Table of Contents CONTENTS PAGE NO | |Acknowledgement —————————————————————————- |1 | |Introduction ———————————————————————————— |2 | |Objective of The Study———————————————————————– |3 | |Profile of The Organization —————————————————————– |4 | |Description of The Study ——————————————————————– |5 | |Finding of The study ————————————————————————– |22 | |Recommendation —————————————————————————– |27 | |Conclusion ————————————————————————————– |44 | |Annexure: | | | | | INTRODUCTION The Non-Government Organizations (NGOs) have been playing very important role in supplementing overall development activities of Bangladesh thus the financial management has very significant role in ensuring productive delivery of this sector.
In current days, the NGOs require to compete bidding process to acquire fund from external sources including Government. This process needs to prove its capacity and quality by qualifying itself in the current market approach of contractual bidding. The sound and professional financial management system of an organization helps to move forward to award those contracts. An effective internal control system and proper accounting system in order to ensure compliance issues are necessary in achieving sound financial management practice in an organization. Compliance to the agreemental bindings including reporting requirements is a significant strength of an organization.
An organization’s internal control system is defined as whole network of systems established in the organization to provide reasonable assurance that organization’s objectives will be achieved, with particular reference to: ? The effectiveness of operations. ? The economical and efficient use of resources. ? Compliance with applicable policies, procedures, laws and regulations. ? The safeguarding of assets and interests from losses of all kinds, including those arising from fraud, irregularity and corruption. ? The integrity and reliability of information, accounts and data. The accounting system consists of the methods and records established to identify, assemble, analyze, classify, record and report an organization’s transaction and to maintain accountability for the related assets and liabilities.
An effective accounting system gives appropriate consideration to establishing methods and records that will – a. Identify and record all valid transactions; b. Accurately record transactions in the proper time/period; c. Properly classify transactions in accounts; d. Properly present financial statements and related disclosure; and e. Form traceable audit trail. OBJECTIVE OF THE STUDY The objectives of the study on Financial Management are: ? To have a uniform book-keeping, accounting and financial system, rules and procedures. ? To assess utilization of fund for the stipulated purpose and to establish discipline and accountability of fund users. To assist the management with necessary financial information required to ensure efficient monitoring and implementation of projects/programs of the organization. ? To assess that basic internal controls are in place in the performance of every function or activity of the organization. ? Accurate and timely financial reporting to the management, donors and GOB can be ensured. PROFILE OF THE ORGANIZATION HIV/AIDS and STD Alliance Bangladesh (HASAB), a specialized leading national Non-Government Organization (NGO) highly focused in HIV/AIDS field, has been working in Bangladesh for more than fourteen years to assist smaller NGOs and Community Based Organizations (CBO) in accessing resources and capacity building (technical, managerial & organizational).
HASAB’s prime role as an umbrella organization also involved in prevention and control of HIV/AIDS/STI among general population and diversified population having high risk behavior, and also providing care and support for HIV positive people. Since its inception in 1994, as a linking organization of International HIV/AIDS Alliance, UK to mobilize and address community responses to HIV/AIDS, HASAB initiated working with the communities vulnerable to HIV/AIDS through partnership with NGOs and CBOs. Gradually, HASAB emerged as a specialized agency with its long experience of grant management and capacity building for smaller NGOs, Community Based Organizations (CBO) and Faith Based Organizations (FBO) in HIV/AIDS field.
HASAB provided both financial and technical support to grassroots NGOs/CBOs for education and raising awareness on HIV/AIDS, leading to behavior change in target population. Over the years, HASAB as an indigenous national level umbrella NGO has experienced in building the technical capacity of substantial number of NGOs/CBOs in HIV/AIDS field who worked on diversified vulnerability with various innovative approaches. HASAB helped many NGOs to successfully scale up their innovations and is highly rated by partner NGOs/CBOs for its approach and support with sound financial accountability, capacity strengthening, and program monitoring and evaluation system in place.
