FACILITY FINANCIAL ACCOUNTING AND REPORTING …pdf.usaid.gov/pdf_docs/PA00MT3H.pdf · facility [s...

PRESIDENT’S OFFICE – REGIONAL ADMINISTRATION

AND LOCAL GOVERNMENT (PO-RALG)

This publication was prepared by President’s Office – Regional Administration And Local Government (PO-RALG) with support from the Public Sector Systems Strengthening (PS3) Activity located in Dar es Salaam, Tanzania, under Contract AID-621-C-15-00003 with USAID/Tanzania.

FACILITY FINANCIAL ACCOUNTING

AND REPORTING SYSTEM (FFARS)

Training Manual

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The USAID/Tanzania Public Sector Systems Strengthening Activity (PS3)

USAID/Tanzania Public Sector Systems Strengthening Activity (PS3) overarching goal is to support

the Government of Tanzania to strengthen the public system to promote the delivery, quality, and use

of services, particularly for underserved populations. This publication was prepared by the President’s

Office – Regional Administration And Local Government (PO-RALG) with support from the Public

Sector Systems Strengthening (PS3) Project Management Unit under Abt Associates located in Dar

es Salaam, Tanzania

MAY 2017

Contract No:AID-621-C-15-00003

Recommended Citation: Training Manual on Facility Financial Accounting and Reporting System

(FFARS), Bethesda, MD: USAID/Tanzania Public Sector Systems Strengthening Activity, Abt

Associates, May 2017.

Cover page drawings by Nathan Mpangala

DISCLAIMER

The contents of this manual are the sole responsibility of PO-RALG and do not necessarily reflect the

views of USAID or the United States Government.

CONTENTS

Glossary ............................................................................................................. vi

Introduction and Training Approach ................................................................ 8

Training Objectives ....................................................................................... 9 Training Methodology ................................................................................... 9

National Training of Trainers (TOT) ....................................................... 9 Phase I Training: Training of Ward Education Officers, District Hospitals and

Health Centers .............................................................................. 10 Phase II Training: Training of Secondary Schools, Primary Schools and

Dispensaries ................................................................................. 10 Training Contents ........................................................................................ 11 Training Timetable ...................................................................................... 11

Session 1: What Facilities Need to Know and Do Before Using FFARS ......13

1.1 Government of Tanzania roles and relationships ................................. 13 1.2 Direct Facility Financing ....................................................................... 13 1.3 Broader Financial Management Cycle ................................................. 14 1.4 Planning and Budgeting ....................................................................... 15

Session 2: Procurement ..................................................................................16

2.1 Defining procurement and its rationale ................................................. 16 2.2 The procurement process at the facility level ........................................ 17

Session 3: Recording of Financial Transactions ..........................................18

3.1 Introducing the different accounting documents and books of accounts 18 3.2 Issuing a receipt for funds received by the facility ................................. 18 3.3 Payment vouchers for expenditures by facilities ................................... 19 3.4 Writing a cheque ................................................................................... 21 3.5 Recording revenues in the cash book ................................................... 21 3.6 Recording expenditures (payments) in the cash book .......................... 22 3.7 Balancing of the cash book ................................................................... 23

Session 4: Facility Revenues with the Conditions in Spending ..................25

4.1 Procedures for recording cash-in and cash-out in the control book ...... 25

Session 5: Bank Reconciliation ......................................................................28

5.1 The meaning and reasons for preparing bank reconciliation statements28 5.2 Procedures for preparing bank reconciliation statements ..................... 28

Session 6: Financial Reports ..........................................................................31

6.1 The meaning and purposes of preparing financial reports .................... 31 6.2 Procedures for preparing financial report .............................................. 31

Appendices ........................................................................................................33

Appendix 1: General Ledger ....................................................................... 33 Appendix 2: Case Study 1: Recording financial transactions in the accounting

documents/books of accounts ............................................................. 34 Appendix 3: Case Study 2: Recording financial transactions in the control book

............................................................................................................. 37 Appendix 4: Case study 3: Preparation of bank reconciliation statements .. 38 Appendix 5: Case study 4: Preparation of financial report .......................... 41

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List of Tables and Figures Figure 1: FFARS Training Methodology ................................................................................. 10 Figure 2: Training Timetable ...................................................................................................... 11 Figure 3: Broad Public Financial Management Cycle ..................................................... 14 Figure 4: Procurement Process at the Facility Level ....................................................... 17 Figure 5: Example of a General Receipt ................................................................................ 19 Figure 6: How to fill the payment voucher ............................................................................. 20 Figure 7: Example of a cheque................................................................................................... 21 Figure 8: How to fill the revenue (Receipts) side of the cash book ........................... 22 Figure 9: How to fill the payment side of the cash book .................................................. 23 Figure 10: How to balance the cash book ............................................................................. 24 Figure 11 How to record financial transactions in the control book - “Cash in” and

“Cash out” sections ....................................................................................................... 26 Figure 12 How to record financial transactions in the control book - Balance section

including daily running balance................................................................................ 27 Figure 13: How to prepare bank reconciliation statements ............................................ 30 Figure 14: How to prepare the financial report .................................................................... 32 Figure 14 Illustration of how to post to the ledger accounts .......................................... 33

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Abbreviations

CHF Community Health Fund

DDF Direct Facility Financing FFARS Facility Financial Accounting and Reporting System

FGC Facility Governing Committee

GFS Government Finance Statistics

GRN Good Received Note

GOT Government of Tanzania

HBF Health Basket Fund

HPSS Health Promotion and Systems Strengthening Project (Swiss-funded)

IPSAS International Public Sector Accounting Standards

LGAs Local Government Authorities

LGTI Local Government Training Institute

LLG Lower Local Government

LPO Local Purchase Order

MOEST Ministry of Education, Science and Technology

MOFP Ministry of Finance and Planning

MOHCDGEC Ministry of Health, Community Development, Gender, Elders and Children

PFM Public Financial Management

NHIF National Health Insurance Fund

PO-RALG President’s Office, Regional Administration and Local Government

PPRA Public Procurement Regulatory Authority

PS3 Public Sector Systems Strengthening Activity

PV Payment Voucher

RBF Results-Based Financing

RPM Regional Program Managers

SNHI Single National Health Insurance

TOT Training of Trainers

TT Telegraphic Transfer

TZS Tanzania Shillings

UDSM University of Dar es Salaam

WEC Ward Education Coordinator

ZHTC Zonal Health Training Centers

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Glossary

Term Description Accountability

Acting with responsibility and transparency in all aspects of work.

Bank Reconciliation

A process that explains the difference on a specified date between the bank balance shown in a facility’s bank statement, as supplied by the bank, and the corresponding amount shown in the facility's own accounting records.

Books of Accounts A collective term for the books used to keep the facility accounts, including the cash book, the control book.

Budget Describes both the expected revenue and expenditures necessary to implement the activities outlined within the plan of the facility during the period of the plan. A budget can also be described as a costed plan.

Capitation A payment system based on the number of people requiring the service, e.g the number of school age children in the catchment area for a given school or the total population in the catchment area for a certain health facility. An initial amount per person may be adjusted for various factors, e.g distance, or how many people actually use the facility.

Cash Book A book into which receipts and payments are recorded daily, with details including date, description, and who paid or was paid.

Category A Signatory

Facility/officer in-charge and one officer appointed among facility staff.

Category B Signatory

Chairperson of the governing committee and one person appointed among committee members.

Control Book This is a book used to record details of expenditure for revenue sources with conditions of spending e.g. school capitation, Result Based Financing (RBF).

Expenditure Payments made by the facility for goods, works, services (expenditure items) provided to the facility. Referred to as expenditure or payments throughout the document.

Expenditure Item The good or service for which payments are made for.

Facility Autonomy The extent to which a facility is responsible for its own decision-making rather than implementing decisions by a higher level body/entity.

General Ledger Central origin of the accounting information of the facility in which the summaries of all financial transactions by type (picked from cashbook) during an accounting period are recorded.

