CACCI Chamber Operations

honeydewscreenManagement

Nov 9, 2013 (3 years and 7 months ago)

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By: Geronimo D. Sta. Ana



CACCI Chamber Operations


Course



August 25
-
30, 2008, Taipei, Taiwan




Financial Management for



Chambers


PRESENTATION OUTLINE


Definition of Financial Management


Why should a CCI be concerned with
Financial Management?


Basic Requirements for Good Financial
Management


Accounting System


Basic Internal Control


Cash Handling


Best Practices


Budget


Financial Statements


Definition of Financial
Management


Some definitions


Harnessing and allocation of resources
of an entity
to achieve its goals and
objective;


Raising of capital to
finance

an entity’s
operations and its
prudent
use.

Why should a CCI be concerned

with Financial Management?


Financial resources are critical to
the
growth and sustainability

of an
organization



Generation of funds (resources)
and their effective use is
vital

to the
attainment of the organization’s
objectives.

Why should a CCI be concerned
with Financial Management?



The funds of a CCI are entrusted to it
by its members and donors/grantors.
It is then incumbent for a CCI to act
as good stewards for these funds.


Basic Requirements for Good
Financial Management


Competent and adequate accounting staff


Adequate accounting system


Adequate internal control


Good practices in cash handling


Budget System


Monthly/Periodic Financial Statements


Internal audit (in big CCIs when
necessary)


Annual independent audit

Accounting System


Chart of Accounts


Books of Accounts


General Ledger


Cash Receipts Book


Cash Disbursements Book


General Journal


Subsidiary Ledgers

Accounting System (continued)


Accounting Procedures


Duties and Responsibilities of


accounting staff


Basic Internal Control Features,




especially on Cash Handling



Periodic Financial Statements


Accounting and Business Forms



Basic Internal Control



Internal Control
-

a process effected by an
entity’s board of directors, management and
other personnel, designed to provide
reasonable assurance regarding the
achievement of objectives in the following
categories:


Effectiveness and Efficiency of operations


Reliability of financial reporting


Compliance with applicable laws and
regulations


Cardinal Principles of Internal
Control


Responsibility for the performance of each
duty must be
fixed;


Accounting and financial operations must be
separated;


Proofs of accuracy should be utilized in
order to
ensure correctness

of operation
accounting;


No one person

shall be in complete charge of
a business transaction;

Cardinal Principles of Internal
Control


Employees must be
carefully selected

and
trained
;


Employees should be
rotated

on a
job. If possible, vacations for those in
position of trust should be enforced;


Employees occupying
positions of

trust

should be
bonded;

Cardinal Principles of Internal
Control



Operating instructions for each position
should be
reduced to writing;


The protective

advantages of

double entry
system of accounting should not be
exaggerated
;


Controlling accounts

should be used
extensively as possible. Mechanical
and/or electronic equipment should

be
used if feasible.


Principles of Internal Control
(Summary)


Establish responsibilities


Maintain adequate records


Insure assets and bond employees


Separate record keeping and custody
of assets


Divide responsibility for related
transactions


Apply technological controls


Perform regular and independent
reviews

CASH HANDLING

Best Practices in Cash Handling




Cash Management


the need to have cash
come in
---

flow in
---

at the right times, so
that it is available to flow out as needed.



General



Adequately train employees who handle
cash, then continually enforce the
who, what,
where, when, why,

and

how

of cash handling
in a never
-
ending cycle;






Best Practices in Cash Handling





General


Maintain good records. This creates a
paper trail

for each
transaction and deters unauthorized transactions, including
theft;


Make sure that two people are involved in preparing,
posting and delivering the deposit;


Deposit cash receipts on a
daily basis
. Do not leave
bank deposit/cash remittance unattended once it has
been prepared. Lock it in a safe until it is time to take
it to the bank/cash office.


Documents should be
initialed

by the preparer in
order to maintain a paper trail for each transaction.


Stamp
“For Deposit Only into Account # ________”

on all incoming checks.


Best Practices in Cash Handling



Instruct bank
never

to cash checks made
out to the company, but to only deposit
them.


Require
ID access

to cash registers and
computer systems so that transactions
can be traced to individual employees.


Require
supervisory approval

of all write
-
offs or write
-
downs and scan accounts for
any unexplained discounts.


Do not

make payments from funds
collected. Separate these transactions.





Best Practices in Cash Handling



Perform
criminal record and background
checks

when hiring employees who will
handle cash, especially temporary staff.



Take out
bond insurance

on all employees
handling bank deposits.


Best Practices in Cash Handling


Allow as
few people as possible

into
the area where cash is stored and
handled. Keep a log of anyone issued
a key or given knowledge of a
combination for a safe or room where
cash is stored or handled.


Enforce
mandatory vacations

and
rotate
duties

of preparing and making deposits.


Maintain a
“trust but verify
” attitude.