HASAB has a substantial length of experience to support and implement various programs like, mass motivational meetings, peer education, life skills education, training & capacity building, promotion of human rights of marginalized population, counseling, STI treatment, advocacy, networking etc. with diversified vulnerable groups and slum dwellers which includes female sex workers (street-based, hotel-based & floating sex workers), men having sex with men (MSM), injecting drug user, transgender (Hijra), internal migrant workers like – bus/truck drivers & helpers, Rickshaw/cart/van Pullers & their wives, injecting drug users, migrant workers to abroad, border crossing people, garment factory workers, jute mill workers, fish processing factory workers, hotel & restaurant workers, dock laborers, city cleaners and people living with HIV/AIDS. DESCRIPTION OF THE STUDY 4. 1 Organogram/ Financial Management Structure of HASAB:
A Director – Finance heads the Finance Department of HASAB, who is directly reportable to the Executive Director. This is central based unit which is operated as per the approved organogram bellow: 4. 2 Accounting System: The accounting system consists of the methods and records established to identify, assemble, analyze, classify, record and report an organization’s transaction and to maintain accountability for the related assets and liabilities. An effective accounting system gives appropriate consideration to establishing methods and records that will– A. Identify and record all valid transactions; B. Accurately record transactions in the proper time/period; C. Properly classify transactions in accounts; D.
Properly present financial statements and related disclosure; and E. Form traceable audit trail. 4. 3 Accounting Principles: 4. 3. 1Basis of Accounting- The fundamental accounting principle, which is adopted by HASAB, is modified accrual basis of accounting, which is a combination of cash and accrual method. 4. 3. 2Accounting for Income- During the year, income is recorded only when it is received. During the year, pledges and assurances are not recorded as income received or as contribution receivable. Only actual amounts received in the year are to be brought to account. Estimates of accrued income are not permitted. 4. 3. 3Accounting for Expenditure-
Generally expenses are accounted for on cash basis. However, accrual basis of accounting is followed during book closure period like quarterly/six-monthly/annually/ project ending. 4. 3. 4Fiscal Year- Generally the fiscal year of HASAB runs from 1 January to 31 December. Sometimes different donor may fix up the project period depending their funding period. HASAB prepares consolidated annual reports for all the project/grants/contract. Monthly/quarterly reports are also prepared as required by donor/management. Different donors’ financial reports are prepared according to their reporting schedule capturing respective information from the consolidated reports. 4. 3. 5Retention of Documents-
All financial records, vouchers, report and documents shall be preserved by HASAB for at least 5 years or as per donor’s requirement. The respective Accounts Officer is responsible for proper preservation of financial records and vouchers. 4. 4Accounting treatment of transactions 4. 4. 1Asset Accounts- Fixed Assets: A fixed asset is an item with an acquisition cost of more than Tk. 5,000 and a useful life of more than one year. The total cost, depreciation and written down value of HASAB assets as on 31 December 2008 are shown in annexure 1. HASAB has two income generating projects which balance sheet as at FY 2205, FY 2006 and FY 2007 are shown bellow to understand the strength of the organization. Particulars |Note |GF |TC | | | | |Fixed Assets | |Current | | | |Assets: | | | | | |Financial Projection of HASAB | | | | | | | |Project Title |Name of Donor | Year | | | |2009 |2010 |2011 | |GFATM R 2 (902 Pack. |SC – USA | 21,194,834 | – | – | | | | | | | |GFATM R 6 (902 Pack. ) |SC – USA | 31,069,443 | – | – | | | | | | | |GFATM R 6 (912 Pack. ) |YPSA | 1,571,670 | – | – | | | | | | | |GFATM R 6 (910 Pack. |AAS | 1,057,489 | – | – | | | | | | | |PRESEP |Manusher Jonno | 19,038,975 | 17,805,082 | 4,038,526 | | | | | | | |Strength Capacity of the NGOs/CBOs |ADB | 978,238 | – | – | | | | | | | |CCS |TDH | 5,058,992 | 4,954,077 | 5,416,726 | | | | | | | |Alliance |Alliance | 1,893,526 | | | | | | | | | |HIV/AIDS Mainstreaming Project in Bangladesh |Oxfam Novib | 3,973,380 | 3,495,301 | 2,342,303 | | | | | | | |HATI (Client Pack. |Unicef | 4,979,700 | | | | | | | | | |HATI – MSM |Unicef | 633,150 | | | | | | | | | |JiC Oikko |GTZ | – | | | | | | | | | |TB/HIV |Open Society Institute | | | | | |USA | | | | | | | | | | |Comprehensive Nutrition Care to the Extremely |World Bank | 755,561 | 1,964,459 | – | |Vulnerable infant and young Children | | | | | | | | | | | |JiC Oikko |HSBC | 500,000 | – | – | | | | | | | |Total | |91,449,397 |26,254,460 |11,797,555 | Loans: Any loans received by HASAB must be within the limitation of the rules and regulations of the organization. In case of emergency/special cause, HASAB may take loan/overdraft from concerned banks where HASAB maintains their bank accounts. Both the receipts and payment of the loan should be substantiated with appropriate and sufficient documents. The accounts unit should maintain a loan register in this regard. The interest on such loan/overdraft will be charged to the respective project but if it is not allowed then the general fund of HASAB will bear the interest cost. Accrued Expenses:
