project accounting and reporting manual
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CHURCH PARTNER ACCOUNTING AND REPORTING MANUAL “Now, a person who is put in charge as a manager must be faithful.” – I Corinthians 4:2 (New Living Translation) Since April 30th 1999 Compassion International has been deeply involved in holistic child development work in partnership with diverse evangelical local churches in Tanzania. The goal is to help children in poverty access a quality of life such that they grow to become fulfilled and responsible Christian adults. In search of that goal, prudent stewardship of all resources and financial resources in particular must underscore decisions at all levels and at all time. In making financial decisions and implementing them, those concerned need to apply due diligence, integrity and openness. Corporate Policy F-1 (Philosophy of Fiscal Responsibility) includes the statement that Compassion will “maintain careful accounting control to ensure all funds are credited and used for the purpose for which they were given.” It is the responsibility of the Field Office to ensure that money sent to Implementing Church Partners is used according to the purpose designated by the donor(s) and that unused funds are returned promptly. Monthly reports and internal controls help provide this accountability and promote financial integrity. Accountability for the funds God has entrusted to us is very important to Compassion. Sponsors give, sometimes sacrificially, to help individual children. Our integrity depends on using and accounting for those funds in ways that are consistent with what we have told our sponsors. The purpose of this manual is to tell you how. This manual will be revised from time to time to reflect changing reality. Users are therefore encouraged to suggest ways to improve its usefulness by sharing their experiences. The following section is designed to introduce you to Compassion’s accounting system. It is not intended to describe what you can spend the money on. Those guidelines are in another Manual. We will, however, state three of Compassion’s Financial Policies: ICP(s) Finance Training Manual May 2011 Page 1 1. As per Support Services Field Manual (SSFM) version 1.2 Corporate Policy F- 5 Loans of Compassion funds are not allowed under any circumstances including advances in salary. 2. Unused Funds: If money cannot be used for the purpose it was Originally given, it must be returned to the Field Office, which will then use account E950 to return the funds to the GMC (the E950 mechanism for returning funds is described in the Finance Resource Guide). CIV Funds: When unused funds remain from a CIV activity, the funds must Be returned to the Field Office as soon as the activity is completed. Funds for one proposal cannot be used for another proposal. Gifts Funds: Every reasonable effort must be made to deliver child or family gifts. If gifts are undeliverable, the money must be returned to the Field Office as soon as the gift is determined to be undeliverable. Three months after the ICP receives the gift, if it has not yet been delivered, it must be returned to the Field Office and subsequently transferred back to the GMC. Other Grants (CSP and a portion of the LDP grant): These are also funds sent for a specific purpose and the integrity of the funds must be honored. If the funds cannot be used for the Designated purpose, they must be returned to the GMC as soon as It is determined that they cannot be used. 3. No Compassion money may be used to do any construction or repairs; 4. It is the policy of Compassion Tanzania to pursue all legal means to recover any Compassion money that is misused. (SSFM 1.2) In addition it is assumed that partners will do all that they can to provide the best value for sponsored children using the money received. This includes bargaining for wholesale prices since you can be a valuable customer to the local vendors. This also means that signatories to the accounts or committee members and their immediate families, cannot be suppliers to the project as this could look like a conflict of interest. If a committee member is currently supplying goods or services to the project, he/ she needs to make a choice between the two, one cannot do both. If you feel in your situation, an exception to this rule would be advantageous to the program, written approval has to be acquired from your Compassion Tanzania representative before any purchases are made. This system has been designed to keep track of all funds that the project receives from all sources. ICP(s) Finance Training Manual May 2011 Page 2 NOTE: We want to make it very clear that we are only talking about funds directly related to the child development centers we are partnering together in. We do not expect or want you to record in this accounting system, other funds that are not directly related to this project (for example, we do not want tithes or expenses of the church or funds received from the government for teacher’s salaries in this system.) It is not Compassion’s intent to provide 100% funding of the project. The parent and the church are encouraged to contribute financially whenever possible. These other funds should also be recorded in this accounting and reporting system. This Manual is concerned with how to properly track and record all financial transactions directly related to the center. It is important to understand how to do the accounting as it is described in these pages. This is one of the requirements listed in the checklist for establishing a Compassion holistic child ministry. Accounting is a tool to help us reach our goal of ministering to needy children. Good accounting helps to protect the resources God has given us and allows us to show how we have been faithful with the money. B. Internal Control and the Compassion Child Ministry Committee: Good internal controls are essential to the success of the program. Internal controls are systems and procedures that help ensure that funds are not misappropriated. There are internal controls builds into this system that are very important to be maintained. One of the most important of these controls is the Compassion Child Ministry Committee. All the committee members are responsible for Planning, budgeting and implementing the activities the ministry undertakes to make a real impact on the lives of the children in the program. The required Child ministry plan (CMP) and Child ministry budget (CMB) are mutually agreed upon by you and your Compassion’s representative. This is a very important activity and it should be taken very seriously. It will help you think through what are the real needs of the children you minister for and what activities you can plan to meet those needs. It is also a very important internal control to be sure the funds are used properly as planned. The next major responsibility they have is supervising and approving all expenditures to ensure that these agreed upon plans and budgets are accomplished and adhered to. If you have any questions as you read through this manual, please make a note and ask the Compassion’s representative the next time he/she comes to visit. Also as you read it, if you have suggestions as to how we can improve the manual please let us know that as well. We’d really appreciate it. ICP(s) Finance Training Manual May 2011 Page 3 Church Partner Accounts Description The following is a list of nominal accounts with codes and description. The accounts are grouped into three main categories namely; assets accounts (for cash at bank and cash box), receipts accounts and expenses accounts. Although most of the accounts have been retained as they have been, new additions have been to reflect new programs and streams of funding. For example, there are new accounts for HIV/AIDS, Highly vulnerable children (HVC) and child survival program (CSP). Please note you are only required to make use of nominal accounts that are relevant to the project. For example, if there is no CSP program, you are not required to use those accounts. The chart of account will be followed by a brief discussion of what each account is used for. Code of Accounts Type Code Description Asset Asset Asset Asset Asset Asset BC01 BS01 BC02 BS02 PC01 PC02 CDSP Current Bank Account CDSP Savings Bank Account CSP Current Bank Account CSP Savings Bank Account CDSP Petty Cash Float CSP Petty Cash Float Receipt Receipt Receipt Receipt Receipt Receipt Receipt Receipt Receipt Receipt Receipt Receipt Receipt Receipt Receipt Receipt Receipt Receipt Receipt Receipt Receipt R100 R101 R200 R201 R310 R315 R320 R321 R325 R335 R340 R345 R350 R355 R410 R415 R420 R425 R430 R435 R440 CDSP Support CSP Support CDSP Gifts CSP Gifts School Fees Grants Environment &Conservation Grants Medical Refund & Grants CSP Medical Refund & Grants Water & Sanitation Grants Disaster Relief Grants IGA Grants Infrastructure Grants Short Term Missions Grants Group & Ind. Sponsor(s) Refund HIV/AIDS ARV Support HIV/AIDS Care Givers & Siblings CSP HIV/AIDS Support HIV/AIDS Education & Counseling HIV/AIDS Medical Support Health (HH) Vector born Intervention (MIV) ICP(s) Finance Training Manual May 2011 Page 4 Receipt Receipt Receipt Receipt Receipt Receipt Receipt R445 R450 R510 R515 R520 R610 R615 Parent Education (PED) Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense E010 E015 E020 Educational Supplies & Fees School Uniforms &Clothes Centre Supplies & Equipments E025 Teaching Aids & Refer Materials E030 E035 E040 E045 E050 E055 E060 E065 E066 E070 E071 E072 E075 E080 E081 E082 E083 E084 E085 E086 E087 E088 E089 E090 E200 E201 E310 E315 E320 E321 E325 E335 E340 E345 E350 E355 Medical Therapeutic Inter.