2013
Financial Manual
6/1/2013
FINANCE MANUAL ISLAMIC RELIEF, BANGLADESH
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Finance Manual, Islamic Relief, Bangladesh.
01 June 2013
Finance Manual
Of Islamic Relief, Bangladesh (IR,B)
INDEX Section-1 ................................................................................................................................................... 7
A. Introduction: .................................................................................................................................. 7
B. Objective of the Manual: .............................................................................................................. 7
C. Relevance with other manuals of IR,B and IRWHQ: .................................................................. 7
D. Revision and updating procedures: ............................................................................................... 8
Section-2 : Financial Desk-Top Procedures ............................................................................................. 9
A. Authority Grid ............................................................................................................................... 9
A.1. Authority grid for approving PR, Advance Requisition, etc. ............................................. 9
A.2. Approval Authority for Travel Approval Form (TAF): In-country and international
Travel. 9
A.3. Authority for Approval of Voucher’s Top Sheet (IRB printed color vouchers) ............... 10
A.4. Authorized limit for Daily Petty cash. .............................................................................. 10
A.5. Per-diem and accommodation while in official travel. ..................................................... 10
A.6. Threshold for procurement. .............................................................................................. 11
A.7. Authority level for approval of other than mentioned above. .......................................... 12
B. PAYMENTS ............................................................................................................................... 13
B.1. Advance ............................................................................................................................ 13
B.1.1 Types of Advances: ....................................................................................................... 13
B.1.2 Common Rules for all Types of Advances other than PNGO & Vendor’s advances. ...... 14
B.1.3 Travel advance & its adjustment: .................................................................................. 14
B.1.4 Miscellaneous advances & its adjustment:.................................................................... 15
B.1.5 Advance for “Cash Transfer (cash for work, training allowance, subsistence allowance
and cash for productive assets) ” to the beneficiaries ................................................................. 15
B.1.6 Cash Advance for “Beneficiary Asset Transfer” . ............................................................ 17
B.1.7 PNGO’s advance (Fund) & its adjustment:................................................................... 20
B.2.1. Vendor/Party Payment .................................................................................................. 21
B.2.2. Payment for consultancy/evaluation/survey work/legal ............................................ 23
Advisor/External Auditor/video documentation. ........................................................................ 23
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B.2.3. Beneficiary Payment ..................................................................................................... 23
B.2.4. Office Rent ....................................................................................................................... 24
B.2.5. Payment for Utilities ........................................................................................................ 24
B.2.6.Staff payments ................................................................................................................... 25
B.2.7. Quarterly Orphan one to one payment to sponsored children. ...................................... 27
B.2.9. VAT and TAX deducted at source deposit to the treasury. .......................................... 27
B.3. Emergency Response Payment Procedures (Total Procedures; Authority to Payment)... 28
B.3.1. Authority ....................................................................................................................... 28
B.3.2. Process for Procurement: Spot Purchase for the above response: ................................ 28
B.3.3. Payment (for spot purchase). ......................................................................................... 28
B.3.4. Petty Cash limit for this response. ................................................................................. 28
B.3.5. Staff Advance and Adjustment of advance: .................................................................. 29
B.3.6. Approval of Voucher’s Top Sheet (IRW-B printed color vouchers) related to above
response. 29
B.3.7. Master List and Master Roll will be maintained for distribution of materials/foods
among the beneficiaries. ............................................................................................................. 29
C. Payroll: ....................................................................................................................................... 29
C.1. Payroll Procedures................................................................................................................... 30
C.1.1 Documents needed from the Staff by 18th
of the month; .................................................. 30
C.1.2 Document needed from Field office Finance by 18th of the month: ................................ 30
C.1.3. Document needed from HR by 18th of the month: .......................................................... 30
C.1.4. Finance will Do ................................................................................................................ 30
C.1.5. Sample of IR,B Payroll .................................................................................................... 31
D. Fund Management. ................................................................................................................... 32
D.1. Fund Transfer to the Field Office ........................................................................................... 32
D.2. Fund Transfer Request (FTR) to the IRW International Office (IRW IO). ............................ 34
D. 3. Petty Cash Management: ....................................................................................................... 34
D.3.1. Petty Cash Control Objective ........................................................................................... 34
D.3.2. Limit of Petty Cash Fund ................................................................................................. 35
D.3.3. Security Rules for Petty Cash/Cheque ............................................................................. 35
D.3.4. Procedures for Petty Cash Management .......................................................................... 36
D.3.5. Petty cash Book ................................................................................................................ 36
D.3.6. Replenishment of Petty Cash ........................................................................................... 37
D.4. Bank Management .................................................................................................................. 37
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D.4.1. Field office bank Account ................................................................................................ 37
D.4.2 Bank Account opening and Signatory .............................................................................. 37
D.4.3. Procedures for bank Payment .......................................................................................... 38
D.4.4. Receipts, Banking for Deposits and Inter Bank Transfer: ............................................... 39
D.4.5. Bank Ledger ..................................................................................................................... 40
D.4.6. Bank Reconciliation ......................................................................................................... 40
E. Budget ........................................................................................................................................ 41
E.1. Types of budget for Islamic Relief, Bangladesh. .................................................................... 42
E.1.1 Project Budget: .................................................................................................................. 42
E.1.2. Project Support Budget (IRPS): ....................................................................................... 43
E.2. Responsibility for preparation Budget..................................................................................... 43
E.2.1 Project Budget: .................................................................................................................. 43
E.2.2. Project Support Budget (IRPS): ....................................................................................... 43
E.2.3. Review of Budget before submission ............................................................................... 43
E.2.4. Time for preparation of Budget ........................................................................................ 43
E.3. Budget Format ......................................................................................................................... 46
E.4. Budget Monitoring/controlling ................................................................................................ 46
E.4.1Control Process:.................................................................................................................. 46
E.5. Revision of Budget .............................................................................................................. 46
E.6. Chart Of Accounts (COA) ....................................................................................................... 47
F. Reporting ................................................................................................................................... 47
F.1. Field Offices’ Financial Support and Reporting System ......................................................... 47
F.1.1 Financial Transactions of the Field/Area/Project Office of IR,B ...................................... 47
F.1.2 Monthly and Quarterly Financial Report from Field/Area/project Office to CO: ............. 48
F.2. Monthly Variance Report to the all Projects. .......................................................................... 49
F.3. Partner NGOs Financial Reporting .......................................................................................... 49
F.3.1 Selection of PNGO ............................................................................................................ 49
F.3.2. Reporting .......................................................................................................................... 49
F.3.3 Types of the PNGO Reports .............................................................................................. 49
F.3.4 Retention of voucher.......................................................................................................... 49
F.4. Financial Reporting to IRW HQ .............................................................................................. 50
F.4.1. Quarterly Financial Reporting and time frame ................................................................. 50
F.4.2. Types of Quarterly report ................................................................................................. 50
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F.5. Financial Reporting for Institutional Donors ........................................................................... 50
G. Fixed Assets’ Accounting For: ................................................................................................. 50
G.1. Fixed Assets Acquisition and Capitalization: ................................................................... 50
G.1.1. Budget Availability. ......................................................................................................... 50
G.1.2. Value for Capital Assets and Non-capital Assets: ........................................................... 51
G.1.3. Capital Expenditure related procurement of capital assets. ............................................. 51
G.2. Depreciation ............................................................................................................................ 51
G.2.1 The details of fixed assets and depreciation rate is as under:........................................ 51
G.3 Disposal (Sale) of Fixed Assets ........................................................................................ 53
G.3.1 Approval for disposal: ..................................................................................................... 53
G.3.2. Disposal value .................................................................................................................. 53
G.3.3. Accounting for sale proceed ............................................................................................ 53
G.3.4. sale procedures: ................................................................................................................ 54
H. Employees Future Fund (PF and Gratuity) ........................................................................... 54
H.1 Contributory Provident Fund ................................................................................................... 54
H.1.1. Procedures of inclusion of PF in Payroll ......................................................................... 54
H.2. Gratuity ................................................................................................................................... 54
I. Internal Control ........................................................................................................................ 55
I.1 Internal Control Process ............................................................................................................ 55
I.1.1. Budgetary Control (confirmation of budget availability) .................................................. 55
I.1.2. Organization Controls........................................................................................................ 55
I.1.3. Division of Duties .............................................................................................................. 55
I.1.4. Physical Control ................................................................................................................ 56
I.1.5. Internal Monitoring of Field offices (FOs)/PNGOs Books of Account ............................ 56
I.1.6. QuickBooks Electronic System ......................................................................................... 57
I.1.7.Financial Reports from QUICKBOOKS ............................................................................ 62
J. Overhead/Cross Charging Costs Calculation ........................................................................ 62
K. PNGOs Financial Management Capacity Assessment for Partnership............................... 63
K.1. Checklist to assess the financial capacity, but not least, for PNGO Selection. ...................... 63
K.1.1. Financial management ..................................................................................................... 63
K.1.2. What are the internal controlling mechanisms? ............................................................... 63
K.1.3.Procurement systems? Is there procurement policy? ........................................................ 63
K.1.4. HR .................................................................................................................................... 63
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K.1.5. Admin............................................................................................................................... 64
K.1.6. Sampling of bills/ vouchers, appointment and different register etc. .............................. 64
K.2. ABC format of IRW and PIN for the assessed partner. .......................................................... 64
L. Annual External Audit ............................................................................................................. 64
I.1 Process ....................................................................................................................................... 64
I.1.1For section of new audit firm .............................................................................................. 64
I.1.2. For audit by the existing external auditor .......................................................................... 64
I.2. Management’s Role in External Audit ..................................................................................... 65
I.3. Preparation of Accounts ........................................................................................................... 65
I.3.1. Process; .............................................................................................................................. 65
I.3.2. Source of Data for accounts; ............................................................................................. 65
I.4. Auditors to help the management team improve financial control .......................................... 65
M. Latest Chart of accounts developed by IRW ............................................................................ 66
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Finance Manual, Islamic Relief, Bangladesh.
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Section-1
A. Introduction:
Islamic Relief, Bangladesh (IR,B) is an International Development Agency that has been
working in Bangladesh since 1991. After that the IR,B has been continuing development
activities for the uplift of the livelihood status of the poor and vulnerable group of Bangladesh
through implementing different projects in health, education, Income Generating Activities,
disaster response, human right, and many other essential sectors. Being an International
Organization, IR,B always maintains a higher standard of policy, procedures and discipline in all
level of its operation and management. Financial Resource is the most important factor of
operation and management of an organization. IR,B aims at proper transparency and
accountability in utilization it financial resource in view of achieving its goal, vision and mission.
IR,B has, therefore, prepared this manual formulating necessary policies, procedures to guide
the management as well as to the finance staff who are working for financial operation and to
other staff as concerned to understand and use the tools and techniques for proper
management and utmost utilization of financial resource.
B. Objective of the Manual:
The Objectives of the Manual are;
- To facilitate the management of IR,B to ensure optimum utilization and controlling of
financial resources of the organization to achieve its goal.
- To facilitate the finance staff of IR,B to understand the policy, procedures and practices of
the organization in its operation at all level.
- To facilitate transparent and fair practice in acquisition, utilization and handling of the
financial resource at all level of IR,B’s operation.
- To facilitate the finance staff in accurate recording of financial data/information, reporting
of them and presentation to the management for decision making purpose.
- To enhance transparency and accountability in financial management.
- To present and expose the overall system and mechanism of financial operation of IR,B to
the concerned stakeholder of the organization; such as; Management, Donor, Auditors
and to the Government.
C. Relevance with other manuals of IR,B and IRWHQ: The Financial Operation Manual contains all the current policies and procedures as required
and applicable for effective management of financial resources of IR,B. These policies and
procedures are fully in agreement with the existing policies and practices of other
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manuals/guidelines of IR,B and in line with the policy and practice of the Head Office, Islamic
Relief Worldwide. Finally, the policies and practices that stipulated in this manual are kept
consistent with the currently enforced financial rules of the Government of Bangladesh.
D. Revision and updating procedures: The policies and procedures of this manual will be effective from June 01 2013. However, these
are not perpetual but to be changed over time to adjust with the demand of time and
situation. IR,B will revise this manual at the outset of each financial year (if there is any addition,
deletion or edition of policies and procedures. The COMT (after consultation with the Islamic
Relief Worldwide HQ , where necessary) has the authority to introduce any new policy and
procedures or to edit or revision of the old policies to meet the demand of the time and the
interest of the Islamic Relief Worldwide HQ and IR,B.
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Section-2 : Finance Desk-Top Procedures A. Authority Grid
A.1. Authority grid for approving PR, Advance Requisition, etc.
A.1.1 In-Charge of Field Office /Project Manager /PC will approve any requisition up
to BDT 10,000
A. 1.2 Office Procurement Committee (Field Office) will approve any requisition up to
BDT 20,000. Chairman of the procurement committee will approve the
requisition.
A.1.3 Program Manager/National Program Manager/Program Coordinator/Deputy
Program Manager (deputy program manger will exercise this authority where
program manager is not appointed in the department) can approve any
amount up to BDT 20,000 if he/she is delegated by the Head of the respective
sector to control budget of the respective project/program.
A.1.4 RPC/RPM will approve any amount up to BDT 30,000 for the respective area
/regional office.
A.1.5 Head of sector/ section can approve any requisition up to BDT 30,000.
A.1.6 Expat can approve any amount up to BDT 50,000.
A.1.7 Deputy CD/Head of Finance can approve up to BDT 50,000 which is not for
his/her own department.
A.1.8 HOP/HoFA/FAM will approve any requisition up to BDT 1,00,000.
A.1.9 CD will approve the requisition for any amount.
A.2. Approval Authority for Travel Approval Form (TAF): In-country and international Travel. A.2.1 The CD will approve the Travel Approval Form (TAF) only for his/her direct supervisee.
A.2.2 The HOP/HOFA/FAM will approve TAF, Visit Plan and Visit report only for his/her direct
supervisee.
A.2.3 TAF for the staff other than above mentioned staff will be approved by the respective
Head of sector/section /RPC/RPM.
A.2.4 The CD will approve TAF for the staff for any kind of official International visit.
A.2.5 Any kind of Air travel will be approved by the CD.