Best Practices in Cash Handling


Check and Balance Activities


On a daily basis, if possible,
compare the
cash register

records
(or cash receipts book) to the
deposit slip

(or cash remittance
form). Ensure that the composition
of cash remains
consistent

(i.e.,
amount of currency, checks, debit,
credit).

Best

Practices in Cash Handling


On a daily basis, if possible, compare
the
deposit slip

(or cash remittance
form) to the
amount of cash

actually
deposited into the bank (deposit slips
returned by the bank). Ensure that the
composition of cash is the same.
Explain and correct differences.


Conduct
surprise cash counts

during
shifts and publicize that they will
occur randomly.

Budget

Budget

-

a pre
-
determined, detailed plan of action,
expressed in units and pesos, developed and
distributed as a guide to current operations and as a
partial basis for the subsequent evaluation of
performance.



Budget components in a manufacturing set
-
up:


Physical budget


Cost budget (manufacturing, selling,
administrative, financing


Income budget (sales, cost of sales and
expenses)


Finance budget (cash, capital budgets,
financing, balance sheet)


Budget


Another classification of Budgets:


Operating cash budget


Capital expenditures budget



Purposes of Budgets


Planning


Controlling


Coordinating


Financial Statements


Definitions


Balance Sheet


Financial statement
showing what the CCI owns, what it
owes and the CCI’s equity at a certain
definite date (usually end of the year);
Assets, Liabilities & Equity or Fund
Balance


Also known as Statement of Condition


Financial Statements


Definitions


Income Statement
-

Financial statement
showing the CCI’s revenues, expenses
and excess of revenues over expenses or
net income (or excess of expenses over
revenues or net loss) for a period of time
(month, quarter, 6 months or one year)


Financial Statements


Definitions


Cash Flow Statement
-

Financial
statement showing the CCI’s cash flows
from operating activities, cash flows
from investing activities, cash flows
from financing activities
--

for a period
of time (month, quarter, 6 months, or
one year) and the net increase/decrease
in cash for the period.

Proforma Balance Sheet

December 31 ___


ASSETS





Last Year Current Year


Current Assets




-

Cash


-

Receivables


-

Temporary Investments


-

Supplies





Total Current Assets





Property & Equipment





Investment in Stocks





Other Assets





Total Assets









Balance Sheet (continued)


LIABILITIES & FUND BALANCES












Last Year Current Year


Current Liabilities



-

Accounts Payable and Accrued Expenses





-

Tenants deposits





-

Current portion of loans payable



-

Other current liabilities


Total current liabilities





Loans payable, net of current portion


-

Total Liabilities


Fund Balance


-

General Fund


-

Property & Building Fund


-

Total Fund Balance


Total Liabilities & Fund Balances


Proforma Income Statement


for Year ended _______







Last Year Current Year

REVENUES







-

General membership fees & dues



-

Import Processing fees



-

Export documentation fees



-

Members services



-

Rental Income



-

Donations & subsidies



-

Seminar fees



-

Trade promotions



-

Interest income



-

Miscellaneous



-

Total Revenues

Income Statement



Expenses



-

Salaries, bonuses & allowances



-

Depreciation



-

Interest



-

Light & water



-

Communications



-

Security services



-

Repairs & maintenance



-

Bad debts



-

Taxes & Licenses



-

Advertisement & publications



-

SSS,Medicare & HDMF contributions



-

Advocacy



-

Office Supplies



-

Transportation & Travel



-

General membership expenses



-

Employees benefits




Last Year Current Year

Income Statement


Expenses (continued)



Insurance



Representation & Entertainment



Professional fees



Fuels & lubricants



Miscellaneous



Total expenses


Excess of Expenses over Revenues

FUND BALANCE



January 1



Transactions during the year, net

FUND BALANCE, December 31

Last Year Current Year

Statement of Cash Flows

Year ended December 31 ___

CASH FLOWS FROM OPERATING ACTIVITIES



Net loss for the year


Adjustments to reconcile net surplus to net cash




(used in) provided by operating activities:




-

Bad debts




-

Depreciation




-

Funds transactions during the year




-

Increase in receivables


Increase (decrease) in operating liabilities




-

Accounts payable & accrued expenses




-

Tenants deposits




-

Members’ deposits




-

Income tax payable


Net Cash Provided by (Used in) Operating Activities

Statement of Cash Flows



CASH FLOWS FROM INVESTING ACTIVITIES


Acquisition of property & equipment


Increase in investment in stocks


(Increase) decrease in other assets


Net Cash Provided by (Used in) Investing Activities





CASH FLOWS FROM FINANCING ACTIVITIES


Acquisition (payment) of loans



NET INCREASE (DECREASE) IN CASH



CASH BALANCE, JANUARY 1



CASH BALANCE, DECEMBER 31

C H E E R S ! ! !