FINANCIAL MANAGEMENT FOR
ASEC/SLDI
By
Suliaman Turay, HTC, BSc, PGC, MBA.
ACFE, PCGA, FCCEA,
COORDINATOR - MBA And Management
Studies Programs, PAID/WA.
slatutpaidwa@gmail.com
7450 5791 or 9957 6066
©Pan African Institute for Development, West Africa (PAID/WA), Buea.
http://www.paidwa.org
GETTING IT RIGHT FROM GENESIS
Accounting is all about:
• Accuracy
• Neatness
• Presentation
Showing “True and Fair View” of business
transactions
WELCOME AND INTRODUCTION
KISS
•Lets Know WHO
Is WHO in this
Room
EXPECTATION AND FEARS
Expectations
Fears
CONDITIONS FOR SUCCESS ( Do’s and
Don’ts)
Lets Create The Enabling Environment
Do’s
Don’ts
OBJECTIVES
Participants will demonstrate their knowledge of
the fundamental and technical concepts of
accounting.
Participants will demonstrate criticalthinking and problem-solving skills on
funds management.
Participants will demonstrate a
sense of responsibility and
Accountability.
MODULE 01. GENERALITIES ON
ACCOUNTING
1
• Luca Pacioli
• The Father of Accounting
2
• Summa de Arithmetica, Geometria,
Proportioni et Proportionalita
• GAAP
1939
3
• Today IAS, IFRS
• IFAC
1494
BASIS OF ACCOUNTING
PRINCIPLES
GAAP
Double Entry
Principle
Golden Rule
IAS
IFRS
CHARACTERISTICS OF GOOD
ACCOUNTING INFORMATION
Relevance b
Understandability
Reliability
Faithfull Representation
Timeliness
Comparability/Consistency
Completeness
ACCOUNTING CONCEPTS AND
CONVENTIONS /ASSUMPTIONS
Business
Legal Entity
Going
Concern
Materiality
Matching
Prudence
DIVISION IN THE DISCIPLINE OF
ACCOUNTING
Statutory
Financial
Accounting
Tax
Accounting
Non
Statutory
Management
Accounting
Forensic
Accounting
ACCOUNTING EQUATION
Capital
Liability
Asset
ASSET
Tangible - Building
• Intangible - Goodwill
Non Current - Building
• Current - Stock
LIABILITY
Current
•Eg. Account Payable, Overdraft, etc.
Non Current
•Loans, Debentures, etc.
CAPITAL
Net Asset
Liability
Asset
Asset – Liabilities = Capital
HOW TRANSACTIONS IMPACT THE
ACCOUNTING EQUATION
ACCOUNTING EQUATION
ILLUSTRATION
Example
• The following illustration for Edelweiss Corporation shows a variety of assets that are reported at a
total of $895,000. Creditors are owed $175,000, leaving $720,000 of stockholders’ equity. The
stockholders’ equity section is divided into the $120,000 that was originally invested in Edelweiss
Corporation by stockholders (i.e., capital stock), and the other $600,000 that was earned (and
retained) by successful business performance over the life of the company.
• Does the stockholders’ equity total mean the business is worth $720,000?
?
• Assets ($895,000) = Liabilities ($175,000) + Stockholders’ equity ($720,000)
Equation
EXERCISE
Accounting Equation
01 July, 2013 SLDI Commenced business with Cash 250
000 FCFA
05 July, 2013 Sister Clarise purchases household
equipment costing 150 000FCFA
business.
Q.1. State the Accounting Equation at start of the
Business
Q.2. Show the effect of the transactions on the
accounting equation
BALANCING ACCOUNTS
A
B
• Sum the Sides - Dr. Cr.
• Locate the Difference
• Insert the Difference on Lower Side
• Complete Double Entry
• bal. c/d…………..bal. b/d
CASH A/c
• Shows Cash Receipt and Payment Dialy
• Must be reconcile every day… showing
physical cash and book balance (Agreeing)
RECORDING TRANSACTION IN THE
CASH A/C
Dr. A/c
•Income
Cr.