GFS Code Government Finance Statistics (GFS) is the code for a revenue source or an expenditure item as listed in the GFS coding manual.

GFS coding manual

This is a document that contains a list of all relevant GFS codes. This manual can be obtained from the LGA accountant.

Goods Received Note (GRN)

A book used to record goods when delivered at the facility. This record is used to confirm whether goods received are the same as those listed in purchase order before payment is made.

Invoice A bill showing the sum due for goods or services supplied/ provided to the facility.

Minimum Benefit Package

An agreed set of services to be provided by each facility to all eligible people (Health Sector specific).

Payee The person or company receiving the payment, usually the person or company who has supplied a

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good or service to the facility.

Payer The person making the payment, usually the facility in-charge.

Payment Voucher Document describing what is being bought and from whom, and which can be used as proof that a monetary transaction has occurred between the two parties, i.e. the facility and the supplier/service provider.

Plan Describes the activities that will be performed by the facility during a given time period in order for the facility to deliver the expected service outputs and thus to contribute to the wider objectives of the sector.

Procurement The process of obtaining goods, services and/or works in order to meet identified needs of the facility.

Receipt A written acknowledgment of having received a specified amount of money.

Revenue Facility income from internal and external sources. It may be received in cash, cheque or by direct bank deposit. Also referred to as receipts.

Shopping Procurement method used when several quotes are obtained by the facility for supply of a given good/service/work. Also known as a competitive quotation.

Signatory Person authorized to sign cheques drawn on the facility bank account.

Single source Procurement method used when only one supplier is contracted.

Threshold Amount of money above which the facility must seek approval from the facility governing committee and/or the LGA before procuring any item. Thresholds are set out in the procurement regulations and guidelines.

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Introduction and Training Approach Service providers, such as health facilities and schools, are public sector organizations responsible for the direct delivery of key services to the local population. They are often the first or main point of contact between the citizens and local government and are accountable to both these groups. Being accountable means acting responsibly and transparently in all aspects of daily work – both in relation to the financial, human, and other resources under facility management, and in relation to the quantity and quality of services provided by the facility. As implied by the name, the Facility Financial Accounting and Reporting System (FFARS) outlined in this document focuses on the management of financial resources – making decisions and reporting on what money comes to the facility, and how it is spent.

Funding for public service provision comes from various sources, including fees or health insurance contributions from service users, and grants from government and development partners. These grants ultimately originate from taxes paid by the wider population, either individually or by companies. Increasingly in Tanzania, this funding is being sent to and managed at the service provider or facility level. New systems and skills are therefore needed by staff at those facilities to ensure that the funds are managed well, in order to achieve the goals of such funding, i.e. to efficiently provide relevant, high quality services to all citizens and communities who need them. Good financial management is important to gain and keep the trust of the people being served, and this is achieved by making wise decisions on how much and when to spend on what, avoiding wasteful spending, and reporting openly on how those funds have been spent to ensure services are provided. The harmonized FFARS has been developed to respond to this growing need for improved financial management skills at the service provider or facility level, and to the challenge of different systems which have been evolving at sectoral level. It includes simple, standardized documents and processes which form part of the United Republic of Tanzania’s official Public Financial Management (PFM) system. FFARS will give a clearer picture of how much funding, and from which sources, is available for core services at each facility, together with how those funds are being used to meet service delivery targets. It will provide information to ensure that procurement regulations are being followed, and will also enable complete and consistent reporting on revenues and expenditures at ward and Local Government Authority (LGA) level. This information is needed to meet government financial regulations. FFARS has been developed by key ministries and agencies in consultation with users1, and builds upon existing practices wherever possible. It includes both a manual (paper) and an automated (electronic) version, responding to the differing circumstances of service providers across the country. Familiarity with the paper systems will aid understanding of the electronic systems and, over time, it is intended that all facilities will move to the automated version as their infrastructure is upgraded. This training manual is intended to achieve several purposes:

To outline the system and processes which make up the FFARS;

To provide materials to be used in the training of facility officials on the FFARS, including case studies and worked examples to aid understanding;

1 Officials from the President’s Office-Regional Administration and Local Government (PO-RALG), Ministry of Health, Community

Development, Gender, Elderly and Children (MOHCDGEC), Ministry of Education, Science and Technology (MOEST) have worked in collaboration with the USAID-funded Public Sector Systems Strengthening (PS3) Activity and the Swiss-funded Health Promotion and Systems Strengthening (HPSS) project.

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To serve as a reminder for those officials receiving training, and as a guide to help them pass on those elements of the training necessary for other staff in the facility (folder, training materials, and forms will be taken back to the facility to serve as the manual or paper version of FFARS).

Training Objectives

Main Objective

To provide awareness and practical on-the-job knowledge and skills to selected officials from facilities on accounting and reporting at facility level.

Specific Objectives

To orient the participants on the application of the FFARS manual;

To provide an overview of the context for FFARS including direct facility financing, and facility planning and budgeting;

To refresh participants’ basic skills on procurement procedures at facility level;

To equip participants with the skills to maintain core books of accounts and other financial records, and to prepare periodic financial reports thereon;

To create a group of national trainers and LGA level responsible staff (e.g. LGA accountants) who can support and supervise facility staff in the understanding, implementation and immediate institutionalization of FFARS;

To supply enough cash book, bank reconciliation, and financial report paper forms to enable introduction of FFARS in health facilities and schools that will use the manual or paper version to start (PO-RALG, Regional Secretariat, or LGAs will need to supply FFARS paper forms in the future).

Training Methodology

FFARS training is expected to be as practical, on-the-job, and interactive as possible with minimal time spent on theoretical and conceptual background. It is anticipated that a total of sixteen (16) days will be used to cover training and system introduction for all facilities in health and education sectors per each LGA (at the end of which all health facilities and schools will begin implementation of FFARS immediately). Two days will be required to provide the Training of Trainers (TOT). The following is the details of the training approach:

National Training of Trainers (TOT) FFARS training will start with the TOT drawing participants from LGAs (accountants), Regional Secretariats, Ministry of Health, Community Development, Gender, Elders and Children (MOHCDGEC), Ministry of Education, Science and Technology (MOEST) and President’s Office, Regional Administration and Local Government (PO-RALG), representatives from Zonal Health Training Centers (ZHTC) and Local Government Training Institute (LGTI), representatives from Public Procurement Regulatory Authority (PPRA) and Accountant General’s Department, Internal Auditor General’s Division (IAGD) and selected representatives from development partners’ projects on the area of public financial management. The TOT is expected to take about two days (half a day for general conceptual overview and one-and-a-half days for practice and reviews), and will create a team of national trainers. By definition, trainers already have financial management and accounting expertise, the TOT is orienting them to the specifics of FFARS and how to train non-accountant facility level users.

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Phase I Training: Training of Ward Education Officers, District Hospitals and Health Centers The national trainers will train Ward Education Coordinator (WEC) and representatives from district hospitals and health centers in each LGA. This training will also be organized for two days (half a day for general conceptual overview and one and a half days for practice on the use of accounting and reporting templates), and will result in a team of local trainers. Participants will be asked to come with information such as payment vouchers, cash books, bank statements and financial reports that they have been using before FFARS so that they can use such information during the practical sessions.

Phase II Training: Training of Secondary Schools, Primary Schools and Dispensaries The WECs will take the lead in training selected staff from secondary schools, primary schools and dispensaries located in their wards, under the supervision and mentorship of the LGA accountants from their respective LGAs. Where necessary, WECs will be responsible for mobilizing support from health centers and district hospitals. Each Ward Executive Officer will be allocated a maximum of twelve (12) days to provide training to all primary and secondary schools and dispensaries within their wards. The average number of facilities for each WEC is six (6) so while ambitious the process is doable. This training will focus on the practical use of accounting and reporting templates but will also involve general overview of direct facility payment systems. The LGA accountants from each LGA will be responsible for supervising and mentoring all facilities located within their respective LGAs. They will also be responsible for preparing and submitting Phase I training reports to the coordinator at the Local Government Finance Department, PO-RALG. Figure 1 below summarizes the FFARS training methodology as explained above.

