Guidelines For Fixed Assets Management - The Global Fund .
Geneva SwitzerlandGuidelines forFixed Assets ManagementOCTOBER 2020GENEVA, SWITZERLAND
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Contents1. Introduction, Purpose and Scope . 5Introduction . 5Definition of Fixed Assets. 5Purpose and Scope . 62. Key Principles and Processes . 7Fixed Asset Acquisition . 7Key Principles and Requirements . 7Summary of Fixed Assets Management Processes . 93. Recognition, Measurement and Reporting of FixedAssets . 10Overview. 10Recognition of Fixed Assets. 10Initial Measurement. 10Subsequent Measurement . 11Fixed Assets Register (FAR) . 11Reporting . 114. Management of Fixed Assets . 13Overview. 13Distribution and Use. 13Insurance . 13Maintenance and Repairs . 14Fixed Assets Monitoring . 14Assurance Requirements . 145. Fixed Assets Transfer and Disposal . 16Overview. 16
Disposal of asset due to impairment . 16Transfer or Disposal of Fixed Assets at Implementation Period (IP) Reconciliation orGrant Closure . 16Approvals and Transfer Plans at Grant Closure . 17Appendix . 19Appendix 1 – Fixed Assets Register Template . 20
1. Introduction, Purpose and ScopeIntroductionThe purpose of the Global Fund is to attract, manage and disburse additional resources to fightAIDS, tuberculosis and malaria. Accordingly, the Global Fund and its implementers are responsiblefor ensuring adequate controls are in place to manage Fixed Assets (as defined in paragraph 1.2below) at both the Global Fund Secretariat and at country level to achieve impact on Global FundPrograms. Unless defined in these Guidelines or the context otherwise requires, all capitalized termsused in this document are defined at Section 2.2 of the Global Fund Grant Regulations (2014).1.Grant implementers1 use Grant Funds to make significant investments in Fixed Assets. Theseinvestments ensure that the required resources and capacities are in place for effective and efficientachievement of Program objectives. As such, the Global Fund Secretariat has developed theseguidelines to help grant implementers effectively manage these Fixed Assets.2.Definition of Fixed Assets3.For the purposes of these guidelines, “Fixed Assets” are Program Assets which:(i) are acquired, held, managed, used and/or controlled by the relevant grant implementer;(ii) are expected to be used over more than one accounting or reporting period for Programimplementation, or for administrative purposes;(iii) provides future economic or service benefits to the disease and RSSH program; and(iv) either have a reliably measured individual cost or value which equals or exceeds ( ) thelower of (i) US 2,500; and (ii) the fixed asset capitalization value of that Program Asset(as defined by the relevant grant implementer’s policies and procedures).Fixed Assets may be tangible (with physical form and existence) or intangible (without physicalform or existence) in nature. Examples of Fixed Assets include, but are not limited to, the following:4.(i) Health Products - Equipment: CD4 analysers, HIV viral load analysers, microscopes, TBmolecular test equipment & other health equipment;(ii) Non-Health Equipment (Tangible): computers, computer equipment, vehicles, furniture,generators and other non-health equipment;(iii) Non-Health Equipment (Intangible): software and applications; and(iv) Leases (Intangible or tangible).Accordingly, Fixed Assets exclude consumable or inventory items such as (but not limited to)condoms, LLINs and syringes etc. Whereas lab refurbishments, construction and renovation projectsmeet the definition of Fixed Assets, they are not covered by these guidelines. Please refer to section7.5 of the Global Fund guidelines for Grant Budgeting for specific requirements regardingconstruction, rehabilitation, renovation and enhancements of health infrastructure.5.1Grant implementers include Principal Recipients, Sub-recipients and Sub-sub Recipients.October 2020Geneva, SwitzerlandPage 05
