Financial ManagementFinancial Management
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What is Financial Management ? Managing of Financial Resources Optimum utilisation of resources Utilisation of funds for the right
purpose Ensure records are maintained for all
financial transactions
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Components of Financial ManagementDiscussion Points Planning Budgeting Accounting Reporting Monitoring Staff Welfare Audit Legal Adherence Financial Policies Governance Structures
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Responsibility of NGOs Responsible and accountable for
implementing the planned activities as formally approved by the donor/funding agency
Adherence to the terms of the MoU if any between donor and NGO
Ensure the prescribed accounting standards are maintained
Responsible for providing strong organizational governance, well-developed systems of functioning in terms of accountability and transparency
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Monitoring the Finances-Role of the PM Ensure the all expenditure is as per the
budget. (any variance needs to get approval) Maintain and monitor the programme trail
and while validating expenditure ensure that the larger accounting trail is also in place.
Expense ----- Cash memo ------ voucher ------- cash book ------ ledger ------ trail balance ------ income and expenditure statement, balance sheet
Program plan ----- activity to be performed ----- authorisation from the program head for the expense related to the activity ----- perform the activity ----maintain the relevant program records
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Planning & BudgetsWhat is a Financial Plan & Budget?
Who prepares this? Program staff or financial staff?
What needs to be put into a budget?
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Monitoring the Accounting trail Expense ----- Cash memo ------ voucher ------- cash
book ------ ledger ------ trail balance ------ income and expenditure statement, balance sheet.
What was spent and when? What kind bill was raised /Amount? Who sanctioned this and when? When was this entered and under which budget head? Was it booked in the accounts? Does it reflect in the final Statements/accounts …. MATCH THIS WITH
Program plan ----- activity to be performed ----- authorisation from the program head for the expense related to the activity ----- perform the activity ----maintain the relevant program records
Was this a planed/budgeted activity who authorised activity and the expenditure ? Was project head aware? Have reports and evidence of the activity been maintained.
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Discussion points Prepare an
expenditure sheet Get necessary
sanctions Discuss recording
both programme & finance
EXPENSES SHEETEXPENSES SHEETAmt Received DatePurpose
Particulars AmountRs. p.
TotalBalance in hand/due
Sign of Payee Sanctioned8
Monitoring Accounting-Monitoring Accounting- Role of the PM
Area of Accounting
Description Monitoring Frequency
Cash Account Listing of cash receipts & payments during the month
PM needs to monitor each month
Cash Reconciliation
Physical cash count & cash book balance
Monitor Daily
Bank Account All bank receipts & payments during the month
End of each month
Bank Reconciliation
Reconciliation of bank statement balance & cash book balance
End of each month
Advances Lists unsettled advances by project staff at month end.
End of each month
Income & Expenditure
Gives picture of Intervention finances, balances & variences
Every six months
Assets Inventory Shows asset value and their financing.
Every year
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Some Basic Issues- PM should monitor Cash payments are not be more than Rs. 2000
- Incentives to PEs- Petty cash expenses
Bank accounts to be operated are in Nationalized Banks only with at least two persons signing the cheques
Stipulation in guidelines are maintained and followed
All records both programme, field reports, minutes of the meeting registers & finance bills, vouchers and SOE are kept
Ensure details of staff, contract papers are on record
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Requirement from NGOs Prepare and submit a budget as per the
prescribed guidelines
Ensure expenditure is monitored and linked to programme activities
Accounting system in places and maintained on a daily basis.
Prepare and submit monthly financial statements on the expenses incurred, quarterly and annual financial reports for the activities described above11
Contd…
Requirement from NGOs Provide yearly organizational audit reports
and allow the internal and/or external auditor to be appointed by and authorized representatives of SACS/NACO/Accountant General
Fulfill all necessary formalities in connection with its status as required under the regulations stipulated by the Government of India and State government
Comply with the financial and procurement guidelines under the programme.
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ConclusionWe are using public money accountability
needs to be focused onThere should be no wastage in utilization of
money.The whole process should be transparent All statutory requirements should be met.All expense must be authorized by the head of
the organization and made
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THANK YOU!
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