as per the standard format. For assistance, please
contact the
Office of Legal and Procurement Support.


Award of Contracts/PO valued at $100,000 or more



Proposed contracts of $100,000 or more (see cases listed below) shall be submitted to the
UNDP ACP and CPO. The CAP should review such proposed contra
cts before being
submitted to the above. In addition, where, under the proceeding, the advice of the ACP (or
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CAP as appropriate) is required to be sought, no commitment may be entered into before the
CPO or the Resident Representative or their authorized d
elegates act upon such advice. In
cases where the CPO or UNDP Resident Representative decides not to accept the advice of
such Committee, he/she must record the reasons for such decision.


Submission shall take place in the following cases:



Purchases of $
100,000 or more;



Multiple purchases totaling $100,000 or more with the same supplier and under the same
project or relating to the same specific purpose.



Any amendment or series of amendments which in aggregate has a value of $100,000 or
more or which w
ould increase the amount of a previously
-
approved Purchase Order
amount by more than 20%, whichever is the lesser amount.


Any attempt to avoid review by the ACP by dividing a single order into several smaller
orders, or to ignore evidence suggesting th
e involvement of ACP, is considered to be a
contravention of Financial Rules. Again, prudence dictates that ACP is consulted in
questionable cases.


All contracts valued less than project authorities can approve $30,000 after notifying and
receiving cleara
nce by UNDP. In specific cases, project authorities may request UNDP CAP
to review the proposal for award.


For contracts valued at $30,000 or more but less than $100,000, based upon competitive
bidding, project authorities submit the proposal for award t
o the UNDP CAP, which make a
recommendation to the Resident Representative for award.


For contracts above $100,000, the proposal for award is submitted to UNDP APC for
approval.


Issuance of Purchase Order

A Purchase Order is issued for all purchases exc
eeding $1,000 and shall, as appropriate,
specify in detail:




Nature of materials being provided;



Quantity being provided;



Unit prices;



Conditions to be fulfilled;



Period covered; and



Terms of delivery and payment.


Retro/Post
-
Facto Contracts

Services

or works are not to commence until a contractual obligation between UNDP and the
entity has been established either by written "offer" and "acceptance" or by signature of both
parties to the contract. Project authorities are expected to make every effort
to avoid post
-
facto or retroactive cases. When they nevertheless do occur, special approval of UNDP is
required before related payments are made.


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Administration Phase


Monitoring the contract

UNDP must remain informed of ongoing activities in the field,

which relate to the contract, as
UNDP is responsible for the overall monitoring of the contract. Wherever possible,
UNDP
should require monthly progress reports for all contracts
of a relevant duration or size.
Such assistance from the field will permit
UNDP to take timely actions, such as pay invoices,
consider proposed modifications, prepare contract amendments when changes to the
contract become necessary, or prepare for and handle disputes and claims.


Verifying and making payments

UNDP verifies all i
nvoices for payment. Verification involves ensuring that all invoiced items
(services/materials/etc) have been satisfactorily performed/delivered in accordance with the
terms and conditions of the contract. This usually entails confirmation from the projec
t
authorities in the field. Once satisfied, the "Request for Payment" accompanying the invoice
is presented to. Which is responsible to pass it to the. /Finance Unit for processing.


Contract amendments

Amendments usually are required in two (2) situation
s:




At some point during the implementation of a contract certain aspects of the contract
need to be changed; or



The original contract is executed as planned and it is decided that further related
services should be rendered by the same entity.


Amending a

contract involves amending the relevant Terms of Reference to include all the
services to be performed under the totality of the contract (original plus amendment),
amending the clauses relating to cost and payment, and any other relevant provision (e.g.,

length of contract period).


The amendment is concluded by a cover letter from UNDP offering the amendment (with
reference to the relevant clause requiring all amendments in writing), and attached
replacement clauses and TOR, which will cancel and superse
de the original provisions.


Contract conclusion/Hand Over


When the contract is completed the PMO ensures for the Final Certificate of Completion to
be duly filled and signed and stamped from both contractual parties. PMO and . will organize
for the full
handover of the completed works to the last beneficiary.


VAT issues


The contractual commitments will include the cost of the VAT when the executing local
companies are locally registered under VAT registration in Liberia. PMO must fully ensure
that the i
nvoicing must be done in compliance with the local laws in force and request for the
exemption to the concerned government authority. UNDP/DEX UNIT will also follow up for
the possible reimbursable amounts and cases.

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Shipping and Issuance


Modes of Trans
port

a) Five different methods are used, either singly or in some combination, to transport goods
internationally. These are: by sea, by rail, by road, by air and by parcel post. An important
decision for the buyer is to decide the mode or modes of transpo
rtation that he/she should
use so as to minimize the sum of visible and not so visible transportation costs.

In general, transportation costs by rail, road and air are comparatively higher than by sea. In
UNDP, sea transport is by far the most important mo
de of transport.

a)

To ensure better delivery, it is preferable to select conference liner, since they operate
along definite routes and call at specific ports. In case of non
-
conference liner, the routes
and delivery time is uncertain.


Markings

To facilitat
e the identification of goods and handling whilst in transit, the suppliers should be
instructed to provide “shipping marks” on all packages as per following format:



Consignee



Destination



Port of Unloading



Project identification



Order number



Case numb
er.


Suppliers Performance Evaluation


To develop and maintain the list of qualified suppliers, existing suppliers must be evaluated.


The evaluation can be based on reviewing the performance in meeting the requirements
under the following attributes.



Qual
ity of good and services



Delivery



After
-
sales service



Accuracy of documentation



Speed of response



Cooperation


The method is simple and calls for grading the supplier’s performance under the above listed
attributes. The grading could be “meets the exp
ectation”, or “Does not meet the expectation”
or “Exceeds the expectation”.


After reviewing the above grading under above listed Attributes, the supplier may be
evaluated as “good”, “satisfactory” or “not satisfactory






DEX UNIT
-

LIBERIA NEX/NGO GUIDELIENS









Annex 11.1: Checklist for procur
ement of equipment and supplies




































Annex 12.2: Check
-
list for procurement of services, goods and works










Between


$1,,000
-
$99,
999

Between

$50
-

$999