Purpose and ScopeThe main purpose of these guidelines is to prescribe or define key principles and processes forthe management of Fixed Assets. They aim to: help grant implementers understand the Global Fund’s minimum requirements relating tothe management of Fixed Assets; enhance clarity in financial decision-making in relation to Fixed Assets; and ensure an appropriate balance between flexibility and efficiency, transparency andaccountability of fixed assets management.6.These guidelines are intended to assist grant implementers to develop and maintain effectivepolicies and procedures relating to the recognition, measurement, maintenance, repairs, transfer,disposal, monitoring and reporting of Fixed Assets. For information on budgeting and theprocurement of Fixed Assets, please refer to the relevant Global Fund guidelines, policies andprocedures. These guidelines are not intended to prescribe or define relevant accounting treatmentsof Fixed Assets in line with applicable accounting standards.7.These guidelines are mandatory for all grant implementers that acquire, manage, hold, useand/or control Fixed Assets. These guidelines also serve as guidance for Country Teams, LocalFund Agents, Fiscal Agents, Fiduciary Agents, Internal Auditors and External Auditors as theydischarge or carry out their respective responsibilities in relation to the management, monitoring,oversight and verification of Global Fund grant resources.8.9.These guidelines are to be used in conjunction with the: the Grant Agreement (including, where applicable, the Global Fund Grant Regulations(2014) as incorporated therein); the Global Fund Guidelines for Grant Budgeting (2019) (as amended from time to time);and relevant operational policies (including, but not limited to, the Operational Policy Note onImplementation Period Reconciliation and Grant Closure).10. To the extent there is a conflict between the provisions set out in the above documents andthese guidelines, the provisions in the above documents shall prevail.October 2020Geneva, SwitzerlandPage 06
2. Key Principles and ProcessesFixed Asset Acquisition11. Fixed Assets may be acquired by grant implementers in one or more of the following ways: procured by the grant implementer in line with their applicable procurement laws andregulations, terms of the Grant Agreement, including the procurement provisions set out inthe Global Fund Grant Regulations (2014); procured by a third party on behalf of the grant implementer (i.e. by a procurement agent); procured by one grant implementer on behalf of another (i.e procurement by a PR on behalfof an SR, etc.); through direct procurement by the Global Fund on behalf of the grant implementer throughthe Pooled Procurement Mechanism or Wambo; transferred to a grant implementer from one or more other grants, implementation periodand/or grant implementers; and donation of Fixed Assets to the Program at country level by one or more other stakeholders.Key Principles and Requirements12. Fixed Assets should be appropriately managed by each grant implementer that acquires,manages, holds, uses and/or controls the relevant Fixed Asset. The following are the minimumcontrol requirements for each grant implementer: procurement in line with applicable procurement laws and regulations, terms of the GrantAgreement, including the procurement provisions set out in the Global Fund GrantRegulations (2014); development and implementation of adequate policies and procedures for the recognition2,management and disposal of Fixed Assets based on applicable laws and regulations,including the Global Fund Grant Regulations (2014) and donor requirements; development of a comprehensive record of all Fixed Assets (the “fixed asset register” or“FAR’ which allows for identification of individual assets, including the details set out insection 3.5 below, as required under Section 6.7 of the Global Fund Grant Regulations(2014); appropriate usage and maintenance of Fixed Assets, including ensuring adequateinsurance (as required under Section 6.4 of the Global Fund Grant Regulations (2014) andInsurance Guidelines for Global Fund grants), secure storage prior to deployment, logbooks and regular operational maintenance and repairs, to ensure effective, efficient andeconomical use of Fixed Assets; undertaking an inventory (including a physical verification) of Fixed Assets on a regularbasis3. At a minimum, the Global Fund expects a full inventory of Fixed Assets to beperformed over an implementation period4. The results of the exercise must bedocumented, including determining the existence, location and condition of the relevant2The policy should outline when an asset is to be capitalized versus expensed when purchased. Refer to Section 3.E.g. annually or as otherwise agreed with the Country Team including a risk-based approach or inventory on a rolling basis to ensurefull fixed assets coverage over an implementation period.4In accordance with Section10.3 of the Global Fund Grant Regulations (2014) an inventory of all outstanding Program Assets must beprovided to the Global Fund within 3 months of expiry / early termination of the grant.3October 2020Geneva, SwitzerlandPage 07
