10 In order to incur expenditure an encumbrance (also referred to as a commitment) must first be requested and duly approved. This encumbrance acts as a budget reservation to ensure that funds are secured to effect payment to the supplier. Upon delivery of the related goods or services the corresponding encumbrance should be released.
20 All procurement contractual agreements that commit payment for goods and services require an obligating document to be established in GSM. These are described in X.2.2 below.
30 In many cases the amount encumbered will vary from the amount on the invoice received. This could be due to exchange rate fluctuations or price / quantity variances agreed with the supplier. It is the responsibility of the award or project manager to regularly review outstanding encumbrances and take follow up action to reduce or modify as necessary.
Payments
40 Supplier data is created in GSM in advance of any related PO approval or payment. The data for a new supplier is entered by the offices responsible for the related contracts and approved by GSC after verification of the request to ensure consistency and accuracy of the data.
To ensure timely and accurate processing of payments, the responsible office must update supplier data before a new contract is issued or whenever there are changes (e.g. changes in the banking regulatory requirements) affecting a supplier data existing in GSM.
See Supplier self-service approval SOPs for details: FIN.SOP.X.036 and 037.
50 Payments shall only be made on the basis of satisfactory supporting documents (invoices, reports, delivery reports, etc.) duly certified by designated officials by way of confirming that:
- services have been rendered or delivery has been completed in accordance with the terms of contract;
- the amount is correct and in accordance with the terms of the contract.
Payments shall be released based on payment terms shown in the respective contracts (Purchase Orders) which are also setup in GSM. Any deviation shall be allowed only in exceptional circumstances, upon case-by-case approval by Comptroller or Officers designated by the Comptroller for Headquarters or Budget and Finance Officers for Regions.
60 The certification of delivery, in full or in part, is done by recording a receipt in GSM. By recording receipt, the contract responsible officer or other authorized personnel with Procurement Requestor GSM responsibility is confirming that the deliverables meet the contract requirements in terms of quality, quantity, timing, and other specified criteria.
70 In GSM, a payment can be processed as an Evaluated Receipt Settlement (ERS) also known as Pay-on-receipt payment or as a Non-ERS payment. Suppliers are classified accordingly.
The classification of a supplier as ERS or Non-ERS supplier is effected based on the specification provided by the relevant requestor at the time of supplier data creation. See SOP (PO based invoice processing: FIN.SOP.X.014A, section 1.4) for details on ERS flagged supplier types in GSM. For example, DFC suppliers (i.e. Ministry of Health), Fellowship suppliers, Consultants, Individual Service Contractors are classified as ERS eligible suppliers.
For ERS payments, invoices are system-generated when receipts of contractual deliverables are recorded in GSM and payments are made automatically.
For Non-ERS payments, requestors must record receipt of contractual deliverables and submit a supplier invoice for accounting and payment.
80 For goods POs and Travel Agent POs, in case of discrepancies between invoiced and PO amount, payment shall be made without having to revise the relevant PO, if the discrepancy is less than US$ 500 or 5% (whichever is the lesser) of the value of the PO.
For service POs the tolerance level for discrepancies between invoice and PO amounts is set to zero.
For any amount payable in excess of the above authorized thresholds, the requestor must revise the PO.
Supplier Records in GSM
90 Having timely and accurate supplier master data records in GSM is critical to processing supplier transactions such as, inter alia, the issuance of contracts, purchase orders and travel authorizations, the processing of invoices, the execution of payments and related notifications.
100 Supplier master data records in GSM can be created or modified either a) directly by the supplier through iSupplier for Supplier Registration or by authorized WHO staff on behalf of the supplier.
110 iSupplier for Supplier Registration shall be the preferred method process for entering and maintaining master data worldwide for corporate suppliers such as suppliers for goods and services, research agencies and company services contractors. Master data creation and modification requests can continue to be raised by authorized WHO staff (requestors) on behalf of suppliers for individuals, non-staff meeting participants and exception handling,
120 Authorised WHO staff are those users who have the required GSM responsibilities.
130 Requestors must ensure requests contain accurate, valid and complete information and provide adequate and complete supporting documentation to substantiate information included in requests.
140 GSC Accounts Payable shall review and approve all supplier creation/modification requests for inclusion in the GSM supplier database. [Ref; FIN.SOP.X.036 and FIN.SOP.X.037 for details]
Mode of Payments to Suppliers
150 Payments to suppliers and staff shall be made through direct electronic fund transfer (EFT) executed by GSC whenever possible as this method is the most efficient, secure and cost effective. However, payments can be made manually based on instructions ('bank lists') issued by GSC or exceptionally by cash.
160 Payments must be in the currency of the PO and must match the currency of the supplier bank account as recorded in GSM. Unless an exception has been pre-agreed with GSC Accounts Payable, invoice payments with a currency mismatch with supplier bank account will be rejected for payment by GSC Accounts Payable.
170 A supplier payment via EFT will be made based on the supplier's banking records available in GSM.
Third-Party Payment Authorization
180 A Third-Party Payment is defined as a payment to any recipient (person or entity) other than a contractual counterpart (contracting party) of WHO. The following mismatches in supplier information generally constitute a third-party payment:
i. Mismatch between supplier name and payee bank account holder name shown in a request for supplier creation/modification
ii. Mismatch between supplier name and /or payee name stated in an invoice and the supplier name held in the supplier database in GSM (recorded on the underlying PO).