Figure 1: FFARS Training Methodology

National TOT

•PO-RALG (10), Regional Secretariats (26); Public Procurment Regulatory Authority (2); Accountant General's Department (2); Internal Auditor General's Division (2); PS3 LGA Accountants- Health and Education (186); Non PS3 LGA Accountants- Health and Educatiion (186); ZHTC (16) and LGTI (4); MOHCDGEC (8); MoEST (2); HPSS (3); PS3 National team (17); PS3 Regional team (30)

Phase I Training

•Health Centers

•District Hospitals

•Ward Education Coordinators

Phase II Training

•Dispensaries

•Secondary Schools

•Primary Schools

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Training Contents

The training contents are organized into six (6) training sessions: 1. What facilities need to know and do before using FFARS; 2. Procurement; 3. Recording financial transactions in the books of accounts; 4. Facility revenue with conditions in spending; 5. Bank reconciliation; and 6. Financial reports. The training sessions have been arranged in a logical flow and each session starts with learning objectives followed by detailed training materials. Where appropriate, the definitions and rationale for the particular session - “the what and why” - are indicated by a question mark symbol ?, and the process – “who needs to do what and when” - by a pen and pencil symbol.

Training Timetable

Figure 2: Training Timetable

TIMING EVENT RESPONSIBILITY

DAY 1

08:00 – 08:30 Registration Secretariat

08:30 – 09:00 Introductions - names, training objectives and norms All

09:00 – 09:20 Official opening Guest of Honor

09:20 – 09:30 Overview of the training program Facilitator

09:30 – 10:10 Session 1: What facilities need to know and do before using

FFARS

Facilitator

10:10 – 10:40 Health Break All

10:40 – 11:10 Session 2: Procurement Facilitator/participants

11.10 – 12.40 Session 3: Recording of financial transactions Participants

Meaning and types of accounting documents and books of

accounts

Facilitator

Acknowledging revenue, writing payment voucher, cheque, cash

book

Facilitator

Key Training Icons

Indicates the ‘What and Why’

Indicates Action Steps

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TIMING EVENT RESPONSIBILITY

12:40-13:10 Session 4: Facility revenue with conditions in spending Facilitator

13.10 – 14.10 Lunch All

14:10 – 16:30 Practice: Group work recording financial transactions in books of

accounts

Participants

16:30 – Refreshments and end of Day 1 All

DAY 2

08:00 – 08:30 Registration Secretariat

08:30 – 08:40 Recap of Day 1 Secretariat/facilitator

08:40 – 10:10 Group feedback Participants

10:10 – 10:40 Health Break All

10:40 – 11:00 Session 5: Bank reconciliation Facilitator

11:00 – 11:40 Group work: Bank reconciliation Groups

11:40 – 12:40 Group Feedback Groups

12:40 – 13:10 Session 6: Financial Reports Facilitator

13:10 – 14:10 Lunch All

14:10 – 14:50 Group work: Financial reports Groups

14:50 – 15:30 Group Feedback Groups

15:30 – 16:00 General Summary (Books of accounts, bank reconciliation and

financial reports)

Facilitator

16:00 – 16:15 Course Evaluation Participants

16:15 – 16:30 Official Closing Guest of Honor

16:30 – Refreshments and End of Training All

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SESSION 1: WHAT FACILITIES NEED TO KNOW AND DO BEFORE USING FFARS

1.1 Government of Tanzania roles and relationships

Service providers (hereinafter called facilities) form part of a larger system which links lower level governments (LLG) at the ward, village, and mtaa level with Local Government Authorities (LGA) at district and municipal level, and through again to sectoral and cross-sectoral bodies within the national government including regional administrations. Each level plays its own critical role within this system and all roles must be performed to achieve good governance, transparency, and accountability for financial management and service delivery to the citizens of Tanzania. Successful implementation of FFARS requires realignment, strengthening and capacity building of three facility level roles with general responsibilities as follows:

Facility governing committee (FGC) – strategic planning, review and approve annual, quarterly or monthly plans and budgets, authorize payments over a threshold level (if a threshold level is set by LGAs or direct facility financing rules), review monthly financial reports, perform other assigned internal control functions as per guidelines, and engage citizens and the community to improve service delivery, transparency and accountability;

Facility in-charge – perform specific FFARS tasks (as described throughout this document), assign FFARS tasks to their staff, and supervise their staff in performance of these assigned tasks;

Facility staff – perform their assigned FFARS tasks.

1.2 Direct Facility Financing

Facilities in the health and education sectors have been managing funds in their bank accounts for a long time (e.g. user fees). Funds available at facility level are directly related to improving management and service delivery, increasing provider autonomy, and also to increasing transparency and accountability at all levels of government. However, to date there has been no standard approach for accounting and reporting at facility level; hence the introduction of FFARS. The linked interventions of direct facility financing (DFF) and FFARS are intended to improve financial management and service delivery at facility level and also strengthen LGA and facility roles and relationships to improve governance, financial management, separation of functions, transparency, and accountability. Various direct facility financing (DFF) mechanisms have already started and are likely to accelerate, including:

School capitation, which started January 1, 2016 and uses flat rate capitation, i.e. a set amount of funding for each pupil;

The Community Health Fund (CHF), which started in 1999 and it is currently being realigned and improved, including aggregation into National Health Insurance Fund (NHIF). CHF is moving to an output- or formula-based payment system with adjustors to address equity, needs, and

Learning Objectives At the end of this session, participants will be able to:

Understand the general cycle of financial management and how FFARS fits into this cycle

Understand roles and relationships, and the related functions or tasks of direct facility financing, planning and budgeting

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performance at facility level (see details in health basket fund below);

NHIF which currently reimburses some health facilities on a fee-for-service basis. Expansion is planned in the future, as per the draft Health Financing Strategy and Single National Health Insurance;

Results-Based Financing (RBF) which started in 2015, is currently being implemented in Shinyanga, Mwanza, Pwani, Simiyu and Tabora regions, and by July 2017 will be rolled-out to Kagera, Kigoma and Geita regions. It shifts to output-based funding with direct financial incentives for facility performance on both specified service delivery or quantity indicators and on a quality scorecard. When facilities receive revenue from RBF, they will immediately start managing those funds using FFARS.

Starting July 2017, health basket fund (HBF) DFF is planned to start in all Tanzania mainland regions. This will change to output-based funding, or determining funding for each health center and dispensary based on a formula. The formula includes a base amount multiplied by certain adjustors for each facility. The adjustors are: catchment population (adjusting for number of people served); utilization (adjusting for a simple performance measure); and distance from LGA center (a simple equity adjustor benefiting remote rural facilities). When facilities receive HBF DFF, they will immediately start managing these funds using FFARS.

1.3 Broader Financial Management Cycle

FFARS is a key element of a broader financial management cycle. This cycle is shown in Figure 3below, which highlights the focus of this training in red. Planning and budgeting is summarized in the next sub-section of this manual for context in the use of FFARS, while a brief review of procurement process follows in Session 2. Details of accounting and financial reporting are the core of FFARS and are described in the subsequent sections of this manual including: detailed statements of who does what and when; figures that show exactly how to complete forms; and case studies for practical group work during the FFARS training. There are other financial management functions such as oversight and accountability, which includes internal audit, external audit, transparency and anti-corruption, and which are also inherent in the broader financial management cycle but not specifically addressed in this training. Facilities will be informed by LGA financial managers of their specific obligations in relation to these functions.