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A.3. Authority for Approval of Voucher’s Top Sheet (IRB printed color vouchers)
For IRCO
A.3.1 Head of Finance can approve up to BDT 30,000 if it is for own department’s approval
(and up to 50,000 which is not for own department)
A.3.2 HoFA/FAM can approve up to BDT 1,00,000
A.3.3 Country Director can approve for any amount.
A.3.4 Head of Finance can approve Journal voucher up to BDT 10,00,000 where related
supporting documents are pre-approved by the CD.
For Field Office
A.3.4 PC/ Project Manager /Area Manager as the in-charge of the field office can approve
up to BDT 30,000 (in case of more than one PC/PM/Area Manager working at the same
Field Office, only In-charge of the Field Office will sign) along with the Field Finance
personnel.
A.3.5 RPC/RPM can approve up to BDT 50,000.
A.3.6 For the amount higher than mentioned above can be approved by the Head Finance,
HoFA/FAM and CD as per authority grid.
A.4. Authorized limit for Daily Petty cash.
For IRCO
A.4.1 For normal situation, limit is BDT 150,000 and for emergency situation, limit is BDT 300,000.
For Field Office
A.4.2 For normal Situation, petty cash limit is BDT 10,000 for Single Project Field Office but this is
BDT 5,000 for each project under Multi-projects’ Field Office. Rangpur Area Office can
increase it up to BDT 10,000 per project based on the need assessed by the local
management. For Emergency situation, limit is BDT 100,000 for all field offices.
A.5. Per-diem and accommodation while in official travel. (for more detail pl refer to HR manual)
A.5.1 Per-diem for 3 meals and incidental is BDT 1000. Breakfast is 10%, lunch 35%, diner 35%
and incidental is 20%. Time for per-diem; breakfast if visit starts before 8 a.m, lunch
before 2 p.m and diner before 8 p.m. For returning from the visit timing will be AFTER the
mentioned times. Incidental will be entitled if at least one meal is entitled. In the case of
residential training/meeting/workshop, where per-diem is applicable, if food is provided
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by the office, incidental will be applicable. Per-diem will not be eligible if field trip does
not cover minimum 4 hours.
A.5.2 During field visit, the driver will be entitled only for one benefit, that is, per-diem except
visit on holiday & weekend. For holiday and weekend, they will be entitled for both per-
diem and overtime maximum 8 hours.
A.5.3 Maximum reimbursement against accommodation cost will be BDT 1,500 with receipt
and BDT 500 without receipt for all grades. Special permission can be taken from the
CD as need basis specially when staff visits in high cost area or visit with donor.
A.5.5 During field visit or travelling of lactating mother (5 years after given birth) can take an
attendant for her child. Attendant will get actual conveyance, food and
accommodation.
A.5.6 In case, any employee works with the permission of his/her supervisor in his/her
office/station after 8p.m, he/she will be eligible for diner within TK 300 only for the
working days.
For weekend/holiday, CTO, food (TK 300 if works beyond 8.pm) and local conveyance
(actual) will be entitled for all staff. Support staff can claim OT instead of CTO. OT will
be calculated only for actual working hour. OT & Per-diem will be considered based on
the reporting time (in/out) in the office. However, starting and ending time will be
considered for per-diem claiming those who will be picked-up or dropped-off at his
/her residence by IR Vehicle/public transport for field trips.
A.6. Threshold for procurement.
For Field Office:
A.6.1 Ceiling for purchase in cash and without quotation at field Office.
a) Up to BDT 10,000 for Single Items.
b) Up to BDT 20,000 for multiple items.
c) For RTC materials, it is up to BDT 30,000 for Multiple items
d) If purchase amount is above BDT 10,000, payment will be by A/C payee cheque.
A.6.2 Purchase by quotations at Field office.
a) Single item costing above BDT 10,000 up to 20,000 needs 3 quotations and CS. WO will
be issued by the Chairman of the Procurement Committee of the Field Office. Single
item costing above BDT 20,000, IRCO will procure as per policy.
b) In case of the field office where RPC/RPM is available, item costing above BDT 10,000
up to 30,000 needs 3 quotations and CS. RPC/RPM will issue WO up to BDT 30,000.
c) Multiple Items costing above BDT 20,000 up to BDT 30,000 need 3 quotations and CS.
Chairman of the Procurement Committee of the Field Office/RPC/RPM as per authority
level will issue WO. Multiple items costing above BDT 30,000 will procured by IRCO as per
policy.
For Country Office
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A.6.4 Ceiling for purchase in cash and without quotation at IRCO.
a. Up to BDT 10000 for single item.
b. Up to BDT 50000 for multiple items (individual item will be up to BDT 10000)
d. If purchased amount is above 10000, payment will be by A/C Payee cheque.
A.6.5 Purchase by quotations at IRCO.
a. Single items costing above BDT 10,000 needs 3 quotations and CS. WO will be issued by
the Head of Finance/Head of Procurement up to BDT 20,000(not for Finance/Procurement
department),by the HoFA up to 1,00,000 and above by the CD.
b. Multiple items costing above BDT 50,000 need 3 quotations and CS. WO will be issued
by the HOFA up to BDT 1,00,000 and above by the CD.
c. Food items will be considered as multiple items and procured as per policy mentioned
above. A.6.6 Donor compliance: If donor’s procurement policy for the particular project is stronger
than that of IR,B, IR,B will follow donor policy.
A.6.7 Above BDT 20,00,000, for single or multiple item procurement will be through press-
Tender.
A.6.8 Items costing BDT 10,001 to BDT 2,000,000 need at least 3 sealed quotations through
RFQ. Sealed quotation should be dropped in the Tender Box.
A.6.10 RFQ can be sent through email by procurement department. IR,B will use specific email
ID to receive quotations. Email password will be set up by at least two personnel; one is
from IT and second from Admin/log. They will check email and open quotations, sign
and handed over to the procurement department after the closing date and time of
quotations. Procurement will present all these to the Procurement Committee.
A.7. Authority level for approval of other than mentioned above.
A.7.1 Any kind of benefit/allowance like Mobile Phone Set, Modem Facilities with Limit &
ceiling, conveyance (extra), medical, hardship, and Financial Assistance to the staff as
a help from the organization, etc will be approved by the CD.
A.7.2 Payroll, Salary Increment, Appointment, Acceptance of Resignation, Staff Final
Payment at the time of separation will be approved by the CD. “No other Claim” and
joining letter (below officer level) will be approved by the Head of HR.
A.7.3 Donor’s Contract, Financial Reports to Donor, Partnership Agreements/ToR/DoA,
payment of installment, Appointment of Auditor, Acceptance of Audit report,
consultant agreement/contract will be approved by the CD. Financial report may also
be approved by the Finance Manager.
A.7.4 Contract with third party for hiring office /house with Landlord/ Office-owner, will be
approved by the Operation Support Manager, HoFA & CD as per their authority level.
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The value will be the total rent amount within the contract period mentioned in the agreement.
A.7.5 Disposal/sale and auction of assets, equipment, vehicle, etc will be approved by the
CD.
A.7.6 Banking issues: a/c opening, closing and signatory changing will be approved by the
CD
A.7.7 Fund transfer one bank to another will be approved by the CD
A.7.8 Budget will be approved by the CD.
A.7.9 Training external/abroad for payment will be approved by the CD.
A.7.10 Requisition for store and warehouse materials at the IRCO will be approved by the
OSM/HoFA/CD as per authority level. At the Field Office level, the same will be
approved by the Project Manager /office In-charge verifying the required materials.
B. PAYMENTS B.1. Advance
B.1.1 Types of Advances:
(a) Travel Advance- For Per-diem, Incidental, accommodation, transport and local
conveyance.
(b) Miscellaneous Advance- For miscellaneous small expense and the payment which is
beyond the bracket of petty cash payment.
(c) Advance for “Cash Transfer” to the beneficiaries
(d) Advance for purchasing of beneficiary’s Asset.
(e) Advance for “cash for work” /Cash for training of the beneficiary.
(d) Partner NGO Advance- Based on the signed Memorandum of Understanding
(MOU)/agreement and stipulated installment schedule as agreed on the MOU/agreement.
(e) Advance through “I-Owe-to-You” (I.O.U).: To meet up the day to day petty expenses
such as vehicle maintenance, food for training/ meeting/ workshop, daily labor, cleaning, flexi
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load/ scratch card for mobile phone/internet modem, office building repair and equipment
maintenance, etc staff admin staff can
B.1.2 Common Rules for all Types of Advances other than PNGO & Vendor’s advances.
Request for advance shall be submitted to the finance section at least 3 working days before
the required day. CD can grant exception to this for urgent requirement. Advance will be
given by cheque if the amount is above BDT 10,000 (Except cash for Work scheme, Beneficiary
Cash Transfer and Cash advance for beneficiary asset procurement).
Other than PNGO’s Advance shall be adjusted within 7 days (except in case of beneficiary
cash transfer and cash advance for procurement of beneficiary assets) after completion of the
activities. PNOG’s advance will be adjusted as per MOU/Agreement. Employees are strongly
discouraged to submit request for 2nd Advance before adjustment of 1st one. The bill will not be
paid or reimbursed if they cannot be read, with any alternation, not signed by the authorized
persons or if they are for any personal use.
Finance shall maintain a list of advance amount against each employee and the adjustment
shall also be made accordingly. If the respective staff fails to adjust the outstanding advance
within one month after returning from filed trip or completing of activities advance will be
adjusted from his/her salary. In case of termination of an employee, IR,B can deduct any
outstanding balance from that employee’s final payment..
All level of staff is allowed to be reimbursed their bill/invoice/perdiem and adjust their advance
only in their work station. For emergency situation, staff may be allowed to take only advance
from the visited IR office with the consent of his/her supervisor.
B.1.3 Travel advance & its adjustment:
Advance Payment Documents (duly approved by the respective approval authority):
- Advance Requisition Form (ARF).
- Travel Approval Form (TAF).
Adjustment Documents (duly approved by the respective authority):
- Summary of Expense Report (Top Sheet).
- Per-diem Form
- Supervisor’s acknowledging signature on receipt of Visit report on the expense report
- PR for Air ticket approved by the CD.
- Relevant receipts:
- Original accommodation bill.
- Bus/Air ticket. For air travel, boarding pass also.
- Local conveyance bill (with English)
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B.1.4 Miscellaneous advances & its adjustment:
Miscellaneous advance can be taken by the concerned office staff who usually deals with
miscellaneous office work that resulted to incur some expense. Any payment where the
amount is less than Tk 10,000.00 and the vendor/s or parties are reluctant to receive cheque
payment should also be paid from the miscellaneous advance. Miscellaneous advance
amount would be an amount of Maximum Tk 10,000.00. The employee can take a further
advance after adjustment of the previous one. Advance should be adjusted within a week
after completion of the subject work. Miscellaneous advance request shall be filled up with
necessary break up of expense of the requested amount by the requester and duly approved
by the respective authority.
Besides, the project staff can also receive miscellaneous advance for any occasional project
activities/events that requires cash payment duly approved by the respective authority.
Miscellaneous advance should also be given upon adjustment of the previous miscellaneous
advance (if any). However, if the purpose of the advance and the activities are different and if
it is found that the previous activities have not yet completed and the previous advance has
not yet exhausted but a further advance is required for another emergency activities, the
concern supervisor may recommend for another advance for the employee in an exceptional
ground.
Advance Payment Documents (duly approved by the respective authority):
- ARF (Advance Request form).
- PR (Purchase Requisition)
Adjustment Documents (duly approved by the respective authority):
- General Voucher(s).
- Original Invoice(s).
- Original PR.
- GRN (Printed)
- and Top Sheet.
B.1.5 Advance for “Cash Transfer (cash for work, training allowance, subsistence allowance and cash for productive assets) ” to the beneficiaries
B.1.5.1. Precondition of Cash Transfer –
- As per project proposal and organization policy, beneficiary master list will be
prepared. Muster list must be approved by the Country Director. Original copy of this
list will be submitted to the finance.
B.1.5.2 Procedure of Cash Advance
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- After approval of application (in case of SHG)/business plan (beneficiary) /cash transfer
plan by the respective Project Manager and endorsed by the respective Head of Sector,
assigned staff will prepare group/cluster base Cash Advance Request along with above
supporting docs. Group wise number of beneficiaries must be mentioned in the Advance
Request.
- Cash Advance must be checked by respective Account Officer/Assistant. She/he will
check availability of budget against advance request and proposed beneficiaries are
included in approved master list of beneficiaries of the project.
- Respective Project Manager/RPC/Head of Sector/CD whatever applicable will approve
Cash Advance Request according to respective authority grid ensuring proper level of
authority such as check, recommendation and endorsement as applicable.
- Cash advance must be submitted at least two working days before distribution so that
respective Account Officer/ Assistant and PM/RPC gets sufficient time for checking and
approval for issuing of cash advance.
- One staff will be eligible for one advance at a time.
- New advance will be issued after ensuring adjustment of previous one.
- In exceptional case or /situation, 2nd advance can be considered depending on proper
justification provided by the respective approval authority.
- Advance must be adjusted within 3 consecutive working days after disbursement among
the beneficiaries and in case of any special situation; duration can be extended for
another 2 working days subject to proper justification of respective approval authority.
B.1.5.3 Procedure of cash transfer/disbursement to beneficiaries
- The advance can be paid to respective staff through cash or cash cheque.
- Finance personnel will accompany with the respective project staff who will receive cash from
the Bank.
- In case of group/cluster base cash transfer at field level, finance personnel will be physically
present as a witness at the time of distribution. Vehicle support can be provided if required
and available.
- Before disbursement, on the top of the Master roll; there will be (i). prepared by the respective
project staff (APO/FF), (ii) verified by the project/program officer and (iii)recommended by
the project manager.
- After Disbursement, at the bottom of the master roll; there will be (i) paid by the advance
recipient, (ii) checked by the respective supervisor and by the RPC/RPM (as applicable), (iii)
witnessed by the Finance staff and LG Representative and (iv) Endorsed by the Head of
Sector.
- In case of failure of transferring any or few beneficiaries’ cash due to different reason;
respective staff will return the full amount to Field office finance with a short explanation and
- respective supervisor consent within 1 working day. Finance will give money receipt to the
respective staff.
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- RPM/RPC can approve any amount up to BDT. 50,000 if proposed advance request is for
beneficiaries’ cash transfer.