At the date of generating the balance sheet/project ending, if there are any unpaid bills or commitments for the period that are not yet paid, these are to be reflected as accruals. Accrued expenses supported by bills and other relevant documents should be preserved in a separate file, which should be recorded in the general ledger passing necessary journal vouchers. Payment thereof will also be recorded in the cash book and general ledger and paid bills are to be enclosed with the voucher. Provision for expenses should be estimated in a reasonable manner on the past record and experience regarding the nature of expenditure. 4. 5 Internal Control- 4. 5. 1Internal controls-a management function-
The term controlling is used in management to describe the function of measuring and correcting activities to make sure that plans and objectives are met. Internal control is regarded as the management function of acting to ensure that objectives are achieved. It starts definition of aims and objectives and continues through an organization’s plans, structure and activities. It can be identified in policies, procedures, regulations, directions, manuals and other arrangements. It incorporates the procedures for directing, supervising, monitoring and reporting on all operations, functions and activities. 4. 5. 2Categories of controls-SOAPMAPS There are broadly 8 categories of internal controls. The acronym SOAPMAPS can be used to categorize the control as follows: S egregation of duties |M anagement review and Monitoring | | | | |O rganizational structures |A ccounting and Arithmetical | | | | |A uthorization and Approval |P ersonnel arrangements | | | | |P hysical safeguards |S upervision | 4. 5. 3Classifications of control procedures There are a number of different ways of classifying control procedures but in the context of organization accounting they can be described broadly as: ? Management controls-these encompass the high level supervision and review by management. They are generally detective in nature and will include, for example, management review of exception reports, performance against budgets. Organizational controls- these controls derive from the way in which the organization is structured and can both be detective and preventive. They will normally include well defined responsibilities and the segregation of functions such as transaction initiation, processing and recording. ? Authorization controls- these will normally operate at the individual transaction level and will be preventive in nature. Their purpose will be to stop a transaction being processed if it has not been approved at an appropriate level. Good authorization controls will be specific about who can approve what, the extent of checking required before approval and how the check should be evidenced. Operational controls-these are concerned with the completeness and accuracy of processing and may be either preventive or detective. They may include sequence checking to provide assurance on the completeness of numbered documents, comparison of one set of documents to another (e. g. purchase order to invoices) and the use of control total and reconciliations (e. g. bank reconciliations, month end account reconciliations). ? Access control-these are usually designed to be preventive and include control over access to assets and accounting records through simple physical measures such as locks and safes but also procedural controls such as controls over stock issue, petty cash issue. 4. 5. 4Level of control
The nature, extent and strength of controls will vary between organizations and within different parts of the same organization. The controls used will depend on the nature of operations, the importance of the system, the degree of risk, the geographical distribution, personnel and many other factors. 4. 5. 5Physical safeguards Appropriate physical safeguards are to be established to – ? Limit access to assets, systems and records. ? Protect personnel and assets. ? Establish clear control of the use of assets, and custodial responsibility for them. 4. 5. 6Cost of controls Management should consider the cost of controls in relation to the risk and exposure they cover.