Figure 3: Broad Public Financial Management Cycle

Planning and Budget

Development

Budget execution, including

procurment and internal control

Accounting

Financial reporting

Audit and oversight

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1.4 Planning and Budgeting

Funding and service delivery targets for service provision at the facility level form part of the LGA plan and budget, and facility officials are therefore accountable to the LGA for showing that they have met their expected targets through wise decision-making and transparent use of the funds sent to them for that purpose. LGAs similarly have to account through regions to the relevant national level bodies for achievement of national targets. In-depth training for facility staff on planning and budgeting is not undertaken through FFARS, and the details of formats are considered in other government guidelines. However, it is useful to consider how financial accounting and reporting relate to the planning and budgeting functions within the PFM cycle outlined in Figure 3 above. The plan and budget outline what the facility is expecting to do during the coming time period, how much it will cost, and where the money will come from. They are key in the management of any facility, whether public or private, as critical tools for enabling, coordinating and controlling activities at the facility and thereby contributing to successful delivery of services to the local population.

A plan is a pre-determined set of activities the facility intends to implement during a definite time period (e.g. financial year) based on its goals and objectives. These goals and objectives come both from national and LGA policies and strategies together with locally defined priorities;

A budget is a costed plan, or the plan expressed in financial terms, setting out both the expected revenues for the facility from different sources, and how these revenues will be spent on the agreed services or activities over the defined period.

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SESSION 2: PROCUREMENT

2.1 Defining procurement and its rationale

In Figure 2 above, procurement follows planning and budget development, as a part of budget execution. Plans and budgets determine what facilities can and should procure, and government procurement methods and processes describe the steps to be taken to accomplish it.

What is procurement?

It is the methods and process of acquisition of goods, works and services to satisfy identified needs.

It includes activities such as buying, renting, leasing or otherwise acquiring any goods, works or services by a procuring entity spending public funds.

What are the objectives of procurement?

To provide the facility with a constant flow of goods, services and works to meet its needs;

To reduce costs through more efficient and effective purchasing by buying appropriately to obtain “value for money”.

What are the categories of procurement?

There are four (4) categories of procurement: goods (i.e. supplies such as medicine, stationaries, etc.), works (e.g. office and staff house construction, repairs of building, rehabilitation, etc.), consultancy services (i.e. technical assistance e.g. training, research, etc.) and non-consultancy services (e.g. cleaning, security services, etc.).

What are the procurement methods at the facility level?

There are two (2) primary procurement methods that can be applied at the facility level:

Shopping (also called competitive quotation): invitation of at least three (3) suppliers based on price quotation of an item;

Single source procurement: procurement made from a single supplier/contractor. Justification must be given as to why single source procurement is needed.


Understand and explain the procurement methods and processes at the facility level

Apply correct procurement procedures at their workplace in line with the requirements of the laws and regulation

Note: Procurement of goods, works and services at the facility must comply with the requirements of the Public Procurement Act and its related regulations, as well as to guidelines and circulars issued by the government; Facilities must also refer to the 2017 Guideline on Public Procurement Procedures for Lower Level Governments for detailed guidance.

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2.2 The procurement process at the facility level

The procurement process at the facility level is composed of six or seven key steps as summarized in Figure 4 below. While specific rules will be set by PPRA or LGAs, in general if procurements are included in the budget, the facility governing committee should only need to approve or authorize them if they are above a set threshold amount (step 2).

Figure 4: Procurement Process at the Facility Level

1. Needs Identification

Identify the items or services to be procured according to the plan and depending on the available budget

2. Approval (if above threshold)

1. Facility in-charge presents proposed goods/services to be procured to the facility governing commitee (FGC)

2. The FGC discusses and approves

3. Selecting the Supplier

1. Use competitive quotation or single source procedures from reliable suppliers

2. If necessary, seek approval from higher level before placing the order

4. Place an Order

Send the order to selected supplier

5. Receiving Stores

1. Ensure all the incoming stores counted and checked to verify the correctness in quality, quantity, and specification by the facility committee

2.. When the goods or services are of a technical nature, seek technical advice from a higher level

3. Immediately notify the supplier when deliveries do not conform to the standard, specifications, or samples through the goods received note

6. Accepting Stores

Record the goods in the relevant stores ledger

7. Pay supplier

Based on the invoice, local purchase order, delivery note, goods received note, facility governing committee minutes, and/or contract, process payment to the supplier

8. Proceed to accounting and reporting step in FFARS

Pay the supplier using FFARS procedures

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SESSION 3: RECORDING OF FINANCIAL TRANSACTIONS

3.1 Introducing the different accounting documents and books of accounts

Which are the accounting documents needed at facility level?

The basic accounting documents to be maintained by facilities are: receipts, payment vouchers, cheques, the cash book, and the control book. There is also a general ledger which will be maintained for the facility by the LGA (see note at the end of this Session). The general ledger is not included in FFARS manual (paper) version but is in the FFARS electronic version as it’s automatically created when transactions are entered (so all facilities will incorporate it in the gradual transition to FFARS automated version).

Why are they needed?

Each facility must maintain these documents in order to ensure proper accounting records and reporting for finances in line with the requirement of relevant laws and regulations, including standards and circulars. These include: Public Finance Act (2001), Local Government Finance Act (1982), Public Procurement Act (2011) as amended 2016, Budget Act (2015), Local Authority Financial Memorandum (2009), International Public Sector Accounting Standards, Local Authority Accounting Manual (2009), PlanRep and Epicor Implementation in Local Government Authorities. Recording in these documents is covered in this Session with the exception of the control book which is covered in Session 4.

3.2 Issuing a receipt for funds received by the facility

The facility in-charge should obtain receipt books and the Government Finance Statistics (GFS) coding manual from the LGA accountant. The facility in-charge should also designate the person(s) responsible for receiving funds and issuing receipts within the facility. The person designated must follow the steps below whenever funds are received:

1. Issue a receipt for any funding received from clients, whether paid in cash, cheque or through

direct bank deposit when notified or after confirmation 2. Complete all parts of the receipt – as illustrated in Figure 5 – and as described below:

GFS code for the specific revenue source as per GFS coding manual

Date of receiving the funds

Name of the payer/customer (Received from…)

Address of the payer/customer (Address…)

Amount paid entered in words and figures (The sum of…)

For what purpose were the funds received (Being…)


Explain the meaning and types of various accounting documents and books of accounts

Record financial transactions in the accounting documents and books of accounts.

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Indicating whether funds were received by means of cash or cheque (i.e. circling as appropriate or cancelling what is not applicable).

Signature and title of the person receiving payments

Figure 5: Example of a General Receipt

MAFANIKIO DISTRICT COUNCIL No: 0001

JARIBU HEALTH CENTRE GENERAL RECEIPT

Date…………….......

Received from …………………………………………………………………………………………………………………….. Address……………………………………………………………………………………………………………………………….. The sum of Tanzanian shillings……………………………………………………………………………………………. ……………………………………………………………………………………………………………………………………………. Being…………………………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………………………………………..

Signature ……………………….. CHEQUE/CASH Title………………………………..

3.3 Payment vouchers for expenditures by facilities

All payments to suppliers or clients must be done through payment voucher (PV). The purpose of a payment voucher is to document the details and authorization for a payment.

The facility in-charge should obtain payment vouchers (PV) and the GFS coding manual from the LGA accountant

The facility in-charge should designate the person(s) responsible for preparing payment documents and recording in the cash book. If the facility employs one or more accounts staff, separation of duties should be maintained, such that one person is responsible for documentation and another person in charge of cash payment (the cashier)

PVs must be prepared for every expenditure, i.e. on a daily basis

The person responsible for preparing PV must ensure that all parts of the PV are completed as described below. An example is shown in Figure 6 below.

1) Facility name in full 2) PV number – this is assigned according to month, so the first payment of the month will be

assigned PV No. 1. The second, third, fourth, etc. payments will be assigned PV No. 2, PV No.3, PV No.4. (For example, PV1/07 implies this is the first payment in the month of July; PV3/07 implies third payment in the month of July).

3) Name and address of payee in full, i.e. name of the supplier or client being paid by the facility (e.g. Matambwe Pele Bujugo, P.O. Box 20, Mpanda or M/s Kisangani Enterprises, P.O. Box 35, Uvinza).