- It is highly encouraged to disburse beneficiaries’ cash transfer through beneficiaries’ individual
bank accounts which is a requirement of the government.
-
- The cash disbursement spot will be selected by the respective the project personnel as
convenient. Numbers of spot will be determined based on the availability of finance staff
under the respective project/filed office so that finance staff can be witnessed.
- Revenue stamps should be used in master role as per government rules/procedure.
- One Master role sheet could not be used for disbursement of 2 group’s cash.
B.1.5.4 Advance Adjustment
- Original master role with all respective people’s signatures and revenue stamp for BDT 10 for
each beneficiary.
- Photo copy of advance request (finance will attach)
- Attendance sheet (required for Cash for Work or Cash for Training)
- Before submitting bill to the finance, it must be properly checked and endorsed by the
respective authority.
- Respective finance staff will check all papers according to finance guideline and settle/adjust
bill.
- Project team will give sufficient time to proper checking of bill documents (at least two
working days)
B.1.6 Cash Advance for “Beneficiary Asset Transfer” .
B.1.6.1Precondition of Asset Transfer –
- Approved master list of beneficiaries will be considered for this advance.
- Proposed asset must be based on TNA or IGA skills and agreed by respective beneficiaries.
- In case of SHG, group resolution mentioning the name of proposed beneficiaries and
IGA/Asset must be attached with application.
- A signed agreement/bond form must be attached with application mentioning payment of
regular installments and proper management of IGA.
- The format include the name of beneficiary, name of respective dependent (if any), address
of beneficiary, name of Samity/group, type of IGA, quantity of asset, expected value of
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asset/goods, maximum amount allocated from project, signature of group/samity president
and secretary and attached photographs.
- After fulfilling above things, assigned project staff including Community Officer/Organizer (CO),
Social Mobilizer (SM), Field Officer (FO), Branch Manager (BM), Procurement Assistant (PA) and
Project Officer (PO) will forward application with relevant papers to respective
Supervisor/Manager where applicable.
- Respective Supervisor will check proposed beneficiaries name with approved master list,
IGA/TNA report, application format information, group resolution, agreement and other
information and forward to respective Project Manager.
- Respective Project Manager will further check and approve it.
B.1.6.2 Procedure of PR and Cash Advance
- After approval of application by the respective Project Manager, assign staff will prepare
Procurement Request (PR) and Cash Advance based on approved application.
- PR and Cash Advance must be checked and signed by respective Account Officer/Assistant.
She/he will check availability of budget against advance request and proposed beneficiaries
are included in approved master list of beneficiaries of the project.
- Respective Project Manager/RPC whatever applicable will approve PR and Cash Advance
according to respective authority grid.
- PR and Cash advance must be submit at least one working day before so that respective
Account Officer/ Assistant and PM/RPC get sufficient time for checking, approval and issuing
of cash advance.
- One staff will be allowed for one advance at a time.
- New advance will be issued after ensuring adjustment of previous one.
- Special case/situation can be considered for issuing 2nd advance subject to satisfaction of the
respective approval authority.
- Advance must be adjusted within 3 consecutive working days after receiving advance and in
case of any special situation; duration can be extended for another 2 working days subject to
satisfaction of respective approval authority.
B.1.6.3 Ceiling of Advance and Approval Authority
- Respective project staff including CO and SM can be received maximum of BDT. 35,000 at a
time and PA, PO and BM can be received maximum of BDT. 50,000 at a time.
- The advance can be paid to respective staff through cash or cash cheque.
- In case of field office based staff where finance personnel are not available, project office
finance will provide cash against advance request through visiting field office, respective
- project manager or any senior staff of project will accompany with finance staff. Vehicle
support can be provided if required and available.
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- In case of failure of procuring asset; respective staff will return the full amount to office with
explanation and respective supervisor consent within given time frame of retaining advance.
- Respective Project Manager/RPC can approve any amount up to BDT. 50,000 if proposed
expense requested for beneficiaries cash transfer. (Only RPC/RPM will exercise this approval
limit where RPC/RPM position is available).
B.1.6.4 Procedure of Beneficiaries Asset Procurement
- Assigned staff will facilitate to purchase beneficiaries asset from community/village or nearest
market/hat.
- The procurement spot must be chosen by respective beneficiary/committee members and or
facilitated by respective staff.
- Asset must be purchased through and by active participation of procurement committee
consisting of 2 members from respective group, respective staff and respective beneficiary.
- Staff role should be a facilitator throughout the procurement process.
- The rate of asset must be fixing up by the committee member and agreed by respective
beneficiary.
- Respective beneficiary can nominate/accompany her any male/female personnel during
procurement of assets.
- Purchase will be made in cash/cheque and payment must be settled in presence of
committee members.
- Respective beneficiary can provide additional amount if selected/chosen asset value exceed
project allocated budget and it must be documented in invoice.
B.1.6.5 Bill Adjustment
- Original PR
- Original invoices (printed) must be submitted in case of asset/goods are procured from
market/shop/vendor with signature/thumbprint of seller/shopkeeper.
- If live asset procured from cow hat/bazar, hasil must be attached with the bill.
- If any asset procured from village farmer/community peoples, respective staff can use IR, B
prescribed invoice and handover format.
- This format will be treated as procurement bill/invoice signed by the respective purchase
committee members. The buyer name will be X beneficiary of Y SHG and Z project of IR,B. the
beneficiary’s name and ID number also be written on the voucher. Beneficiary also will sign
mentioning that “She/he has received the goods/asset in a good and functional conditional
condition as well as the written purchase value of asset is actual /accurate”.
- Revenue stamps should be used in this bill/format as per government rules/procedure.
- Signature of procurement committee members must be ensured and properly checked before
submitting bill to finance.
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- Project team will give sufficient time to proper checking of bill documents (at least one working
days).
- If the said assets are procured through competitive bidding process, following documents are
needed to pay vendors; Original PR, at least 3 quotations, CS, WO as per authority level, IRB
GRN, Beneficiary master roll duly signed, stamped, endorsed by local government, etc.
Payment will be by account payee cheque.
B.1.6.6 Assets Hand Over to the Beneficiary:
- The prescribed handover format (Asset Transfer Form) will be used for this and beneficiary or
his/her nominated person will sign hand over documents. Details of the assets such as; value,
date of purchase, comments/ condition, signature of beneficiary, signature of respective staff,
signature of procurement committee member etc, must be mentioned in the handover
format.
- After hand over the asset/goods, the respective beneficiary or her nominated person will be
responsible for any kind of loss or damages. SHG project will not take any responsibilities for any
kind of loss or damage after hand over the goods/asset.
B.1.6.7 Asset’s recording:
- Asset transfer register would be filled up by the respective staff/project according to
prescribed sheet. Respective Manager will ensure the entry of this register.
- Respective Community Organizer/project assistant/officer/Social Mobilizer/Field Officer, where
applicable, will ensure proper entry of asset in respective beneficiary Pass Book after transfer of
assets.
B.1.7 PNGO’s advance (Fund) & its adjustment:
Partner NGO (PNGO) advance will be made according to the signed Memorandum of
Understanding (MoU)/Terms of Reference (ToR)/Agreement/Contract and the stipulated
schedule of Installments payment of the committed fund. Finance will maintain a list of the
PNGO and their payment schedule provided by the respective program(s). In case of PNGO
advance, the adjustment would follow the terms & conditions outlined with the clauses of the
MoU/ToR)/Agreement/Contract. Installments will be paid by account payee cheque in the
name of the PNGO or through bank transfer. To receive fund, PNGO must have separate bank
account in the name of the project in the scheduled bank.
Advance Payment Documents (duly approved by the respective authority):
- MoU/ToR)/Agreement/Contract.
- Written request by the ED/CEO of the PNGO in official pad.
- Recommendation of the respective Head/Head of Sector of IRB.
- Terrorist screening result sheet (Ensured before signing of MoU)
- Approval of the CD of IRB.
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- Fund will be transferred as per MoU.
Adjustment Documents (duly approved by the respective authority): -
- monthly/quarterly fund statement (Cash flow statement) as per books of accounts.
- Expense Report (budget – Expenditure variance Report)
- Statement of Clarification for 10% of over/under spent.
- Bank statement with reconciliation statement
B.1.8. Advance through “I-Owe-to-You” (I.O.U).
To meet up the day to day petty expenses such as vehicle maintenance, food for training/
meeting/ workshop, daily labor, office cleaning, flexi load/ scratch card for mobile
phone/internet modem, office building repair and equipment maintenance, etc, admin and
procurement staff can take advance through I.O.U slip.
Preconditions;
i) I.O.U slip will be renumbered and printed. One I.O.U slip will have 3 copies; one is for
customer copy, one is for voucher copy and last one will be with I.O.U book.
ii) Expense will be within BDT 10,000.
ii) Advance will be adjusted within 2 days from receiving of advance.
Documents for advance.
i) Approved PR (Photo Copy).
ii) Approved I.O.U
Adjustment documents
i) copy of I.O.U
ii) Original copy of PR
iii) SGRN
iv) Invoice
v) Attendance sheet/participants list as applicable.
vi) 10-Taka-revenue-stamp is for expense of Tk 400 and above.
B.2.1. Vendor/Party Payment Vendor will directly submit their invoice/bill to the finance department. Finance will inform
procurement/admin department to submit related documents for processing of payment.
Within five (5) working days finance will make payment after having related documents from
procurement Department. Finance will make payment as per terms and conditions mentioned
in the work order but following clauses are mandatory but not limited to mention in the Work
Order as terms and conditions;
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- Last date of delivery
- Penalty for each delayed day
- Payment by cross check if amount is above our Cash purchase limit
- VAT and Tax Issue
- Partly payment issue (highly discouraged as it is risky to keep records of previous payment
and records of tax/vat deduction at every partial payment).
- Child safety and anti bribery polices.
If vendor make invoice in Musak-11, finance will not deduct VAT at source. Also, if the vendor
deposits related tax in the government treasury in advance and submits finance the deposit
challan with the invoice, finance will not deduct tax at source.
Any bill made against purchases of capital assets/Fixed assets/Office equipment/Non capital
assets will have inventory/register record of the item. Procurement will attached this record
with document for payment. The bill will not be paid or reimbursed if they are unclear, altered,
not sign by the authorized persons of if they are for personal use.
Payment documents (must be original copy and duly approved)
- Invoice/bill
- Delivery Chalan
- GRN/SRN
- Purchase Requisition
- ID number in case of Fixed assets (capital/non-capital) as per asset register.
- 10-Taka-revenue-stamp is for expense of Tk 400 and above.
- Anti-terrorism screening result sheet.
If procurement is made through quotations in addition to above following documents are also
required;
- RFQ
- Quotations original copies
CS with Procurement Committee approval
- Paper cutting if it is through advertisement in the Daily newspapers
- Work Order
- Valid Trade license
- Valid VAT registration certificate
- Valid TIN Certificate
- Letter to unsuccessful vendors.
- Photocopy of the Bank Grantee/Pay Order/Bank Draft against earnest/security money, if
applicable.
- VAT /tax chalan , if available, to avoid VAT/tax deduction at source.
Finance will attach following documents with invoice:
- VAT calculation sheet.
- TDS calculation sheet.
Regular/Enlisted Vendor Payment
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- Vendor’s/supplier’s payment shall be made by a/c payee cheque irrespective of amount.
Vendor will receive cheque giving acknowledgement of receipt.
B.2.2. Payment for consultancy/evaluation/survey work/legal Advisor/External Auditor/video documentation.
HR will hire consultant as per project/section’s need following the same procurement
process applied for procuring of service (ToR, PR, Collect proposal from the respective parties,
profiles, CS and WO, etc). Payment could be made either by installments Or the whole
contract value could be paid after submission of the final report. Consultant will submit final
report for final payment
If the payment is by installments, schedule may be as follows: 20% payment as signing
money, 30% payment after starting field work and the remaining 50% payment will be made
after submission of the final report. Inclusion of reimbursement of travel/filed visit costs like ticket
fare, hotel/accommodation bill, per-diem and local conveyance in the agreement is highly
discouraged.
For Hiring legal or Tax advisor, payment may be paid on the basis of specific assignment/task
or monthly basis. In this regard, retainer-ship can also be considered.
For External auditor, enlistment with NGOAB is must.
Payment documents (must be original copy and duly approved)
- PR with ToR - Proposals/profile/quotations with profiles - CS - Interview sheet, if applicable
- WO/agreement - SRN (Service Received Note) - Draft Report with project/section certification for payment of second installment. - Final report with project/section certification for final payment. - Other travel documents like Ticket for fare, accommodation invoice, per-diem and local
conveyance if agreement includes the clause (should follow IR, B policy/procedures) of
reimbursement of these costs.
B.2.3. Beneficiary Payment
B.2.3.1 Cash Transfer, Cash for work/training and Beneficiary assets transfer
Please see sections B.1.5. to B.1.6
B.2.3.2 Payment of Microcredit (MC) Loan -
Payment documents (must be original copy and duly approved)
-
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- We will follow micro credit operation guidelines/policy. As the minimum requirement
following documents will be required for sanction of MC Loan.
- Group resolution.
- Application for loan duly signed by the beneficiary and approved by the IR MC
management.
- Invoice or Hasil or seller acknowledgement on IR format with revenue stamp in case of
procuring beneficiary asset/goods from market/haat/village.
-
- GRN: beneficiary will sign for acknowledgement on the application form after receiving of
goods/assets. This will serve as GRN.
-
-
B.2.3.3. Orphans One-to-One Sponsorship Transfer
HQ will send breakdown showing individual BAN/orphan allocation and sponsored donor/IR
Partner. After receiving of the TRANSFER from HQ, Finance will provide program with the actual
exchange rate to disburse sponsorship money among the orphans.
-
- Payment documents (must be original copy and duly approved)
- Sponsorship Transfer Break Down.
- Orphan Wise Transfer Sheet Signed by Program Officer, Head/Head of Sector and the CD
- Bank Transfer Advise Letter signed by the signatory. Top sheet voucher will be approved.
- Issued cheque for the district where bank requires in addition to Advice Letter.
-
B.2.4. Office Rent
IR will have written agreement on stamp paper with landlord for its each office approved by
the authority mention in clause # A.7.4. Admin is the key section for dealing with this. Finance
section will preserve the Original copy of the agreement for audit reference.