Control costs money and the wrong balance of controls may make an organization inefficient and lethargic. The need for and costs of individual controls should be balanced against the wider needs for control over economy, efficiency and effectiveness. The choice of control methods should be based on a comparison of costs and expected benefits or reduction of risk. 4. 5. 7Limitations of internal controls Internal controls cannot by itself guarantee the achievement of objectives, efficient and effective administration and the completeness and accuracy of processing. Factors that may diminish the effectiveness of control systems will have to be borne in mind, such as: ? The potential for controls to be overridden by those responsible for them. Improper application of control due to human error as a result of mistaken judgement or interpretation, carelessness or distraction. ? The inability of standardized control systems to deal with non-routine transactions. ? Control break down due to changes in processing transactions and the development of non-standard procedures. Internal controls cannot be proof against fraud, especially by those holding positions of authority and trust. Internal controls that depend on separation of functions can be weakened by collusion. The competence and integrity of management and staff operating controls can be fostered by selection and training. 4. 5. Allocation of Overhead/ Admin. Cost: HASAB has been charging the overhead/Admin. Cost towards on-going projects depending on the available budget where the organization has calculated standard rate based on the available approved budget. But when any of the on-going project close or re-allocation its resources then that standard rate requires re-defining which occurs frequently. Each organization has to have a standard overhead rate and as per discussion with the management we have collected information from last four years audit consolidated report. The program and administrative cost ratio for last five years are shown below: [pic] 4. 5. 9External Audit
HASAB has the responsibility to its donor(s) for the maintenance of proper books of accounts and financial management of all funds received, which can be evidenced by the audit of the annual financial statements. In its constitution, the accounts of HASAB are required to be audited annually by a Chartered Accountants firm duly appointed by the Executive Committee. Sometimes donor may appoint the external auditor directly. In this case HASAB will provide necessary support to the auditor. A Terms of Reference (TOR) of audit shall be approved by the ED in consultation with Treasurer and Chairperson. Further consultation may be made with donor as per agreement.
The financial audit, which should be carried out in accordance with internationally accepted auditing standards, involves examination of the relevant book and records of HASAB, and preparation of a management letter. The auditor’s report and management letter should be signed by authorized representatives of HASAB. Audit firm will be selected on at least three bids. The audit report will contain report on the followings: ? Expressing opinion on financial statements prepared by HASAB. ? Assessing the internal control system of the organization. ? Checking compliance with applicable laws and regulations. The latest audit annual consolidated audited financial statement is shown bellow: [pic] [pic] [pic]
FINDING OF THE STUDY Accounting Jobs are not well segregated among the personnel who are working under different project rather controlled by central system. Accounting software for recording the accounting transactions is required to ensure quick delivery of accounting information. Daily posting and weakly print out is encouraged due to technical reason and it is mandatory to keep back up support through re-writable CD. There are some financial challenges for HASAB; several are included in the finance challenges document attached. Some key challenges are: • HASAB has a successfully developed a diversified funding base, with currently 12 donor projects.
