1. Sound Financial Management
NGO Governance & Professional Practice
Voluntary Certification System
Sound Financial Management
Prepared by: Mr. Sok Sovann
Certification Specialist
Edited by: Pen Monorom
Vision: A strong and capable civil society, cooperating and responsive to Cambodia’s development challenges

2. New Version Code 3- Sound Financial Management 3 10 8 Key Areas
Standards
Guidelines
Indicators
1-Governance 7 20 19
2-Relationships and
Communications 4 9 11
3- Sound Financial 
Management  3 10 8
4- Accountability and
Transparency 
5- Quality Assurance 1 6
6- Human Resource 
Management 18
Total 25 65 70

3. How do we measure? Measure all list indicators
Document
Practices
Following the code assessment criteria and rating from 1-5

4. SOUND FINANCIAL MANAGEMENT
3 Standards
10 Guidelines
8 Indicators

5. Standard 3.1: The organization has an annual organization-wide financial audit by an acceptable firm or equivalent body
Guidelines
Indicators
3.1.1 Recruited auditor with clear ToR An annual organization- wide financial audit The organization wide audit is shared with all relevant staff Financial statements should be prepared in accordance with the organization’s financial manual & The recommendations from the auditors and funder, should be followed and duly implemented
3.1.1 The audit reports including management and financial reports, must be available and shared with all relevant staff
3.1.2 The recommendations of the auditors and donors have been addressed or have an action plan to be addressed at least 12 months. Minutes of the meeting should be recorded about any action taken as a result of the auditor’s report
Guideline:
3.1.1 The auditor should be properly recruited with clear Terms of Reference and by an appropriate committee including either: management team members, governing body members, and/or with donor consultation
3.1.2 The organization ensures that an annual organization-wide financial audit or equivalent forms of financial audits are conducted and documented. Organization-wide financial audit refers to an audit covering all whole organizational financial statements. Equivalent forms of financial audits refer to separated audits of all projects/programs as long as the audits cover the whole organizational financial statements
3.1.3 The organization wide audit is shared with all relevant staff
3.1.4 Financial statements should be prepared in accordance with the organization’s financial manual
3.1.5 The recommendations from the auditors, should be followed and duly implemented
3.1.6 The recommendations from funders on financial management are duly implemented

6. Standard 3.2 Practical financial policies and procedures are in place
Guidelines
The content of current financial policy and procedure should comply following:
a-For organizations using the cash basis/modify cash of accounting framework, the following should be included in the accounting manual:
Statement of Management/ Governing Body
Management responsibility
Accounting framework and financial year
Currency
Guideline:
3.1.1 The auditor should be properly recruited with clear Terms of Reference and by an appropriate committee including either: management team members, governing body members, and/or with donor consultation
3.1.2 The organization ensures that an annual organization-wide financial audit or equivalent forms of financial audits are conducted and documented. Organization-wide financial audit refers to an audit covering all whole organizational financial statements. Equivalent forms of financial audits refer to separated audits of all projects/programs as long as the audits cover the whole organizational financial statements
3.1.3 The organization wide audit is shared with all relevant staff
3.1.4 Financial statements should be prepared in accordance with the organization’s financial manual
3.1.5 The recommendations from the auditors, should be followed and duly implemented
3.1.6 The recommendations from funders on financial management are duly implemented

7. Standard 3.2 Practical financial policies and procedures are in place
Guidelines
Internal control System
Chart of account
Documentation and filing
Asset management
Procurement
Authorization and approval of expenditure
Cash on hand and at bank management
Advance
Budgeting
Accounting system
Guideline:
3.1.1 The auditor should be properly recruited with clear Terms of Reference and by an appropriate committee including either: management team members, governing body members, and/or with donor consultation
3.1.2 The organization ensures that an annual organization-wide financial audit or equivalent forms of financial audits are conducted and documented. Organization-wide financial audit refers to an audit covering all whole organizational financial statements. Equivalent forms of financial audits refer to separated audits of all projects/programs as long as the audits cover the whole organizational financial statements
3.1.3 The organization wide audit is shared with all relevant staff
3.1.4 Financial statements should be prepared in accordance with the organization’s financial manual
3.1.5 The recommendations from the auditors, should be followed and duly implemented
3.1.6 The recommendations from funders on financial management are duly implemented