Payment documents (must be original copy and duly approved)
At the time of initiating renting of office building/guest house;
- PR
After signing agreement;
- Photo copy of the agreement
- Finance will prepare monthly payment list in Excel Sheet for all Offices’ rent– Finance
Manager and Country Director will authorized the sheet.
- Finance will issue cheque/or pay cash as per policy or agreement.
- Tax will be deducted at source as per government rules.
B.2.5. Payment for Utilities
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Admin will submit photocopy bill to finance immediate after receiving from WASA/DESA etc for
payment within deadline to avoid penalty for late payment. Admin will preserve original bill to
handover to the landlord at the time of final termination Office Rent agreement.
Payment documents (must be original copy and duly approved)
- Finance will attach photo copy of the bill with the Voucher sheet for approval and issue
cheque.
B.2.6.Staff payments
B.2.6.1. Reimbursement of Travel Expense
Payment to a staff is required mainly when a staff travels for official visits. For this
purpose, a staff can take advance and after finishing the visit (s)he can adjust. In this case,
payment will be made against adjustment of advance stated in clause B sub clause 1.3.
But if a staff travels without advance, he/she can claim reimbursement after finishing the visit.
In this case, he /she will submit same documents mentioned in clause B sub clause 1.3 (except
ARF) to claim reimbursement of the costs.
B.2.6.2. Monthly Mobile Phone Bill
Staff will be reimbursed for monthly mobile phone bill maximum up to his/her entitlement as per
the policy. Excess amount will be booked as his/her personal advance and adjusted with
monthly salary if staff does not pay the office. Approved policy for mobile phone bill will be
followed for this payment.
-
Payment documents if it is office provided SIM (must be original copy and duly approved)
-
- Summary sheet signed by desk officer, Head of Operation Support, Head of finance
manager and approved by the CD.
- Company produced individual bill.
-
Payment documents if it is not office provided SIM but eligible for reimbursement of phone bill
(must be original copy and duly approved).
- Approved memo mentioning staff name for entitlement.
- PR
- Flexi load bill/ payment invoice
B.2.6.3. Internet bill for using internet modem
As same as mentioned above in clause No. 2.5.2
B.2.6.4 Overtime payment
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The staff, which nature of work is driver or office guard or cleaner or cooks or massager is
eligible for Overtime payment. Overtime will be paid once in a month. Payment will be
calculated as per admin manual. Respective support Staff/driver may work after his/her
working hour on the basis of requisition from the Requester. OT payment will be for the actual
hours worked. During field visit, driver will get OT maximum 8 hours per day on holiday.
Calculation: (Basic salary per month X12 for calculating yearly basic salary)/ 2496 yearly hours
X2 X Actual hours worked as OT.
Per week working hours for above staff: 48
Per week working days: 5
Per year working hours: 2496
Per year working days: 263
Payment Documents (duly approved by the respective authority):
- Requisition for Overtime Form signed by requester
- Overtime Register Form duly filled up by the attendance information from Daily attendance
sheet. Approved by the section manager.
- General bill mentioning BDT amount approved by the section manager.
B.2.6.5 Medical- Hospitalization Expense Reimbursement
Reimbursement will be only for the case of hospitalization and maximum amount will BDT
50,000 per case accept maternity case. Maximum two cases will be reimbursed. In case of
maternity, maximum BDT 30,000 will be reimbursed if hospitalized. For detail please refer to
Medical manual.
Payment Documents (duly approved by the respective authority):
- Hospital admission documents
- Doctor prescription for medicine taken.
- Discharge certificate and bill for accommodation/cabin/ward
- Diagnosis report and related bills
- General bill mentioning total BDT approved by the CD or Head of HR as per authority level
with signatures of Head of HR and respective program/section manager.
B.2.6.6 Salary Payment
HR will prepare initial payroll. Then Finance will calculate tax, PF, deductions (if any), etc and
incorporate in the Payroll. Salary will be paid monthly. Payday will start from 25th of the month
but it is encouraged to pay within the month. Payday for Salary for the field/project based staff
may be on 1st or onward of the following month but in this case there will be written instruction
from the respective Head of Sector. Payroll for all IR field/Upzila/team offices/project/section
will be prepared centrally at IRCO, Dhaka and must be approved by the CD.
Salary details are stated in the payroll section-C
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B.2.7. Quarterly Orphan one to one payment to sponsored children.
IR, Bangladesh disburses quarterly an amount to the sponsored orphan Children donated by
the different sponsored donors. IR,B Finance will send FTR (Fund Transfer Request) to the IRW
Finance after receiving donor-wise and sponsored-children-wise break down from the IRW
Child Welfare Department.
Documents needed from IRW:
- Donors and sponsored children wise break down from the IRW Child Welfare Department.
- Fund transfer from the IRW Finance
Finance will provide actual rate for disbursement among the sponsored children.
Documents needed from CWP of IR,B:
- (i) Fund Request to transfer to the district IR,B bank accounts for orphan disbursement.
Approved area-wise break-down of fund amount equivalent to the total amount to be
disbursed among the orphan children in that particular area.
- (ii) Forwarding letter for disbursement with the Country Director’s approval.
- (iii)Area-wise list of orphans mentioning BAN, Name, Sponsor fund raising Partner Office, per
orphan amount, orphan bank a/c number, bank name, Gratian name and a/c titled, etc.
Transfer process by the Finance:
- Finance will first transfer fund to the respect district IR,B bank accounts as per above
request by the program. Finance will prepare Bank Transfer Advice from IRCO mother
account/other account to IR,B district bank accounts after approving by the CD on the
payment voucher and signing by the signatories on the advice.
- Finance will also prepare Bank Transfer Advice for transferring money to the individual
orphan bank account. An area/district wise list of orphans will be attached with the transfer
advice.
B.2.9. VAT and TAX deducted at source deposit to the treasury.
VAT and Tax as per government’s rules are deducted at source at time of payment to vendors
and staff and create a liability (Expense or salary debit and Tax/Vat payable credit) for the
organization. This payable VAT/tax is deposited in the treasury twice in a month.
Documents to deposit in the treasury;
- A summary sheet mentioning details of VAT /Tax with approval of Head of Finance and
finally of the CD.
- Fill up treasury challan and deposit in the Sonaly Bank/Bangladesh Bank.
- Fortnightly deducted amount will be deposited to the GoB treasury.
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B.3. Emergency Response Payment Procedures (Total Procedures; Authority to Payment).
Following authority and procedures are initially applicable for one month from starting of
the Emergency Operations. Period is renewable. For this response, a person designated as The
Emergency Response Team Leader will lead the whole emergency operation.
B.3.1. Authority
- The Central Emergency Response Team Leader can approve any requisition up to BDT
500,000 related to above response.
- The Field Emergency Response Team Leader can approve any requisition up to BDT 50,000
related to above response.
- TAF related to the above response can be approved by Emergency Response Team
Leaders.
- Staff Advance up to BDT 100,000 related to the above response can be approved by the
Central Emergency Response Team Leader.
- Staff Advance up to BDT 50,000 related to the above response can be approved by the
Field Emergency Response Team Leader.
- Bill/voucher up to BDT 500,000 related to the above response can be approved by the
Central Emergency Response Team Leader.
- Bill/voucher up to BDT 50,000 related to the above response can be approved by the Field
Emergency Response Team Leader.
B.3.2. Process for Procurement: Spot Purchase for the above response:
In addition to IR,B’s regular procurement policy following system can be used for above
response up to BDT 500,000;
- A spot procurement committee consisting one finance staff and at least other two staff
will be formed. Where finance staff is not available, 3 staffs will be in the team.
- Quotations will be collected on the spot.
- A spot procurement form will be used (IRCO procurement will provide this format).
B.3.3. Payment (for spot purchase).
- It is highly encouraged to pay a/c payee cheque for above BDT 50,000.
B.3.4. Petty Cash limit for this response.
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- Limit for IRCO is BDT 200,000.00
- Limit for Field office is BDT 100,000.00
- Every Thursday or day before holiday/strike, normal petty cash limit (BDT 150,000 for
IRCO and BDT 10,000 for FOs) will be replenished so that on holiday/weekend/strike-day
cash is available. Fund can be transferred through mobile banking/Bikash System
during emergency period to the Field offices where emergency occurred. Field Office
In-charge will have official Bikash registration to receive the said fund.
B.3.5. Staff Advance and Adjustment of advance:
- Up to Tk. 100,000 as advance and can be given in cash.
- Advance will be adjusted in the office from where it was received.
B.3.6. Approval of Voucher’s Top Sheet (IRW-B printed color vouchers) related to above response.
- The Central Emergency Response Team Leader can approve up to BDT 500,000.
- The Field Emergency Response Team Leader can approve up to BDT 50,000
B.3.7. Master List and Master Roll will be maintained for distribution of materials/foods among the beneficiaries.
C. Payroll: Initial payroll will be prepared by the HR section
IR,B employees’ payroll for IRCO and Fos will be prepared by the finance department centrally
in its country office. IR,B always pays its employees’ salaries through bank account.
HR department will notify Finance for any changes regarding monthly salaries such as; joining
of a new staff, confirmation, separation, leave without pay etc by 20th of each month so that
Finance can make necessary adjustment in monthly payroll. Any changing information
received after 20th of the month will be entertained in the next month’s payroll.
Finance will send Salary Transfer Letters mentioning name and net take-home salaries of each
staff under the respective Country/ Area/Field Offices to the respective banks. The Bank will
transfer salaries to the respective staff’s bank account accordingly.
PF and other deductions will be made directly from head office and to be deposited to the
concerned bank A/C for staff future fund directly. Finance will issue a payroll slip for each
individual employee furnishing the earnings and deduction. All the staff of IR,B should preserve
the payroll slip for future reference particularly for earnings, deductions, savings and income
tax issues. Staff Salary will be transferred to the individual staff’s bank A/C not before the 25th of
each month.
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C.1. Payroll Procedures
C.1.1 Documents needed from the Staff by 18th of the month;
- Bank account number for new staff
C.1.2 Document needed from Field office Finance by 18th of the month:
- Staff information regarding resigning, transfer, joining etc.
C.1.3. Document needed from HR by 18th of the month: - Accepted joining letter for the new staff
- Appointment letter/ Contract for the new staff
- Photocopy of JAC approved hiring requisition form for the new staff.
- Salary held up letter/memo/mail, if any, for the existing staff.
- Transfer letter, if any, for the existing and transferred staff
- Resignation letter for the separated staff to held up salary, if any.
- Suspension letter for the staff under investigation, if any.
- Termination letter for the staff under disciplinary action, if any.
- Attendance information for cross charging.
- Memo mentioning allocation of time for the shared staff, if any.
- Letter related to promotion or increment.
- Letter related to any deduction from the salary such as leave without pay, loan repayment
etc.
C.1.4. Finance will Do
Payroll Officer (PO) or designated will prepare payroll (finance part) as per letters from HR for
the month. PO will send payroll to the Head of HR first for his/her check and signature. Head of
Finance will verify the disbursement which will be finally approved by the country director.
PO prepares and sends of Bank Transfer Letters for salary after obtaining signatures from the
bank signatories.
C.1.4.1 Calculation Monthly Gross salary:
Monthly gross salary consists of following components:
- Basic salary
- House rent
- Medical allowance
- Transportation allowance
- PF contribution (organization part)
C.1.4.2. Monthly Deduction of salary Monthly deductions from salary are as follows;
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- PF contribution (both organization & staff part).
- Income tax as per GoB rules
- Any penalty approved by the CD
- Leave without pay approved by the CD
- Staff welfare fund contribution
- Others, if any, approved by the CD.
C.1.4.3 The procedure of transferring salary to the employee’s bank account is given below:
- “Save as” the last moth salary for following month.
- Make addition in the employee’s list if any staff is newly appointed last month, but subject
to the availability of his / her signed contract, joining report and account number
information from HR department.
- Retain the staff salary if any mail or information is receive in written from HR. ( Sometimes we
can retain the salary on verbal discussion also, but later on HR will have to provide it in
written)
- Put the staff advances/loan deduction amount in column “This Month Loan deduction” but
after checking the staff advance/loan balance from Quick Books.
- Put the staff advances/loan deduction amount in column “This Month Loan deduction” but
after checking the staff advance/loan balance from Quick Books.
- Put the staff personal charges regarding (Mess, Vehicle usage, Telephone, Mobile etc) in
column “Other deductions”.
- If there is any other addition of amount like repayment of excessive deduction to our
employee, it would be inserted in the column “Other addition”.
- If there is any amount of arrears, for example, in case of new appointee arrears for few
days of last month or annual increments arrears. This amount would be entered in column
field “Arrears”.
- The final figure would be available now in the column “Net Salary”.
- After the above steps, get the project wise salary sheet prints by using filter function in
column “Project”.
- Sign that sheet first, and then get the signatures from Finance Manager and finally send it
for CD’s approval.
- For bank letters hide all the columns except Sr. No, Name, Account No, Bank / Branch and
Net salary columns.
- Use same filter function in column “Bank/Branch” for bank wise transfer letters.
C.1.5. Sample of IR,B Payroll
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D. Fund Management. D.1. Fund Transfer to the Field Office
Monthly advance(s) to run project activities under the Field Office(s) can be taken by the field
office management through the Field Office Current A/C. Field Office sends monthly fund
requisition giving details, that is, name of activities, quantity of activities, rate of cost per
activity, total amount, name of the month, etc, where applicable. Requisition should be
justified by existing approved budget. Requisition should be submitted to the Finance Officer at
least 3 working days before the starting of implementations.
Field offices will close monthly books of accounts by 25th of each month (reporting period is 26th
to 25th of following month).
Field Office will adjust advance by sending Monthly Expenditure Report or by sending Original
Invoices duly approved by the respective authority within 30th of the month.
Documents needed for FO fund transfer:
- (i) Money Requisition Detail sheet showing columns of donor & IRW account code, heads,
budget, expense up to date, budget balance up to date and requested amount for the
month, etc. (Budget- Expense-Balance-Request).
- (ii) Break-down of money requisition showing columns of donor & IRW account codes,
heads, requisition column with sub columns: unit, unit price and Total (unit X unit price).
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- (iii) If there is more than one project in the same FO, a summary sheet is also required.
