Financial Management

Financial ManagementFinancial Management

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What is Financial Management ? Managing of Financial Resources Optimum utilisation of resources Utilisation of funds for the right

purpose Ensure records are maintained for all

financial transactions

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Components of Financial ManagementDiscussion Points Planning Budgeting Accounting Reporting Monitoring Staff Welfare Audit Legal Adherence Financial Policies Governance Structures

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Responsibility of NGOs Responsible and accountable for

implementing the planned activities as formally approved by the donor/funding agency

Adherence to the terms of the MoU if any between donor and NGO

Ensure the prescribed accounting standards are maintained

Responsible for providing strong organizational governance, well-developed systems of functioning in terms of accountability and transparency

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Monitoring the Finances-Role of the PM Ensure the all expenditure is as per the

budget. (any variance needs to get approval) Maintain and monitor the programme trail

and while validating expenditure ensure that the larger accounting trail is also in place.

Expense ----- Cash memo ------ voucher ------- cash book ------ ledger ------ trail balance ------ income and expenditure statement, balance sheet

Program plan ----- activity to be performed ----- authorisation from the program head for the expense related to the activity ----- perform the activity ----maintain the relevant program records

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Planning & BudgetsWhat is a Financial Plan & Budget?

Who prepares this? Program staff or financial staff?

What needs to be put into a budget?

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Monitoring the Accounting trail Expense ----- Cash memo ------ voucher ------- cash

book ------ ledger ------ trail balance ------ income and expenditure statement, balance sheet.

What was spent and when? What kind bill was raised /Amount? Who sanctioned this and when? When was this entered and under which budget head? Was it booked in the accounts? Does it reflect in the final Statements/accounts …. MATCH THIS WITH

Program plan ----- activity to be performed ----- authorisation from the program head for the expense related to the activity ----- perform the activity ----maintain the relevant program records

Was this a planed/budgeted activity who authorised activity and the expenditure ? Was project head aware? Have reports and evidence of the activity been maintained.

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Discussion points

Prepare an expenditure sheet

Get necessary sanctions

Discuss recording both programme & finance

EXPENSES SHEETEXPENSES SHEETAmt Received Date

Purpose

Particulars Amount

Rs. p.

Total

Balance in hand/due

Sign of Payee Sanctioned8

Monitoring Accounting-Monitoring Accounting- Role of the PM

Area of Accounting

Description Monitoring Frequency

Cash Account Listing of cash receipts & payments during the month

PM needs to monitor each month

Cash Reconciliation

Physical cash count & cash book balance

Monitor Daily

Bank Account All bank receipts & payments during the month

End of each month

Bank Reconciliation

Reconciliation of bank statement balance & cash book balance

End of each month

Advances Lists unsettled advances by project staff at month end.

End of each month

Income & Expenditure

Gives picture of Intervention finances, balances & variences

Every six months

Assets Inventory Shows asset value and their financing.

Every year

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Some Basic Issues- PM should monitor Cash payments are not be more than Rs. 2000

- Incentives to PEs- Petty cash expenses

Bank accounts to be operated are in Nationalized Banks only with at least two persons signing the cheques

Stipulation in guidelines are maintained and followed

All records both programme, field reports, minutes of the meeting registers & finance bills, vouchers and SOE are kept

Ensure details of staff, contract papers are on record

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Requirement from NGOs Prepare and submit a budget as per the

prescribed guidelines

Ensure expenditure is monitored and linked to programme activities

Accounting system in places and maintained on a daily basis.

Prepare and submit monthly financial statements on the expenses incurred, quarterly and annual financial reports for the activities described above11

Contd…

Requirement from NGOs Provide yearly organizational audit reports

and allow the internal and/or external auditor to be appointed by and authorized representatives of SACS/NACO/Accountant General

Fulfill all necessary formalities in connection with its status as required under the regulations stipulated by the Government of India and State government

Comply with the financial and procurement guidelines under the programme.

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ConclusionWe are using public money accountability

needs to be focused onThere should be no wastage in utilization of

money.The whole process should be transparent All statutory requirements should be met.All expense must be authorized by the head of

the organization and made

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THANK YOU!