(MED-TFI) Parents Contribution CDC IGA Sales Local Donation& Church Contri HVC CDI Support HVC CPR Child Protection Physical Dev. & Health Provision Personal Hygiene Food, Nutrition & Cooking Utensils Domestic Assistance Livelihood & Skills Training Social Development Spiritual Development Staff Salaries & Wages Staff Training & Development Administration Telephone Expenses Meals & Refreshments Transportation CSP Medical & Health screening CSP Training on GOBI FFF CSP Food Supplements CSP Spiritual development CSP Social Emotional Dev. CSP Livelihood skills training CSP Salaries & wages CSP Administration CSP Transportation CSP Supplies & Equipments Support transfer to other CDCs/CSPs CDSP Gifts CSP Gifts School Fees Grants Expenses Environment & Conservation Reimbursable Medical Expenses CSP Reimbursable Medical Expenses Water & Sanitation Expenses Disaster Relief Expenses IGA Expenses Infrastructure Expenses Short Term Missions Expenses Group & Sponsor(s) Visit Expenses ICP(s) Finance Training Manual May 2011 Page 5 Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense E410 E415 E420 E425 E430 E435 E440 E445 E450 E510 E515 HIV/AIDS ARV Expenses HIV/AIDS Care Givers & Siblings CSP HIV/AIDS Expenses Expense Expense Expense Expense E520 E525 E610 E615 Local Donation& Church Cont. Catering & Security Wages HVC CDI Expenses HVC CPR Child Protection HIV/AIDS Educ. & Counseling HIV/AIDS Medical Expenses Health (HH) Vector born Intervention (MIV) Parents Education (PED) Medical Therapeutic Inter (MED TFI) Parents Contribution Centre IGA Expenses Assets Accounts BC01: Current bank account It is a requirement that every CDSP or stand alone CSP will open and operate a current bank account with a reputable bank. A current account allow authorized official to make payments and withdraw cash using duly signed cheques. Where a CDSP and CSP are based in the same location (project), one current account is sufficient. The account must be in the name of the CDSP or CSP for standalone CSPs. In the accounting record (books or electronic form), columns for deposit, withdrawal and running balance must be maintained. Bank transactions need to be regularly updated, preferably daily or as they occur. Monthly bank reconciliation is required. BS01: Saving bank account A saving bank account is not a requirement. However, if it is considered prudent to operate a savings account, then, one may be opened with a reputable bank. Before opening a savings account or any other type of bank account (other than a current account), it is important to ensure that interest earned (influenced by the account balance) exceed all charges to that account. Otherwise, it is not necessary to operate a savings account as in actual sense, deposits are gradually dilapidated. The account must be in the name of the CDSP or CSP for standalone CSPs. In the accounting record (books or electronic form), columns for deposit, withdrawal and running balance must be maintained. Bank transactions need to be regularly updated, preferably daily or as they occur. Monthly bank reconciliation is required. ICP(s) Finance Training Manual May 2011 Page 6 Receipts Accounts R100: CDSP Support In this account, record all funds received from Compassion International designated for child support (CHS) and Unsponsored funds (USP). The gross amount should be recorded in this account as well as in the bank account deposit column. To complete the entry, show total deductions as a withdrawal and record corresponding expense, mostly bank charges in the respective expense account column. R101: CSP Support This account is similar to R100. Record all funds received from Compassion International designated for child survival program (CSP). Since CSP support come through the CDSP’s BC01 account, funds transfer charges are not usually deducted. The exceptions are stand alone CSPs in which case; record gross amount in this account as well as in the bank account deposit column. To complete the entry, show total deductions as a withdrawal and record corresponding expense, mostly bank charges in the respective expense account column. R200: CDSP Gifts Record in this account all CDSP gift receipts including individual child gift, family project gifts, graduation gifts, Christmas gifts and any other gifts relating to CDSP. If a gift cannot be delivered to the intended beneficiary within two months, it must be returned to Compassion International. It is wrong to buy and hoard a gift as a bargaining tool such as to compel parents to give contributions. R201: CSP Gifts Record in this account all CSP gift receipts. Except for Christmas gifts, CSP gifts are rare. But all CSP related gift receipts should be recorded in this account. If a gift cannot be delivered to the intended beneficiary within two months, it must be returned to Compassion International. R310: School Fees Grants In this account, record all school fees support receipts. These grants include; bright student support initiative (BSSI) and Compassion education fund (CFNEDU). These are not regular funds but may be available from time to time. Availability is communicated through the Partnership Facilitator (PF). For extremely needy cases such as a registered high school student sent away from school for fees and without hope of raising required fees, an appeal for assistance can be made through the PF. ICP(s) Finance Training Manual May 2011 Page 7 R315: Environment & Conservation Grants These are supplementary funds that are disbursed when specific funding is available. Record in this account all funds meant for environmental care and conservation such as tree planting funds. Any unutilized funds should be returned to Compassion International. An activity should not exceed the received amount. In cases where the activity amount is not enough, local resources and preferably NOT from the parents can be raised to complete the activity. R320: Medical Refund & Grants In this account, record all medical claims reimbursement and any medical grants received. By matching the credits in this account and expenses recorded in account E320, it will be possible to know at a glance the outstanding balance. R321: CSP Medical Refund & Grants In this account, record all CSP medical claims reimbursement and any medical grants received. By matching the credits in this account and expenses recorded in account E321, it will be possible to know at a glance the outstanding balance. R325: Water & Sanitation Grants These are supplementary funds disbursed occasionally when specific funding is available. Record in this account all funds meant for water provision such as water tanks and sanitation activities such as toilet construction. Any unutilized funds should be returned to Compassion International. An activity should not exceed the received amount. In cases where the activity amount is not enough, local resources and preferably NOT from the parents can be raised to complete the activity. R335: Disaster Relief Grants Occasionally, disasters such as flooding and famine may occur that require external assistance. All funds received from Compassion International to relief affected families should be recorded in this account. If support received is insufficient, local resources can be raised to supplement. Return all unutilized disaster relief funds to Compassion International. R340: IGA Grants These are supplementary funds that may be disbursed occasionally whenever specific funding is available. Record in this account all funds meant for income generating activities. The activity should not exceed the received amount unless IGA fund beneficiaries supplement with their own resources. Any un utilized funds should be returned to Compassion International. ICP(s) Finance Training Manual May 2011 Page 8 R345: Infrastructure Grants These are supplementary funds that may be disbursed occasionally whenever specific funding is available. Record in this account all funds meant for infrastructure development activities such as children playground improvement. The activity should not exceed the received amount unless local resources are raised to supplement. Any unutilized funds should be returned to Compassion International. R350: Short Term Missions Grants These are supplementary funds that may be disbursed occasionally whenever specific funding is available. Record in this account all funds meant for short term missions exposure trips activities. This is a unique type of funding in that a project host a group of visitors working as volunteers to help the project with their expertise. Some projects have already benefited from such visits. If the activity exceed amount received, claims for reimbursement can be made to Compassion International. Any unutilized funds should be returned to Compassion International. R355: Group & Sponsor(s) Visit Refund Occasionally, the project may host individual sponsors or tour groups accompanied by Compassion International staff. In consultation with the PF and Sponsor &Tours Specialists, it is allowed to incur expenditure and claim for reimbursement. Only pre-approved expenses will be reimbursed. Record all such reimbursements in this account. R410: HIV/AIDS ARV Support All benefits provided for ARV recipients except for CSP children (Category 4 care) are recorded in this account. This is a common funding stream. As long as the registered child is on ARV treatment, all incomes, including support to members of immediate family will be recorded in this account. R415: HIV/AIDS Care Givers & Siblings Receipts for benefits provided to caregivers or siblings except if child on ARV or child is HIV+ is recorded in this account. Receipts are only recorded in this account if a registered child is not HIV+ but a sibling or caregiver is HIV+. In other words, this is for affected (not infected) registered children. R420: CSP HIV/AIDS Support All HIV/AIDS expenses related to CSP children or caregivers, even if on ARV should be recorded in this account. R425: HIV/AIDS Education & Counseling Project related HIV/AIDS education, awareness, training and voluntary counseling & testing (VCT) receipts should be recorded in this account. R430: HIV/AIDS Medical Support Receipts for all medical related support for HIV+ registered children (but not on ARV) and their caregiver or sibling should be recorded in this account. ICP(s) Finance Training Manual May 2011 Page 9 R435: HEALTH (HH) Support Record in this account income for intervention that addresses issues affecting beneficiary health, safety and physical wellbeing. R440: Vector born Intervention (MIV) Receipt of funds which provide education and protection against malaria + other vector borne diseases such as chaga’s and Chikaungunga to Compassion beneficiaries. R445: Parent Education (PED) This is an income to provide training activities for parents and caregivers of registered CSP and CDSP beneficiaries to enable them to better care for the children. R450: Medical Therapeutic Intervention (MED- TFI) Record in this account income to provide restorative and/ or therapeutic treatment for severely and moderately malnourished Compassion Beneficiaries R510: Parents Contribution Record in this account all incomes raised from parents/caregivers in cash or