However, but each has different requirements, reporting formats are very detailed, and each requires a separate bank account to be used; • The staffing structure in finance is set up on a project basis – each officer covers all the finance activities for 2 projects; for example each officer is preparing an individual payroll. • Working across a diversified range of projects has made it a challenge to see the complete financial picture of the organisation; • HASAB has become a direct implementer of some projects and activities, both at the Dhaka office and also managing drop-in centres and offices in other locations, increasing the number of transactions and requiring new internal controls to be set up. • Delayed disbursements from donors are common, requiring loans from nternal HASAB funds to continue project implementation. Since HASAB has been playing the grants management role, the On-ward Grants Management Manual is required which was not available. Anti-fraud policy was not available. 5. 1Other challenges faced by the HASAB finance department are noted bellow: 1. Accounting Software:Need automation system and training Want supplier tracking (when ; Tk 100, 00 in a year for a supplier, must pay VAT) Budget vs expenditure variance analysis Payroll system and also HR information No fixed assets register in automation system 2. Common allocation:can’t get consolidated financial information Basis for allocation
Share costs across projects – many cheques to pay 1supplier invoice 3. Common salary allocation. 4. Processing payments:preparing a/c payee cheques for small amounts Unbudgeted expenditure Lengthy process to obtain documents Cheque signing takes long time 5. Internal audit:Want 100% checking by internal audit system 6. Donor reporting:Different headings are used for different donors For 3 donor projects (2 for HATI, GTZ), need to send and copy all vouchers Different formats Completing on time –late reports from partners 7. Cash flow:late disbursements from donors 8. Training:Staff wants more training to build their capacity 9. Workload:Everyone is doing everything! 5. 2. Searching for new funds:
During my study I have searched several websites of prospective donor where HASAB can explore future funding sources in coming days. The criterias for those funding are analyzed and stated bellow: The Staying Alive Foundation (SAF) believes: • That young people can bring about positive social change around HIV prevention, if given the opportunity • In the power of the individual to mobilize others to take action • That the education of young people is one of the key planks helping prevent HIV infection. • SAF has been set up to support young people, globally, working in AIDS awareness, education and prevention campaigns among their peers. In particular, SAF looks to identify, support and mentor individual youth leaders responding to HIV and AIDS in their communities. . 3About the Awards: 1. Awards of up to $12,000 will be made to small youth-led organizations and young individuals (aged between 15-27 years) who are working on HIV prevention and AIDS education campaigns within their communities. 2. Awards are made to cover up to one year’s activity; all Awards are eligible for renewal. 3. Awards are selected by the Awards Review Committee (ARC). The ARC is made up of selected members of the SAF Board, who understand SAF’s vision and philosophy, and are therefore best able to select awards which match this. 4. Award winners will be required to submit a mid-term progress report and a final project report. 5.
Recipients of a Staying Alive Award will agree to be audited and reviewed at anytime during the award term. 6. Noncompliance with the terms of the Award, or false statements made in connection with the application or management of Award funds shall be cause for termination of the Award, and The Staying Alive Foundation may require reimbursement of any payments made. 7. Completed application forms must be received by 6th April 2009. 8. Successful applicants will be informed by 20th May 2009. 9. New Staying Alive Awards will be publicly announced on or around 1st June 2009. 5. 4Awards criteria: Awards will be made to individual young people and small youth-led initiatives that: 1.
Educate and/or give out responsible and accurate information about HIV and AIDS targeted at young people within their communities. 2. Eliminate or alleviate the stigma and discrimination associated with HIV and AIDS. 3. Encourage young people to take concrete action to protect themselves from HIV infection. 4. Demonstrate innovation and creativity. 5. Reflect and honor the culture in which the project operates. • All Staying Alive Award winners must demonstrate credibility through independent references, government accreditation (if you have any), and verifiable banking and accounting systems. • All Staying Alive award winners must agree to allow SAF and MTV to promote and publicise their projects.
We will use compelling award winner stories to inspire other young people. 5. 5What we will not fund: • Organizations that work with young people but which are not lead by young people. • Scholarships or college fees • Doctoral or other research • Projects that discriminate against people because of religion, sex, race, disability or sexual orientation • Projects that focus principally on abstinence as a means of controlling the spread of HIV. • Projects with budgets that primarily reflect a focus on capital expenditure e. g. erecting buildings, creating physical infrastructure (such as schools, orphanages, community centres etc. ) or the purchasing of major equipment (such as vehicles). Projects with a primary focus on delivering health care, shelter, food security or other non-education focused development initiatives. RECOMMENDATION 6. 1 Organization Policies and Procedures 6. 1. 1Sources of funds HASAB’s funding depends on different grant/contract/sub-agreement with donors, government and local agencies. Local income includes training fees, member’s subscription etc. HASAB continually shall endeavor raise additional funds through both national and international fund raising activities and own income. 6. 1. 2Receipts 6. 1. 2. 1Grant HASAB receives foreign donations from the donor agencies after signing an agreement between donor agencies and ED of HASAB. The Chairperson of EC may countersign the agreement where it is applicable.