Approval process: Prepared and signed by the respective project manager or coordinator or
by the field office in charge with the help of local finance < ----------- > recommended by the
Head of program department (also approved by Head of sector if amount is within Head’s
authority) < ------------------- > reviewed and certified by the head of finance < -------- > or/and
Approved by the CD (if amount is beyond the Head’s authority level).
Deadlines for of Fund Request:
i. Project monthly fund requisition for the next month should reach to the local
finance within 28th of the month on the basis of forecasted expenditure.
ii. The Accountant will verify and compile the monthly requisitions and send to the
Head of sector signed by the Project and Area manager within 30th of each month
for verification and approval.
iii. After critical review the fund requisition by the Head of sector, he/she will send the
requisition to the Head of Finance manager for fund review within 2nd h of the next
month.
iv. Finance Manger will certify and arrange to transfer the fund to the Area
Office/Project Office on or before 5th of the next month.
The procedure of transferring funds to the field offices is given below (for finance):
i. Check the field office funds position that how much funds are available there.
ii. Also, consider the availability of funds in country office bank account for these
transfers. It is prohibited by the IRW to transfer fund one project to another project
without IRW Finance permission.
iii. For Ramadan and Qurbani Programs, HAER will give formal request to transfer fund
to implementing NGOs. Since these funds are committed from IRWHQ, so we
process by adopting the same internal payment procedures.
iv. Same action is taken when we receive the request from Orphan department.
v. If it is needed to inter projects fund transfer for the project running short of fund due
to delay of fund transfer from IRWHQ, get first approval from IRW through their
prescribed form.
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D.2. Fund Transfer Request (FTR) to the IRW International Office (IRW IO).
IRW IO does not transfer fund automatically other than first month’s cash requirement of the
newly approved project. The country office requests for fund transfer (FTR) monthly to the IRW
IO. FTR is prepared for Individual project which contains Fund Request, Expense report, Cash-
flows/budget of the project , up-to-date customized P&L account extracted from the
QuickBooks .
Documents for FTR;
- Fund Request Sheet in Excel mentioning ; Project Pin, Project Duration, Project Name,
Budget in Original Currency, Budget in GBP, Budget in BDT, Funds Received-to-date (BDT),
Expenditure-to-date (BDT), Fund Balance In BDT,, Cash-flow Requirement in BDT,
Comments/explanation if amount requested is not in line with cash-flow forecast.
- Customized P&L accounts from QBs.
- Cash-flows of the project (Budget in IRW format)
Deadlines for submission of Fund Request:
- By 5th of each month.
The procedure of submission:
Upload this FTR project wise in the AX enterprise portal. See Ax guideline with Finance Depart.
D. 3. Petty Cash Management:
Petty Cash type expenses are defined as expenses that are small and repetitive in nature such
as minor building repair & maintenance expenses, office equipment, IT equipment repair &
maintenance, meeting expense, vehicle maintenance, toll plaza expenses, utility bills and
employees medical bills. However, if the requisition for such an expense is more than BDT
10,000 both for IRCO and Field Office, then payment will be made through cross-cheque. Petty
cash disbursements are not for payment of regular vendors because such payments are
generally made through cheque. Vendor/supplier’s payment shall be made in cheque
irrespective of amount as per GoB rule.
D.3.1. Petty Cash Control Objective
“To ensure that petty cash funds are disbursed only for proper Purposes and adequately
safeguarded and properly recorded.”
Assigned Petty Cashier will prepare a summary daily basis indicating total cash disburse and
cash in hand.
Petty cash withdrawal from bank must be through a single cheque.
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Assigned Petty Cashier will entry daily petty expense in the petty cash ledger on a regular basis
and at end of the day he/she will close ledger denominating the cash in hand.
Sr. Accounts Officer/Deputy Finance Manager/HoF will surprise count the cash in hand.
D.3.2. Limit of Petty Cash Fund
The petty cash fund is based on the imprest system in which the fund is periodically reimbursed
by a single cheque for the total amount expended from petty cash.
D.3.2.1 Petty Cash Limit for IRCO
- For normal situation petty cash limit is BDT 1, 50,000.
- For emergency situation petty cash limit is BDT 2,00,000.
D.3.2.2 Petty cash limit for single project’s field office.
- For normal situation, limit is BDT 10,000.00
- For emergency period, limit is BDT 100,000.00
D.3.2.3 Petty cash limit for multi-projects’ field office.
- For normal situation, limit is BDT 5,000.00 per project.
- For emergency situation, limit is BDT 100,000.00 overall.
-
D.3.2.4 Petty cash limit for Rangpur Area office.
- For normal situation, limit is BDT 5,000.00 per project. But it can be increased up to BDT
10,000.00 per projects based on the need assessed by the Area Office Management team.
- For emergency situation, limit is BDT 100,000.00 overall.
D.3.3. Security Rules for Petty Cash/Cheque
Petty cash shall never be lying around. Cash/Cheque should be kept in a lockable metal box
during petty cash hours and after the close of the workday, the cash box should be kept in a
locked cupboard/ steel almira which is in a properly secured area.
The key must be held by the assigned accountant. Arrangements must be made when the
assigned accountant is absent. One copy of the key should be kept by the finance manager
for CO/office in-charge for Fos, or his/her designated.
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Petty Cash shall be denominated by the assigned accountant and re-checked and counter-
signed by the finance/accounts officer daily basis using daily cash count sheet after close of
the workday.
Two persons shall count the cash and sign the cash reconciliation before a new imprest is given
out.
The assigned accountant should never mix petty cash with personal money.
In the event of a theft, the loss must be reported to the IRCO and the Local authorities.
D.3.4. Procedures for Petty Cash Management
Employee can ask for the reimbursement through “General Bill”. The person who is making
cash payments generally follows the process given below:
- Check whether the request is properly prepared and signed by the employee.
- Request for Payment is duly signed and verified by the departmental manger or originator
immediate supervisor.
- Check the authorization of Country Director for payment.
- Check the project name and donor name.
- Budget is available & budget code is properly mentioned.
- Amount mentioned in the requisition duly matched with the supporting bills.
- If the request for payment form fulfills all the above requirements, cashier will put his/her
signature in a relevant box named “Payment prepared by” and handover the Form to the
finance Officer for further verification.
- Finance officer will further check all the bills in detail, if satisfied put his signature in a
relevant box named “Checked by”.
- Before payment assigned petty cashier shall make checked and approved the invoice or
bills by the Finance Manager.
- After that, payment is made to the employee and the bill will reimbursed out of the Petty
Cash Fund.
- Get the signatures of the person who is receiving the cash.
- Affix the rubber stamp “Paid” on all the supporting documents.
The procedure for making cashing payment will remain same but the requirements vary with
the nature of expense.
D.3.5. Petty cash Book
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The assigned person of the petty cash will maintain a Petty Cash Book and give entry regularly.
He/she will post all the receipts in the debit side and all the payments in the credit side of the
petty cash book. Cashbook must result in a debit balance.
Before leaving office at end of the day, he/she will do balancing of the cash book and
according daily cash count sheet will be prepared.
D.3.6. Replenishment of Petty Cash - The pertly cashier will prepare a cash status sheet/cash count sheet showing the cash in
hand and requirement of cash to replenish the petty cash limit.
- At IRCO the status/count sheet will be checked by another finance/accounts personnel
,who will be finally approved by the HoF or his/her designated.
- At the field office level where only one finance person is not available, Field office in-
charge will be responsible for verification and approval of petty count sheet.
- Petty cashier will prepare voucher and make it approved by the respective authority as per
authority level through HoF or his/her designated.
D.4. Bank Management
All bills/invoices should be produced to the Finance Section for processing of payment at least
five (5) calendar days before the expected date of payment. Finance Section will process the
bill/invoices in accordance with the budgetary provision, accuracy and authenticity of the bill,
necessary approval from the concerned authority and then finalize the bill for payment. In an
exception, emergency payment will be made with the desecration and approval of the
Country Director. Recipient/s of payment (vendor/parties/employee) should receive the bill
directly from the Finance Section. Payment of cash and/or cheque will be made always up to
3.30 P.M. of every working day. Cheque signing and Bank transaction scheduled will be as
follows;
Cheque Signing Bank Transaction
Day Time Day Time
Sunday 11.00 a.m Monday 10.00 a.m
Tuesday -do- Wednesday -do-
Thursday -do- Sunday -do-
This schedule may be changed time to time by the decision of the management. But the
above one will remain valid until further written notice.
D.4.1. Field office bank Account
Every filed office must have bank account if the management wants to do transaction through
that Field Office.
D.4.2 Bank Account opening and Signatory
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IRW Finance Approval: For opening new bank account or changing signatory or closing any
bank account, prior approval of IRW Finance through Desk officer is must. There is a prescribed
form (BAF)to request IRW Finance for approval.
Common signatory and minimum number of signature on the cheque: The Country Director will
be the common signatory for all bank accounts all over Bangladesh where IR,B project is
running. For signing any cheque minimum any two (2) signatories’ signatures are must.
Nomination for signatory: The country director is the prime authority to approve the name of
the signatory. For field offices, respective head of sector will nominate the person from the field
office where his or her program is running. If more than one project is running under the same
field office, any project can propose name but finally the Country director will approve the
name for signatory. Program/respective department will inform the Head of finance about
nomination by e-mail or letter.
Procedure for inclusion as the signatory: The assigned finance person will collect signatory card
from the respective bank and include all the old and proposed signatories, take specimen
signature of all in the card, collect photographs and management resolution letter with
signature, prepared bank forwarding letter , take signature of the existing signatories, if any, or
of the country director for new bank account and finally submit to the respective bank.
Custodian of cheque book: finance is the custodian of the bank documents including cheque
books.
D.4.3. Procedures for bank Payment
Accountant will submit bills/vouchers to the CD by 11.00 a. m. for obtaining approval of the
Country Director, if it is beyond staffs’ CD’s authority level.
Bank Payments Payment of regular vendors is generally made through cross cheque by following the
procedure given below:
- Check, whether the Payment Request is properly prepared and signed by the person who
prepares it and is duly signed and verified by the departmental manger as per authority
along with the date.
- Check the authorization of Country Director for Payment.
- Check Project name donor name.
- Verify the budget code.
- Whether the budget availability was confirmed from finance before purchase , if it was not,
then payment will be stopped and relevant manager will be informed in writing.
- Amount mentioned in the requisition duly matched with the supporting bills.
- Invoice will be original.
- Bid Evaluation Sheet (BES/CS) will be attached if the purchase is of more than BDT 10,000.
- The amount written on the cheque is exactly matching with the amount given on WO.
- Original Work Order (WO) issued to supplier will be attached.
- Name of payee written on cheque will be exactly matching with the name given in
Payment Request payee’s field.
- Purchase request (PR) in original will be attached with Payment Request duly signed by the
originator, the admin officer and by the admin coordinator.
- Verify the criteria for selection of supplier in BES.
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- Check whether the prices given in quotation are matching with original invoice.
- Appropriate VAT/tax deduction, for example in case of supplies 2.25% VAT will be
deducted however in case of consultant (10+4.5) 14.50% will be deducted. Standard VAT
rate 15% is some cases applicable need to check before payment. These rates are
changeable time to time. So, for current rate please always communicate with IRCO
Finance.
- Check the signatures of the person who prepared the cheque.
(33)
- Verify from the counter file of cheque whether it is matching with Payment Request or not,
the person who prepared the cheque should sign the counter Cheque Register.
- Verify and cross cheque the amount in word and in figures.
- Cheque prepared for supplier should be marked as “Payee A/c Only”.
- Cheque number will be written on Payment Request.
- Name of bank of which the cheque is issued should be written on Payment Request.
- Signatories should sign right beside the cheque number on Payment Request.
- Make a photocopy of this cheque and attach it with Payment Request.
- Get the signatures of the person who will receive the cheque. All the cheques will be
mailed to the suppliers by the procurement department and to the payees directly by the
finance department.
- Affix the rubber stamp “Paid” on all invoices and on the purchase request form. After this
whole process, the expense will be recorded in the Quick book and the Payment Request
will be filed.
D.4.4. Receipts, Banking for Deposits and Inter Bank Transfer:
IR,B mainly receives fund from its head office; IRW-HQ. It also receives local fund from local
donors. Besides; IR,B earns some local incomes from training venue, guesthouse, bank interest,
etc. All these are direct inflow of fund. Apart from these, there are different types of receipts
but these are not fund flow, such as; Adjustment of Advances, etc.
In case of sales proceeds of old items, , sales of qurbani animal’s skin, etc, which are related to
income, must be supported by proper documents.
All cash/cheque received must be banked on a regular basis (Defined as next day of
receiving of money).
D.4.4.1. Procedures for Receipts and Deposit cash/cheque in Bank
Two individuals under all circumstances should undertake all banking of cash/cheque
(defined: the two individuals, driver may be one individual, who may drive the individuals to
and from the Bank).
The Accountant/s shall provide money receipts for all receipts, other than bank transfer, duly
approved by the Finance Manager or by the Country Director. The Accountant(s) shall
prepare a credit voucher supported by the money receipt/s and the voucher must be
approved by Area manager, Office Inn-charge, Finance Manager and Country Director,
where applicable, as per their authority level.
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D.4.5. Bank Ledger
Bank Ledger is a subsidiary ledger like Cashbook. Bank ledger includes all transactions made
from bank account and that already entered into the General Ledger. Bank Ledger is very
important ledger to know the up to date fund position at bank account. This is also essential for
checking the entries with the bank statement supplied by the bank for reconciliation purpose.
A bank ledger contains both the debit & credit side as usually like other subsidiary ledger. All
disbursements are entered into the credit column while all receipts are entered into the debit
column. Bank Ledger is normally entered on daily basis.
IR,B is maintaining its bank ledger in the QuickBooks.
D.4.6. Bank Reconciliation
This is a statement by which reason(s) for difference between balance as per bank book and
balance as per bank statement is reported.
Obtaining bank statement from the bank; the assigned person of the finance department will
collect bank statement for the each account from the bank by 3th of the following month.
Reconciliation: The assigned person of the Finance department will prepare bank
reconciliation statement within 10th of the following month for each bank account. Finance
manager will check and finally the CD will approve. The assigned person after approval of the
CD will maintain it in the respective file for future audit or donor reference.