4) Date of payment (e.g. 02/07/2017).

CODE………………

…

TZS………………………

……..

Council

LOGO

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5) Local Purchase Order number (LPO No) -- this is filled out by the facility when purchases are made through a competitive procurement process (shopping or competitive quotation, see Session 2).

6) Invoice number -- this is taken from the invoice submitted by supplier or client. 7) Amount to be paid written in both words and figures. 8) Payment in respect of -- this is what is being purchased, i.e. the expenditure items (e.g.

disinfectant supplies for health facilities; chalk for schools). 9) Accounting details, including;

Activity code (extracted from facility plans. The codes incorporates GFS code) Description --explanation of the activity code, including item purchase as per GFS code

description) Fund source—source of fund from which the payments will be charged from Amount to be paid

10) Name, title and signature of the person preparing the PV 11) Name, title and signature of the person approving the PV 12) Cheque number -- this is only entered after approval of the PV and the cheque has been written

and signed by the appropriate signatories.

Figure 6: How to fill the payment voucher

Note: All relevant supporting documents for each payment (e.g. invoice, local purchase order, delivery note, goods received note, minutes of facility governing committee) must be attached to the PV and rubber stamped “PAID”.

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Note: The cheque must be written clearly and neatly so that it is readable. If a mistake is made, (e.g. mistake in entering name of payee, or the amount in words or figures), that mistake must be cancelled and both signatories must sign their initials above the cancellation.

3.4 Writing a cheque

After approval of the PV, a cheque will be prepared to enable payment to be made to the individual, customer or supplier. Depending on LGA policy, small amounts of cash may be kept at the facility level and used to pay for either emergency or very small purchases.

The facility in-charge should designate the person(s) responsible for writing cheques. Most likely this is the same person keeping the cash book due to both small facilities with small number of staff and the human resources shortage.

The responsible person should collect cheque books from their bank.

The person responsible for preparing/writing cheques must complete the following steps every time they issue a cheque (see Figure 6 below for illustration):

1) Date of payment (i.e. the date when the cheque is being prepared). 2) Name of payee (i.e. name of the supplier or client being paid by the facility as written in the PV) 3) Amount in words and figures 4) Signatures of two signatories -- one from Category A and the other from Category B (see

Glossary)

Figure 7: Example of a cheque

3.5 Recording revenues in the cash book

The cash book is used to record revenues and expenditures made in cash or by cheque. The cash book has two parts – the revenue side is normally on the left-hand side and the expenditure side is on the right-hand side.

The facility in-charge should designate the person(s) responsible to record revenues in the

Category A signatory must

sign here

Category B signatory must sign here

Enter amount

in words Enter name of

payee

Enter amount

in figures

Enter date, month and year

22

Note: the heading in the example is Receipts rather than Revenue – these are the same for the purposes of this training

cash book. In general, and certainly in smaller facilities, the same person will be responsible for recording both revenues and expenditures in the cash book.

The designated person should follow the steps below to record revenues on the left-hand side of the cash book on a daily basis (see Figure 8 below for illustration):

1) Date column: record the date the funds were received, as indicated in the receipt book. This is the date when the client paid your facility (e.g. 01/07/2017).

2) Reference column: record the receipt number as the reference for this transaction. 3) Description column: write the description of this transaction as indicated in the receipt (e.g.

MoF). 4) GFS code column: record the GFS code as shown in the receipt (e.g. 130123 for health basket

fund). 5) The cash book columns will be blank below the underlined “Source of Funds.” On each page of

the cash book, write in by hand the different fund sources that are received by the facility (e.g. HSBF if funds received is from health sector basket funds).

6) Appropriate source of funds column: Record the received amount in the relevant column for that particular source of funds.

7) Cash column: if the receipt was in cash or cheque, record the amount in the cash column. 8) Bank column: if the receipt was through the facility bank account, record the amount in the

bank column.

Figure 8: How to fill the revenue (Receipts) side of the cash book

3.6 Recording expenditures (payments) in the cash book

The person responsible for recording financial transactions in the cash book should do the following to record payments on the right-hand side of the cash book on a daily basis (see Figure 9 below for illustration):

1) Date column: record the date of this transaction as indicated in the reference document, i.e. the payment voucher. This is the date that the supplier was paid by the facility (e.g. 08/07/2017).

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2) Reference column: record the PV number as the reference number for this transaction (e.g. PV1/07).

3) Description column: write the payee as indicated in the PV (e.g. MSD). 4) GFS code column: record the GFS code as shown in the PV (e.g. 220407 for laboratory supplies). 5) GFS code description column: to record the purpose of the payment, write the description of

this GFS code in words (e.g. laboratory supplies) 6) The cash book columns will be blank below the underlined “source of funds.” On each page of

the cash book, write in by hand the sources of funding that are received by the facility. 7) Appropriate source of funds column: Record the amount paid in the relevant fund source

column. 8) Cash column: if the payment was in cash, record the amount in the cash column. 9) Bank column: if the payment was through the facility bank account (i.e. by cheque or transfer),

record the amount in the bank column.

Figure 9: How to fill the payment side of the cash book

3.7 Balancing of the cash book

When do you balance the cash book?

Balancing of the cash book is done at the end of every month in order to calculate the closing balance at the end of that month and the opening balance for the next month.

The person responsible for recording financial transactions in the cash book should do the following at the end of each month to balance the cash book (see Figure 10 below for illustration):

1) Make sure that last month’s closing balance is recorded at the start of the monthly cash book as this month’s opening balance.

2) Add up all the receipts/revenues in all the columns on the left-hand side of the cash book, including the opening balance. It is particularly important to add up the amounts in the cash column and bank column to create a total of cash and bank receipts.

3) Add up all the payments/expenditures in all the columns on the right-hand side of the cash book including the opening balance. It is particularly important to add up the cash column and bank column to create a total of cash and bank payments.

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A note on the General Ledger: after recording financial transactions in the cash book, the next step is the process of transferring information from cash book to another book of account called the general ledger (see Appendix 1 for the details). As already mentioned, the accounting and reporting system at facility level will also be maintained in an electronic form. Facilities will therefore be required to submit their completed cash books to the LGA headquarters every month for posting into the system. When cash book transactions are posted into the electronic system, that system will both keep a copy of the cash book as well as automatically post the information from the cash book to the general ledger. Therefore, this task of posting information from cash book to the general ledger will not be performed manually by the facilities. It will instead be performed through the electronic system at LGA level.

4) On the next line below these totals, write in “This month’s closing balance.” Then subtract total

payments from total receipts for both cash and bank columns and write them in on the right side of the cash book as shown in the example.

5) Then either draw two double lines below this month’s closing balance or turn to a new page of the cash book. Then record the closing balance that you have just calculated and written in step 4 above as the opening balance on the left side of the next month cash book.

6) Figure 10: How to balance the cash book

Note: Writing in the cash book should be clear, neat and readable. Do not use correction fluid to correct any mistakes made in the cash book. You need to cancel the mistake, write the correct word or figure above it and sign (initial).

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SESSION 4: FACILITY REVENUES WITH THE CONDITIONS IN SPENDING

What do we mean by a condition in spending?

Some sources of funding at facility level, especially from the government, have conditions or limits on how they can be spent. This is generally to help achieve certain policy objectives. Example of conditional receipts are:

Capitation grants for primary and secondary schools:

o Primary School: 30% Books, 30% Renovation, 20% Exams, 10% Admin, 10% Sports.

o Secondary School: 35% Admin, 30% Academic, 15% Exams, 10% Emergency Kits and 10% minor works.

Health (for district hospitals, health centers and dispensaries):

o Results Based Financing: 25% Motivation, 75% Facility Activities

Why do we need to control these?

These conditions form part of the financial regulations and guidelines that facilities need to comply with. This means that additional controls are needed to show that the conditions have been met.

How do we perform this control?