8. Standard 3.2 Practical financial policies and procedures are in place
Guidelines
Period end closing procedures
Period end reports
Audits
B- Appendix: Document template
Guideline:
3.1.1 The auditor should be properly recruited with clear Terms of Reference and by an appropriate committee including either: management team members, governing body members, and/or with donor consultation
3.1.2 The organization ensures that an annual organization-wide financial audit or equivalent forms of financial audits are conducted and documented. Organization-wide financial audit refers to an audit covering all whole organizational financial statements. Equivalent forms of financial audits refer to separated audits of all projects/programs as long as the audits cover the whole organizational financial statements
3.1.3 The organization wide audit is shared with all relevant staff
3.1.4 Financial statements should be prepared in accordance with the organization’s financial manual
3.1.5 The recommendations from the auditors, should be followed and duly implemented
3.1.6 The recommendations from funders on financial management are duly implemented

9. Standard 3.2 Practical financial policies and procedures are in place
Indicators
3.2.1 The financial policies and procedures abide by the guidelines The financial policies and procedures is well documented and available to all staff members More than 80% of interviewed staff members (including the finance unit) can demonstrate understanding and compliance of financial policies and procedures that are relevant to their own work
Guideline:
3.1.1 The auditor should be properly recruited with clear Terms of Reference and by an appropriate committee including either: management team members, governing body members, and/or with donor consultation
3.1.2 The organization ensures that an annual organization-wide financial audit or equivalent forms of financial audits are conducted and documented. Organization-wide financial audit refers to an audit covering all whole organizational financial statements. Equivalent forms of financial audits refer to separated audits of all projects/programs as long as the audits cover the whole organizational financial statements
3.1.3 The organization wide audit is shared with all relevant staff
3.1.4 Financial statements should be prepared in accordance with the organization’s financial manual
3.1.5 The recommendations from the auditors, should be followed and duly implemented
3.1.6 The recommendations from funders on financial management are duly implemented

10. Standard 3.3: The organization has an effective and well functioning finance system
Guidelines
The finance function system should consider the following:
Strategy: Documented objectives and strategies of the finance function are available
Annual review of the manual and approval by the governing body:
Clear and functioning financial structures are available.
Clear job description of financial and accounting staff
Staff qualification
Clear reporting lines
3.3.2 Independency of financial unit:
Lesson learned are reflected in the amended accounting manual
Capacity development of financial unit
The implementation needs to comply with the financial policy and procedures
Guideline:
3.1.1 The auditor should be properly recruited with clear Terms of Reference and by an appropriate committee including either: management team members, governing body members, and/or with donor consultation
3.1.2 The organization ensures that an annual organization-wide financial audit or equivalent forms of financial audits are conducted and documented. Organization-wide financial audit refers to an audit covering all whole organizational financial statements. Equivalent forms of financial audits refer to separated audits of all projects/programs as long as the audits cover the whole organizational financial statements
3.1.3 The organization wide audit is shared with all relevant staff
3.1.4 Financial statements should be prepared in accordance with the organization’s financial manual
3.1.5 The recommendations from the auditors, should be followed and duly implemented
3.1.6 The recommendations from funders on financial management are duly implemented

11. Standard 3.3: The organization has an effective and well functioning finance system
Indicators
3.3.1The Organization has developed strategies for financial sustainability that are well implemented > 80% of interviewed financial unit staff identifies that they can perform their work independently and professionally and without pressure from senior management An internal financial report is completed by the financial unit and available

12. THANK YOU! &