Financial Management Skills

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Nov 10, 2013 (3 years and 9 months ago)

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YWLA


Financial Management Skills




June 17
th
, 2010

Agenda



Financial Management and Control



Budgets



Accounting for NGOs



Audit Points

Management



Planning



Organizing



Controlling



Monitoring







Financial Management and
Control




Planning


Organizing Controlling




Monitoring
Reach

Resources

Objectives

Financial Management and
Control




Manage scarce resources

: funds increasingly scarce




Manage Risk
: limit damage (ex: fraud)




Manage strategically
: “bigger picture”, long term planning




Manage by objectives
: Plan Do Review

Financial Management and
Control




Plan :
Set budgets




Do:
Implement plans
-

receive and spend funds




Review:
Monitor budgets





Build in learning and take action


Plan again




Financial Management and
Control



Good financial management will:


1.
Help managers make effective use of resources to achieve
objectives

2.
Help the NGO become more accountable to donors

3.
Gain the respect of funding agencies

4.
Give the NGO the advantage in competition for increasingly
scare resources

5.
Help the NGO prepare for long
-

term financial sustainability


Financial Management and
Control



Financial Control
: the
heart

of financial management




Establish systems and procedures to make sure resources are
properly being handled




Should develop a policies and procedures manual for the NGO




Financial Management and
Control



The Seven Principles


1.
Consistency (policies and systems)

2.
Accountability (explain how funds are being spent)

3.
Transparency (being open)

4.
Viability (measure of financial continuity and security)

5.
Integrity (honesty and propriety)

6.
Stewardship ( resources are being used for the intended
purpose)

7.
Accounting Standards ( system for keeping financial records)


Financial Management and
Control





“CAT VISA”




Use these principles as a checklist to identify the strengths and
weaknesses of your organization

Financial Management and
Control





Systems

Design

Accounting

Records

Financial

Planning

Financial

Monitoring

Internal

Control



Financial

Control



Happy

Stakeholder

Financial Management and
Control




Exercise Time!!!!!


Financial Control

Objectives

of Financial Controls

Financial Controls

Assure compliance
w/regulations and
grant terms

Safeguard against
theft/ fraud

Deter loss due to
mistakes,
unauthorized use

Provide for accurate

timely financial
reporting

Restrict funds on
hand



Limit signatory

authority to director
+backup NOT
ACCOUNTANT

Establish an
imprest

petty cash account for
routine expenses.
Accountant should
not be authorized to
disburse cash

Count cash on last
business day

+
surprise cash counts
(involve more than 1
person)

Financial Control

Objectives

of Financial Controls

Financial Controls

Assure compliance
w/regulations and
grant terms

Safeguard against
theft/ fraud

Deter loss due to
mistakes,
unauthorized use

Provide for accurate

timely financial
reporting

Restrict funds on
hand


X

X

Limit signatory

authority to director
+backup NOT
ACCOUNTANT

Establish an
imprest

petty cash account for
routine expenses.
Accountant should
not be authorized to
disburse cash

Count cash on last
business day

+
surprise cash counts
(involve more than 1
person)

Financial Control

Objectives

of Financial Controls

Financial Controls

Assure compliance
w/regulations and
grant terms

Safeguard against
theft/ fraud

Deter loss due to
mistakes,
unauthorized use

Provide for accurate

timely financial
reporting

Restrict funds on
hand



Limit signatory

authority to director
+backup NOT
ACCOUNTANT

X

Establish an
imprest

petty cash account for
routine expenses.
Accountant should
not be authorized to
disburse cash

Count cash on last
business day

+
surprise cash counts
(involve more than 1
person)

Financial Control

Objectives

of Financial Controls

Financial Controls

Assure compliance
w/regulations and
grant terms

Safeguard against
theft/ fraud

Deter loss due to
mistakes,
unauthorized use

Provide for accurate

timely financial
reporting

Restrict funds on
hand



Limit signatory

authority to director
+backup NOT
ACCOUNTANT

Establish an
imprest

petty cash account for
routine expenses.
Accountant should
not be authorized to
disburse cash

X

X

Count cash on last
business day

+
surprise cash counts
(involve more than 1
person)