The control book is the key tool to enable facilities to keep track of spending within the given conditions or limits in spending for those sources of funding which come with conditions. The control book is used to record these conditional revenues whenever they are spent and thus to be able to monitor them on a daily basis. The control book has three key sections: “cash in”; “cash out”; and “balance”. If there is more than one source of funding which has conditions guiding its use, make sure that each fund source is maintained in a separate control book page. The book is kept by showing the respective category allocations, payments made during the day, and the balance at any point in time for each allocation category.

4.1 Procedures for recording cash-in and cash-out in the control book

The person designated by the facility in-charge to record revenues and expenditures in the cash book is also responsible for recording transactions relating to conditional revenues from the cash book to the control book. She/he should do the following (on daily basis or immediately after occurrence of the transaction) in respect of “cash in”, “cash out” and

“balance” sections of the control book (see Figures 11 and 12 for illustration):


Identify facility revenues with conditions in spending

Be able to manage and control expenditures consistent with guidelines keep control on them

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“Cash in” section of the control book 1) Date, description and reference columns (labelled 1, 2 & 3 in the example): Enter the date,

description and reference of the receipt as recorded in the cash book into the respective columns (1, 2, 3 ) on the “cash in” section of the control book.

2) Total amount column: Enter the total amount received as per cash book in the total column of the “cash in” section of the control book.

3) Categories of allocation columns: Using manual calculations or a calculator, allocate the above total amount into the respective categories as per the applicable guideline for that particular source of funding. There should be entries in each of columns 5 to 9.

“Cash out” section of the control book 1) Date, description and reference columns (1, 2 & 3): Enter the date, description and reference of

the payment as recorded in the cash book in the respective columns (1, 2, 3) of the control book.

2) Total amount column (10): Enter the total amount paid out as per cash book in the total column of the “cash out” section of the control book.

3) Categories of allocation columns: Record the details of the above total amount paid into the relevant categories as per applicable guideline of that fund source. There will be at least one entry in columns 13 – 17.

Figure 11 How to record financial transactions in the control book - “Cash in” and “Cash out” sections

“Balance” section of the control book 1) For each fund source, start by recording the allocated (refer step 3 of the ‘cash in section of

control book above’) and total amount in the balance side of the control book i.e. in the same row.

2) When payments are made, deduct the paid amount (as per “cash out” section) from the available balance in the column applicable to the spending category, to get the new balance.

3) Whenever new revenues are received, enter the total and respective allocation to applicable categories of that fund into the “cash in” section, and update the previous balance to get new balance in the same row.

4) Note: Procedures number (2) and (3) will continue happening as you receive and make payments.

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Figure 12 How to record financial transactions in the control book - Balance section including daily running balance

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SESSION 5: BANK RECONCILIATION

5.1 The meaning and reasons for preparing bank reconciliation statements

What do we mean by bank reconciliation and why prepare bank reconciliation

statements?

In bookkeeping, bank reconciliation is a process that explains the difference on a specified date between the bank balance shown in a facility’s bank statement (supplied by the bank), and the corresponding amount shown in the facility’s own accounting record (cash book). It is normally carried out on a monthly basis with the key objective of identifying the items which are different between the two independent records and then reconciling them. There are several reasons why the bank records and records kept in the facility’s cash book (bank column) could be different. They include:

Cheque issued and recorded in the cash book but not yet presented to the bank for payment

Direct bank deposits not yet recorded in the cash book

Bank charges and interest entered in the bank statement but not entered in the cash book

Cheque deposited but “referred to drawer” by the bank

Errors in the cash book and/or the bank statement

To bring these items into account or to balance the two independent records, a reconciliation statement needs to be prepared every month.

5.2 Procedures for preparing bank reconciliation statements

In preparing the bank reconciliation statement, the facility staff responsible must have in hand both the bank statement for the relevant period (e.g. month of July) and the balanced cash book (see section 3.8) with transactions for the period in question. The facility staff responsible for preparing bank reconciliation statements should do the following at the end of

every month to complete the bank reconciliation process (see figure 13 for demonstration):

1) Adjust the cash book closing balance after receiving the bank statement by recording items which appear in the bank statement but not in the cash book (e.g. direct bank charges, direct bank receipts)

Direct bank charges: record them as expenditures on the right-hand side of the cash book) at the month end (e.g. 31st July, 2017).

Direct bank deposits: record them as revenues on the left-hand side of the cash book at the month end (e.g. 31st July, 2017).


Understand and/or explain the meaning and reasons for preparing bank reconciliation statements.

Explain the procedures for preparing bank reconciliation statements.

Prepare bank reconciliation statements as per requirement of laws and regulations

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After recording direct bank charges and direct bank deposits in the cash book, calculate the adjusted closing balance in the same way as the initial closing balance was calculated (see section 3.8). Then enter the amount on the “Balance as per adjusted Cash Book” line of the bank reconciliation statement.

2) Determine total amount of cheques issued by the facility but not yet appearing in bank statement (i.e. unpresented/outstanding cheques) by comparing drawn cheques appearing in cash book against drawn cheques in bank statement.

Enter the total amount in the unpresented/outstanding cheques line in the bank reconciliation statement

This total amount of unpresented/outstanding cheques will be added to the adjusted cash book balance in step (1) above.

3) Determine cash deposited but not appearing in bank statement (i.e. cash in transit) by comparing total receipts in cash book against total receipts in bank statement.

Enter the amount in the cash in transit line in the bank reconciliation statement

This total amount of cash in transit will be deducted from the adjusted cash book balance in step (1) above.

4) Calculate the “Expected balance per bank statement” line in the bank reconciliation statement by adding unpresented/outstanding cheques and subtracting cash in transit from Balance as per adjusted Cash Book.

5) Compare the “Expected balance as per bank statement” line in the bank reconciliation statement with the “Actual Balance as shown in the bank statement” line in the bank reconciliation statement. The difference should be zero, i.e. the two independent balances must now agree. (Note: if they do not agree, continue tracing the difference until they agree).

6) Complete the bank reconciliation statement using the format provided in Template No. 8 in the Manual on FFARS.

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Figure 13: How to prepare bank reconciliation statements

THE UNITED REPUBLIC OF TANZANIA

PRESIDENT’S OFFICE REGIONAL ADMINISTRATION AND LOCAL GOVERNMENT

Jaribu Health Centre

Reconciliation Report for the month ending…………..…. (e.g. 31/07/2017)

______________________________________________________________________________ BANK ACCOUNT NAME (e.g. Jaribu Health Centre Cash Account) AMOUNT

Balance as per adjusted cash book as at (e.g. 31/07/2017) XXX Add unpresented/outstanding cheques XXX Less: cash in transit (deposit in cash book not in bank) (XXX) Expected balance as per bank statement XXXX Actual Balance as shown in the Bank Statement as at (e.g. 31/07/2017) XXXX Unreconciled Difference between Book and Bank 0.00 Prepared by: Approved by: Name: ___________________ Name: Title: ___________________ Title: ___________________ Signature: ___________________ Signature: ______________ Date: ___________________ Date: _________________

The figure is obtained as per explanation in Step No. 1

Refer Step No. 2

Refer Step No. 3

These two figures must be the same i.e agree (Refer to Step No. 4)

Heading/Title as it should appear on the report i.e. name of the facility and period for the report.

This the responsible

or appointed staff This is the head

of facility

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SESSION 6: FINANCIAL REPORTS

6.1 The meaning and purposes of preparing financial reports

What do we mean by financial reports and why prepare financial reports?

Financial reports are formal records of the financial activities (e.g. revenues and expenditures from cash book) and the financial position of a facility produced at a specified period (e.g. monthly, quarterly, annual).

They summarize revenue and expenditures during the period and determine surplus, deficit, and cash remaining.

The financial report will be used by the Council Treasurer for preparation of LGA financial statements, and also by the facility to enable it to improve its management and service delivery.