Field office finance will follow the same procedure but after local approval by the local office
–in-charge, the assigned person of the local finance will send it to the IRCO finance
department to incorporate it in the central reconciliation system.
D.4.6.1 Procedures for reconciliation:
a. Start with the bank book. Tick each amount (receipts, then payments) in the bank book
when the same item is found again on the bank statement. Tick the figure on the bank
statement as well.
b. Then examine the bank statement. Look at each item that has been ticked. Check again
that it is not in the bank book, or that you have not forgotten to tick it. It could have been
in the bank book in a previous period and the item will then appear on your previous bank
reconciliation.
c. If the un-ticked item is not in the bank book, and you are satisfied that is not a mistake by
the bank, the item in question should be entered into the bank book. Such items would
include :
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• Bank charges or interest.
• Standing orders (amounts paid automatically by your bank as instructed by you).
• Returned/dishonored cheques (amounts you have received and banked, and
originally entered as a receipt by the bank, but then cancelled by an entry on the
payments side of the bank statement; you will also need to enter this as a payment in
your bank book, unless the cheque is successfully “represented”).
(35)
• Finally, re-examine the bank book. There will be a number of un-ticked items. These will
include cheques issued by you, or payments into the bank which do not yet appear on
the bank statements. These items should be recorded on your bank reconciliation.
D.4.6.2. BANK RECONCILIATION FORMAT
BANK RECONCILIATION FORMAT
AS ON
Name of the Bank : Account No.
Balance as per Statement
ADD : Deposited but amount not yet credited by the bank
ADD: Bank charge or any payment deducted by the bank but not posted in bank book
Less: Interest credited/amount deposited by bank but not posted in bank book
Less; Cheque issued/payment done by cheque but not placed in bank by vendor/staff
Balance as per bank Book
E. Budget
Budget is the numerical/financial expression of the programming commitments and future
action plans of a particular project /organization for a particular period. Respective
project/section will prepare budget with the help of the finance section.
Zero Base Budgeting (ZBB): All project budgets will be developed by using the Zero-base
Budgeting System which requires a justification for the all expected expenditures. The logic of
ZBB is that specific projected activities provide the basis for specific project expenditures.
Therefore, all project expenses accounts code/ line items are said to begin at zero and are
increased based on activities rather than according to the level of previous year’s
expenditures.
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E.1. Types of budget for Islamic Relief, Bangladesh.
E.1.1 Project Budget: This is prepared to submit to the donor with specific project proposal. This may also be multi-
year.
E.1.1.1. Different costs of the project Budget
The project budget consists of two types of costs;
i) Total project cost: Summation of the total direct cost and the total indirect costs is the total
project cost.
ii) Direct Project Cost: It is the cost which is fully dedicated for a specific project, for example;
salary of the project manager. If a finance officer is fully dedicated for a specific project, his or
salary is a direct cost for that project.
iii) Indirect Project Cost: This is the cost which is for more than one project. That is, it is not
dedicated for one project but for many. This cost is charged to a specific project at a
percentage of the total cost of a line item, for example, Finance manager salary, Country
office rent, etc. It is also known as the shared cost.
- Indirect cost for Islamic Relief Fund Raising partner Office (IRFPO): Indirect cost for the
project funded by the IRFPO is of two categories; one is the 7% of the total project cost and
second one is the 8% of the total project cost.
-
- Indirect Cost for Institutional Donor funded Project: This is based on the specific donor policy
and system. For example, EU, ECHO, DFID etc allow only 7% of the total project cost.
-
- Calculator of the indirect cost for IRFPO funded project:
-
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E.1.2. Project Support Budget (IRPS):
It is prepared to support, but not limited to, the core administrative expenses like support staff
salaries, country office rent and other office running cost, etc. This budget is yearly base. In
August, PS budget for the next year will be submitted to IRW.
E.2. Responsibility for preparation Budget
E.2.1 Project Budget:
Respective Head of Sector is responsible to prepare the budget for his/her project/section.
Finance will provide technical and other necessary assistance for this. The CD will finally
approve to submit to the respective donor.
E.2.2. Project Support Budget (IRPS):
Head of Finance is responsible to prepare the IRPS budget consulting with the CD and other
sections. The CD is the approval authority for submission to IRW.
E.2.3. Review of Budget before submission
Finance will finally review the budget getting information from the respective support service
departments like HR, Admin, Media, procurement etc and prepare review sheet. Review sheet
will be finally sent to the Desk officer of Bangladesh at IRW IO after duly signed by the Head of
Finance and the respective Head of Sector.
E.2.4. Time for preparation of Budget
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Normally Budget is prepared annually. In IR,B also, budget is prepared annually. In IR,B budget
is prepared for three sources of funds; i. fund from IRW HQ for IR,B regular projects, ii. fund from
different institutional donors for specific/emergency/need based projects and iii. fund from
local (Bangladesh) donors. In case of IRW HQ fund the financial year begins from January 1.
So, budget prepared by 20th of August and submitted to the Head Quarter. However,
emergency and need based budget is also prepared as and when needed for emergency
and need based projects. Besides, normally at the eve of designing of a new project, when
project proposal is submitted to the donor, a multiple year budget is also prepared for the
project life. The Multiple Year Budget is prepared as and when any new project proposal is
developed.
Sample of Review sheet
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E.3. Budget Format Both the Project and IRPS budgets will be prepared on the IRW format with monthly cash flows
for IRW approval. Every budget is link with Final Budget sheet, Operational Budget sheet, cross
charging sheet, DCHE Costing sheet, Calculator sheet and working sheet. Budget format also
includes cash flow time frame for whole the project period.
Sample IRW budget form
Please communicate with IRCO finance.
E.4. Budget Monitoring/controlling
Budget monitoring is an important part of internal controlling of financial system of an
organization. IR,B has also the practice of budget monitoring. IR,B prepares a Budget Variance
Analysis Report (BVAR) on monthly basis. The BVAR format contains the Budget line items,
Budgeted amount for the year, previous month’s expense, current month’s expense, Year to
Date expense, annual budget balance and Notes & Remarks column. In case of IR,B the
monthly financial closing is done at the 30th day of each month and the BAVR is prepared
project/department wise and circulated to the concerned management for their review and
future action (if needed) by the 10th of the following month.
E.4.1Control Process:
1. Program will submit finance the approved agreement and budget prior to the start of the
project(s).
ii. Before purchasing any goods or services Finance Manager will confirm the availability of the
fund in the Procurement Requisition (PR).
iii. Following the confirmation by the Head of Finance for IRCO, finance personnel for Field
Offices, the CD will approve the PR as per authority level..
iv. Finance will provide the Head of Sector monthly budget expenditure variance statement
and Head of Sector will according take control measures.
v. Finance will provide the Head of Sector exchange gain/loss statement monthly, where
applicable and Head of Sector will take actions according to revise the budget.
E.5. Revision of Budget
Budget can be revised if respective program/project/IRPS thinks necessary. But as all the
projects are pre-approved and agreed by line items by the donors, donor approval/consent is
required every time if the revision by line items varies above 10%.
Following is procedure for donor approval on revision;
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“For Project support, approval from desk. For ODS, approval from orphans department IRW. For
everything else, approval from the donors via the desk”.
E.6. Chart Of Accounts (COA) Account(s): it is the head of a specific expenditure under which forecasted future expendable
amount for a specific activity is budgeted. IR,B (also all other IRW country programs) has one
single code for each single specific activity/account. IR,B’s all accounts’ codes are of 4
categories in terms of accounting principle;
- Expenditure accounts codes
- Revenue/income/grants accounts codes
- Assets/recourses accounts codes
- Capital fund/Liability accounts codes
Chart of accounts: COA is the list of all above accounts. IRW all country programs follow a
unique chart of accounts developed by the IRW IO consulting with the country offices. Unique
is required as the IRW is using AX ERP software where different account codes for one line item
is accessible.
COA is attached as an annexure
F. Reporting These types of reports IR,B finance produces;
-
- Monthly variance report
- Quarterly variance report
- Donor report.
- PNGO Report
F.1. Field Offices’ Financial Support and Reporting System
F.1.1 Financial Transactions of the Field/Area/Project Office of IR,B
With reference to the clause no D.5.1. of this manual, there will be a bank A/C in each
individual Filed Offices to support its operation. The field office will maintain accounting records
and prepare monthly financial reports. Main transactions related to the project activities will be
are made from Filed Office’s Bank A/C. Also, expenses like office utility, office supplies,
motorcycle/vehicle fuel & maintenance, travel, per-diem of the field office staffs and other
monthly office running costs will be made from this Bank A/C, if cash payment limit is
exceeded. Bank Cheque book will be maintained in the Head Office , if there is no
finance/accounts personnel based in the particular field office. For the above transactions,
cheque will be signed and sent from country Office to the field office.
Except CAP and Core admin of Rangpur Area Office, bills/invoices shall be sent to CO monthly
basis . The field office shall prepare monthly Receipts & Payments A/Cs and send to the
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Finance duly signed by the proper authority (as same as fund requisition). After closing of a
project, related documents like bills/invoices/master roll will be sent to the CO.
F.1.2 Monthly and Quarterly Financial Report from Field/Area/project Office to CO:
Accounting period: as the fiscal year of IR is 1st January to 31st December, IR,B monthly
accounting period will close on the 25th of the respective month.
F.1.2.1. Monthly Financial Reporting: (Receipts and Payments A/C)
All staff will submit or adjust their bills/invoices and advance to the project accountant by the
25th of the each month before closing of business. Field office finance person will submit the
monthly financial report to the IRCO on 30th of the each month.
FOs will submit complete reporting package. Schedules of this package are self explanatory
or where explanation is required can be found in the report footnote. The entire package is
required to complete the quarterly financial reporting.
If the schedule is not applicable or there has been no reportable activity, submit the schedule
with an “N/A”.
SCHEDULE SCHEDULE NAME COMMENTS
Schedule-1 Bank reconciliation for each bank account and bank
statement.
Schedule-2 Fixed assets register
Schedule-3 Receipts and payment
Schedule-4 Monthly Fund request.
F.1.2.2. Every month on 30th of the month, one finance person from each filed office will come to IR,B Country Office with the following documents, where applicable:
Monthly financial Reports supported by all bank statements with bank reconciliation
statements according to IR,B existing formats and check and verify by the respective
manager.
Finance accounts for IGA projects (including balance sheet, income & statement/Profit & Loss
a/c, Trading A/c and trail balance etc).
Cash in hand in monthly financial report to be shown with details in a separate sheet (Purpose
of cash to be shown).
Bank Reconciliation must be reviewed by the Area manager/office-in-charge and must be
signed off on a monthly basis. Reconciliation must be prepared for each bank account.
Regular monthly reconciliation of bank accounts must be performed to ensure all remittances
and payments have been deposited / withdrawn into/from the Islamic Relief bank accounts as
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expected and properly recorded in the general ledger. Any discrepancies must be disclosed
to the manager and resolved immediately.
F.2. Monthly Variance Report to the all Projects.
After reconciliation of the filed transaction and report, IRCO Finance will provide monthly
financial variance report showing burn rate to the concerned program staffs by the 10th of the
following month.
Format:
A/c
code
particular Budget expense variance Burn rate
F.3. Partner NGOs Financial Reporting
F.3.1 Selection of PNGO
PNGO will be selected after assessing by a prescribed assessment form developed jointly by
the management ( PDMFER and programs and support services). An ABC Form developed by
the IRW will also be filled up and sent to IRW. Finally agreement will be signed between PNGO
and IR,B.
F.3.2. Reporting IR,B shall receive monthly financial reports from the PNGOs. IR,B shall report to its head quarter
based on the expenses incurred by the IR,B itself along with the financial reports sent by the
PNGOs. Necessary adjustment for PNGOs reports will also be made if any discrepancies found
during internal audit by IR,B. Adjustment should be made immediately after the findings i.e. in
the next quarterly financial report. PNGOs will submit their financial report using the prescribed
format provided by the IR,B. The PNGOs will report in two sheets, one showing fund flow
statement and the other to show budget variance.
F.3.3 Types of the PNGO Reports i. Receipts and payments accounts (cash flow)
ii. Budget –Expenditure Variance Statement showing accumulated expenditure for the
previous period.
iii. Bank Reconciliation Statement with bank statement
F.3.4 Retention of voucher
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Original invoices will be retained by the PNGO for 10 years or as per NGOAB regulation if it has
NGOAB’s approval for the respective project. But if PNGO does not have NGOAB’s approval, it
will send all original invoices quarterly to the Islamic Relief, Bangladesh country office.
F.4. Financial Reporting to IRW HQ
F.4.1. Quarterly Financial Reporting and time frame
IR,B reports to its head quarter on quarterly basis. The reporting quarter is Jan-March, Apr-Jun,
Jul-Sep and Oct-Dec. Reporting deadline is the 20th of the following month after ending a
quarter. The Quarterly Financial Report (QFR) includes, the fund flow statement, Budget
Variance Report, QuickBooks produced Trial balance, QuickBooks transaction details.
Format for reporting:
i. QFR formats are prescribed by IRW available with finance .
F.4.2. Types of Quarterly report
i. Quarterly variance report like monthly variance report stated above.
ii. Quarterly cross-charging report
iii. Fund Statement
F.5. Financial Reporting for Institutional Donors
IR,B shall send financial reports to the institutional donors through HQ on their projects as per
MoU/ToR agreed and signed by the both IRW/IR,B and Respective Donors. Reporting Format in
this regard will be as per instruction given in agreement.
G. Fixed Assets’ Accounting For:
IR,B will consider Fixed Asset consisting of anything which the organization owns or buy for use
within the organization and which still retains a value at year end. They usually consist of major
items like Land, Building, and Furniture & Fixture, Equipment, and Vehicle. The term Fixed can
be translated as ‘Long term’ and by that we mean an item which will still retain a significant
value.
G.1. Fixed Assets Acquisition and Capitalization:
G.1.1. Budget Availability.
Fixed Assets additions must be purchased within the budget set for / by Islamic Relief where
appropriate approval must be followed.
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G.1.2. Value for Capital Assets and Non-capital Assets:
Fixed asset which costs above BDT 5000 and expected longevity of which is more than 1 year
will be treated as Capital Asset (CA). Fixed asset which costs BDT 2000 and up to BDT 5000 and
expected longevity of which is more than 1 year will be treated as Non-Capital Asset (NCA)
but like paper basket, stapler (other than heavy duty), punch machine, pen holder etc will be
treated as consumable items though their longevity is more than 1 year.