•Expenditure
EXERCISE
2. CASH A/C
January 04, 2013 SLDI Started Business with
1 000 000FCFA
January 07, 2013 Purchased Goods 500
000FCFA
January 12, 2013 fees 800 000FCFA
Task: Record transactions in the Cash A/c
BANK A/C
Shows Bank Receipt and Payments Each
Month.
Must be reconciled every month
Showing Bank Statement Balance and
Cash book balance agreeing.
RECORDING TRANSACTIONS IN BANK
A/C
Dr. A/c
•Income
Cr. A/c
•Expenditure
EXERCISE
3. BANK A/C
January 04, 2013 SLDI Started Business with a
Cheque of 1 000 000FCFA.
January 07, 2013 Purchased Goods paying by
cheque 500 000FCFA.
January 12, 2013 received fees 800 000FCFA by
cheque.
Task: Record in the Bank A/c
Capital and Profit Calculation
Opening Capital Items
01/01/2012
FCFA
Closing Capital Items
31/12/2012
FCFA
Premises
50 000
Premises
52 000
Furniture’s
7 500
Furniture
7 200
Stock
9 100
Motor vehicle
5 500
Debtors
6 700
Stock
Cash at bank
3 100
Debtors
6 200
Creditor
5 800
Bank over draft
2 800
………………
………………………
Creditor
10 200
6 300
MODULE 02 ACCOUNTING
PROCEDURES
Basis of Accounting
Maintaining Accounting
Trail
How to manage cash a/c, and transactions
in NGOs
Bank a/c operations
Procedures for salaries and Advances in
NGO
Bank reconciliation
Travel Expenses and Advances
Source documents validation
FINANCIAL MANAGEMENT - WHO’S
RESPONSIBLE?
BOD
Director
Management
Beneficiaries
Peers/Partners
?
?
?
WHY INTERNAL CONTROL
MECHANISM
Expenditure within Budget
Only Expenditures on Budget
Financial documentation in orderly Manner
INTERNAL CONTROL
Objectives
To Safe guard Asset and
Ensure Operational
Efficiency
To Check Accuracy and
Reliability of
Accounting Data and
Records
Attributes
. Segregation of Duties
. Appropriate
Organisational
Structure
.Internal Checks
. Management
Supervision
RED SIGNAL AREAS IN INTERNAL
CONTROL
Petty
Cash
Cash
Disbursement
Pay
roll
Segregation
of Duties
Cash
receipts
Watch Out!!!
Grants
THE ACCOUNTING SYSTEM
RECORDING
SUMMARISING
COMMUNICATION
ANALYSING
BASIS OF ACCOUNTING
a) The organization shall prepare its accounts on the basis of historical basis of
accounting but assets shall be re-valued from their historic cost to reflect current
values as necessary
b) The organization shall apply accrual based accounting method. Revenue and
grants/donations shall be recorded in the accounting period it is received and
expenses recognized when incurred. Loan and Grant revenue is recognized when
received. Other revenues are recognized in accordance with the accruals concept.
c) Grants and donations if any shall be recorded separately from operational activities.
They will be shown “below” the operating line on the Income Statement, together
with non-operating income and expenses and taxes. When transferred to the Balance
Sheet, they will not be included in the Retained Earnings from operations, but in
Contributed Capital (or Donated Equity).
d) In-kind contributions must be recognized through journal adjustments that are
supported by appropriate and objective documentation (e.g. agreements, formal
letters or memos, Memorandum of Understanding).
MAINTAINING ACCOUNTING TRAIL
•
Every transaction would need to be traced back
account=books are maintained in a set pattern.
•
The trail is as follows:
•
Expense—–Cash memo——voucher——cash book——
ledger——trail balance——income and expenditure statement,
balance sheet
•
Hand in hand with an accounting trail, we can trace what we
can call as a programmatic trail.