in kind. If some parents/caregivers make contribution in kind such as labor and foodstuff, the contribution should be quantified in shillings terms. For example, if a parent brings a quantity of quality dry maize, the project can buy the maize and credit the parent with the contribution. However, due to the problematic nature of accounting for contributions in kind, they should be the exception rather than the rule. R515: Centre IGA Sales Some projects do run special projects that serve both as skills training and income generating activities. Such activities include but not limited to; crops/fruits farming, animal husbandry and ornaments/carvings artwork. All gross sales proceeds should be recorded in this account. By matching with the aggregate amounts in this account and expenses recorded in account E515, it is possible to tell if the activity is operating at a surplus or deficit. R520: Local donations & Church Contribution In the past, local/host churches have made contributions and or raised funds to benefit the project. A good example has been kitchen construction. There have been instances where projects have received donations such as from the constituency development fund (CDF) to improve an aspect of the project. All such donations and incomes should be recorded in this account. R610: HVC CDI Support In this account, record all orphans and vulnerable (HVC) children funds receipts for basic daily needs as food, nutrition, clothing, fees associated by ongoing care & other support required for CSP & CDSP beneficiaries’ to fully participate at the Compassion Programs. ICP(s) Finance Training Manual May 2011 Page 10 R615: HVC CPR- Child Protection Fund In this account, record all orphans and vulnerable (HVC) children funds receipts as one time support to meet emergency needs, legal fees, relocation needs, family training, basic items to help in initial set up & integrations of CSP & CDSP beneficiaries, & temporary shelter. Expenses Accounts E010: Educational Supplies & Fees This is a sub account for child support (CHS) expenses. It is a very active account. All expenses relating to registered children school fees payment, stationery and course books should be recorded in this account. School fees savings are no longer allowed and should therefore not be recorded in this account. Instead, it is advisable to budget for school fees support for those who get admission to secondary schools. E015: School Uniforms &Clothes This is a sub account for child support (CHS) expenses. In this account, record all expenses relating to registered children’s school uniform, centre uniforms (if necessary to have) and clothing. The exception is clothing bought using the gift fund which should be recorded in account E200 for CDSP and E201 for CSP beneficiaries. E020: Centre Supplies & Equipments This is another sub account of child support (CHS) expenses. In this account, record all expenses relating to purchase of general purpose equipments and supplies. This account serves as a capital expenditure account. Examples of general purpose equipment and supplies include office furniture, office stationery, public address system (PAS), musical instruments, and computers. It is not appropriate to charge equipment such as PAS in account E060 as they can be used for different purposes such as games events. The exception is cooking utensils which are charged to account E040. E025: Teaching Aids & Reference Materials This is a sub account of child support (CHS) expenses. Record in this account all teaching aids such as wall charts and board markers and reference materials such as dictionaries and atlases. E030: Physical Dev. & Health Provision This is a sub account of child support expenses. Charge in this account all expenses relating to registered children’s health screening, health training, first aid items and treatment costs that are below the set threshold amount. Currently, the threshold amount is set at Tzshs.1, 000. Any amount exceeding the limit should be charged to account E320. However, the limit is subject to review and care should be taken to comply with current limits. E035: Personal Hygiene This is another sub account of child support expenses. In this account, charge all expenses relating to registered children’s personal grooming training and ICP(s) Finance Training Manual May 2011 Page 11 supplies such as dental care products (e.g. toothpaste & brushes) and soaps among others. E040: Food, Nutrition & Cooking Utensils This is a very active child support expenses sub account. Record all expenses relating to purchase of foodstuffs, cooking ingredients, fruits among others as well as cooking and serving utensils. E045: Domestic Assistance This is a unique account in that expenses relating to a child’s home situation improvement are funded from child support. The focus should be on longterm and sustainable intervention rather than on giving handouts. Domestic assistance should foster self reliance rather than dependency. As a result, ‘nice to have items’ such as fancy cutlery sets should not be bought. Some projects have used this account well by making interventions such as giving seeds at the onset of a planting season. Note that selected homes intervention to relief a family in short term distress is encouraged. For example, a single parent who can’t work due to a short term illness can be assisted to feed the immediate family by buying reasonable food supplies. All expenses must be supported by applicable accounting documents such as receipts. E050: Livelihood & Skills Training This is another child support expenses sub account. Record all expenses relating to life skills training including skills instructors’ wages. Skills training should take into consideration market relevance, a child age and interest/gifting. If it is not effective and efficient to offer skills training at the project, approaches such as apprenticeship and sending selected children to a technical school (e.g. a polytechnic) is encouraged. The goal for skills training is to equip each child with a skill that they can utilize for economic empowerment. Expenses such as purchase of computers that are dedicated for computer training and not for office use can be recorded in this account. E055: Social Development This is another child support expenses sub account. Record in this account all expenses relating to social emotional development activities e.g. team building activities, community clean-ups and role plays. E060: Spiritual Development This is another child support expenses sub account. Record in this account all expenses relating to spiritual development activities e.g. vocational bible school (VBS) events, purchase of age appropriate bible literature material, youth camps and worship materials (e.g. song books, DVDs etc) among ICP(s) Finance Training Manual May 2011 Page 12 others. Sunday school teachers’ wages and training expenses should also be recorded in this account. E065: Staff Salaries & Wages This is a sub account of child support expenses. In this account record expenses relating to staff net pays statutory deductions payments, medical expenses/insurance and any other staff payments. Note that expenses recorded in this account are only for employees engaged on a continuous basis. E066: Staff Training & Development This is a sub account of child support expenses. In this account record expenses relating to staff short term courses, seminars, conferences and general courses. The expenses must be in an approved budget. In the description of the transaction, avoid repeating ‘staff training or staff development.’ Instead, the description should be specific e.g. ‘2 day HVC seminar fee for Jane Matonya.’ Note that expenses recorded in this account are only for employees engaged on a continuous basis. E070: Administration This is a sub account of child support expenses. In this account, record all expenses relating to Partner Church Committee (CPC – formerly PMC) training and official assignments related expenses other than meals and telephone expenses. Note that CPC members are not entitled to receive allowances or preset amounts for trips. Any amount advanced for official assignment should be accounted by submitting authentic receipts proving official expenditure and surrender cash balances within two days of return. Any unaccounted amount must be paid by the CPC member who signed for it. Any other expense necessary for smooth operation of the project should be recorded in this account. E071: Telephone expenses This is a sub account of child support expenses. In this account, record all expenses relating to telephone and email/internet. The telephone expenses are only those necessary for smooth running of children programs. Since telephone calls are expensive, it may be necessary to meet the person instead of length phone calls. E072: Meals & Refreshments This is a sub account of child support expenses. In this account, record all expenses relating to Partner Church Committee (CPC – formerly PMC) meeting snacks and refreshments as well as official assignments related meals and refreshments incurred by either CPC or Child development workers. Any amount advanced for official assignment should be accounted by ICP(s) Finance Training Manual May 2011 Page 13 submitting authentic receipts proving official expenditure and surrender cash balances within two days of return. Any unaccounted amount must be paid by the CPC member/staff who signed for it. E075: Transportation This is a sub account of child support expenses. Record all official transport expenses for staff and CPC members in this account. Rounding up fares to the nearest convenient amount and arbitrary (illogical) claims are not allowed. E080: CSP Medical & Health screening Record in this account all expenses relating to CSP mothers and children’s health screening, health training, first aid items and treatment costs that are below the set threshold amount. In the past, the threshold amount was set at Tzshs.2, 500 and any amount exceeding that limit was charged to account E321. However, the limit is subject to review and care should be taken to comply with current limits. E081: CSP Training on GOBI FFF Record in this account all expenses relating to CSP mothers training on GOBI FFF including charts, brochures and trainers fee if a person other than CSP staff is hired to train. E082: CSP Food Supplements Record in this account all expenses relating to purchase of CSP mothers