Financial Management 1

What is Financial Management ? Managing of Financial Resources Optimum utilisation of resources Utilisation of funds for the right purpose Ensure records are maintained for all financial transactions 2

Components of Financial Management Discussion Points Planning Budgeting Accounting Reporting Monitoring Staff Welfare Audit Legal Adherence Financial Policies Governance Structures 3

Responsibility of NGOs Responsible and accountable for implementing the planned activities as formally approved by the donor/funding agency Adherence to the terms of the MoU if any between donor and NGO Ensure the prescribed accounting standards are maintained Responsible for providing strong organizational governance, well-developed systems of functioning in terms of accountability and transparency 4

Monitoring the Finances-Role of the PM Ensure the all expenditure is as per the budget. (any variance needs to get approval) Maintain and monitor the programme trail and while validating expenditure ensure that the larger accounting trail is also in place. Expense Cash memo voucher cash book ledger trail balance income and expenditure statement, balance sheet Program plan activity to be performed authorisation from the program head for the expense related to the activity perform the activity ----maintain the relevant program records 5

Planning & Budgets What is a Financial Plan & Budget? Who prepares this? Program staff or financial staff? What needs to be put into a budget? 6

Monitoring the Accounting trail Expense Cash memo voucher cash book ledger trail balance income and expenditure statement, balance sheet. What was spent and when? What kind bill was raised /Amount? Who sanctioned this and when? When was this entered and under which budget head? Was it booked in the accounts? Does it reflect in the final Statements/accounts …. MATCH THIS WITH Program plan activity to be performed authorisation from the program head for the expense related to the activity perform the activity ---- maintain the relevant program records Was this a planed/budgeted activity who authorised activity and the expenditure ? Was project head aware? Have reports and evidence of the activity been maintained. 7

Discussion points Prepare an expenditure sheet Get necessary sanctions Discuss recording both programme & finance EXPENSES SHEET Amt ReceivedDate Purpose ParticularsAmount Rs.p. Total Balance in hand/due Sign of PayeeSanctioned 8

Monitoring Accounting- Monitoring Accounting- Role of the PM Area of Accounting DescriptionMonitoring Frequency Cash AccountListing of cash receipts & payments during the month PM needs to monitor each month Cash ReconciliationPhysical cash count & cash book balance Monitor Daily Bank AccountAll bank receipts & payments during the month End of each month Bank ReconciliationReconciliation of bank statement balance & cash book balance End of each month AdvancesLists unsettled advances by project staff at month end. End of each month Income & Expenditure Gives picture of Intervention finances, balances & variences Every six months Assets InventoryShows asset value and their financing. Every year 9

Some Basic Issues- PM should monitor Cash payments are not be more than Rs Incentives to PEs - Petty cash expenses Bank accounts to be operated are in Nationalized Banks only with at least two persons signing the cheques Stipulation in guidelines are maintained and followed All records both programme, field reports, minutes of the meeting registers & finance bills, vouchers and SOE are kept Ensure details of staff, contract papers are on record 10

Requirement from NGOs Prepare and submit a budget as per the prescribed guidelines Ensure expenditure is monitored and linked to programme activities Accounting system in places and maintained on a daily basis. Prepare and submit monthly financial statements on the expenses incurred, quarterly and annual financial reports for the activities described above 11 Contd…

Requirement from NGOs Provide yearly organizational audit reports and allow the internal and/or external auditor to be appointed by and authorized representatives of SACS/NACO/Accountant General Fulfill all necessary formalities in connection with its status as required under the regulations stipulated by the Government of India and State government Comply with the financial and procurement guidelines under the programme. 12

Conclusion We are using public money accountability needs to be focused on There should be no wastage in utilization of money. The whole process should be transparent All statutory requirements should be met. All expense must be authorized by the head of the organization and made 13

14 THANK YOU!