G.1.3. Capital Expenditure related procurement of capital assets.
The invoiced net of any supplier discounts, plus tax freight and all other significant cost
necessary to prepare an asset for use should be capitalized. Other capital costs may include:
Initial inspection and testing, installation cost and other similar expenses only if material in
amount.
The cost of maintenance of contract on equipment and software should be expensed when
paid.
G.2. Depreciation
i). Depreciation will be charged as per reducing balancing method.
ii) As the IR,B fiscal year is from January to December, the asset procured anytime/date before
June will be charged for full (100%) of the depreciation rate for that particular asset as
depreciation and the asset procured anytime/date after June will be charged for half (50%) of
the depreciation rate for that particular asset as depreciation
G.2.1 The details of fixed assets and depreciation rate is as under:
Head of Accounts Particulars
Capitalized Assets
Land & Land
Development
Purchase of land and development work of land as land filling
etc.
Building Every kind of construction work, boundary wall, pillar, piling
work, instillation of electric line, seawares line, drainage, gas
line, WASA line, etc.
Depreciation on
Building
Rate will be 2.50%
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Vehicle All kind of transport vehicle, van, rickshaw, Motorcycle,
Motorcar, cycle, etc.
Depreciation on
Vehicle
Rate will be 20%
Furniture & Fixture Furniture-Wooden, plastic and steel furniture as Cot, bed, chair,
table, file cabinet, Almira, rack, patient bed, TV stand, TV box,
dining table, Alna, dressing able, tool, ladder, hanger, bench,
self, trolley and all kind of fan etc.
Fixture-Carpet, curtain, Bed cover, pillow, Blanket, Cover
fittings, internal decorations, window screen, etc.
Depreciation on
Furniture & Fixture
Rate will be 10%
Office Equipment AC, refrigerator, photocopier machine, microwave oven,
generator, Still Camera & Memory Card, Print Calculator, Video
camera, overhead projector. Multimedia Projector, ?Stabilizer,
TV, VCP, Hand mike set, Tape Recorder, Charger, Fire
Extinguisher, Sillier machine, etc.
Depreciation on
Offices Equipment
Rate will be 20%
Medical Equipment All surgical instruments, First Aid Box, Blood Pressure Machine,
Ultra Sonogram Machine, Weight machine, Surgical Tray,
Diagnostic Box, Spirit Lamp another medical related instrument,
pathological instrument.
Depreciation on
Medical Equipment
Rate will be 20%
Computer Computer, Monitor, CPU, Printer, UPS, IPS, Scanner, Software,
CD Writer, etc.
Depreciation on
Computer
Rate will be 20%
PABX & Telephone
Set
PABX system and all kind of telephone and PABX line
installations, Mobil set, hand phone set, fax machine, etc.
Depreciation on
PABX Telephone Set
Rate will be 20%
Rain Water Harvest Vegetable cultivation, etc.
Depreciation in Rain
Water Harvest
Rate will be 20%
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Training Materials All kind of materials related to Training like bags, letter piece,
etc.
Depreciation on
Training materials
Rate will be 20%
Books & Journal Journals, Reference books, Subject/Project related CD, books,
Documents, etc.
Depreciation on
Books & Journal
Rate will be 20%
Tube well Deep, Shallow and all kind of tube well.
Depreciation on Tube
well
Rate will be 20%
Slab Latrine
Depreciation on Slab
Latrine
Rate will be 20%
Mobile Phone If the cost price is above BDT 5,000 it will be treated as the fixed
asset. Depreciation rate will be 30%.
Non Capitalized
Assets
Non- depreciable items
Biological Assets This kind of assets like Cow, Bull, Fish, Calves, Nursery & Sapling,
etc.
Kitchen Utilities Plate, Glass, Dish, Knife, Spoon, Water Filter, Gas Burner with
Cylinder, etc.
Other Assets Bathroom Scale, Battery for Mike, View Chart, Packing Materials
for milk, Signboard, white Board, fabric panel, towel, Etc.
G.3 Disposal (Sale) of Fixed Assets
G.3.1 Approval for disposal:
Fixed Asset must have a zero net book value at the time of retirement’s and disposal. If there is
any remaining value, the asset shall first be written off to the appropriate account. All disposal
of fixed asset must be approved by the Country Director of Islamic relief prior and Gain/Loss will
be recorded in accounts. A disposal committee will be formed approved by the CD.
G.3.2. Disposal value
All assets should be disposed at market value regardless of the book value.
G.3.3. Accounting for sale proceed
The individual sale of fixed assets should be recorded under sale of Fixed Asset (disposal)
account. The proceeds should go to the cashbook and should be analyzed separately for
each assets sold. Sales proceed of assets sold will be treated other income or adjusted fixed
assets cost under PSB.
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G.3.4. sale procedures: As per manual an asset will be disposed / sold but following are at least.
- Authorized staff (admin manger/OSM) or his/her designated will propose for the disposal of
a fixed asset to the CD using the Assets Disposal Form or preparation of note.
-
- OSM/Admin manager will send proposed information to the HQ on prescribed form.
-
-
- A disposal committee will be formed on approval of the CD.
-
- Procure/admin personal on behalf of the committee will assess the minimum market value
of the said asset.
-
- Procure/admin personal on behalf of the Committee will collect quotations/sale offer by
advertisement/RFQ.
-
- After preparing CS, sale order will be given to the highest quoted vendor signed by the
CD.
-
- OS department will update the Fixed Asset Register and Finance will update the Asset
Account and report profit or loss in the Income and Expenditure Account.
H. Employees Future Fund (PF and Gratuity)
H.1 Contributory Provident Fund
Provident Fund is a part of the compensation package. In IR,B, all the regular employees
receive this benefit. Confirmed staff is paid 10% of basic salary monthly as the organization’s
contribution to the provident fund. This 10% of basic salary (organization’s contribution) plus
further 10% of basic salary (staff contribution) is deducted from the staff monthly payroll and
deposited into the Provident Fund A/C. Provident fund amount (both contributions) is payable
only at the event of separation of a staff from the organization as final payment. For easy &
quick understanding of the IR,B PF system, please refer the bylaws/Regulation for the
management of the Provident fund and admin manual.
H.1.1. Procedures of inclusion of PF in Payroll
- HR will submit Finance confirmation letter as regular staff
- Finance will add 10% of basic salary as IR,B contribution in the payroll and deduct 20%
of basic salary to deposit employee PF A/c in the name of the respective staff.
H.2. Gratuity
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IR,B has a provision of gratuity payment to its employees. Gratuity allowance is equivalent of
one month’s gross salary of the individual employee that is normally charged to the respective
project(s) and deposited in the gratuity account. IR,B settles its staff gratuity in every year for
charging/reconciliation purpose. The gratuity amount does not pay to the staff every year,
instead it is paid to the employees at their separation from the organization as the final
payment if the separated staff has completed at least 1 year of uninterrupted service with IR,B.
For easy and quick understanding please refer the HR manual.
I. Internal Control
This is the system of controls established by management in order to;
- Carry on the business of the organization in an orderly and efficient manner.
- Ensure that management policies are strictly followed.
- Safeguard assets.
- Ensure the completeness and accuracy of the accounting records.
- Inspire confidence in the organization by its funding partners and beneficiaries
I.1 Internal Control Process
I.1.1. Budgetary Control (confirmation of budget availability)
All transactions should be in accordance with the activities that are stated in the donor
approved budget. Expenditures should not exceed budgeted amount. Internal overspent is
accepted up to 10% of the line item but the bottom line budget is not allowed to exceed by
any amount. However, with donor’s approval this is allowed. Respective program manger is
the budget holder and responsible for budget controlling. Finance manger’s confirmation on
the availability of the budget is mandatory before any expenditure. The CD’s approval is
needed if the requisitioned amount is above the Head of Sector’s authority level.
I.1.2. Organization Controls
These include division of the organization’s activities and operations into appropriate
departments, and the appointment of persons to assume responsibility for different activities.
There should be clear lines of authority, and division of responsibility between these persons
and the governing body. Management should ensure good overall coordination of the daily
activities and operations. For example, all procurement will be done by the procurement
department, staff will hired by the HR department and payment will done by the Finance, etc.
I.1.3. Division of Duties
Segregation of duties reduces the risk of fraud and error. For example, finance will pay the
vendor, so finance will not be engaged to the direct procurement to avoid the conflict of
interest.
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I.1.4. Physical Control
These include restricting physical access to cash, stocks and other assets. For example, is cash
banked regularly and a minimum kept on the premises? If the organization holds large
amounts of cash (or stores) than a small amount sufficient for daily needs should be kept in one
(50)
place, while the bulk of cash (or stores) not immediately required is held elsewhere with
extremely tight controls as to access.
I.1.5. Internal Monitoring of Field offices (FOs)/PNGOs Books of Account
I.1.5.1 Monitoring of FO Finance:
As the IR,B has number field offices to implement its projects directly by its staff, therefore,
internal monitoring to the FOs is an important task of the IR,B. The finance section is primarily
responsible for conducting internal monitoring to the FOs books of accounts for optimum
utilization of fund and ensures transparency in each stage of financial operations. The finance
section will report to the management for necessary action. Each FO should be visited and
monitored by finance staff at least once in every 3 months. Besides, the Head of Sectors are
also responsible for monthly financial monitoring of their projects under the respective filed
office. The purpose of the internal monitoring is to find out any irregularities in financial
operations as well as some sorts of capacity building of the FOs finance/program team in
better financial management.
I.1.5.2. PNGO finance monitoring
The finance section will also monitor the PNGOs for IR,B fund and report to the management
for necessary action. Each PNGOs should be visited by finance staff at least once in a quarter .
Besides, the project Coordinators/Managers are also responsible for monthly financial
monitoring of PNGOs under their respective Field office. The purpose of the financial monitoring
is to build the capacity of the PNGO financial management and find out any irregularities in
financial operations of IR,B’s fund.
I.1.5.3. Process for visit
i. Finance will prepare an annual visit plan and make approved from the CD.
ii. Before going to the field office, finance will inform respective Head of Sector about the visit’s
objectives.
iii. After coming back respective visitor will give visit report to his /her supervisor.
iv. Supervisor will inform respective Head of Sector as well as CD about the reports.
I.1.5.4. Books of Accounts/Records to be reviewed during financial monitoring
I.1.5.4.1. Financial Report
- Arithmetical accuracy of the financial report (summation, balancing etc.).
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-Review of total receipts, expenditure and balances to be matched with cash book/Bank pass
book.
-Current month’s expense review head wise proofing their matching with the head wise entry
into the Ledger book.
-Expense to date column as resulted after addition of current month’s expense with the
previous months expenses.
(51)
-Budget balances in accordance of the total budget and total expense to date.
I.1.5.4.2. Ledger book
-All the head of transaction should be reviewed
-Expense shown in the financial report for the month under monitoring should be matched with
the head wise ledger entry
-The transactions made in the month under monitoring should be corresponded with the entry
reference with cashbook and voucher
I.1.5.4.3. Cash book
-Each individual transaction, of the month under monitoring, should be reviewed
-Receipts and disbursement should be corresponded with the individual head of expense of
the Ledger book as well as the monthly financial report
-Transactions should be corresponded properly with voucher reference, date and amount
-All receipts and disbursement should be corresponded with the Bank pass book
I.1.5.4.4.Bank Pass book
-Each individual transaction of the month under monitoring should be reviewed
-Deposit and withdrawal should be matched with the transactions entered into the cash book
-Deposit and withdrawal should be absolutely ADP activities related
-Total withdrawal of fund for a month should be corresponded with total monthly expenses as
mentioned in the financial report
I.1.5.4.5 Voucher
-All vouchers should be reviewed with date, amount, supporting and their correspondence
with the ledger book, cash book and financial report.
-Vouchers amount should be matched with the transactions mentioned in the cash book and
bank passbook
-All vouchers should be properly supported by original bills/receipts and these are properly
approved by the management.
I.1.6. QuickBooks Electronic System
Islamic Relief uses QuickBooks, customized accounting software for its recording, reporting of
financial transactions. For the convenience of same accounting practices and procedures in
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the country offices of the Islamic Relief , it has supplied the QuickBooks CD in all country offices
like Bangladesh. IR,B has started using QuickBooks in its financial operation since Jan 2007. IR,B
has designed its Standard Chart of Accounts for the QuickBooks GL in accordance of its
requirement of tracking of Assets, Liabilities, Revenue and Expenses for different sources of fund
and its outlay in different activities.
I.1.6.1. Financial documents used in supporting to QUICKBOOKS operation
I.1.6.1.1.Vouchers
A voucher is a form used in an internal control system to document information about and
authorization of accounting transactions. All transactions, such as; receipts, disbursement, or
adjustments, must be initiated by preparation of vouchers. Vouchers are the supporting
documents of Journal Entries. IR,B uses four (4) categories of vouchers for journal entries into
QuickBooks; Paymnet Bank Payment, Cash Payment, Receipts Voucher and Journal Voucher.
Vouchers are normally prepared using printed prescribed format. All vouchers carry a serial
number and date. For example BPV 04, where “BPV” represents Bank Payment Voucher, “04”
represents the receipt number represents the voucher’s SL no. Voucher Serial Number starts
from the beginning of a Financial Year. In the vouchers there is a space for explanation of
details of the transactions. Vouchers are duly prepared, checked and approved by authorized
persons.
Procedures
i. Accountant will prepare a voucher based on the supporting documents available.
ii. Finance/accounts officer will check
iii. Finance manager will confirm rechecking
iv. Finally this will be submitted to the CD for approval as per authority level.
I.1.6.1.1.1 Receipt Voucher
Receipt vouchers are prepared for each deposit of funds into the bank account: cash, check,
pay order, demand draft etc. Receipt vouchers are of two categories; Bank receipts and
Cash receipts.