and children foodstuffs, cooking ingredients, fruits among others. E083: CSP Spiritual development Record in this account all expenses relating to CSP mothers & children spiritual development activities and materials e.g. purchase of bible and bible study materials among others. E084: CSP Social Emotional Dev. Record in this account all expenses relating to CSP mothers and children social emotional development activities e.g. team building activities and social support group activities. E085: CSP Livelihood skills training Record all expenses relating to CSP mothers economic skills training including skills instructors’ wages. To make the mothers more economically self dependent, skills training should enhance their craft or trade. E086: CSP Salaries & wages In this account record expenses relating to CSP staff net pays, statutory deductions payments, medical expenses/insurance and any other staff payments. Note that expenses recorded in this account are only for employees engaged on a continuous basis. ICP(s) Finance Training Manual May 2011 Page 14 E087: CSP Administration Where a CSP is in the same location as a CDSP, the two programs should have one CPC. In such as case, most of the CPC expenses are taken up by the CDSP. But CPC expenses that are directly incurred in a CSP related assignment should be charged to this account. If necessary and practical, an appropriate ratio can be calculated for sharing common administrative expenses between the two programs. All telephone and email/internet expenses are also recorded in this account. CSP staff training should be recorded in this account. Any other expense necessary for smooth operation of the CSP should be recorded in this account. E088: CSP Transportation Record all CSP official transport expenses for staff and CPC members in this account. Rounding up fares to the nearest convenient amount and arbitrary claims are not allowed. E089: CSP Supplies & Equipments In this account, record all expenses relating to purchase of general purpose equipments and supplies. Examples of general purpose equipment and supplies include office furniture and office stationery. E090: Support transfer to other CDCs Occasionally, children will transfer to others areas making it necessary to transfer to a nearby project. When necessary transfer procedures are completed, child support amount accumulated in the transfer process at the originating (old) project should be transferred (without any deductions) to the receiving (new) project. Amount transferred to other projects should be recorded in this account. The receiving project should treat the amount as ordinary child support and record it in account R100. Transfers for gift amounts or other grant amounts should be recorded in respective account e.g. account E200. Compassion International, upon request will deduct at source and pay to the new project. It is therefore not necessary to write a cheque to another project. E200: CDSP Gifts Record in this account all CDSP gift purchases including individual child gift, family project gifts, graduation gifts, Christmas gifts and any other gifts relating to CDSP. If a gift cannot be delivered to the intended beneficiary within two months, it must be returned to Compassion International. It is wrong to buy and hoard a gift as a bargaining tool such as to compel parents to give contributions. All gifts must be acknowledged by recipients by way of appending name and signature against a gift list. Gift list could be a gifts ledger or a printout. As a minimum, gift lists should contain the child number, child name, gift description and gift amount. Gifts cannot be given out in cash. ICP(s) Finance Training Manual May 2011 Page 15 E201: CSP Gifts Record in this account all CSP gift purchases. Note that except for Christmas gifts, CSP gifts are rare. But all CSP related gift receipts should be recorded in this account. If a gift cannot be delivered to the intended beneficiary within two months, it must be returned to Compassion International. E310: School Fees Grants Expenses In this account, record all school fees grants expenses. These grants include; bright student support initiative (BSSI) and Compassion education fund (CFNEDU). These are not regular funds but may be available from time to time. Availability is communicated through the PF. For extremely needy cases such as a registered high school student sent away from school for fees and without hope of raising required fees, an appeal for assistance can be made through the PF. E315: Environment & Conservation Expenses Record in this account all expenses relating to environmental care and conservation such as tree planting funds. Any unutilized funds should be returned to Compassion International. An activity should not exceed the received amount. In cases where the activity amount is not enough, local resources and preferably NOT from the parents can be raised to complete the activity. E320: Reimbursable Medical Expenses In this account, record all reimbursable medical claims and any medical grants expenses. By matching the amount in this account and receipts recorded in account R320, it will be possible to know at a glance the outstanding balance. E321: CSP Reimbursable Medical Expenses In this account, record all CSP reimbursable medical claims and any medical grants expenses. By matching the amount in this account and receipts recorded in account R321, it will be possible to know at a glance the outstanding balance. E325: Water & Sanitation Expenses Record in this account all expenses relating to water provision such as water tanks and sanitation activities such as toilets construction. Any unutilized funds should be returned to Compassion International. An activity should not exceed the received amount. In cases where the activity amount is not enough, local resources and preferably NOT from the parents can be raised to complete the activity. E335: Disaster Relief Expenses Record in this account all expenses related to disaster relief for affected families. If support received is insufficient, local resources can be raised to supplement. Return all unutilized disaster relief funds to Compassion International. ICP(s) Finance Training Manual May 2011 Page 16 E340: IGA Expenses Record in this account all expenses related to income generating activities grants. The activity should not exceed the received amount unless IGA fund beneficiaries supplement with their own resources. Any unutilized funds should be returned to Compassion International. E345: Infrastructure Expenses Record in this account all expenses for infrastructure development activities such as children playground improvement. The activity should not exceed the received amount unless local resources are raised to supplement. Any unutilized funds should be returned to Compassion International. E350: Short Term Missions Expenses Record in this account all expenses for short term missions’ exposure trips activities. If the activity exceed amount received, claims for reimbursement can be made to Compassion International. Any un utilized funds should be returned to Compassion International. E355: Group & Sponsor(s) Visit Expenses Occasionally, the project may host individual sponsors or tour groups accompanied by Compassion International staff. In consultation with the PF and Sponsor &Tours Specialists, it is allowed to incur expenditure and claim for reimbursement. Only pre-approved expenses will be reimbursed. Record all such reimbursements in this account. E410: HIV/AIDS ARV Expenses All benefits provided to ARV recipients except for CSP children (Category 4 care) are recorded in this account. As long as the registered child is on ARV treatment, all expenses, including support to members of immediate family will be recorded in this account. E415: HIV/AIDS Care Givers & Siblings Expenses for benefits provided to caregivers or siblings except if child on ARV or child is HIV+ is recorded in this account. Expenses are only recorded in this account if a registered child is not HIV+ but a sibling or caregiver is HIV+. In other words, this is for affected (not infected) registered children. E420: CSP HIV/AIDS Expenses All HIV/AIDS expenses related to CSP children or caregivers, even if on ARV should be recorded in this account. E425: HIV/AIDS Education & Counseling Project related HIV/AIDS education, awareness, training and voluntary counseling & testing (VCT) expenses should be recorded in this account. ICP(s) Finance Training Manual May 2011 Page 17 E430: HIV/AIDS Medical Expenses Expenses for all medical related support for HIV+ registered children (but not on ARV) and their caregiver or sibling should be recorded in this account. E435: HEALTH (HH) Support Record in this account expenses for intervention that addresses issues affecting beneficiary health, safety and physical wellbeing. E440: Vector born Intervention (MIV) Record in this expenses which provide education and protection against malaria + other vector borne diseases such as chaga’s and Chikaungunga to Compassion beneficiaries. E 445: Parent Education (PED) Record in this expenses which provide training activities for parents and caregivers of registered CSP and CDSP beneficiaries to enable them to better care for the children. E450: Medical Therapeutic Intervention (MED- TFI) Record in this account expenses to provide restorative and/ or therapeutic treatment for severely and moderately malnourished Compassion Beneficiaries E510: Parents Contribution Record to this expense related to parent’s contribution E515: Centre IGA Expenses Some projects do run special projects that serve both as skills training and income generating activities. Such activities include but not limited to; crops/fruits farming, animal husbandry and ornaments/carvings artwork. All IGA expenses should be recorded in this account. By matching with the aggregate amounts in this account and sales proceeds recorded in account R515, it is possible to tell if the activity is operating at a surplus or deficit. E520: Local donations & Church Contr. Expenses In this account, record all expenses relating to special projects such as kitchen construction funded from money raised by the church, donations from well wishers and other sources. E525: Catering & Security staff wages In this account record all catering and security/guards wages and related expenses. It is a legal requirement that public catering staff be medically certified. Therefore, parents/caregivers