•
Program plan—–Activity to be performed—–Authorization
from the program head for the expense related to the activity—–
Perform the activity—-Maintain the relevant program records
•
The accounting trail is important as it helps to
check/countercheck expenditure incurred/ activities done and thus
helps in maintaining a transparent system.
WITHDRAWAL OF CASH FROM BANK
•
a) The Cash Withdrawal Form/Money Indent to be
filled up and signed by the staff handling cash.
•
b) The cash balance available and the estimated
expenses would need to be computed.
•
c) The authorized persons must verify the requirement
before signing the check for withdrawal of cash.
•
d) The signature of the person presenting the check
and receiving the cash should be attested on the back side of
the check by one of the authorized signatories.
•
e) A Cash Receipt (Contra) voucher to be prepared and
accounted for by the accountant on the same day.
•
f) The Cash Account (Manual) to be updated for receipt
of the Cash.
CASH PAYMENTS
a) Cash payments will be made only after preparing the Payment voucher.
b) All vouchers should be pre-printed with machine made serial numbers
c) The Voucher has to be approved by the competent authority before
payment.(as per the requirement of individual projects )
d) The Payee must sign the voucher for having received the payment.
e) In case the competent person is not present, the voucher must be
verified/approved by any other person standing-in for the person per before
release of the payment.
f) As per Income Tax Rules, no cash payment of more than FCFA 100 000 is
permitted.
g) All cash payments above 50 000FCFA should be receipted with a revenue
stamp as per the provisions of the stamp act.
h) The number of cash payments has to be reduced by converting settlements
through cheque payments.
CASH VERIFICATION
•
a) The competent authority should physically
verify the cash balance occasionally and
compulsorily at the end of the month.
•
b) The Cash Account record should be signed
by the person handling the cash and the person in
charge of finance as and when the physical
verification of cash is carried out.
•
c) Any discrepancy noticed during the physical
verification should be recorded and reported in
writing to the person concerned immediately.
CONTROLS TO BE EXERCISED
•
a) Third parties should not be allowed access to
the accountant or the safe. Cash should be paid to them
in the front office.
•
b) Cash is handled by only one designated person
who is responsible for it.
•
c) A fixed period of time has to be fixed for cash
disbursements. Only emergency payments can be
released during other times.
•
d) Maximum and minimum cash limits to be
strictly observed.
•
e) Accounting of cash receipts/payments is done
on a daily basis.
PETTY CASH
•
a) Petty cash shall be maintained on an imprest basis. At any
given time, the cash and receipts in the cash box shall total the imprest
level. The level shall be maintained at FCFA______.
•
b) Only the accountant will handle petty cash. Actual cash will
be spot-checked and verified by the supervisor/finance manager at
least once per week. The staff person in charge of the fund will
reimburse for any discrepancies.
•
c) All requests for petty cash must be signed by an authorized
supervisor/finance manager on a pre-numbered voucher.
•
d) A check to replenish the fund shall be issued when the fund
is low, and at the end of every month.
•
e) The cash and vouchers shall be kept in “locked box or safe.”
SALARIES
•
a) All permanent employees shall be issued with appointment letters signed by the
organization head and employee-signifying acceptance of the terms and conditions set forth thereto.
The appointment letter shall contain the initial salary, responsibilities, duties and the general terms and
conditions.
•
b) Subsequent changes in salary, responsibilities, duties, terms or conditions of employment
shall be communicated to the employee in writing.
•
c) A personal file shall be opened for every employee. Copies of job application letters,
Appointment letters and any other correspondence between employer and the employee shall be kept
in this file.
•
d) Salaries shall be paid monthly in arrears. A salaries schedule showing the gross pay,
advances, deductions and net pay shall be prepared by the Accountant, checked and verified by the
Finance manager/HR manager and approved by the organization head prior to the preparation of
payment vouchers and the check.
