A Harmonized Approach to Cash Transfers to Implementing Partners (HACT) was launched in April 2005. The HACT shifts the management of cash transfers from a system of rigid controls to a risk management approach. It aims to:

• Reduce transaction costs pertaining to the country programmes of the ExCom agencies by simplifying and harmonizing rules and procedures;
• Strengthen the capacity of implementing partners to effectively manage resources;
• Help manage risks related to the management of funds and increase overall effectiveness.

The new approach uses macro and micro assessments, conducted with implementing partners during programme preparation, to determine levels of risk and capacity gaps to be addressed. It uses assurance activities such as audits and spot checks during implementation. And it introduces a new harmonized format for implementing partners to request funds and report on how they have been used. This is called the FACE: Funding Authorisation and Certificate of Expenditures Form.

The HACT is integrated into the steps for common country programming. The macro assessment is an element of the UNCT’s support for country analysis. It highlights the capacity development needs of the national public financial management system, which should be addressed in the UNDAF. The micro-assessments are conducted by the agencies with selected implementing partners, as the CPAPs are developed. On the basis of the results, assurance activities are planned with each of the implementing partners. These are described, along with the agreed cash transfer modality, in the AWP.

The inter-agency HACT Advisory Committee revised the UNDG HACT Framework in 2013, based on various assessments of the HACT Framework implementation, including the HACT Global Assessment (December 2011) and the Joint Audit of the Governance Arrangement for the Harmonized Approach to Cash Transfers (HACT) (November 2012). Furthermore, it accounted for comments from agencies’ country offices and inputs from UN Country Teams throughout the revision process.

Agency HACT Focal Points at Headquarters

-   UNDP:          Helen Hall at helen.hall@undp.org, BOM/OFRM

-   UNICEF:       Silvia Chiarucci at schiarucci@unicef.org, DPS; Andrea Suley at asuley@unicef.org, DFAM

-   UNFPA:        Mona Khurdok at khurdok@unfpa.org, DMS

Key elements of the revision:

• HACT as a risk-based management approach is reconfirmed, whether implementing partners are joint among several agencies or not;
• Once roll out is completed, HACT is the sole framework applied by the adopting agencies when transferring cash to implementing partners and is applicable in every country and context based on their respective risk profiles. Emphasis is on standardizing the way we work with Implementing Partners (IPs), reducing transaction costs, while ensuring joint operationalisation to country macro assessments as well as assessments and audits of shared partners. Such joint operationalisation is particularly critical in Delivering as One context in view of the requirements of the QCPR;
• The agreed principles and processes will be mainstreamed into the guidelines of the adopting agencies which are aligned with the revised HACT Framework with due consideration to the specificity of each agency’s business model and existing business processes;
• Accountability and responsibility for applying these procedures and monitoring application lies with each agency, while promoted and coordinated by the Resident Coordinator with oversight at headquarters level.
• Further clarification is provided on assurance planning.  Financial audit will be added to the menu of assurance activities for higher-risk IPs, while internal control audit will apply to lower-risk IPs and spot checks and programme monitoring to all IPs as per agency procedures.

The revised Framework, entitled “UNDG HACT Framework 2014”, was endorsed by UNDP, UNICEF, and UNFPA, and approved by UNDG in February 2014. The 2014 Framework supersedes the 2005 version and applies to all countries and contexts, including emergency, crisis and post-conflict countries. It is acknowledged that some agencies may require a transition period to fully roll-out the framework.