are not allowed to offer cooking labor in lieu of contribution unless they are certified and hired. E610: HVC CDI Support In this account, record all orphans and vulnerable (HVC) children expenses to meet basic daily needs as food, nutrition, clothing, house hold expenses like pots, pans, and mattresses, fees associated by ongoing care & other support ICP(s) Finance Training Manual May 2011 Page 18 required for CSP & CDSP beneficiaries’ to fully participate at the Compassion Programs. E615: HVC CPR- Child Protection Fund In this account, record all orphans and vulnerable (HVC) Expenses one-time expenses to meet emergency needs, legal fees, relocation needs, family training, basic items to help in initial set up & integrations of CSP & CDSP beneficiaries, & temporary shelter. HVC funds expenses may be a common in some projects and a rare one in others. The role of Church Partner Committee (CPC) The principal role of the CPC in project finance management is to offer leadership. Since they are volunteers, they are not expected to be involved in the day to day running of the project. In other words, their role is to make decisions that are in the best interest of the registered children. The other role of the CPC in financial management is to supervise the work of the Project Director and the Child Development Workers by way of reviewing and approving expenditure and reports. Specific tasks that they carry are mentioned in different sections of this handbook. Planning & Budgeting Budgeting is a plan of how to use specific amounts of money to meet specific needs. The process includes setting goals/intended outcomes, identifying activities, costing activities, compiling in a standard format and approval. A good budget is based on wide consultation involving beneficiaries and stewards. Budget should be done at least annually. Budgeting period The current budgeting period run from 1st July to 30th June of that FY. Setting goals/intended outcomes It is often said that failure to plan is planning to fail. To achieve the long term goal of enabling children grow to become fulfilled and responsible Christian adults, budgeting must have clear goals and or intended outcomes. The goals must be based on children needs and available resources. There must be goals/intended outcomes for all the areas of child development. Some goals/intended outcomes can only be achieved over several budgeting periods. Such can then be repeated but activities may vary from period to period. ICP(s) Finance Training Manual May 2011 Page 19 Identifying activities Goals and intended outcomes are mainly achieved by carrying out specific activities. For example, if the goal/outcome is to enable children complete primary education, activities may include providing learning materials and paying school fees. Costing activities Having identified activities, the next step is to determine how much money is required to successfully complete an activity. Many activities will have both direct and indirect costs. For example, if an activity is to buy a computer, direct costs include buying the actual computer and software (computer programs). Indirect cost will include maintenance and electricity/power bills. Both direct and indirect costs should be included in costing activities. Adjust/provide for changes in other budget lines arising from other activities. For example, buying a computer and a printer will result in new expenses such as toner cartridge. Compiling in a standard format There is a standard budget format that should be used by all projects. An MS Excel format is also available. The standard forms/format can be requested through your PF. Approval Compiled budgets must be signed by the CPC chairperson, secretary and treasurer or other CPC members acting on their behalf. The budget proposal is then sent to the PF on or before 15th May for review and approval. It is common for the PF to ask for certain revisions. Once all revisions are incorporated, the PF will approve the budget by signing or if it is in an electronic form, by way of email. Note that the PF will retain a copy of the final approved budget. No activity may be carried out without an approved budget provision. Therefore, there is need to begin the process in time such that the approved budget is in place before the beginning of a new financial year. Cash Management All projects must have a separate bank where all the project funds are kept and maintained. The bank account should be in the name of the project, not in the name of an individual. An up-to-date running bank balance needs to be maintained in the cash journal. Bank reconciliations should be done on a monthly basis. It is recommended that each project should have three signatories. All cheques or bank withdrawals must be signed by at least two signatures. If a cheque is to be drawn in the name of a signatory, that signatory should not sign the cheque, even if it is for cash withdrawal. ICP(s) Finance Training Manual May 2011 Page 20 One or two Child Development Workers can be introduced as bank account agents. This is done by way of a letter to the bank manager and outlining what the agent is permitted to do. An agent should be allowed to make enquiries about transactions in an account, withdraw cash with a signed cheque drawn in his/her name and obtain balances. But as a control, limit the amount of cash that a staff can withdraw. A recommended limit is Tzshs.500, 000. Having staff as agents is a more efficient way to operate and takes less time for signatories. Cash at hand and in the bank is one of the most important asset and also the easiest to misappropriate. Therefore, adequate controls must be in place to safeguard and ensure proper application of cash to achieve the project’s goals. One useful safeguard is the separation of duties with regard to cash handling. For example, the responsibility of record keeping should be separated from that of keeping the cash. Segregation of duties reduces the risk of intentional manipulation (fraud) and or errors. An imprest system for cash at hand (cash float) is recommended. Imprest system is whereby a fixed sum is advanced to the cash box holder/operator (cashier) who is required to account for amount spent before reimbursement (refund) is made. Only official expenses are reimbursed, accompanied by valid documentation proofing expenditure. In addition to reimbursements due to a low balance, petty cash should be reimbursed at the end of each month so that all expenditures taking place in a month will be included in the appropriate monthly report. All petty cash payments need to be approved by CPC members. Advances from petty cash for project’s business must be documentation and accounted for with authentic receipts within three days from the date of return to the project. One should not proceed on leave before accounting for any advance. At all times, the cash balance in the cash journal should be the same as the actual cash less expenses incurred but not recorded in the journal. Petty cash should be kept in a secure cash box which is kept in a secure and lockable drawer. Petty cash should not mix with personal or church funds but kept separately. All monies received should first be banked and not added to the cash box/float. Purchasing guidelines In pursuit of holistic child development, numerous purchase decisions will be made from time to time. Purchasing is a process that requires diligence and sound judgments to get value for money. A typical process will have the following steps: ICP(s) Finance Training Manual May 2011 Page 21 Needs identification Adults working with children will encounter many needs in different situations. Activities such as home visits, school visits and interaction with children at the project will reveal many needs. In addition, people living in a community will be aware of children needs. Budgeting A budget is a plan of how to spend money to meet needs. At any one time, there is not enough money to meet all the needs. Therefore, needs should be prioritized in a balanced way to ensure holistic child development. A good budget should prioritize need in the four area of child development namely; spiritual, physical, social and economic. Shopping Shopping is the search for adequate information on what is available in a market and at what prices. Routine purchases may require less information search. Non routine purchases require more information search to ensure best quality and quantity for the best price. For purchases from Tzshs. 150,000, there should be document to show that adequate shopping was done. Common shopping documentation includes quotations, price lists, pro forma invoices and catalogues. Buying Approved budgets will have planned timing indicating when various activities will be carried out. During CPC meetings, duties should be allocated on who get to buy various items at different times. At times, suppliers will deliver items at the project. In such cases, a staff or CPC member should inspect the goods to ensure they are of the right quality and quantity. Once verified, a delivery note should be signed and the goods moved to a secure location. If buying require going to the vendors location, appropriate logistics should be arranged. Where necessary, two to three persons should be present. Payment When paying for procured goods or services, insist on cheque payment or any other modern mode of payment. Cash payment should be avoided unless it is not practical to do so. In any case, payments equal or exceeding Tzshs. 