•
e) A personal data card shall be opened for each member of staff. Salaries shall be paid by
check through the respective bank accounts.
•
f) Employees shall be issued with a pay slip every month, which will show the computation
of his/her net salary.
•
g) Signing the payment vouchers for the net pay, and the monthly transfer sheets where
applicable shall evidence authorization of salary payments.
SALARY ADVANCES TO STAFF
•
Staff advances shall be given upon request in accordance with
regulations stipulated in the personnel policies and procedures manual
(by complete, signed and authorized Staff Advance Authorization form,
SAAF).
An Advances ledger account should be opened and reconciled at every
end month. However, all advances should be approved subject to the
availability of funds.
Pending Advances
•
A statement of funds lying with outsiders and staff should be
recorded at the end of every month-end. It is necessary to review it
on a monthly basis to identify whether any deposits/advances are
lying unadjusted or overdue for settlement. While it is possible
that the actual date of payments and the purpose of which the
deposit/advance was given gets obliterated by passage of time, this
report will regularly give details of such funds lying elsewhere.
TRAVEL EXPENSES
•
Travel expenses incurred by staff or any other
authorized person shall be reimbursed according to the
regulations set out in the Human Resource Policies and
Procedures Manual.
Travel Advances to Staff
•
Travel advances shall be granted in accordance
with the above mentioned regulations. A separate staff
debtor account shall be opened for each advance
granted. Any advances not accounted for within two
weeks shall be recovered from the salary of the employee
concerned without prior reference to the employee.”
ACCOUNT BOOKS AND DOCUMENTS
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
a) Cash Payment/Receipt Vouchers & Book
b) Bank Payment/Receipt Vouchers & Book
c) Summary/Daily Petty Cash Book
d) Journal Vouchers and Journal
e) General Ledger
f)
Fixed Assets Register
g) Contract/Registration Documents
h) Attendance Register
i)
Budget Copies of various grants
j)
Utilization Certificates
k) Relevant Registration papers
l)
Copies of Consultancy agreements
m) Capital assets approvals
n) File of original bills of assets purchased
o) Copies of all Contracts and agreements.
p) Stationery Register
q) File containing Bank Mandate and authorized signatories.
r)
Quotation file for all purchases
s)
Advance Payment Register (Advance to third parties & Staff Advances)
t)
Cheque issue register
u) Cancelled check register
v) Donation receipt issue register
PROCUREMENT, STOCK AND
INVENTORY MANAGEMENT IN NGOS
As NGOs receive funding, implement projects
and expand their offices, they will be required to
make purchases of goods and services. Ideally, it
is better to draw up a plan for making such
purchases and also outline it in the financial
management policy.
PURCHASING
The purchasing function involves:
a) Identification of needs, for goods and services,
b) Identification of costs to cover the needs for those
goods and services,
c) Identifying the suppliers, procuring estimates (at least
three)
d) Negotiating favorable trading terms with them,
e) Placing an order.
f) Receiving the goods and/or services and paying for
them
g) Preparation of accounting and archiving expenditures
IDENTIFYING THE SUPPLIER
•
The purchasing function involves:
•
a) Credibility of the supplier in terms of being able to
supply the requirements and in time
•
b) Cost effectiveness of the goods supplied
•
c) Quality of goods supplied
•
d) Supplier should meet all necessary formalities in connection
with its status as per the rules and regulations of the Government.