6.2 Procedures for preparing financial report

The facility staff responsible for preparing the financial report on a monthly or quarterly or annually basis must complete all parts of the report as described below (see Figure 14 for illustration):

1) Enter all relevant details at the top or heading of the report. If not known, obtain Council, Ward, Village, Facility codes from LGA accountant.

2) Enter codes and amounts for the opening balances of cash on hand and cash at bank. These opening balances are copied from the last reporting period closing balances.

3) Add together opening balances of cash on hand and cash at bank. Enter this total amount obtained in the space provided (Row A Sub-Total)

4) From the cash book, enter codes, description and total amounts for each revenue item received during the reporting period (e.g. HBF, CHF, user fees, RBF).

5) Add together these amounts per revenue item and enter the total revenue obtained in the space provided (Row B Sub-Total Revenue).

6) Add Row A Sub-Total (total opening balances of cash on hand and at bank) and Row B Sub-Total Revenue (revenue for the period) to obtain total available revenue. Enter this total amount obtained in the space provided (Row C Total Available Revenue).

7) From the cash book, enter codes, description and total amounts for the expenditure items incurred during the reporting period (e.g. medical supplies, drugs, stationery, fuel).

8) Add together these amounts per expenditure item and enter the total expenditure obtained in the space provided (Row D Total Expenditure).

9) Deduct total expenditure (Row D) from total available revenue (Row C) to determine the closing balance for the period. Enter this closing balance amount obtained in the space provided (Row E


Understand and/or explain the meaning and purposes of preparing financial reports

Understand and/or explain various types of reports and their frequency of preparation.

Prepare and submit financial reports to LGAs as per requirement of laws and regulations

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Closing Balance). Note: Enter breakdown of closing balance by cash and bank as indicated in cash book

10) The person responsible for preparing the financial report should then sign and enter their designation, together with the date of preparation.

11) The facility in-charge responsible for authorizing the financial report should then sign and enter their designation, together with the date of authorization.

12) Submit the financial report to facility governing committee and LGA accountant.

Figure 14: How to prepare the financial report

Monthly/Quarterly/Yearly Financial Report

Region name______________________ Council code: ______________

Council name______________________ Ward code:_________________

Ward name________________________ Village code: ________________

Village name_______________________ Facility code:____

Facility Name:_________ Reporting Period: Month……………………… Quarter…………………Year…………………………………

SN Codes Particulars Amount (TZS)

Opening Balance

Balance on hand (Cash)- (from cash book) xx

Balance at Bank (from cash book) xx

A

Sub-Total (Enter the total of Cash balance on hand/draw plus

balance at bank) xxx

Revenue GFS Code

Revenue Items (received for the period)

(e.g. CHF or Capitation) xx

B Sub-Total Revenue for the period (Enter the total

amount of revenue received during reporting month/quarter/year) xxx

C Total Available Revenue (A +B) i.e. (Enter the total of

revenue received during reporting month/quarter/year) plus opening balance

xxxx

Expenditure GFS Code

Expenditure Items (incurred for the period)

(e.g. Diesel or Electricity) xx

D Total Expenditure (Enter total expenditure during reporting

month/quarter/year) xxxx

E Closing Balance (C-D) – i.e. (Total available revenue

minus Total expenditure) xxxx

Closing Balance (Breakdown)

Cash on hand (from cash book) xx

Cash at Bank (from cash book) xx

Prepared by:_________________________Designation:___________________Date:_____________ Authorised by:________________________Designation:___________________Date:_____________

Enter the amount of cash that the facility retained last month/quarter/year on hand/office safe/draw

This is the amount of money that the facility retained last month/quarter/year in bank account

Enter the name of revenue source (e.g. Own source, User fees, CHF, school capitation, etc) in this column and its amount in next column. This is for total revenue received during reporting month/quarter/ year

Enter the name of expenditure item (e.g. diesel, allowance, electricity, perdiem, etc) in this column and total amount spent in next column. This is for total amount spent for that expenditure item during reporting month/quarter/ year

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APPENDICES

Appendix 1: General Ledger

The general ledger is the principal/ chief book of account. This is because it is a book that contains a summary of all transactions of the facility by type (each source of revenue will have a summary of all collection received during the particular period e.g. a month, recorded in that specific source ledger. Likewise, each expenditure item will have a summary of payments related to that expenditure incurred during the particular period e.g. a month, recorded in that specific item of expenditure ledger.

Each page of the ledger contains one type of account (either specific revenue source account or specific expenditure item account), the title of which appears at the top.

It is important to note that a transaction (either revenue or expenditure) must be recorded in the cash book before opening a ledger account for that particular transaction.

The person responsible for maintaining the ledger should do the following on a daily basis in order to transfer information from the cash book to the ledger (see Figure 12 for illustration):

1) Open all appropriate ledger accounts (each page containing one type of account) relating to revenue and expenditure items

2) Write the account name (i.e. the name of revenue or expenditure item) as heading at the top e.g. Wages A/C

3) Write the date: this is the date as written in the cash book relating to the information being transferred to the ledger (e.g. 31/07/2017)

4) Description: enter the method of receipt or payment as recorded in the cash book 5) Fund source: enter the fund source as written in the cash book 6) Post the amount in the debit side of the ledger if that transaction is recorded in the expenditure

side (i.e. the credit/ right-hand side of the cash book). 7) Post the amount in the credit side of the ledger if that transaction is recorded in the revenue

side (i.e. the debit/ left-hand side of the cash book). 8) Balance: This is the running balance determined as entries are being made in the relevant ledger

account

Figure 1 Illustration of how to post to the ledger accounts

Laboratory supplies A/C

Date Description Fund Source Debit

(TZS)

Credit

(TZS)

Balance

(TZS)

31/7/2016 To bank User Fee 50,000 50,000

HSBF A/C

Date Description Fund Source Debit

(TZS)

Credit

(TZS)

Balance

(TZS)

01/7/2016 By Bank (MoF) HSBF 10,000,000 10,000,000

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Appendix 2: Case Study 1: Recording financial transactions in the accounting documents/books of accounts

Scenario 1: Facilities in the Health sector

The following relate to the transactions pertaining to Azimio Dispensary from Urambo District in Tabora

Region for the Month of July, 2016:

1st July, 2016 The dispensary started with a balance of TZS 200,000.00 CHF fund (GFS Code 210607) in its

bank account and TZS 20,000.00 User fee (GFS Code 140399) in Cash

2nd July, 2016 The dispensary received a total of TZS 18,000.00 User Fees (GFS Code 140399) from 6

outpatients. An acknowledgement receipt No. 0001 was issued by the facility for the total

amount.

3rd July, 2016 The dispensary deposited TZS 38,000.00 user fees into its bank account, bank pay-in slip No

1111.

10th July, 2016 The dispensary received TZS 10,000,000.00 RBF funds from the Ministry of Finance and

Planning. The amount was received directly in the dispensary bank account. An

acknowledgement receipt No. 0002 was issued by the facility.

11th July, 2016 Dispensary withdrawn 300,000 for the Office uses in the name of facility incharge by Cheque

No. 797892 attached with PV01/07.

13th July, 2016 Dispensary paid cash 50,000/= for electricity (GFS Code 220201) under RBF

15th July, 2016 Dispensary paid cash 10,000/= to Mr. Juma for monthly security costs (GFS Code 229905)

from User Fees.