asset, reconciling the inventory result with the FAR, and investigating differences (if any);and development of a system of reporting of any stolen or unaccounted for assets to the GlobalFund.13.Although each grant implementer is required to maintain a FAR for the Fixed Assets, the PR isultimately responsible for maintaining a FAR which lists and consolidates the Fixed Assets (usingsame approach as for consolidation of Annual Financial Report (AFR) expenditure) whether or notthe PR (rather than the grant implementer) acquires, manages, holds, use and/or controls the FixedAsset - refer to section 3 (Recognition and Reporting of Fixed Assets) below. This is a requirementwhich must be adhered to for the purposes of reporting to the Global Fund, even if the grantimplementer’s own reporting requirements differ for accounting purposes.14. The below table summarizes each grant implementer’s key responsibilities in relation to FixedAssets:#Activity - nin the o theGlobalFundPRSRSRPRSR and PRPRPRPRPRPRPRSRSRPRSR and PRPRSRSRPRSR and PRPRSSRSSRSR and PRSSR, SRand PRPR51234565Fixed Assets acquiredby a procurement agentonbehalfoftheimplementer and held,managed, used and/orcontrolled by the PR.Fixed Assets acquiredby the procurementagent on behalf of theimplementer and held,managed, used and/orcontrolledbySubRecipients (SRs).Fixed Assets acquiredby the PR and held,managed, used and/orcontrolled by the PR.Fixed Assets acquiredby the PR and held,managed, used and/orcontrolled by the SR.Fixed Assets acquiredby the SR and held,managed, used and/orcontrolled by the SR.Fixed Assets acquiredby the SR and held,managed, used and/orcontrolled by the Subsub Recipients (SSR).Accounting refers to recording the asset in the book of accounts.October 2020Geneva, SwitzerlandPage 08
Summary of Fixed Assets Management Processes15. The following diagram summarizes the Fixed Asset management process as it relates to the Global Fund requirements:1: Recognition, Measurement andReporting Recognition Criteria: Follow applicableaccounting standards and accounting basis. Please refer to section 1.2 above for thedefinition of Fixed Assets for the Global Fund’spurposes.Fixed/ Non-Current AssetsInitial Measurement andReportingFixed Assets shall be initiallyrecognized at cost, including: purchase price (i.e. amount ofcash or cash equivalent paidor the fair value ofconsideration given to acquirethe relevant Fixed Asset) andafter deducting trade discounts(if any); and any additional cost incurred todeploy, operationalize andbring the Fixed Asset to thecurrent location and conditionincluding the cost of sitepreparation, delivery andhandling, installation, relatedprofessional fees etc.All Fixed Assets (as defined insection 1.2 above) must berecorded in the Fixed AssetsRegister (FAR) irrespective ofaccounting treatment.October 2020Geneva, SwitzerlandSubsequent-Measurementand Reporting Follow applicableaccounting standards foraccounting and reportingpurposes. Record the Fixed Assets in“FAR” at cost until theearlier of:(i) the end ofuseful life of fixed assets or(ii) the transfer/disposal ofthe Fixed Asset. The PR is responsible tomaintain an up-to-dateconsolidated FAR for agrant and make it availableupon the Country Team’sspecific /ad-hoc request orrequest from externalauditor as part of scheduleof Fixed Assets.2: Management of Fixed AssetsDistribution, Use andMonitoring Internal controls and checksmust be in place to ensureappropriate use,maintenance, completenessand accuracy of records. Fixed Assets must bedistributed to intendedbeneficiaries based on aneeds assessment. Verification of the existenceof Fixed Assets throughphysical counts should takeplace periodically following arisk-based approach. A review or assessment ofthe current condition andexpected estimatedremaining useful life of theFixed Assets must beconducted on periodic basic.3: Fixed Asset Transfer & DisposalInsurance Implementers areresponsible for ensuringadequate insuranceprotectionFollow the Global Fund’s“Insurance Guidelines forGrants”Fixed Assets Repairs &Maintenance Implementers are responsiblefor ensuring adequate repairand maintenance of FixedAssets (particularly vehiclesand GeneXpert machines) arecarried out on regular basis. Log books should bemaintained for vehicles. Reasonable maintenance andrepair costs can be includedas part of the program budget. Requests for replacementassets may not be approved, ifthere are inadequate repairsand maintenance of FixedAssetsPage 09Fixed Asset TransferFixed Assets Disposal Fixed Assets should onlybe transferred at:a) IP Reconciliationb) Grant Consolidation;c) Change of the PR; ord) Transition from GlobalFund Financing The PR is to submit aconsolidated FAR to theCountry Team at thebeginning of the grantmaking process for thenext IP using the List ofProgram Assets andReceivables to betransferred from thecurrent IP to the next. (seeAnnex 1 of the Make,Approve and Sign GrantsOPN) Only incremental FixedAssets will be negotiatedand budgeted in the nextIP, after excluding fromthe total requirement,those Fixed Assets carriedforward from the previousIP Fixed Assets are nolonger in useablecondition or the cost ofmaintenance andrepairs exceed the valueof the related assets Fixed Assets cannot betransferred by end of IPReconciliation or GrantConsolidation or changeof PR Unless otherwise agreedwith the Country Team,fixed disposal should becarried out inaccordance with theimplementers’ policiesand documentedaccordingly for theassurance providers; Any proceeds from thedisposal of Fixed Assetsshould be accounted foras part of Grant Funds
3. Recognition, Measurement and Reporting of FixedAssetsOverview16. It is important to note that the Global Fund does not prescribe the accounting treatment of FixedAssets other than the requirement that implementers follow the appropriate standards, laws, donorrequirements and accounting standards applicable to them. This section outlines key requirementsof the Global Fund relating to recognizing, measuring, tracking and reporting of Fixed Assets thatshould be followed in addition to any applicable accounting standards.Recognition of Fixed Assets17. Each Fixed Asset must be recognized in accordance with the applicable accounting standardand recorded in FAR.18. Each Fixed Asset item must be recorded separately in the FAR. The grant implementer is notrequired to record and report an individual Fixed Asset items if their individual cost or value is lessthan US 2,500. However, if the aggregated cost of Fixed Assets of a similar nature, function anduseful life exceeds the US 2,500 threshold for a particular transaction or during the implementationperiod, these must be recorded as a line item in the FAR (aggregated by units and/or amounts). Thiswill apply to items such as laptops, IT equipment, cameras, projectors and/or mobile phones andany other assets as determined by the Country Team, even where the individual cost or value is lessthan US 2,500.19. In addition to the FAR, the grant implementer should also maintain a memorandum account tomonitor the US 2,500 threshold for lower value items through an implementation period. Forexample, the purchase of five mobile phones valued at US 200 each should be recorded in thememorandum account, but does not need to be entered in the FAR. However, should a further 10mobile phones be procured during the Implementation Period, as the 15 individual assets have anaggregated cost of US 3000, they should all subsequently be recorded on the FAR.Initial Measurement20. A value is to be assigned to each Fixed Asset reported in the FAR. Each Fixed Asset is to bemeasured at cost, including: purchase price (i.e. amount of cash or cash equivalent paid or the fair value6 ofconsideration given to acquire the relevant Fixed Asset) and after deducting trade discounts(if any); and any additional cost incurred to deploy, operationalize and bring the Fixed Asset to thecurrent location and condition including the cost of site preparation, delivery and handling,installation, related professional fees etc.21. Given import du
the management of Fixed Assets; enhance clarity in financial decision-making in relation to Fixed Assets; and ensure an appropriate balance between flexibility and efficiency, transparency and accountability of fixed assets management. 7. These guidelines are intended to assist grant implementers to develop and maintain effective
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