•
e) Supplier must be able to supply all the good in the
requisition/or of the specification prescribed in the purchase order
•
f) Must be local, reliable and known
•
g) Must be able to supply large quantities if necessary
•
h) Past performance
•
i) Availability of supplier
•
j) Reputation of supplier
PURCHASING CAPITAL ASSETS
a) Any non consumable item of equipment, needed to start program operations and major capital
expenditures as outline in the plans and budgets are called fixed assets.
b) In the case of capital asset purchases and consumables in bulk, it is always healthy to issue
purchase orders clearly spelling out the terms and conditions of purchase.
c) As mentioned above, all non consumable items of expenditure should be purchased with three
quotations. It is important here to understand that attractive asserts like camera, tape recorder etc also
from part of fixed assets, even through their value might not be very high. Office equipment
and IT equipment will also from part of the fixed assets.
d) All incidental charges which are incurred to get the asset to the place where it is situated and to get
the asset into operating condition must be added to the cost of the asset.
e) An inventory of the capital assets should be maintained and updated from time to time.
f) It is suggested that the fixed assets register is approved and signed by the competent authority after it
is updated every six months or annually.
g) All assets must be given an identification number and such number must be painted on the asset.
This number should also be mentioned in the fixed assets register.
h) Physical verification of assets should be undertaken (preferably by an office bearer or someone of
adequate authority) at least once a year. All additions, deletions, modification etc should be recorded
i) Contracts Register (for all contracts issued with payment details and other particulars)
MAINTAINING A STOCK REGISTER
a) This is to be maintained at the office where the goods are purchase
or stored centrally.
b) The format of the central stock register is enclosed.
c) This register shall be updated on the receipts column as and when
fresh stocks arrive. It is important that the person responsible for the
stocks initials the quantity in the stock book.
d) All requisitions must be numbered and in duplicate. One copy has to
be maintained at the central store and the duplicate given to the
accounts.
e) All issues shall be recorded immediately in the stock register
and this must be update on a daily basis.
f) The stock registers should be maintained on a FIFO(first in first
out basis).”
DONOR REPORTING
Expenses Summary
•Financial Report
Reconciliation of
donor contribution
•Statement of Fund
Activities Plan
Verification
•Activities Report
RECORDING FINANCIAL TRANSACTION
Basic Accounting System
Books of
Prime Entry
Documentation
Procedure
Policy
Operational
Aspects
ACCOUNTING SYSTEM FRAMEWORK
Transaction
Books of
Accounts
Financial
Statements
Cash
Credit
Cash Ledger
General Ledger
Trial Balance
. Income
Statement and .
Statement of
Financial Position
METHODS OF RECORDING
TRANSACTIONS
Single Entry
Double Entry
Recording
Transaction on
one of the two
fold Effects
Recording
Transactions on
the two Fold
Effects
TYPES OF TRANSACTIONS
CASH
Goods and
Services exchange
Money
CREDIT
Goods and
Services
exchanged for
future payment
CASH BUSINESS DOCUMENTATION
Seller
Buyer
Sales invoice
Purchase
Invoice
Cheque, Receipt
Receipt, Cheque
CREDIT BUSINESS DOCUMENTATION
A/C
Receivable
A/C
Payable
Sales invoice
Purchase
invoice
Credit Note
Debit note
PROCESS OF RECORDING BUSINESS
TRANSACTIONS WITHIN THE
ACCOUNTING SYSTEM
Source
Documents
Ledgers and
Trial balance
Financial
Statements
DUALITY OF TRANSACTIONS AND THE
DOUBLE ENTRY SYSTEM
Two Fold
Effect
The
Receiver
The Giver
Action
Debit
Dr.
Credit
Cr.
DUALITY OF TRANSACTIONS
Cr.
Dr.
Transaction
BOOKS OF PRIME ENTRY
Journal
Proper
Petty
Cash Book
Sales
Journal
Cash Book
Return
Outwards
Journal
Purchases
Journal
Return
inwards
journal
BOOKS OF PRIME ENTRY – CASH
1
•Cash Book
2
•Petty Cash Book
3
•Journal proper
BOOKS OF PRIME ENTRY – CREDIT
• Sales Journal
1
2
3
• Purchases Journal
• Return Outwards Journal ?
• Return Inwards journal ?