Financial Control

Objectives

of Financial Controls

Financial Controls

Assure compliance
w/regulations and
grant terms

Safeguard against
theft/ fraud

Deter loss due to
mistakes,
unauthorized use

Provide for accurate

timely financial
reporting

Restrict funds on
hand


X


X

Limit signatory

authority to director
+backup NOT
ACCOUNTANT

X

Establish an
imprest

petty cash account for
routine expenses.
Accountant should
not be authorized to
disburse cash

X

X

Count cash on last
business day

+
surprise cash counts
(involve more than 1
person)

X

X

X

Financial Control

Objectives

of Financial Controls

Financial Controls

Assure compliance
w/regulations and
grant terms

Safeguard against
theft/ fraud

Deter loss due to
mistakes,
unauthorized use

Provide for accurate

timely financial
reporting

Establish

clear levels
of financial authority
for program
managers, office
managers, accountant



Assign diff
responsibilities to
different people.
(Authorizing,
recording, preparing

documents..etc)

Require prior written
approval by
authorized staff of all
disbursements using a
voucher form

Maintain appropriate
personnel, financial
records

Financial Control

Objectives

of Financial Controls

Financial Controls

Assure compliance
w/regulations and
grant terms

Safeguard against
theft/ fraud

Deter loss due to
mistakes,
unauthorized use

Provide for accurate

timely financial
reporting

Establish

clear levels
of financial authority
for program
managers, office
managers, accountant


X

X

Assign diff
responsibilities to
different people.
(Authorizing,
recording, preparing

documents..etc)

Require prior written
approval by
authorized staff of all
disbursements using a
voucher form

Maintain appropriate
personnel, financial
records

Financial Control

Objectives

of Financial Controls

Financial Controls

Assure compliance
w/regulations and
grant terms

Safeguard against
theft/ fraud

Deter loss due to
mistakes,
unauthorized use

Provide for accurate

timely financial
reporting

Establish

clear levels
of financial authority
for program
managers, office
managers, accountant



Assign diff
responsibilities to
different people.
(Authorizing,
recording, preparing

documents..etc)

X

X

X

Require prior written
approval by
authorized staff of all
disbursements using a
voucher form

Maintain appropriate
personnel, financial
records

Financial Control

Objectives

of Financial Controls

Financial Controls

Assure compliance
w/regulations and
grant terms

Safeguard against
theft/ fraud

Deter loss due to
mistakes,
unauthorized use

Provide for accurate

timely financial
reporting

Establish

clear levels
of financial authority
for program
managers, office
managers, accountant



Assign diff
responsibilities to
different people.
(Authorizing,
recording, preparing

documents..etc)

Require prior written
approval by
authorized staff of all
disbursements using a
voucher form

X

X

Maintain appropriate
personnel, financial
records

Financial Control

Objectives

of Financial Controls

Financial Controls

Assure compliance
w/regulations and
grant terms

Safeguard against
theft/ fraud

Deter loss due to
mistakes,
unauthorized use

Provide for accurate

timely financial
reporting

Establish

clear levels
of financial authority
for program
managers, office
managers, accountant



Assign diff
responsibilities to
different people.
(Authorizing,
recording, preparing

documents..etc)

Require prior written
approval by
authorized staff of all
disbursements using a
voucher form

Maintain appropriate
personnel, financial
records

X

X

Financial Control

Objectives

of Financial Controls

Financial Controls

Assure compliance
w/regulations and
grant terms

Safeguard against
theft/ fraud

Deter loss due to
mistakes,
unauthorized use

Provide for accurate

timely financial
reporting

Establish

clear levels
of financial authority
for program
managers, office
managers, accountant


X

X

Assign diff
responsibilities to
different people.
(Authorizing,
recording, preparing

documents..etc)

X

X

X

Require prior written
approval by
authorized staff of all
disbursements using a
voucher form

X

X

Maintain appropriate
personnel, financial
records

X

X

Financial Management Tools



Planning (strategic plans, cash flow forecast ,etc.)



Organizing (org charts, job descriptions, etc)



Controlling (budgets, procedures manual, etc)



Monitoring (evaluation reports, financial reports, etc)







Budgets and Costs



“A budget describes an amount of
money

that an
organization plans to raise and spend for a set
purpose

over a given period of
time



Budget Functions :

1
-
Planning

2
-
Fundraising

3
-
Project implementation

4
-

Monitoring and evaluation



Budgets and Costs


What makes a good budget?