25,000/= cannot be paid by cash. For certain supplies such as milk, suppliers can be paid periodically, preferably monthly in arrears. Payment need to be supported by a payment voucher, receipt and/or invoice with at least two signatures by CPC members. ICP(s) Finance Training Manual May 2011 Page 22 Conflict of interest Conflict of interest occurs when a person making a purchase decision stand to make personal gain. For example, a CPC member/staff is a supplier or a supplier is a relative of a CPC member/staff. A person should not make purchase decisions if conflicts of interest exist. Bookkeeping Bookkeeping is the recording of all financial transactions undertaken by an individual or organization. It is required that complete and accurate records of all financial transactions be kept at the project. Those records should be based on actual events carried out in the pursuit of the project’s mission. Good financial records are a basis for sound financial management of the project. Financial records are useful for information, credibility, legal matters and for future planning. This section will itemize and briefly discuss basic records that need to be kept. Documents of original entry These are documents used as evidence that a transaction took place. Projects are largely expected to follow cash accounting method where goods and services are paid for within the same accounting month. For incomes, these documents will mostly be receipts issued by the project and funds disbursement advices received from Compassion International. For expenses, receipts received from payees accompanied by others documents such as invoices or bills where applicable need to be the basis for recording all financial transactions. Other common documents with expenses are: quotations, local purchase orders (LPOs), invoices; goods received notes, delivery notes, receipts, credit notes and job cards. To authenticate expenses documents, they can be signed overleaf by the Project director and at least two CPC members. All settled/paid invoices should be stamped “PAID” to avoid double payment. Payment vouchers This is an internal document used to summarizes and code accounting information in readiness for posting to the journal/ledger books. The total amounts on all payment vouchers should be equal to the total of all supporting receipts. If there were other documents of original entry, they should also be attached. Payment vouchers should be reviewed and signed by at least two CPC members. Vouchers should be numbered sequentially using three components to ensure they are not repeated. The components are year, month and voucher number. For instance, voucher number 30 for July 2011 should have a complete voucher number as 20110730 or ‘110730. All voucher and supporting documents must be filed in such a way that the source documents can be found quickly for all income/expense amounts in the financial records. It is recommended that documentation for petty cash expenditures be kept in the same location as documentation for other expenditures. ICP(s) Finance Training Manual May 2011 Page 23 Cash journal/Ledger All transactions summarized in the payment vouchers need to be posted (transferred in a summarized form) to the cash journal/ledger. Since cash accounting is the predominant accounting method, the cash book serves both as a journal and a ledger hence the popular term ‘cash journal’. The double entry convention must be observed while posting transactions into the cash journal. All cash received as an income will increase the bank balance and increase the receipts/income. Payment by cash will reduce the cash at hand and increase expenses. Payment by cheque will reduce the bank running balance and increase expenses. Cash withdrawn from the bank for petty cash reimbursement will be reduce the bank running balance and increase the cash at hand balance. These are just but examples of practical application of the double entry principle. At the end of each month and when as much as is practicable all the expenses and incomes have been posted, total all the accounts to determine the various expenses for the month. For the bank and petty cash running balances, take the ending running balance instead of totaling up the three individual columns for deposits, withdrawal and balance. The ending balances and totals forms the basis for amounts in the “Compassion assisted project monthly expense report” (similar to a trial balance) section of the monthly financial report. Other financial records Asset register: All items bought for use over several years need to be recorded in an assets register. The register could be a counter hard cover book or a computer file that is updated regularly and print-outs done and filed. Details to be captured in this register include date of purchase, voucher number, amount, asset description, model/make, serial number (where applicable), current location and status (whether or not the asset is in usable condition). Similar assets can be grouped together in the records but each item need be recorded separately. On at least an annual basis, a stock take should be done to verify that the assets exist and clarify their status. Library register: All reference library materials such as books, videos and DVDs need to be recorded in a similar way as assets (see asset register). Borrowing records should be maintained separately to track the movement of library materials. Clear and simple rules should be developed to guide borrowing and usage of those materials. The rules should include borrowing duration, care for materials and applicable penalties for delayed return, damage and loss. The rules should be enforced impartially to all. Regular stock takes and reconciliation should be done e.g. every six months. Inventory records: There should be records to track the movements of inventory items including stationery items, foodstuffs, drugs and learning materials (e.g. skills training materials). The records should track each type of inventory in terms or receipts and issues as well as show quantities remaining. It should be clear from the records who is the issuer and to whom the items are issued to. Inventory records can be maintained in a computer or ICP(s) Finance Training Manual May 2011 Page 24 in a book. For back-up purposes or where signatures are needed, print-outs can be made. Salaries & Wages record: All persons working for the project and who earn wages or salaries need to have an engagement letter stating at least the work to be done, duration and amounts payable. All wages and salaries should be in agreement with the engagement letters. Pay slips need be issued for salaried staff. Salaried staff need to have bank accounts and should therefore be paid by cheque or by way of bank transfers. Salaries should not be paid in cash. Statutory payments In accordance with the partnership agreement, it is expected that all projects will operate within the law of the land. Therefore, all projects have the responsibility of keeping abreast all the legal changes especially those on individual taxations. Project accountants in particular need to be very conversant with taxation changes. All those qualifying to pay taxes must be deducted those taxes at all the time and the same paid to Tanzania Revenue Authority (TRA). Annual returns should be made for the preceding calendar year on or before the 31st day of March. The other regular statutory deductions and payments are NHIF, NSSF and HELB for those graduates who benefited. The deadlines for paying PAYE and NHIF deductions are on or before the 15th day of the following month and on or before the 10th day for NSSF. If the deadline falls on a public holiday or a weekend, the deadline shifts to the earlier business day. Monthly Financial Report All projects are required to submit a monthly financial report. The submission deadlines for Arusha and its environs such as Kilimanjaro, Monduli, Namanga and USA RIVER is on or before the 5th day of the following month. The deadline for all other projects is on or before the 10th day of the following month. Where the deadline falls on a weekend or public holiday, the report is due on the next working day. Reports must be submitted in any of the two standard formats namely: The standard “Compassion assisted project monthly expense & funds summary report” or the MS Access cash journal report generated from Compassion International Finance Management System (CIFMS). Monthly financial reports (manual version) should have the following components: Current month income and expense for child support, gifts, complementary intervention funds (CIVs), and non-Compassion funds. Any funds received by the project other than from Compassion should be recorded as nonCompassion funds and should be planned, budgeted and expended for purposes consistent with our partnership agreement. ICP(s) Finance Training Manual May 2011 Page 25 Variance analysis compares expenses to approved project and CIV budgets. Variances that are 10% and above (both over and under budget) should be accompanied with a brief and clear explanation of what caused the variance. Such variance explanations serve to highlight areas of significant deviations from plans and should lead to action e.g. implement what has not been implemented or slow down on certain expenses lines. The explanations should also be taken as useful information for future management decision making. A fund balance report for child support, gifts, CIV funds, and non-Compassion funds needs to be prepared each month. The sum of the entire fund balances needs to be reconciled to the total of cash on hand and cash in bank/savings accounts. The fund balance for child support should not be greater than three months of child support. Bank Statement copies of the most current bank statements must be included with all reports. The statement from the month prior (for savings account only) to the report month is acceptable if the statement from the report month does not arrive in time. Bank reconciliation statement must be completed for each bank statement. In instances where a prior month bank statement is used because the statement for the reporting month has not arrived in time, all cheques written in the current month plus all cheques that had not cleared up to that last statement date must show up as outstanding cheques. Provide the outstanding cheques’ dates and numbers. The person preparing the report must indicate the name and signature in the signature section. The report must also be approved /Signed by at least two CPC members in the same section. Policies on various funds Gift funds Gifts should be distributed within the month they are received; therefore the month end gift fund balance should not include gifts sent to the project more than two months previously. If gifts cannot be delivered within two months, they should be returned to the country office. Local contributions Contributions or advances made by the church partner or parents should be tracked in a separate fund. There should be a budget for related expenses. Expenses for non-compassion funds must be accounted for like Compassion funds. ICP(s) Finance Training Manual May 2011 Page 26 Restrictions on the use of project funds There are a number of restrictions to the use of project funds. The following is a brief discussion of the restrictions. A breach of