TRIAL BALANCE
A list of Dr. Cr. Balances
Extracted from Various Ledger Accounts
Show a proof of arithmetical accuracy
LAY OUT
Date
Detail
Dr.
Cr.
EXERCISE
THE JOURNAL
Transactions not
qualified to be
entered in the
other books
EXERCISE ON JOURNAL
The following are the first five transactions of >>>>>business:
May 01
Put £41,000 into a business bank
account.
May 02
Paid rent £1,600 by cheque.
May 04
Paid £15,000 for equipment, paying by
cheque.
May 09
Bought goods for resale £6,000, paying
by cheque.
May 12
Bought stationery for £600, paying by
cheque.
Task : Record in the Journal
EXERCISE ON CASH BOOKS
June 5 balnace brought forward 600 000FCFA
June 8 Sales 500 000FCFA cheque
June 9 Purchases Goods 400 000FCFA
June 13 Received from ASEC 750 000FCFA
June 16 Sales 200 000FCFA cash
June 17 Purchase Equipement 300 000FCFA
Record in the cash book and show balance
EXERCISE PETTY CASH BOOK
MMH runs her office petty cash on the imprest system. She
has columns: Postage, Travelling, Cleaning, Stationary, Office
Sundry.
May 02 Drew float 200 000FCFA from chief cashier; paid office
tea 15 000FCFA
May 04 Paid envelopes 13 000FCA; paid stamps 17 000FCFA
May 08 paid for cleaning materials 16 000FCFA; paid fares 45
000FCFA
May 12 Paid stationary 12 500FCFA; postage 3 500FCFA
May 18 Paid cleaners wages 50 000FCFA; paid fares 12
500FCFA
Required : Balance off the petty cash book and restore the
float. [25 mk ]
MODULE 03. BANKING SYSTEM AND
TRANSACTIONS
Module
Account
Opening
Account
Management
Documentation
Pass book
Electronic
Cards
Cheque
Paying slip
Purpose of a bank reconciliation
a) the accuracy of the cash book
b) the accuracy of the bank statement
c) that undue delay is not occurring between
payments, receipts and their clearance by the
bank
d) to discover payments made and items
received by the bank not entered in the cash
book
REASONS FOR DIFFERENCES IN BANK
STATEMENT AND CASH BOOK
 a) Items (not consisting of errors) which appear in the
bank statement but which are not in the cash book, e.g.,
dishonoured cheques or bills, interest and bank charges,
standing order (an order made to the bank to make a
regular payment), dividends or interest income
credited direct to the bank
and payments by
customers which are paid direct to the bank.
 b) Items (not consisting of errors) which appear in the
cash book but which do not appear in the bank statement.
These are confined to outstanding cheques and
outstanding deposits.
 c) Errors made in the compilation of the cash book or the
bank statement.
TWO FORMS OF BANK
RECONCILIATION
1) The bank balance is reconciled to the
balance in the depositor’s records (or the
balance in the depositor’s records to the bank
balance)
2) Both the bank balance and the balance per
depositor’s records are reconciled to a correct
balance.
THE BANKING PROCESS
Deposit
Withdrawal
Transfer
• Savings
• Current
• Deposite
• Cheques
• Withdrawal
Slips
• Standing
order
• Credit cards
• Wire
CASH AND BANK A/cs
Income
Expense
BANK RECONCILIATION
Bank Statement
Difference
Cash Book
REVISED CASH BOOK ITEMS
Items in the Bank
statement not in
the Cash book
Bank Charges
Standing Orders
Transfer
REVISED CASH BOOK PREPARATION
Dr. CB with Cr. Items on BS
Cr. CB with Dr. Items on BS
BANK RECONCILIATION STATEMENT
ITEMS
1
•Unpresented
Cheques
2
•Uncredited
Cheques
BANK RECONCILIATION STATEMENT
PREPARATION
Revised Cash
Book Balance
Bank Statement
Balance
Add:
Unpresented
Cheque(s)
Less:
Unpresented
Cheque(s)
Less:
Uncredited
Cheque(s)
Add:
Uncredited
Cheque(s)
EXERCISE
PAYROLL
Pay Slip
Time
Sheet
• Compulsory
deductions
• Voluntary deductions
• Clock in
• Clock out
PROCESSING PAYROLL TRANSACTIONS
INTO THE ACCOUNTING SYSTEM
Salary Account
Dr.