Foreign donations may be provided in one or more installments as per terms of the agreement. Funds are remitted from the donor’s bank account to HASAB’s designated bank account by direct transfer or through an account payee cheque issued by donor in the name of HIV/AIDS and STD Alliance Bangladesh (HASAB). Funds received from foreign donors (foreign currency) are deposited into the “mother” bank account and immediately it will be transferred to the project bank account. A Credit Voucher is prepared indicating the source funds and account to which the funds have been deposited. The full amount of the fund should be recorded as a receipt in cash book. 6. 1. 2. Local Income Any money received from other sources earned by HASAB will be recorded in cash book stating the source and purpose. MFA/AMFA will approve the money receipt of own income and other receipts. A separate cash book may be maintained for own income. 6. 1. 2. 3Bank Interest Bank Interest on savings account earned in particular month as shown in the bank statement must be entered into cash book in the following month. A credit voucher is to be prepared to account for interest receipt prior to the posting it into the cash book. Bank interest shall be refunded to the donor if it is required by the contract. 6. 1. 3Payments 6. 1. 3. 1Cheque Payments
All payments exceeding Tk. 4,000 shall be made by cheque. The ED and MFA or Manager HR & OD or Line Manager (if approved by the EC) shall sign all cheques up to Tk. 40,000. ED and Chairperson or Treasurer shall sign cheques over Tk. 40,000. Payment of salaries to staff must be made through bank account transfer or cheque payment except for those staffs permitted to draw salaries in cash in paragraph 6. 3 of this manual. Cheque should be crossed, i. e. , Account payee only. Blank cheque must not be issued. If any vendor requires bearer cheque or cash payment that must be mentioned in the quotation or bill and before payment the MFA must approve such request.
However, cash or bearer cheque is to be issued as advance for workshop/ training organizing expenses or staff travel for which initial budgetary approval for workshop/training and approved plan for travel is required. The AAO/AAA should be the custodian of the cheque books. Cheque books must be kept in a safe place, under lock and key. If it is ever lost, then the bank must immediately be notified. Counterfoil of cheques should bear the payee’s name, amount and date. Cancelled cheque must be retained in the cheque book with respective counterfoil. 6. 1. 3. 2Bank Account Foreign grants shall be deposited into mother account maintained in the name of HIV/AIDS and STD Alliance Bangladesh (HASAB). Separate bank account may be opened if donor requires.
