Vision: A strong and capable civil society, cooperating and responsive to Cambodias development challenges 1.

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SOUND FINANCIAL MANAGEMENT FOR NGOs

Presented by: APV (Cambodia) Co., Ltd

Vision: A strong and capable civil society, cooperating and responsive to Cambodia’s development challenges

CONTENTS

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 • Introduction of Financial

Management

• Important of Financial Management

• Effective of Financial Management

• Responsible Personnel

• Sustainable Financial Strategies

• Internal Vs. External Audit

• Why External Audit Important?

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INTRODUCTION OF FINANCIAL MANAGEMENT

INTRODUCTION OF FINANCIAL MANAGEMENT

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  Profit Vs. Non Profit Organization

Concept of Financial Management:

• Planning

• Organizing• Directing/Leading and • Controlling

INTRODUCTION OF FINANCIAL MANAGEMENT

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  Group Discussion

“ What is the important of Financial Management?”

Divide into 4 Groups

15 Minutes for Group Discussion

10 Minutes for Presentation Per Group

IMPORTANT OF FINANCIAL MANAGEMENT

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 Important of Good Financial Management

• Decision making: revising, seeking for new funding, expanding the activities

• Manage proactively rather then reactively

• Manage short-term cash flow effectively

• Comply with Government law and regulation

• Sustainability of positive cash flow

• Safeguard of asset and record

• Make operation more efficient

IMPORTANT OF FINANCIAL MANAGEMENT

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 Important of Good Financial Management (Con’t.)

• Creditability from donors

• Plan ahead of employee’s benefits

• Operated with acceptable risks

• Promote operational efficiency and effectiveness

• Provide reliable financial information

• Encourage adherence to prescribed policies; and

• Reducing and preventing errors in a cost-effective manner.

IMPORTANT OF FINANCIAL MANAGEMENT

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 Important of Good Financial Management (Con’t.)

• Ensuring priority issues are identified and addressed.

• Protecting employee and resources.

• Having more efficient audit, resulting shorter timeline, less testing and fewer demands on staffs.

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EFFECTIVE OF FINANCIAL MANAGEMENT

EFFECTIVE FINANCIAL MANAGEMENT

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 • Financial Planning: Budgeting

• Controlling and Monitoring Financial Activities: Control over recording financial

transactions

Control over cash expenditure

Comply with accounting standards, law and regulation

Risk management

Timely and accurately financial reports to the donors

EFFECTIVE FINANCIAL MANAGEMENT

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 • Controlling and Monitoring Financial

Activities (Con’t.) Effective control over resource of the

Organization

Effective control over grant funds – sustainability

Internal Audit

EFFECTIVE FINANCIAL MANAGEMENT

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  Some Element Should be Focused1. Policy and Procedure Manual2. Accounting Policies3. Grants Receipts 4. Cash on Hand (Petty Cash or Imprest

Account) 5. Banking6. Security 7. Expenditure / payment8. Fixed assets (equipment and property) 9. Cash advance10.Internal Control of Purchasing

EFFECTIVE FINANCIAL MANAGEMENT

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  Some Element Should be Focused (Con’t.)11. Travels 12. Payroll 13. Financial Statement14. Budget Control 15. Audit 16. Related Policy

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RESPONSIBLE PERSONNEL

RESPONSIBLE PERSONNEL

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 • Board of Directors: Transparency

and accountability

• Executive Director: Used 3Es of resources to achieve plan

• Program Manager: Project budget management and uses it wisely

• Finance Manager: Overall responsibilities of finance management and ensure that financial transactions comply with accounting standards.

RESPONSIBLE PERSONNEL

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 • Accountant: Recording and prepare

accurate and timely financial statement and in compliance with accounting policies

• Cashier: Safeguard of the organization’s cash

• Other staff

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SUSTAINABILE FINANCE STRATEGIES

SUSTAINABILE FINANCE STRATEGIES

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 Group Discussion

“ What is the strategies for NGOs to be sustainable?”

Divide into 4 Groups

15 Minutes for Group Discussion

10 Minutes for Presentation Per Group

SUSTAINABILE FINANCE STRATEGIES

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  Variety of fund sources

Multiple ways of seeking funds

Up to date of financial planning

Good reputation and recognition

Adhere to the vision and mission of the Organization

Transparency and accountability over the financial activities

Reserve funds

Strong networks with sponsors

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INTERNAL VS. EXTERNAL AUDIT

INTERNAL VS. EXTERNAL AUDIT

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 Internal Audit: is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

External Audit: ISA 200 states the objective of an audit of financial statements is to enable the auditor to express an opinion whether the financial statements are prepared, in all material respects, in accordance with an identified financial reporting framework.

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WHY EXTERNAL AUDIT IMPORTANT?

WHY EXTERNAL AUDIT IMPORTANT?

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 • Ensure the entity is complied with the

provided financial policies and procedure

• Provide creditability of the organization to the donors

• Independent opinion on the financial statements

• Critique on the internal control procedure and enhance its effectiveness, efficiency and economy

• Double check on the work of internal audit

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Q & A

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Thanks!!!