Cash/Bank Account
Cr.
MODULE 04. LEDGERLISING
TRANSACTIONS and TRIAL BALANCE
Ledger
Account
Trial Balance
TYPES OF LEDGER/ACCOUNT
Personal
•Debtors
and
Creditors
Impersonal
•Real
•Nominal
BASIC RULE FOR LEDGERLISING
MAINTAINING A CASHBOOK
Dr.
Cr.
All
All
Income
Expenditure
MAINTAINING PETTY CASHBOOK
Imprest System
Float
Re - Imbursement
Cashier
Petty Cashier
SALES AND CREDIT TRANSACTIONS
Dr.
Cr.
Customer
Supplier
A/c
A/C
SALES AND CASH TRANSACTIONS
Dr.
Cash
A/c
Cr.
Sales
A/c
PURCHASES AND CREDIT
TRANSACTIONS
Dr.
Cr.
Purchases
Supplier
A/c
A/c
PURCHASES AND CASH TRANSACTION
PURPOSE OF CONTROL ACCOUNTS
AND RECONCILIATION
To locate difference in:
Sales A/c
Purchases A/C
TRIAL BALANCE
List
Dr.
Balances
Proof
Cr.
Balances
Arithmetical
Accuracy
ERRORS WHICH DO NOT AFFECT THE
TRIAL BALANCE
Omission
Commission
Compensating
Principle
Complete
Reversal
ERRORS WHICH AFFECT THE TRIAL
BALANCE
Single Entry
Under Stating
Over Stating
SUSPENSE ACCOUNT
Difference on Trial Balance
Dr. Suspence account………For difference on Dr.
Cr. Suspence account……….For difference on Cr.
Cr. Journal … Dr. Journal
CORRECTION OF ERRORS AND NET
PROFIT
Add
Subtract
• Items which understate
profit
• Items which overstate
profit
MODULE 05 FINANCIAL REPORTING
and ACCOUNTABILITY
• Name
Financial
Statements
1
2
3
• Interpret
Financial
Statement
• Appreciate
Regulations
NGOs FINANCIAL STATEMENTs
Balance Sheet
Income and
Expenditure
Expenditure
Variance
Cash Flow
Grant Utilisation
Status
NGOS NON FINANCIAL STATEMENTS
1
2
3
• Internal Control Measures
• Statutory Compliance
• Management Information Report
MONTHLY REPORTS
Monthly Accounts
Expenditure variance
Analysis of
Expenditure against
Budget
Grant Utilization
Status
Monthly Bank
and Cash
Balances
Fixed/Consumable
Assets
YEARLY REPORTS
Audited
Financial
Activities
Report
Statutory
Compliance
Cash Flow
Statement
Management
Information
WHY ARE THESE STATEMENTS
USEFUL?
Gives Financial Health of the Organisation
Directors to Understand the Financial position
of the organization and plan strategy
USE OF THE TRIAL BALANCE
To Check
Arithmetical
Accuracy of
Ledgers
WHY THE RECEIPT AND PAYMENT
STATEMENT
1.
2.
. Summary of Cash Book of
NGOs
. Shows Opening and Closing
Cash Balance of NGOs
.Identify any Unplanned
Expenditure.
DIRECTORs USE OF THE BALANCE
SHEET
To
Check
Debt
Net
Current
Assets
Accumulated
Fund
WHY THE CASH FLOW?