Easy to read



Calculations are clear



Fully justified and accurate



Explanatory notes are provided


Budgets and Costs




What are the objectives of the project?


What activities will be involved in achieving these
objectives?


What resources will be needed to perform these activities?


What will these resources cost?


Where will the funds come from?


Is the result realistic?

Budgets and Costs




A

B

C

D

E

F

G

Description

Unit

No.
Unit

Quantity

Unit

Cost

Total

Cost

1.

Workshop
Costs

1.1

Room

Days


5

1

50.00

250.00

1.2

Trainer

Fees

Days


5

2

100.00

1,000.00

1.3

Trainer
Lodging

Nights

6

2

75.00

900.00

1.4

Lunch

Trainees

25

5

10.00

1,250

1.5

Handouts

Trainees

25

1

3.00

75

1.6

Pens

Trainees

25

1

0.20

5

Sub total

3,480
USD

Budgets and Costs






Exercise 30 Minutes

Accounting for NGOs


Good financial records are the basis for sound financial
management



Information



Credibility



Legal requirement



Future requirement


Accounting for NGOs


Which accounting records should you keep?



Receipt or voucher for money received



Receipt or voucher for money paid out



Invoices
-

certified and stamped as paid



Paying

in vouchers for money paid into the bank



Bank statements




Accounting for NGOs


Other useful supporting documents



Payment vouchers



Local purchase orders



Goods received notes






Accounting for NGOs

1
-

Segregation of Duties

Disburses

Requests

Authorizes

Records

2
-

Use checks as opposed to cash (checks are safer and
easier to track)


3
-

Minimize cash in the office (imprest cash account) Ex:
300 USD per week


4
-

Keep cash in a safe ( limit access to only 2 people,
accountant should NOT have unrestricted access)


5
-

Surprise cash counts AND weekly cash counts

Accounting for NGOs


Invoices / receipts



A valid receipt is the
original

written receipt, or other
documentation.



Examples : Plane ticket stub, supplies invoice, taxi
receipt, etc.



Copies are acceptable
only

in rare instances when
receipts need to be retained for in
-
country VAT
reimbursement



Accounting for NGOs


Invoices / receipts




Name/ address of vendor providing goods and services


Date of transaction


Description of goods & services provided


Total amount of the goods or services


Signature of the individual seeking reimbursement



Accounting for NGOs

Further requirements



Costs incurred that are over 1,000 USD: three bids must
be submitted with the reconciliation. If the least
expensive is not chosen a decision memo



Hired staff salaries: signed timesheets are required, plus
proof of payment (payroll slip) Checks
MUST

be in
the name of the first beneficiary



Meetings & conferences: list of participants; agenda,
fully itemized bill




Accounting for NGOs

Further requirements



Mileage log : reimbursed for the business use of a
personal vehicle. Provide date, time, purpose, location,
etc. Multiply kilometers by rate. Submit with voucher
form for reimbursement



Inventory Log: Tracking number, tag number,
description, quantity, location, acquisition cost, vendor
name






Accounting for NGOs

Salaries



Employee must fill out a timesheet, which is then
verified by his/her supervisor/ manager



Timesheet must be signed by both parties



Checks MUST be in the name of the employee (i.e.
first beneficiary)



Proof of receipt




Audit Points

Organization


-
Organization chart (responsibilities among personnel)



Human Resources


-
Job descriptions

-
Employee files including CV, contract, salary history,
performance evaluations

-
Records of compliance with payroll tax laws







Audit Points

Procurement


-
Written policy ensuring competitive acquisition of
supplies and equipment

-
Contract/purchase records (date, cost, vendor, terms)

-
Records tracking personal use of assets vehicle logs,
phone/fax logs

-
Inventory of furniture and equipment

-
Tags on furniture and equipment








Audit Points

Finance


-
A safe for cash on hand


-
Copies of all past financial records and reports


-
Current period accounts up
-
to
-
date










Read your agreements VERY well



Communicate with your donor (try to get things in writing)



“Don’t assume”



Keep files organized



Don’t panic and learn from mistakes