New bank account for HASAB shall be opened with prior authorization from EC of HASAB. All funds shall be operated in the Title Account Name of “HASAB”. 6. 1. 3. 3Signatories of Bank Accounts The bank accounts are to be operated through joint signature. All transaction up to Tk. 40,000 is to be paid by signature of the ED and Manager-Finance & Admin. or Manager-HRM & OD or Line Manager (if approved by the EC). This limit includes petty cash Cheque and all cheque payments up to Tk. 40,000. The ED and Chairperson or Treasurer shall sign all cheques above Tk. 40,000. Signatories to the bank shall put initial on counterfoil of the cheque book. The same procedure will apply for bank transfer advice. 6. 1. 3. 4Bank charges
Bank charge and commission shown on the bank statement in particular month must be entered into cash book during the following month so that the cash book balance agrees with the bank statement. Debit voucher should be prepared for passing the entry into cash book. 6. 1. 4Authorization Schedule To safeguard the interest of the organization, HASAB has to ensure adequate control over the financial transactions with an efficient and effective internal control system. Therefore, the internal control system will be organized in such a way that work of one person is automatically checked by another officer (immediate senior) and thus ensuring that the possibility of irregularities is minimized. Type of activity/ Transaction |Activity carried out by | |(a) General Committee |Annually | |(b) ED/EC Chairperson/Treasurer |Quarterly | |(c) Donor |Monthly, Quarterly/ As per agreement | |(d) NGO Affairs Bureau |Annually/ As per project period | |(e) Manager (Finance & Administration) |Within 13th of following month | 6. 16. 2Internal report Internal report consists of the followings: ? Project report – Receipts and Payments Account ? Budget Variance Analysis 6. 16. 3Financial reports to Donors HASAB shall submit financial report to its donor agency as and when required as per the letter of agreement in a prescribed/suitable format. The Director – Finance will review the financial report in the prescribed format provided by donor. The Executive Director shall approve the report. Any other statement as required by the donor agency shall be enclosed therewith. The attachments will be listed on a covering letter. 6. 16. 4NGO Affairs Bureau report
The NGO Affairs Bureau requires the following reports: a) Financial Statements – Balance Sheet, Income and Expenditure Account and Receipts and Payments Account b) Donor fund utilization (against approved budget) with reasons for variance and unspent balance 6. 17Budgeting Basically, financial budgeting in HASAB involves two steps; (a)Expressing in monetary terms the results of plans anticipated in future period. (b)Comparing actual results with the program estimates. Any significant differences point to the need for corrective action. In short, the budget becomes a standard for appraising operating results. Budget is prepared based on the activities planned by the programme personnel.
The Director- Finance will prepare/review the budget having input from respective Project Manager/TL. Activity is set on the basis of project proposal and quantified in monetary terms. The format and line items of budget may vary for different donor agencies. Expenditure should be made within the budget line items not exceeding the maximum limit as per agreement. Subsequent information shall be given to the NGO Bureau regarding budget revision (if required). 6. 18Audit 6. 18. 1Internal Audit The ED can call for or appoint an internal audit/Auditor or financial evaluation of the organization. For this purpose a Terms of Reference (TOR) for such assignment shall be approved by the ED.
Further consultation may be made with donor as per agreement. This will involve the examination and evaluation of HASAB’s activities, with the objective of assisting HASAB with the effective discharge of its responsibilities. Additionally, it should furnish with analysis appraisals, recommendations, counsel and information concerning activities that have been reviewed. Scope of Internal Audit, more specifically, shall include: A. Verifying whether the financial activities are being operated as per policy and procedures of HASAB. B. Verifying whether the accounting systems are being operated as per generally accepted accounting principles/IAS. C.
Verifying financial transactions with bills, counterfoil of cheques, other related paper and documents and determine whether the recorded transactions are related with the activities of the organization. D. Verifying whether the recorded transactions are being accounted for in the proper head of accounts. E. Assessing whether product or services have been acquired in the most economic manner in view of quality, quantity etc. F. Directly assessing whether the price paid for acquired goods were reasonably compared with quality. G. Verifying arithmetical accuracy of the accounts and balances. H. Verifying whether the accounts have been prepared properly and such accounts reflect the true and fair view of the state of affairs of the organization. I.
Verifying whether the assets of the organization are being maintained properly. J. Conducting physical verification of fixed assets of the organization and verifying books, records, documents, registers etc. relating to these. K. Verifying whether cash management of the organization are being conducted as per financial manual of the organization. L. Determine the variances between budget and actual of all items of expenditures and analyze the reasons of such variances. CONCLUSION The financial management system as recommended above will help HASAB to ensure professional management practices within organization and also increase credibility in the relevant field.
The automation of accounting entries will be benefited the organization in gathering all information as required for management decision making and it will also save man hour to produce financial statements. Efficiency in resources allocation is another most important area for achieving overall goal of the organization. I must acknowledge the cooperation and support extended by the accounts personnel, other management staffs during my internship. ———-THE END———- ———————– Executive Director Director – Finance Coordinator- Finance Sr. Accounts Officer Internal Audit Accounts Officer, Accounts Asst. DF Corporate Accounts Management Accounts Grant Management