INTRODUCTION OF FINANCIAL MANAGEMENT 4 Profit Vs. Non Profit Organization Concept of Financial Management: Planning Organizing Directing/Leading and Controlling
INTRODUCTION OF FINANCIAL MANAGEMENT 5 Group Discussion What is the important of Financial Management? Divide into 4 Groups 15 Minutes for Group Discussion 10 Minutes for Presentation Per Group
IMPORTANT OF FINANCIAL MANAGEMENT 6 Important of Good Financial Management Decision making: revising, seeking for new funding, expanding the activities Manage proactively rather then reactively Manage short-term cash flow effectively Comply with Government law and regulation Sustainability of positive cash flow Safeguard of asset and record Make operation more efficient
IMPORTANT OF FINANCIAL MANAGEMENT 7 Important of Good Financial Management (Cont.) Creditability from donors Plan ahead of employees benefits Operated with acceptable risks Promote operational efficiency and effectiveness Provide reliable financial information Encourage adherence to prescribed policies; and Reducing and preventing errors in a cost-effective manner.
IMPORTANT OF FINANCIAL MANAGEMENT 8 Important of Good Financial Management (Cont.) Ensuring priority issues are identified and addressed. Protecting employee and resources. Having more efficient audit, resulting shorter timeline, less testing and fewer demands on staffs.
EFFECTIVE FINANCIAL MANAGEMENT 10 Financial Planning: Budgeting Controlling and Monitoring Financial Activities: Control over recording financial transactions Control over cash expenditure Comply with accounting standards, law and regulation Risk management Timely and accurately financial reports to the donors
EFFECTIVE FINANCIAL MANAGEMENT 11 Controlling and Monitoring Financial Activities (Cont.) Effective control over resource of the Organization Effective control over grant funds – sustainability Internal Audit
EFFECTIVE FINANCIAL MANAGEMENT 12 Some Element Should be Focused 1.Policy and Procedure Manual 2.Accounting Policies 3.Grants Receipts 4.Cash on Hand (Petty Cash or Imprest Account) 5.Banking 6.Security 7.Expenditure / payment 8.Fixed assets (equipment and property) 9.Cash advance 10.Internal Control of Purchasing
EFFECTIVE FINANCIAL MANAGEMENT 13 Some Element Should be Focused (Cont.) 11. Travels 12. Payroll 13. Financial Statement 14. Budget Control 15. Audit 16. Related Policy
RESPONSIBLE PERSONNEL 15 Board of Directors: Transparency and accountability Executive Director: Used 3Es of resources to achieve plan Program Manager: Project budget management and uses it wisely Finance Manager: Overall responsibilities of finance management and ensure that financial transactions comply with accounting standards.
RESPONSIBLE PERSONNEL 16 Accountant: Recording and prepare accurate and timely financial statement and in compliance with accounting policies Cashier: Safeguard of the organizations cash Other staff
18 Group Discussion What is the strategies for NGOs to be sustainable? Divide into 4 Groups 15 Minutes for Group Discussion 10 Minutes for Presentation Per Group
SUSTAINABILE FINANCE STRATEGIES 19 Variety of fund sources Multiple ways of seeking funds Up to date of financial planning Good reputation and recognition Adhere to the vision and mission of the Organization Transparency and accountability over the financial activities Reserve funds Strong networks with sponsors
22 Internal Audit: is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.assuranceconsulting effectivenessrisk managementcontrolgovernance External Audit: ISA 200 states the objective of an audit of financial statements is to enable the auditor to express an opinion whether the financial statements are prepared, in all material respects, in accordance with an identified financial reporting framework.
24 Ensure the entity is complied with the provided financial policies and procedure Provide creditability of the organization to the donors Independent opinion on the financial statements Critique on the internal control procedure and enhance its effectiveness, efficiency and economy Double check on the work of internal audit