18th July, 2016 The dispensary incurred the following expenses:

i. Spent TZS 2,000,000.00 RBF funds to purchase a delivery bed (GFS Code 420105) from the ABC Pharmaceutical Company. The dispensary paid the company by cheque No.797893 attached with PV02/07, Invoice No.333 and LPO No.99

ii. Spent TZS 1,000,000.00 RBF funds to purchase medical equipment (GFS Code 410406) from the Medical Store Department. The amount was also paid by cheque No. 797894 attached with PV03/07, Invoice No.717 and LPO No.100

28th July, 2016 The dispensary spent a total of TZS 840,000.00 RBF funds to purchase the following items to construct an incinerator and a placenta pit (GFS Code 410406):

i. 20 bags of cements at a total cost of TZS 280,000.00

ii. 3000 bricks at a total cost of TZS 400,000.00 iii. 2 lorry of ‘mchanga’ at a cost of TZS 120,000.00

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iv. TZS 40,000.00 spent for transporting bags of cements and bricks

The amount was drawn from bank by the Head of the Dispensary Mr. Mkude Juakali through cheque No. 797895 attached with PV04/07

REQUIRED

Enter the above transactions into their relevant accounting documents and/or books of accounts: i. Receipt

ii. Payment Voucher iii. Cheque iv. Cash book (NB: Also, balance the cash book when you have completed entering transactions for the

month of July, 2016).

Scenario 2: Facilities in the Education sector

The following relate to the transactions pertaining to Majani ya Chai Primary School from Ilala District in Dar-

es-Salaam Region for the Month of July, 2016:

1st July, 2016 Majani ya Chai had a bank balance amounting to TZS 500,000

2nd July, 2016 Ministry of Finance disbursed TZS 10,000,000 to Majani ya Chai Primary School being

capitation grant (221314) for the month of July 2016. An acknowledgement receipt No. 0001

was issued by the facility

6th July, 2016 Transferred TZS 500,000/= to the Cash Till by Cheque No. 545001 attached with PV01/07

8th July, 2016 Paid by cheque no. 545002 TZS 2,000,000 for Examination Printing (GFS No 221311 ) to

Hassanali Printers Ltd, attached with PV02/07, Invoice No. 2020 and LPO No. 146.

15th July, 2016 Paid transport to distribute examinations (GFS Code 221311) TZS 200,000 by Cheque No.

545003 attached with PV03/07.

20th July, 2016 Paid Cash TZS 250,000 allowances (GFS Code 210315) to examination supervisors.

22nd July, 2016 Paid TZS 3,000,000 by Cheque No.545004 to Masumin Stationery for buying science books

(GFS Code 220105), attached with PV04/07, Invoice No.717 and LPO No.147

25th July, 2016 Paid by cheque No.545005 to Dawasco TZS 100,000 for water bill (GFS Code 220202),

attached with PV05/07 and Invoice No.086.

26th July, 2016 Paid cheque No. 545006 to TANESCO TZS 150,000 for electricity (GFS Code 220201),

attached with PV06/07 and Invoice No.588

30th July, 2016 Paid salary (GFS Code 210207) for school watchmen TZS 900,000 cheque No. 545007

attached with PV07/07 and list of watchmen

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30th July, 2016 Collected Cash donated (GFS Code 221406) by Member of Parliament TZS 500,000. An

acknowledgement receipt No.0002 was issued.

30th July, 2016 Banked the amount donated by Member of Parliament.

REQUIRED

Enter the above transactions into their relevant accounting documents and/or books of account: i. Receipt

ii. Payment Voucher iii. Cheque iv. Cash book (NB: Also, balance the cash book when you have completed entering transactions for the

month of July, 2016).

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Appendix 3: Case Study 2: Recording financial transactions in the control book


Refer to Case study 1 and the records you entered into the cash book (i.e. dates: 13th July; 18th July and 28th July). You are further provided with the following information on facility revenue received on 10th July, 2016:

Guideline for the use of RBF funds: 75% facility activities and 25% motivation

REQUIRED

Enter the above transactions in the control book of Azimio Dispensary for RBF funds for the month of July, 2016.


Refer to Case study 1 and the records you entered into the cash book (i.e. dates: 8th July; 15th July, 20th July; 22nd July; 25th July; 26th July and 30th July). You are further provided with the following information on facility revenue received on 2nd July, 2016:

Guideline for the use of Capitation Grants: 30% Text Books; 30% Renovation; 20% Examinations; 10% Administration and 10% sports.

REQUIRED

Enter the above transactions in the control book of Majani ya Chai Primary School for Capitation Grants for the month of July, 2016.

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Appendix 4: Case study 3: Preparation of bank reconciliation statements


You are given the following bank statement in respect of Azimio Dispensary for the month of July, 2016:

NMB CUSTOMER ACCOUNT STATEMENT Print Date: 03/08/2016

User ID: ak04460

Name In-charge Azimio Dispensary Branch 331- Urambo

Customer No 001348876 Account No. 22101100060

Address

BOX 25 URAMBO

Account Description In-charge Azimio Dispensary

Account Class Current Account

Account Open Date 10/04/2000

Account Currency TZS

From Date 01/07/2016

To Date 31/07/2016

DATE NARRATION CHEQUE

NO

DEBIT

(cash out)

CREDIT

(cash in)

BALANCE

01/07/2016 Opening Balance 200,000.00

03/07/ 016 Deposit- User Fee 38,000.00 238,000.00

10/07/2016 Ministry of Finance & Planning

10,000,000.00 10,238,000.00

11/07/2016 Azimio Disp - in-charge

797892 300,000.00 9,938,000.00

18/07/2016 Medical Stores Department

797894 1,000,000.00 8,938,000.00

28/07/2016 Mkude Juakali - in-charge

797895 840,000.00 8,098,000.00

30/07/2016 Ministry of Finance- RBF

12,000,000.00 20,098,000.00

31/07/2016 Bank Charges

1,000,000.00 19,098,000.00

31/07/2016 Deposit- Outpatient

50,000.00 19,148,000.00

…………………………………………………End of Report……………………………………………………………………………….

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REQUIRED

Using the cash book you completed in Case Study 1(a) and the above bank statement, prepare the bank reconciliation statement of Azimio Dispensary for the Month of July, 2016.


You are given the following bank statement in respect of Majani ya Chai Primary School for the month of July, 2016:

NMB CUSTOMER ACCOUNT STATEMENT Print Date: 02/08/2016

User ID: ak01150

Name Headteacher- Majani ya Chai P/School

Branch 022- llala

Customer No

001348876 Account No. 22101100020

Address

BOX 1836, ILALA

DAR-ES-SALAAM

Account Description Headteacher- Majani ya Chai P/S

Account Class Current Account

Account Open Date 02/01/2000

Account Currency TZS

From Date 01/07/2016

To Date 31/07/2016

DATE NARRATION CHEQUE

NO

DEBIT

(cash out)

CREDIT

(cash in)

BALANCE

01/07/2016 Opening Balance 500,000.00

02/07/ 2016

Ministry of Finance 10,000,000.00 10,500,000.00

06/07/2016 Majani ya Chai Primary School – headteacher

545001 500,000.00 10,000,000.00

10/07/2016 Hassanali Printers Ltd

545002 2,000,000.00 8,000,000.00

15/07/2016 Transport-Examination 545003 200,000.00 7,800,000.00

26/07/2016 Dawasco

545005 100,000.00 7,700,000.00

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30/07/2016 Salaries-Watchmen

545007 900,000 6,800,000.00

30/07/2016 Cash deposit- MP 500,000 7,300,000.00

31/07/2016 Bank Charges

500,000.00 6,800,000.00

31/07/2016 Deposit- desks contribution: Wananchi Group

1,000,000.00 7,800,000.00

…………………………………………………End of Report……………………………………………………………………………….

REQUIRED

Using the cash book you completed in Case Study 1(b) and the above bank statement, prepare the bank reconciliation statement of Majani ya Chai Primary School for the Month of July, 2016.

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Appendix 5: Case study 4: Preparation of financial report


Using the cash book you completed in Case Study 1(a), you are required to prepare the financial report of Azimio Dispensary for the month of July, 2016.


Using the cash book you completed in Case Study 1(b), you are required to prepare financial report of Majani ya Chai Primary School for the month of July, 2016.

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TRAINING MANUAL FOR FACILITY FINANCIAL

ACCOUNTING AND REPORTING SYSTEM (FFARS)

FACILITY FINANCIAL ACCOUNTING AND REPORTING …pdf.usaid.gov/pdf_docs/PA00MT3H.pdf · facility [s...

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