190 Payment to a third party is normally not allowed and can only be exceptionally approved where operational circumstances do not allow for a payment to be made directly to a bank account bearing the same name as the supplier to whom the relevant PO is issued. A request for such exceptions must be made, only with full justification, by the supplier named in the relevant PO or a responsible administrative authority of the supplier. Such request shall only be accepted on a duly completed WHO 'Third-Party Payment Authorization' form signed by both the supplier and the third-party or their respective responsible administrative authorities, accompanied by the required supporting documentation. This form must also be signed by the officer in WHO, who is responsible for the contract/PO and authorized by the relevant Regional Budget and Finance Officer for Regions, Coordinator Global Finance at GSC for HQ (as designated by Comptroller) or the Head of Finance for WHO Partner Entities The duly completed and signed Third-Party Payment Authorization form, along with supporting documentation shall be reviewed by GSC Accounts Payable before it is recorded in GSM supplier database. [Ref: FIN.SOP.X.043 for details].
Non purchase order payments
200 A request for direct payment (i.e. without a PO) is allowed only on an exceptional basis. In such cases a payment request must be submitted using the iSupplier portal for non-PO based payments, along with justification for the exception and documentation for the transaction. The request shall be approved following the approval workflow established in the system.
For details, see SOP for Non-PO based payments: FIN.SOP.X.14B, section 1.2.
Advance payments
210 According to Financial Rule 107.2 payments shall generally not be made in advance of receipt of goods or services.
220 As an exception and only where operationally
justified, contracts (POs) may be entered into which require payment in advance prior to the delivery of
goods or performance of services. An advance payment request must be approved by
the Comptroller or Officers designated by Comptroller for Headquarters or
Director of Administration and Finance for Regional Offices.
Advance payments to non-ERS Suppliers
230a In order for any contract (PO) to be entered into requiring payment in advance, the official requesting such terms shall provide full justification and demonstrate why such payment terms are necessary and in the interest of the Organization. Requestors are strongly encouraged to provide such justification as part of the documentation needed during contract or PO approval.
- To request advance payment to a non-ERS supplier, where such payment has been authorized based on explanations and justifications provided during the contract or PO approval process, copy of the relevant sections of the approval documentation (e.g. approval by the Contracts Review Committee) must be submitted to GSC as support for the request to be made using Prepayment Template (Prepayments/Value-added-tax Payment Request Form) signed by the Responsible Officer for the PO.
- To request advance payment to a non-ERS supplier, where such payment was not part of the consideration at the time of approval of a contract or PO, a duly completed Prepayment Template must be submitted to GSC. The Prepayment Template must be approved by the Comptroller or Officers delegated by Comptroller at Headquarters and the Director of Administration and Finance for the regional offices.
Such advance payments shall be recorded as Prepayments. The prepayment amount is reversed and charged to expenditure when WHO receives the relevant goods or services and the related invoice is processed by GSC.
For details, see SOP on Prepayments: FIN.SOP.X.030, section 1.2
Advance payments to ERS flagged suppliers
230b Payments to ERS flagged suppliers are automatically initiated upon recording of receipts of deliverables in GSM (e.g. receipt of countersigned contract, reports, delivery reports, etc.). When such payments are made against deliverables set as 'receipt of countersigned contracts', they basically represent advance payments. Except for paragraph 140 below, the receipt of a counter-signed contract does not represent performance of work. Accordingly, approval by Comptroller or Officers designated by Comptroller for Headquarters or Director of Administration and Finance for Regions must be obtained as part of the PO approval process when a deliverable set as 'receipt of countersigned contract' exceeds the following thresholds:
- 25% of the total contract value for individuals, and
- 50% of the total contract value for institutions
All payments made as ERS transaction are immediately charged to the relevant expenditure, except:
- when the actual work under a PO (e.g. research, report, etc.) is expected to be delivered in a future financial year; and
- a payment against receipt of countersigned contract under the same PO involves a large amount (as shown in SOP on Prepayments), in which case the amount paid shall initially be charged to Prepayment.
When actual work is delivered and receipt is entered in GSM, the amount charged to Prepayment as stated above shall be reversed and recorded as expenditure.
For details, see SOP on Prepayments: FIN.SOP.X.030, section 1.4
Payments against countersigned contracts must be reviewed as part of the year-end financial reporting exercise to ensure correct classification of transactions between prepayment and expenditure.
For details, see SOP on Accruals and Adjustments: FIN.SOP.XII.004, section 1.2.4
240 Direct Financial Cooperation (DFC), Technical
Service Agreement (TSA), Fellowship, and Grant Letter of Agreement (LOA)
contracts are used as funding mechanisms for WHO Grants. Therefore, delivery is always considered to
have taken place at the point of contract finalization. Therefore, all payments made under these
contract are charged to expenditure immediately and are not considered
prepayments.
Highly recurring transactions involving advance payments of relatively smaller nature (e.g. deposits with hotels for a WHO event), which are usually settled shortly (within 30 days) after effecting the advance payments, do not require Prepayment Template. These are charged to expenditure directly.
For further details, see SOP on Prepayments: FIN.SOP.X.030, Section 1.2.
Refunds from suppliers
250 Any refunds from suppliers will be credited back to the original workplan and source of funding. When refunds relate to work plans belonging to
closed biennium, the returned funds shall be credited to miscellaneous income.
