FLOW CHART OF ORGANISATIONAL STRUCTURE AND FUNCTIONS

Voluntary Organization is LEGAL Entity

Governing Body Formed by Members

Represented by Governing Body/Board

Advisory Board

CEO/Chief Functionary & Staff Members

Statutory Auditor

External Consultants /Evaluators

Internal Auditor

AGM, Appointment of Auditor, Election of Board, Other Decisions as per Bye -Laws

Day to Day Administration & Management

Board Meetings & All Other Important Decisions & delegation of Authority

Matthew Khawlum EHA ORCHID (July 2011)

CHECKLIST FOR ACCOUNTING AND FINANCIAL SYSTEM

A. BOOK KEEPING & ACCOUNTING
1. Basis of Accounting

Cash Basis of Accounting (Entry in books of accounts made only when there is transaction of CASH, i.e., as and when cash is paid out or when cash is received)

2. Bank Account

i) Existing saving bank account in the name of Organization ii) Bank authorized signatories to be 2 or 3 (not less than 2) iii) Cheque book to be maintained. iv) Cheque Issue record to be maintained. v) Monthly Bank statement (pass book to be updated on the first working day of each month)

3. Voucher

i) Printed vouchers to be used ii) Pre-printed voucher serially numbered iii) Name and Address of organization printed in voucher iv) Payments above Rs.500/- should be affixed with revenue stamp & payee to signed on it. v) Payment after obtaining authorization or approval by assigned authority vi) Vouchers to be maintained with adequate supporting documents vii) Vouchers serially to be filed Type of Voucher i) Cash Payment Voucher; ii) Bank Payment Voucher; iii) Receipt Voucher (for cash & bank) iv) Journal Voucher.

4. Books of Accounts to maintained

The following books of accounts and registers should be maintained by the Society: a) Primary Books of A/c Cash Book/ Bank Book Petty Cash Book Journal Receipt book ( separate for local & foreign fund Ledger Trial Balance Monthly Cash/Bank Reconciliation statement (CRS/BRS) Register for Journal/Magazines/News Papers Register of temporary advances Register for Bank draft/Cheque received Cheque book Register Bank withdrawals and deposits Register Bank Pass Book
Matthew Khawlum EHA ORCHID (July 2011)

b) Final Books of A/c

c) Secondary Books of A/c

Mail Register for Outgoing(dispatched) and Incoming ( received) Bills Register for fees of newspaper, magazine, journal, Stock Register (Commodities at main office and at DIC) Movement Register Attendance Register Fixed Assets Register Monthly accounts of Receipts and Payments Vehicle Log Book Staff Monthly Salary Register Register of contractors/suppliers General office consumables Register

B. OVERALL FINANCIAL MANAGEMENT STRUCTURE

1. Components of financial management:

Financial Policies Budgeting Accounting System Inter Control & Internal Audit Reporting Audit Legal Compliances Leveraging programmes & Administrative expenses Planning Participatory Processes Meeting, Resolutions & Minutes Monitoring & Appraisal Reporting & Documentation Management Information System (MIS) Capacity Building Staff Welfare Measures(schemes) Finance Policies & Procedures Manual Human Resource Policies (Staff) Manual Procurement Policies & Assets Maintenance Manual Administration Procedures & Policies Manual

2. Above components need to be complemented with managerial and administrative components:

C. OPERATIONAL MANUALS & GUIDELINES

Matthew Khawlum EHA ORCHID (July 2011)

Minimum Standards for Financial Management in NGOs

A. Minimum Requirements Standard
1.A valid supporting document for every transaction, (securely filed and stored for the minimum period required.) 2.A cash book for every bank account, reconciled every month. 3. A Chart of Accounts used consistently in the accounting records and budgets 4. A budget detailing costs and anticipated income for all operations. 5. Clear delegation of authority from governing body through the line management structure. 6. Separation of duties sharing finance duties between at least two people. 7.Annual financial statements preferably audited by an independent person.

Why
Protection for staff, evidence and details of transaction. To organise and summarise transaction information; check for errors and omissions. Principle of consistency; to facilitate production of financial reports. Planning, fundraising, control and reporting. To know who is responsible for what and within what limits. To prevent temptation to steal and reduce opportunity to commit fraud; to share the load. Accountability to stakeholders; transparency.

B. Good Practice
8. Additional accounting records when staff are employed (wages book) or assets owned (assets register). 9. Budgets based on real activity plans, which include the full cost of running a project. 10.Budgets with clear calculations and notes. 11.Separate core costs budget. 12.Monthly cash flow forecast. 13.Use of Cost Centres when working with multiple donors and/or projects. 14.Funding grids, if more than one donor is funding an organisation or project. 15. Budget monitoring reports at least monthly to managers (and also regularly to beneficiaries). 16.Written policies and procedures, including a code of conduct for staff & board members. 17.Diversified funding base mix of restricted and unrestricted funds. 18.A reasonable level of reserves. To meet statutory and audit requirements; for control purposes. Realistic, more likely to meet targets. Easy to read and make adjustments. Easy to justify calculations. Encourages active management and financing strategy for core costs. Helps to identify and take action to avoid short-term cash flow problems. To separate restricted funds and related transactions; to facilitate reporting to managers and donors. To avoid double-funding situations and identify areas of shortfall. To monitor progress; control purposes. To prevent confusion about organisation rules and expected practice. Less vulnerable to financial shocks; helps to build up reserves. Less vulnerable to financial shocks; helps overcome cashflow problems

Matthew Khawlum EHA ORCHID (July 2011)