any of the restrictions shall constitute a serious violation of the Partnership agreement and will therefore be subject to the actions contained therein. Advances Staff should be encouraged to manage their finances in a manner that will enable them meet their requirements without resulting to advances. Where it is deemed necessary, e.g. to help staff respond to emergencies, salary advance may be given. However, advances should not exceed an amount equivalent to the pay for number of days already worked in that month. All other stakeholders at the project including CPC members cannot get advances from project funds. Loans Project funds shall not be given out as a loan or used to guarantee any loan. Construction Project funds cannot be used in construction or renovation of buildings and other facilities e.g. playgrounds. The exception to this requirement is when specific funding (infrastructure development) is given or when local funding is raised to undertake specific construction/renovation work. Land purchase Project funds shall not be used to purchase freehold or leasehold land. Vehicles purchase Project funds shall not be used to purchase motor vehicles or motorcycles. Audits by Compassion International auditors As stipulated in the partnership agreement, every project will be audited from time to time. Usually, a notice will be given before every audit stating who is required to be in attendance. In some instances, spot audits may be conducted. Spot audits are brief and narrow in scope. The scope for scheduled audit includes programs, children records, financial records, internal controls, management structure, environment and legal issues. The intent of each audit review is to improve on the ministry to children in a way befitting the local context. At the end of each audit review, an audit exit meeting will be held to discuss audit finding and action points. An audit report will be sent covering the scope of the audit. Projects are expected to respond detailing action taken and making commitment for future actions. PFs will make follow-up of those commitment to ensure implementation. ICP(s) Finance Training Manual May 2011 Page 27 Fraud and other irregularities In an event of frauds and other irregularities occurring, immediate steps need be taken to address the situation. Possible actions include stopping, reducing, restitution and reducing future occurrences. In the events of burglary or theft, local police should be notified immediately and an abstract documenting the occurrence issued. The PF should also be notified immediately. All efforts should be made to recover stolen items. The root cause should be investigated and appropriate action, including but not limited to dismissing dishonest employees. In addressing the situation, lawful means must be employed. Projects store keeping and stock control:Storekeeping refers to the safe custody of all the items of material stocked in the store room/office for which the project management acts as a trustee. This simply means that the materials carried into the project are to be stored in the projects store/office, in such a manner that:The possibility of their being stolen or damaged due to fire or any other causes are reduced and they can be easily located and issued whenever required for use in and outside the office/storeroom. Storekeeping thus, may mean “Physical storage of Materials carried into the Project store/office in a scientific and systematic manner with a view to “ -Saving them from all kinds of damages and losses. -Exercising over all control over their movements. Important functions of project store keeping: Receipt of materials into projects store/office storage and preservation records keeping and issuing of materials. Storage and Preservation:Storage means custody of materials or items in a scientific way so as to help in the maintenance of regular flow of items/materials into and out of the store room/project office for the smooth and efficient running of the entire project with which that storeroom is connected. For proper storage, an office or storeroom should be well laid out and equipped with stores ledger in order to facilitate access, identification and storage for each item of stock. Preservation refers to the safe custody of the materials so as to help the maintenance of its value and quality. Preservation helps in making available the materials/items in perfect serviceable condition. Proper preservation of stores over a period of time may entail elaborate measures, depending upon the nature of the material/item, the length of time in storage and the rate of deterioration. ICP(s) Finance Training Manual May 2011 Page 28 Record keeping:Maintenance of records of goods/items carried into and out of the store is one of the most important functions which storekeeping has to perform. Proper maintenance of records of the project items helps in the management of items/materials of the project, and end up in proper and smooth service to beneficiaries (children). Proper up to date and complete records result in reduction or elimination of wastages and misappropriation of items/materials. It also acts as a checkpoint in the store and removes possibility of theft and pilferage. Stores ledger/stores accounting:Stock records refer to documents, which give information regarding the movement of stock. These include records kept both for accounts and costing purposes. There are individual accounts for each item of stock on which are recorded all receipts and issues of that particular item and thus the balance at hand. Stores accounting refers to the mathematical process, which reveals the quantity, quality and value of stores or items carried and preserved in an office/store of the project on a given date relating to a specified period. Stores accounting thus, assumes the role of indicating the future need based on past experiences, extending a helping hand in planning and Co-ordination. Merits of proper stores accounting system: Proper and Complete record of all receipts, issues and balances is ensured. Indication about the right time, right quantity, right quality and best suppliers are readily available. It exerts a moral check on the staff. Efficient and economic stores operation is the added advantage of a scientific system of stores accounting. ICP(s) Finance Training Manual May 2011 Page 29 Stores Ledger/Stock ledger: The stock/items ledger is a book, which contains individual account of each item of materials stored in the storehouse. Its functions are as follows: To record in all details the receipt issue and balance of materials/items. To show the different levels of replenishments; To show the value of the materials received issued and in balance; To facilitate the ascertainment of the cost of materials within least possible time; and To serve as a chief stores accounting book and to form the basis of further and detailed stores accounting covering various aspects and requirements. -Project stores ledger will have two sides, the receiving side, and the Issuing side and the balance. Project income tax requirements:Since deductions and payments of income tax are the statutory requirements, we are obliged to follow and obey that. The Government of Tanzania (Ministry of finance) through Tanzania Revenue Authority has laid down an Act to administer paying of income tax. TRA Income tax Act 1973 and the finance act 2004, 2007,2008 which has been amended with effect from 1st July 2010 &1st September 2011 have laid down rates of Taxes as follows. The individual rates of tax shall be: MONTHLY INCOME IN TZSHS. 1. Where income does not exceed shs. 135,000/= 2. Where such total income exceeds shs. 135,000/= but does not exceed shs.360,000/= 3.Where such income exceeds shs.360,000/= but Does not exceed shs. 540,000/= 4. Where such income exceeds shs. 540,000/= but does not exceed shs. 720,000/= Where such income exceeds shs. 720,000/= ICP(s) Finance Training Manual May 2011 RATE PAYABLE NIL 14% of the amount in excess of shs.135,000/= Shs.31, 500/= +20% of the amount in excess of shs. 360,000/= Shs. 67,500/= + 25% of the amount in excess of shs. 540,000/= Shs.112, 000/= + 30% of the amount in excess of shs. 720,000/= Page 30 7.1 TAXATION OF EMPLOYMENT INCOME: In most cases tax on income from employment will be paid by withholding tax by employers under the PAYE system. The tax will be paid on wages, salary, payment in lieu of leave, fees, commissions, bonuses, gratuity or any subsistence, traveling entertainment or any allowances received in respect of employment, payments providing discharge or reimbursement of personal expenditure incurred by an employee, retirement contributions, other than those made to approved retirement funds, and retirement payment by the employer, payment of redundancy or loss or termination of employment, otherwise there shall be deduction of 10% from the gross salary as the amount to be paid for NSSF of the employee for that particular month. Below is a worked example of how tax could be computed from a total income. Mr. Chikoti as our typical example Tzshs. Basic income 185,000/= Housing allowance 30,000/= Transport allowance 30,000/= Medical allowance 35,000/ Gross income of Mr. Chikoti = 280,000/= Taxable amount will be calculated as follows, take 280,000/= as gross income less 10% of which is 28,000, therefore taxable amount will be 252,000/= Now going back to our table above, we can see that taxable income of Mr. X will now be shs. 252,000. In our table, where total income exceed shs. 135,000/=, but does not exceed 360,000 the tax rate is 14% of the amount in excess of shs. 135,000/= here the amount in excess of shs.135, 000/= is shs.117, 000/=, then multiply that amount by 14% you get shs.16, 380/=. Therefore that is the amount of tax to be paid by Mr. X as per the calculations above. DUE DATE FOR REMITTANCE OF WITHHOLDING TAX, INCLUDING PAYE DEDUCTION Every with holding agent shall pay to commissioner the amount of tax withheld within seven days after the end of each calendar month. A withholding agent who fails to withhold income tax must nevertheless pay the tax that should have been withheld in the same manner and at the same time as tax that is withheld ICP(s) Finance Training Manual May 2011 Page 31 National Social Security Fund Act.1997: The act was en acted by parliament of the United Republic of Tanzania. This Act may be cited as the National Social Security Fund Act, 1997. This Act shall come into