ACCOUNTABILITY
Accountability Statement Shows
Approaches
Employed for
objective
Implementation
Duration
Justification
Approaches
Justification of
Duration
Statement of
Finance
STORY #1: MUKONO WATER PROJECT
A donor funded water project was set in Mukono. The project write up
was excellent and the proposed accountability procedure was also very
discrete. The project implementers misappropriated most of the money.
But they made very good accountability to their donors. In the middle of
the rainy season, they invited the donors to come and see the project. In
the meantime they managed to put up a tank and a single pipeline out of
ten planned and funded. On the eve of the donors’ visit, the
implementers hired a water tanker to deliver water to the tank. When the
visitors arrived, all was set.
Owing to the mud during the rainy season, the water pumping station
purported to have been built deep down the valley could not be visited.
But a standby tap with running water was visited. The donors were
impressed and more money was released for another project. The project
beneficiaries later complained to the donors and a value for money audit
was instituted. The audit discovered the whole scam and the
implementers were arrested.
What do we learn about accountability?
STORY #2: MOTHER’S UNION
A Diocese in Central Region received funding through the development
arm of the Church to provide Mothers in the Mothers’ Union
education on HIV/AIDS and Family Life. The Bishop ensured that all was
done according to plan. However, being church people they assumed
that everybody trusted their utmost good faith. They wanted results to
speak for themselves and not mere papers. The Mothers Union did not
document their work beyond knowing themselves that they had done
everything that was to be done in the project. When a verification
team came to check on the project implementation, there were no
documents but long verbal tales of the project achievements. The
verification team recommended the cancellation of the second phase
funding.
What do we learn about accountability?
IN THESE TWO STORIES THERE ARE
TWO MAIN ISSUES REALIZED
1
2
Value for
money is part
of
accountability
Good
performance
should be
accompanied
with good
documentation
FINANCIAL REPORTS EX. 01
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As Cost Accountant at Bishop House you extract the following actual and budgeted data for the period ending 30 June
2014:
Credit sales:
November and December 2013 £34,000 Each
January, February and March 2014 £39,000 Each
April, May and June 2014 £44,000 Each
Credit purchases:
November and December 2013 £17,000 Each
January, February and March 2014 £20,000 Each
April, May and June 2014 £22,000 Each
Salaries and wages payable for each month £7,000
Insurance, rent and rates payable each month £4,000
Other overheads payable each month £6,000
Depreciation for each month £1,500
Equipment costing £60,000 is to be bought and paid for in January.
An investment of £9,000 cash is expected to be received in January.
The bank balance on 1 January 2014 is expected to be £4,000 OVERDRAWN.
Customers are granted one month’s credit.
Suppliers of goods for resale allow one month’s credit.
TASKS
a) Prepare the cash budget for the period January–June 2014.
b) Comment on the budgeted cash flow position revealed by your cash budget
FINANCIAL REPORTING EX 02
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As Cost Accountant at Bishop House you extract the following actual and budgeted data for the period ending 30 June
2014:
School Fees:
November and December 2013 £34,000 Each
January, February and March 2014 £39,000 Each
April, May and June 2014 £44,000 Each
Expenses:
November and December 2013 £17,000 Each
January, February and March 2014 £20,000 Each
April, May and June 2014 £22,000 Each
Salaries and wages payable for each month £7,000
Insurance, rent and rates payable each month £4,000
Other overheads payable each month £6,000
Depreciation for each month £1,500
Equipment costing £60,000 is to be bought and paid for in January.
An investment of £9,000 cash is expected to be received in January.
The bank balance on 1 January 2014 is expected to be £4,000 .
TASKS
a) Prepare the cash budget for the period January–June 2014.
b) Comment on the budgeted cash flow position revealed by your cash budget.
END OF WEEK
THANK YOU SISTERS.
U ARE THE BEST TO WORK WITH.
THE INTERACTION IS A LIFE TIME MEMORY!!!
SISTERS!!!! BYE