I.1.6.1.1.2 Disbursement Voucher
Disbursement vouchers are prepared for each disbursement of fund from the bank account;
for example advance to partner NGOs, payment of vendors, staff, withdrawal of petty cash
fund etc. Disbursement vouchers are of two categories; Bank disbursement and Cash
disbursement
I.1.6.1.1.3Adjusting/Journal Voucher
An Adjusting Voucher is a voucher that is prepared in order to adjust an original book of entry;
disbursement journal, receipt journal etc. Adjusting Vouchers are prepared for any non-
financial transaction i.e. no financial transaction is made but any previous transactions
adjusted. Normally Adjusting Vouchers are prepared for the following cases; (i) Adjustment of
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an advance where the expense is equal to the amount advanced (ii) Accruals (iii)
Rectification of any error in proper classification of expenses etc (iv) Cross charging.
Process:
Adjustment/journal voucher will prepared by the Sr. Finance/Accounts Officer.
I.1.6.1.1.4 Journal Entry
Journal entry is the primary entry in the books of Accounts. A journal also known as the Book of
Original Entry in which accounting transactions are primarily recorded in chronological order
before being posted to a ledger. Journal voucher supports each transaction. In computerized
accounting system, journal entry is the only task to get all report and information regarding
financial transactions. Once the journal entry is completed, all the entry should be verified
carefully in terms of date of entry, period of the FY, Source code, appropriate charging etc. if
all the entry is correct, the journal entry can be posted. Once the entries are posted, in no way
it can be changed. Therefore, prior to posting, all entry must be checked properly. Once the
journal entries are posted into the General Ledger (GL), all the reports are updated with
transactions, and any sorts of report can be produced after posting the entries.
I.1.6.2. Data Entry in Quick Books When the payments are made to the supplier or to the payee then we have to enter the
expense in our accounting software known as “Quick Books”.
I.1.6.2.1. General points of Data Entry:
A single individual does not perform the task of entering data into the quick books.
The following points must be keeping in view before entering the data:
- All the entries should be cross checked and verified by operations supervisor.
- Receipt vouchers (RVs) can enter only by the person other than the cashier.
- Data entry of Bank Payments and JV’s should be processed by the person other than bank
payments processing staff.
- The person other than cashier should perform data entry of Cash payments.
I.1.6.2.2. Entering Cash Payment
The procedure for entering the Cash payment is given below:
- Open the quick books go to “Chart of Accounts” in the main menu list.
- A new window will open, then go to the “Activities” and click on the “Make General
Journal Entries” a new window will appear on the screen.
- Put the date in “Date” field.
- Assign a voucher number in the “Entry No” field.
- Enter the expense head in the “Account” field and debit amount in the respective field.
- In “Memo” field put the code of the relevant expense and a little description regarding the
expense.
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- If the expense relates to Medical, then write down the name of the employee in the
“Name field”. Otherwise, write the name of the donor in name field like IRHQ, DFID, or EC.
ix. In the “Class” field write the name of the project like DIPECHO-V,HELP-UP, CAP, ICAP
etc and in case the expense are not charged to specific project which are being charged to
admin then write “PS-Bangladesh/IRCO/RAFO etc” in class field.
- On credit side enter “Cash in hand” in “Account” field.
Write the credit amount or total amount of the Payment voucher (cash) in the allotted field
- In “Memo” field write the Cheque no, press the space bar twice (Double space) and then
write the narration “Petty Cash reimbursement”.
- In “Class” field write Core Admin-Bangladesh.
- Affix the rubber stamp “Posted” on the Payment Request.
I.1.6.2.3. Entering Bank Payment
All the payments, which relates to the supplier or vendors, should be entered into the quick
books by using option “Enter Bill” and “Pay Bill”.
The procedure is given below:
- Open the quick books go to “Suppliers” in the main menu list and click on the option “Enter
Bills” a new window will appear on the screen.
- Enter the supplier name in the “Supplier” field.
- Enter the date in the next field.
- Assign the voucher number in the “Reference No” field.
- Then enter the cheque number in the “Memo” field.
- Enter the expense head in the “Account” field and debit amount in the respective field.
- In “Memo” field put the code of the relevant expense and a little description regarding the
expense.
- Write the name of the donor in “Name” field like IRHQ, DEC, or EC.
- In the “Class” field write the name of the project like HELP-UP, Sid Livelihood,etc and in case
the expense are not charged to specific project which are being charged to admin then
write “Core Admin-Bangladesh” in class field.
- On the credit side, enter the “Withholding tax payable” in the “Account“ field and credit
the amount in the respective field.
- Then in “Memo” write down the supplier name and the total amount as a reference.
- In “Class” field write Core Admin-Bangladesh.
- Affix the rubber stamp “Posted” on the Payment Request.
After that, this particular voucher will be shown as payable in the quick books. So in order to
pay we follow the procedure given below:
- Go to “Suppliers” in the main menu list and click on the option “Pay Bills” a new window w ill
appear on the screen.
- Select the payment and enter specified bank from where the payment is made like “IBBL”
in the “Payment Account” field.
- Enter the date in the “Payment due” field, and then click on the “Pay & New”.
- Enter the cheque number in the blank field and click “Ok”.
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I.1.6.2.3. Payment through “General Journal Module”:
By following the above procedure, the payment will be entered into the quick books and
the expense will be recorded. On the other side, all the payments, which relates to the
employees regarding “Advances” (above Rs. 10000) should be entered by using “General
Journal”.
The procedure is given below:
- Go to “Chart of Accounts” in the main menu list.
- A new window will open, then go to the “Activities” and click on the button named “make
general journal entries” a new window will appear on the screen.
- Put the date in “Date” field.
- Assign a voucher number in the “Entry No” field.
- Enter the expense head in the “Account” field and debit amount in the respective field.
- In “Memo” field put the code of the relevant expense and a little description regarding the
expense.
- As the expense is relates to an employee so enter the name of the employee in the “Name
field”. Otherwise, write the name of the donor in name field like IRHQ, DEC, or EC.
- In the “Class” field write the name of the project like HELP-UP, Sidr Livelihood etc and in
case the expense are not charged to specific project which are being charged to admin
then write “core Admin-Bangladesh” in class field.
- On the credit side, put the name of the specified bank from where the payment is made
like “IBBL” etc in “Account” field.
- In case the payment is being made in foreign currency, then change exchange rate
according to conversion rate of that particular voucher.
- Write the credit amount in the allotted field.
- In “Memo” field write the Cheque number and then press the space bar twice (Double
space) and then write the narration.
- In “Name” field write IRHQ and in “Class” field write core Admin-Bangladesh.
- Affix the rubber stamp “Posted” on the Payment Request.
-
I.1.6.2.3. Entering Receipt Vouchers
The process of entering a receipt voucher is given below:
- Put the date in “Date” field.
- Assign a voucher number in the “Entry No” field.
- On debit side put the bank name in “Account field” and then amount in debit field.
- Put the deposit slip number in the memo field and then press space bar twice and write the
narration of that receipt.
- Put the name of the donor to whom receipt relates in the “Name” field.
- Put the project name in “Class” field like IRHQ etc.
- On credit side write the account to be credited for example Local donations, Advance
against salary or supplier, or Institutional donations, then enter the amount.
- In “Memo” field write the receipt number issued by IR and then writhe the narration.
- In case receipt is in foreign currency then change exchange rate from the field below.
- Affix the rubber stamp “Posted” on the RV.
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I.1.7.Financial Reports from QUICKBOOKS
Normally the Trial Balance, GL listing/transaction details etc. can be automatically printed for
any information and report preparation. Besides, Sort income statement and Balance Sheet
can be produced from the financial reporter option. There is also the option to design
customized financial report using the Financial Reporter option of QUICKBOOKS in which one
can generate financial report as one desire.
J. Overhead/Cross Charging Costs Calculation
The basis of calculation may be the time factor i.e. the time spent by the shared staff for
support to the individual-service-receiving project or may be the number of staff of the
project(s) divided by the total staff. For IR,B regular projects funded by the IRW HQ, IR,B does
not calculate any OHC ratio for allocation of shared cost allocation to those projects as the
whole OHC budget is met from PSB budget.
However, for emergency and need based projects, IR,B will charge OHC as per ratio based on
budget, duration and staff.
Sample:
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K. PNGOs Financial Management Capacity Assessment for Partnership
PNGOs selection is an important factor for pertaining a good partnership and ensures proper
fund management. IR,B has some basic criterion for PNGO selection. This criterion is defined
both in programmatic and financial management aspect. Proper fund management is the
most important criteria for using donor’s money and it is the responsibility of both the fund
providing and the fund receiving partners to ensure effective utilization of the fund. Therefore, if
the PNGOs which have sound financial set up, transparency and accountability are selected
for partnership, the grant management of the funding agency become easy and vise versa if
a PNGO with weak financial set up and poor financial management capacity is selected. IR,B
shall assess the NGOs capacity in financial management through practical visit of the NGOs
financial set up, reviewing & cross checking their previous financial practices with other donors
fund etc.
First of all, the Country Director will form an Assessment Committee consisting at least 3
persons; where one program personnel, one finance personnel, one HR person is mandatory.
K.1. Checklist to assess the financial capacity, but not least, for PNGO Selection.
K.1.1. Financial management
01. What is the finance system in place? Is there a finance/HR/Admin manual?
a) Whether the organization maintains cashbooks, ledger books?
b) Whether the organization prepares receipt and payment A/C, income/ expenditure a/c,
balance sheet
c) Whether the organization maintains separate books of accounts and prepares accounts for
different donors?
K.1.2. What are the internal controlling mechanisms?
a) Approval and payment systems?
b) Types, Advance approval, limit, and adjustment duration?
c) Store keeping and asset management?
d) Staff salary payment systems (cash or bank),
K.1.3.Procurement systems? Is there procurement policy?
a) Procurement committee (Number of members, authority level for Work Order etc)
b) Steps for Quotations?
K.1.4. HR
a) Recruitment committee
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b) Advertisement process
c) Terms and conditions of appointment (JD, appointment letter etc.)
d) Is there any salary structure?
e) Existence of personnel file
f) Leave management
g) Perdiem/lodging rate?
K.1.5. Admin
Internal control-staff attendance register, charging of shared cost if any? etc,
K.1.6. Sampling of bills/ vouchers, appointment and different register etc.
K.2. ABC format of IRW and PIN for the assessed partner.
After finalization of assessment, respective appraisal committee will fill up the ABC format of
IRW and send it to the IRW Finance through Desk Officer. IRW will assign a unique PIN for the
partner. Without this PIN from HQ, fund will be transferred to The partner.
L. Annual External Audit
This is a routine job of each country office of Islamic Relief to submit an external audit report to
its head quarter. In case of IR,B, alongside the requirement by its head quarter, the external
audit is also a statutory obligation to the Government. IR,B conducts the external audit by a
chartered accountants firm that enlisted under the NGO affairs Bureau. IR,B conducts its
external audit for a consecutive 3 years by a selected firm to maintain consistency of the audit
report. In each 3 years, IR,B changes its auditors, if not otherwise advised by its head quarter
and others concerned authority, to ensure transparency in auditing. In selecting audit firm, IR,B
collects firm profile from more than 5 reputed audit firms through its procurement department
and select one from them based on various criterion such as; Enlisted by NGOAB, Number of
principles, number of article ship students, fees etc. Prior to start the audit, IR,B and the audit
firm sign a Terms of Reference (ToR) and determine the overall scope of work, manner, report
submission time frame, payment procedures etc.
I.1 Process
I.1.1For section of new audit firm
- Respective department/program will submit requisition for audit to the procurement.
- Procurement will collect audit proposals from at least 3 audit firms
- Respective dept/program will prepare ToR.
- Procurement will give work order for starting audit signed by the CD.
I.1.2. For audit by the existing external auditor
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- Respective department/program will submit requisition for audit to the procurement.
- Procurement will prepare ToR and give work order for starting audit.
I.2. Management’s Role in External Audit
This is management’s responsibility to conduct external audit for its financial statements and
accounts. The management shall hire external audit with its own initiative as per the
requirement of the COMT/board, head quarter, donor and the Government. In conducting the
external audit, a standard Terms Of Reference (TOR) shall be developed. Before going to
contract an external auditor the TOR can be shared with the head quarter (if necessary). The
TOR will be the basis of the audit. Besides, it is the management’s responsibility of full disclose of
all the facts and figures to the auditors as relevant and concerned with the audit. The
management shall also provide necessary logistics support to the auditors as agreed in the
ToR.
I.3. Preparation of Accounts This is the responsibility of the organization to prepare necessary Accounts for the organization.
The auditor’s role is to verify the accounts and its different statement along with all-
corresponding documents in support of the authenticity of financial transactions. The
organization shall have to prepare the accounts statements as per their requirement and
following the Generally Accepted Accounting Principles and the International & Country Audit
Standards. In case of IR,B, all accounts statements are prepared by the IR,B and the external
auditors verify as per the ToR and the audit standards. In preparation of the Accounts
statements IR,B shall also keep in mind the requirement of the NGO Affairs Bureau of the
Government of Bangladesh.
I.3.1. Process; i. Finance will prepare project wise final accounts
ii. Finance will prepare a list of accruals for the payments of goods or services which have been
received but not paid during the year.
I.3.2. Source of Data for accounts; i. QuickBooks; Class wise P&L, balance sheet, trial balance, etc.
ii. Finance will follow Last year audit reports for the continuing projects.
I.4. Auditors to help the management team improve financial control
As the audit work is carried out, the auditor may identify weaknesses in the system, or mistakes
in the records. The auditor will make a note of these and will decide whether they are matter,
which are material. That is, important or substantial enough to be included in the audit report.
In most cases the weaknesses will be of a fairly minor nature, and the auditor may not consider
it necessary to mention them in the formal audit report.
However, the concerned management will be interested to have details of all weaknesses or
mistakes found by the auditor, however small: this is an opportunity to improve controls and
procedures which they should not miss. The management should insist that the auditors discuss
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all their findings with the management team, however trivial. The auditor should be willing to
offer this service. In addition the auditor should prepare a written report listing all findings,
together with recommendations, in a management letter.
A good procedure is to arrange a meeting between the auditors and the management team
towards the end of the audit. The auditor should give management a draft report, preferably
before the meeting. And go through the matter raised. This gives management the opportunity
to ask questions, or to give the auditor further information which has not been brought to the
auditor’s attention or has not been taken into account in the drat audit report.
The management should ensure that the recommendation as made by the auditor should be
addressed for future improvement of the identified weakness.
M. Latest Chart of accounts developed by IRW
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Thank you
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