operation on such date as the Minister may by Notice in the Gazette, appoint and at different dates may be appointed for different provisions of this Act. National Social Security Fund Part II. (1). There is established fund to be known as the national social Security fund into which shall be paid all contributions and other Moneys required by this Act. (2) There may from time to time be paid out of the fund benefits and other payments including payments in respect of the expenses of the Board, as are authorized by this Act. An employee: That means any person who is employed in mainland Tanzania under any Contract of service or apprenticeship with an employer, whether by way of Manual labor, clerical work or otherwise and howsoever paid; or Is permanently resident in mainland Tanzania and is employed outside Mainland Tanzania under a contract of service with an employer in Mainland Tanzania by whom he is paid, shall pay NSSF contribution at the rate of 10% of gross salary and employer contributing the same amount. This contribution is compulsory and all employees and employers are bound to abide by it. ICP(s) Finance Training Manual May 2011 Page 32 ILLUSTRATION OF A TYPICAL MONTH Below is a description of the financial transaction of the Tanzania Student Centre, TZ-999 for January, 2000. Their December, 1999 ending balances, as reported on the last month’s fund balance summary, were as follows: 100 200 300 500 1000 Support/UDP Gifts Other Compassion Non-Compassion Total - 484,180.00 0.00 0.00 84,500.00 568,680.00 These amounts should be carried forward to the beginning balance column on the January, 2000 Fund Balance Summary. Last month’s cash balances were as follows: Adjusted bank balance (cash in bank) Petty Cash Total Cash 533,615.00 35,065.00 568,680.00 Transactions for the month Note: All of these expenditures are in accordance with the Project Planning Budget Form (PPBF). 6 Jan You purchased 20 Math. Books at 4,000/- each and 50 History books at 4,920/- each from the Mitinje Bookshop; the total invoice came to 326,000/-. You paid with cheque No. 100115. 6 Jan Mr. Malulu went to town to pick up the textbooks. He was reimbursed 3,000/- out of petty cash for his transport cost. 6 Jan Ms. Social Worker was given 11,500/- to buy a map to be used to teach Geography. She brought a receipt as required. ICP(s) Finance Training Manual May 2011 Page 33 7 Jan - You received notification from Compassion that the January 2000 Support is out and the Accountant has deposited the cheque No. 100999 to the Project Account in the bank: Support 2,064,760.00 USP 523,800.00 Gifts 62,300.00 2,650,860.00 8 Jan - You needed to increase your petty cash by 50,000/- so you will have enough funds to buy some school supplies. Since Mr. Project Worker was going to town on personal business, you asked him if he would pick up the money needed. 9 Jan - Mr. Malulu went to purchase the following: School supplies with petty cash since the place of purchase and cost was known: 144 Exercise books 15,500.00 5 Wall posters 12,500.00 1 First Aid Kit 20,000.00 10 Bars of soap 3,800.00 51,800.00 10 Jan - You issued Cheque No. 100117 to Partners in Progress of 586,800/- as 50% deposit for 50 school uniforms for sponsored children 15 Jan - Partners in Progress returned your cheque No. 100117 because the amount written out in words was not correct and their bank would not accept it. You voided it. 16 Jan - You issued Partners in Progress another cheque No. 100118 being careful to write it correctly this time. 19 Jan - Cheque No. 100119 was spoiled when written, therefore it was voided. More care needs to be taken when writing cheques. 19 Jan - You issued cheque No.100120 in the amount of 108,000/- to book your Bible Camp. This will reserve a place at the camp for your 108 registered children in the project. ICP(s) Finance Training Manual May 2011 Page 34 25 Jan - 27 Jan - 28 Jan - 30 Jan - 30 Jan - You issued a cheque No. 100121 for 50,000/- to Mabula Mutyani, a Committee Member for January gifts. The 12,300/- gift for Child TZ-999-0001 was not distributed at this time because the child is presently in Mt. Meru Hospital for appendix surgery. It will be distributed as soon as he returns to the project. You issued cheque No. 100122 to Mr. Project Worker for 500,000/- for final payment on the 100 shoes purchased at 5,000/- each. Discount, so he only accepted 450,000/-. The remaining 50,000/was returned to the project and deposited in the Bank account. You paid Mr. Social Worker his January salary 120,000/- with cheque No. 100123 Ms Project Worker was given 5,020/- to go to town to telephone and post a letter to Compassion. The costs were as follows: Transport 1,000.00 Telephone call 1,500.00 Postage 2,520.00 5,020.00 You received your January Bank Statement which showed a Ledger Fee of 13,500/- 30 Jan - You received 165,000/- from the sale of the project’s onion harvest. You deposited it in the bank. 31 Jan - You paid Mr. Gagula 130,000/- with cheque No. 100124 to make the Book/File Shelf for the project 31 Jan - You received a 40,000/- Compassion Fund Grant to help with the hospital bill of TZ-999-0001 for appendix surgery 31 Jan - You paid 50,000/- to the parents of TZ-999-0001 so that he could pay their son’s hospital bill for his appendix surgery. They brought to you an invoice from Mt. Meru Hospital for 60,000/-. This was the total amount. The parents were only able to pay 10,000/- so the project contributed an additional 40,000/- to Compassion’s Fund Grant. ICP(s) Finance Training Manual May 2011 Page 35 PRACTICAL EXERCISE Feb 1 - Bank and Petty Cash Balances were the closing balances in January Feb 4 - Balance for the uniforms amounting to 586,800/is paid by cheque No. 100125 to Manumbu Uniforms Suppliers Ltd Feb 5 - Received a cheque from CIT and deposited in the Bank: Gifts 56,830.00 Support 2,438,260.00 Hunger/Health 1,080,000.00 (for latrine) 3,575,090.00 Feb 8 - Transport for Mabula Mutyani to the Bank 1,500/by cash Feb 10 - Project Chairman asks for a loan of 80,000/- to be repaid in March when he will have finalized arrangements of a overdraft with his bank by cheque No. 100126 Feb 11 - A trip to the Duluti which has been arranged earlier will be on the 25th of the month but the bus owner (Geoffrey Ng’humbua) needs to be paid in advance. 45 children are to take part and each will be charged 4000/-. However the 45 include 15 who are not Project assisted children cheque No. 100127 of Tshs 180,000/- was paid. Feb 15 The following expenses were paid by cash: Transport for Mr. Project Worker to the Post Office 200.00 Postage 300.00 Phone Call 1,000.00 Salt 1,600.00 - ICP(s) Finance Training Manual May 2011 Page 36 Feb 20 -Bought 100 school bags from Uniform Distributors Ltd by cheque for Tshs 250,000/- Feb 22 - Paid by cheque No. 100127, Tshs 50,000/- for food Stuff supplied by Nyanzala Shop Feb 25 - Construction materials worth 500,000/- for the Latrines bought from Ujenzi Stores by cheque No. 100128 Feb 27 he - Nyanzala Shop returns the cheque sent because had closed his Bank account and the cheque was closed one. He is to be paid in cash Feb 28 - Project Worker requested for a bank statement but she was told that the machine processing the Statement is broken down. The bank says the Statement may take two weeks to be ready. Feb 28 - Bus fare to Bank 200 for Project Worker Feb 28 - Paid salary by Cheque No. 100129 Tshs 60,000/to Mr. Coordinator, Cheque No. 100130 Tshs 50,000/- to Mr. Accountant and Cheque No. 100131 to Ms. Social Worker Required: 1. Make payment and enter the above information in Cash Analysis Book/Ledger/Journal and prepare a Monthly Report 2. Are there some comments to make about this Project as far as the transactions of this month are concerned? Please list them and submit them together with your answer (1) above. Assumptions: Price survey has been made; vendors/suppliers have been found and recommended by the Church committee members. Tax invoices are also in a place. ICP(s) Finance Training Manual May 2011 Page 37 PAYMENT VOUCHER COMPASSION ASSISTED PROJECT VOUCHER (or project name) Date Voucher number Vendor/payee Address Voucher Payment by Cheque Type Payment by cash # Description of transaction: QTY Items purchased/ services received Unit Price Cost Account Number Voucher total Date APPROVED Received by: Date: ICP(s) Finance Training Manual May 2011 Passed by: Date: Page 38 MONTHLY REPORT FORM COMPASSION ASSISTED PROJECT FUND SUMMARY Project # TZ Monthly report of Project Name Date FUND BALANCE REPORT Beginning Balance FUND Monthly Expenses Monthly Income 100 Support/USP 200 Gift 300 CIV Funds 400 HIV/AIDS Program 500 Non Compassion 600 HVC Funds Ending Balance 5) 3) 1) 00 TOTAL DETAILS OF NON COMPASSION INCOME PROOF OF CASH Cash in Bank Petty Cash 2) Total Cash TOTAL NON- COMPASSION 1) 3) 1. Total ending balance must agree with total cash 2. Cash in Bank must agree with bank reconciliation below BANK RECONCILIATION Account 1 Account 2 A. Date on bank statement B. Balance per bank statement C. Plus: Deposits in transit D. Less: Outstanding cheques B+C-D ADJUSTED BANK BALANCE TOTAL C. Deposits in transit Account 1 Date Amount TOTAL X xxxxxxxxx 2) TOTAL (Checking) (Savings) D. Outstanding cheques account 1 Cheque # Date Amount C) Cheque # Date TOTAL Amount D) If line 300 above has an ending balance, please give the following details documenting that balance. Month of transaction Amount TOTAL 4) Description of transaction ICP(s) Finance Training Manual May 2011 Page 39 COMPASSION ASSISTED PROJECT MONTHLY EXPENSE REPORT Project Number TZ- Report is for the month of Expense amount Actual for the Actual to month date Expense Item 10 Educational Supplies and fees 15 School Uniform/ clothes 20 Supplies/Equipment 25 Teaching aids/Reference Books Budget to date Variance 20_____ % 30 Physical/Health provision 35 Personal Hygiene 40 Food/Nutrition/Cooking Utensils 45 Domestic assistance 50 Livelihood Skills Training 55 Social Development 60 Spiritual Development 65 Social workers salaries 70 Administrative Expenses 75 Transport 80 Child Survival Program 100 Total Program expenses (10-75) 200 Gifts 300 Other Compassion 500 Non Compassion 1000 TOTAL EXPENSE FOR THE MONTH NOTES Completed by: Date: APPROVAL Committee Chairman Committee Member If you have other compassion expenses, on line 300,400,500 & 600 please attach the appropriate forms or description of transaction. ICP(s) Finance Training Manual May 2011 Page 40
