The Global Fund Financial Management Handbook for Grant Implementers December 2017 Geneva, Switzerland This page has been intentionally left blank Table of Contents 1 Executive Summary ................................................................................ 4 1.1 Introduction................................................................................................................ 4 1.2 Purpose and Scope ..................................................................................................... 5 1.3 The Global Fund Funding Model ............................................................................... 6 1.4 The Global Fund’s Financial Management Principles ............................................... 6 1.5 Financial Management System .................................................................................. 7 2 The Global Fund Funding Cycle .............................................................. 9 2.1 Overview ..................................................................................................................... 9 2.2 Financial Management in the Funding Cycle ............................................................ 9 2.2.1 Stage 1: Country Dialogue.................................................................................................. 9 2.2.2 Stage 2: Funding Request ................................................................................................ 10 2.2.3 Stage 3: Grant Making ..................................................................................................... 10 2.2.4 Stage 4: Implementation ................................................................................................. 12 2.2.5 Stage 5: Grant Closure ..................................................................................................... 12 3 The Global Fund’s Financial Management Principles............................ 13 3.1 Overview ................................................................................................................... 13 3.2 Financial Management Arrangements .................................................................... 13 3.2.1 Principal Recipients ......................................................................................................... 15 3.2.2 Sub-Recipients ................................................................................................................. 17 3.2.3 Payment for Results (PfR) ............................................................................................... 17 3.3 Financial Management Capacity Assessment of Implementers .............................. 18 3.4 Strengthening the Financial Management of Implementers ................................. 20 3.5 Financial Management Impact Review ................................................................... 21 3.6 Assurance Planning, Execution and Management .................................................. 21 3.7 Portfolio Optimization.............................................................................................. 22 4 Institutional and Oversight Arrangement ............................................. 23 4.1 Overview ................................................................................................................... 23 4.2 Institutional Arrangement ....................................................................................... 23 4.3 Oversight Arrangement ............................................................................................ 25 4.3.1 Management Oversight ................................................................................................... 26 4.3.2 Finance and/or Audit Committee.................................................................................... 27 4.3.3 Country Coordinating Mechanism .................................................................................. 28 4.4 Internal Controls ..................................................................................................... 30 4.4.1 Principles and Approach for Risk and Assurance Framework ........................................ 31 4.4.2 Components of Internal Control ..................................................................................... 33 4.4.3 Control Environment ....................................................................................................... 33 4.4.4 Risk Assessment (Risk Management Process) ................................................................ 34 December 2017 Geneva, Switzerland 1 4.4.5 Control Activities ............................................................................................................. 35 4.4.6 Information and Communication ................................................................................... 38 4.4.7 Monitoring ....................................................................................................................... 40 4.5 Human Resources .................................................................................................... 41 4.5.1 Human Resources Function ............................................................................................ 41 4.5.2 Human Resources Policies and Procedures .................................................................... 42 4.5.3 Recruitment Process ........................................................................................................ 42 4.5.4 Benefits, Compensation and Leave Policy ....................................................................... 42 4.5.5 Staff Accountability and Performance Evaluation .......................................................... 43 4.5.6 Staff Retention and Employee Turnover ......................................................................... 43 4.5.7 Payroll Processing............................................................................................................ 43 4.5.8 Code of Conduct............................................................................................................... 44 4.5.9 Selecting the Grant Financial Team ................................................................................ 45 4.6 Financial Management Information System (FMIS) .............................................. 46 4.6.1 Global Fund’s Minimum Requirements for a Financial Management Information System …………………………………………………………………………………………………………………………..46 5 Financial Controlling ........................................................................... 48 5.1 Overview .................................................................................................................. 48 5.2 Principles of Financial Controlling ......................................................................... 48 5.2.1 Accounting and Finance Function ................................................................................... 49 5.2.2 Accounting and Finance Policies and Procedures ........................................................... 49 5.2.3 Accounting Principles, Policies and Basis ....................................................................... 49 5.2.4 Organizational Chart of Accounts (CoA) ......................................................................... 54 5.3 Planning, Budgeting and Fund Flow ....................................................................... 55 5.3.1 Budgeting Cycle and Process ........................................................................................... 56 5.3.2 Budget Control and Monitoring ...................................................................................... 57 5.3.3 Budget Adjustments ........................................................................................................ 58 5.3.4 Funds Flow ...................................................................................................................... 58 5.4 Contracts Management ........................................................................................... 60 5.4.1 Contract Management ..................................................................................................... 60 5.5 Invoices, Payments and Recording .......................................................................... 62 5.5.1 Payment Methods ............................................................................................................ 63 5.5.2 Payment Process .............................................................................................................. 64 5.5.3 Key Supporting Documents ............................................................................................. 65 5.5.4 Specific Considerations for the Global Fund ................................................................... 66 5.5.5 Advance Payments ........................................................................................................... 68 5.6 Treasury Management ............................................................................................. 70 5.6.1 Bank Account Management............................................................................................. 70 5.6.2 Petty Cash Management .................................................................................................. 73 5.6.3 Mobile Money .................................................................................................................. 74 December 2017 Geneva, Switzerland 2 5.6.4 Foreign Currency Risk Management ..............................................................................