Issue Source: Workshops/Training, BOM Units, OIST, Atlas Helpdesk, Finance Dashboard, Atlas Snapshot
Affected Parties: Headquarters, Country Offices, Donors
Categorization: Efficiency – Application Usability, Efficiency – Office Organization/User Capacity
Despite numerous requests/instructions and guidance from the HQ side many users do not create pending items for contributions in advance. Instead, they are recording pending items only after the cash is received from the donor. According to the current guidelines as soon as the cost sharing agreement has been finalized and the payment schedule agreed among the parties UNDP has to create the pending item in the Accounts Receivable module. When cash is received it must be applied against these items. The entry of the pending item upon finalization of the agreement may become even more important as UNDP moves to international accounting standards (IPSAS) as these standards will likely be interpreted to require contribution income to be recorded at this time instead of at the receipt of cash.
User non-compliance with this policy is in part caused by a tedious and inadequate system design.
Users also do not see the benefit from this exercise as there are few reports that allow them to accurately track the outstanding contributions (pending items) and because under current UNDP expenditure policy, the contributions cannot be spent and are not reflected as income until collected.
The risk is that we cannot age receivables and cannot report on them to donors. Further, lack of the pending item being created at the start contributes deposits entered that are never applied to the appropriate donor and contribution. And with the eventual move to IPSAS, lack of accurate receivables could lead to incorrect financial statements.
To reduce the role of the Atlas system in contributing to this problem, new functionality has been recently added. First, new write-off functionality has been released. With this functionality, it is no longer necessary to un-post a contribution and re-create when the amount received from the donor does not exactly match the amount of the pending item. The amount can be adjusted upon application of the deposit to the pending item, with the remainder being written off so that the remaining it is no longer considered outstanding. Further items and portions of items can be written off separately from the deposit application using the Maintenance Worksheet. This allows the donor contributions to be more easily managed on an ongoing basis
New multi-currency application functionality has also been released. This allows a contribution to be recorded in one currency (such as US dollars) but the deposit to be applied in another currency (such as a local currency). This can be used in conjunction with the write-off functionality to handle situations where the contribution and deposit do not exactly match do to exchange rate differences.
Occasionally there are rounding problems when the currency of the deposit and the currency of the payment are different and neither is the base currency (i.e. USD). This is because Accounts Receivable converts the amounts through the base currency and there will often be slight rounding differences of less than 1 USD. This makes handling of multi-currency items more difficult in selected situations. In the interim the under-payment and over-payment adjustment functions are being used to create adjusting items to account for this issue and allow payment application to post. However, this workaround can be cumbersome.
As mentioned previously it will become even more important to accurately record and manage outstanding contributions in the Accounts Receivable module in order to improve cash forecasting and in order to accurate report financial information with the move to IPSAS. It is expected that the existing and future improvements to the Accounts Receivable module will make it easier for country offices to handle this task efficiently on a regular basis.
The Contracts module will be initially introduced for non-core donor contributions only, capturing the donor agreement and the related payment schedules that upload automatically to Billing and Accounts Receivables. The use of the Contracts module should be explored further to capture donor agreements for core funding in order to streamline receivables management and provide better contribution information from Atlas.