FINANCIAL MANAGEMENT POLICY
The entity of an organization is separate from that of the individuals who are authorized to operate finance and accounts. The top management shall be responsible for ensuring that, all the transactions and activities of the organization are carried out within the framework of its aims and objectives, as well as based on the decisions and policies adopted by the Executive or General body.
As a registered non-profit organization, we must adopt rigorous financial controls and procedures throughout the organization. This will enable us to fulfill the expectations of the stakeholders and ensure financial viability for the future of the organization. This policy has been designed to be flexible enough to allow the organization to grow.
The finance and accounting system of our organization should integrate both, activities as well as expenditures to be able to effectively analyze, understand, comply and present inter-relations between the various activities undertaken and expenditures incurred for which it is meant.
FAME Foundation for Girls and Women Empowerment (FAME) believes that timely, free- flowing information in accessible language, form, and format is essential for ensuring accountability to its stakeholders, learning, trust, and excellent performance.
FAME’s financial management:
It involves the following four building blocks:
The foundation of all accounting is keeping records that describe the organization’s income and expenditure. This includes the funding and letters for money we receive, the receipts, and debits for our expenses.
These records prove that every transaction has taken place. They are the cornerstones of being accountable. We must ensure that all these records are carefully filed and kept safe.
We must also ensure that the details of each transaction are written in a ‘payment voucher’ – which is a description of how much we spent, on what and when.
FAME has proper controls in place so that money cannot be misused. However, some controls that are often used include:
- Keepingcash in a safe place (ideally in a bank account).
- Allexpenditure is properly authorized; by the Board of
- Followingthe planned
- Financialmonitoring (how much money has been spent on what every month).
- Employedqualified finance
- Conductingboth internal and external annual financial
For good financial management, FAME prepares accurate budgets to know how much money is required to carry out our work. A budget is only useful if it is worked out by carefully forecasting how much is expected to be spent on each activity/project.
The fourth building block used by FAME is writing and reviewing financial reports. A financial report summarizes our income and expenditure over a certain period.
Financial reports are created by adding together similar transactions and summarizing the information held in the cash accounts/vouchers. This is normally done using a system of budget heads, to allocate transactions to different categories. These categories might often be defined by donors/project budget heads.
Donors usually make grants to organizations that they have confidence in. All our dealings with donors should aim to build up their confidence in our organization, for instance by:
Describing how to use funds – through clear plans and budgets. Demonstrating proper controls in place, including good management. Providing honest and accurate reports of our work.
Reporting to donors:
Sending reports late is guaranteed to reduce a donor’s confidence in the organization. FAME always identifies the donors’ reporting requirements and sets up a reporting timetable as per the donor’s format and timing of reports.
Board of Trustees
The Board of Trustees is responsible for:
- Safeguardingthe assets of the organization
- Keepingfinancial records in accordance with the governing document and relevant
- PreparingAnnual Accounts in accordance with the governing document and relevant
The Board of Trustees’ responsibilities are achieved through designating responsibilities to the Executive Director.
To enable the Board of Trustees to carry out these responsibilities, the Finance Policy must be followed at all times by all Board of Trustee members, staff, and volunteers.
This policy in exceptional circumstances may be overridden with the approval of the ED; any such override will be immediately reported by the ED to the Board. A Board decision may also override the policy in exceptional circumstances.
A copy of this policy will be given to all Board of Trustee members on their election/appointment to the Board, and to all relevant staff and volunteers.
- FAMEFoundations’ Financial Year runs from 1st January to the 31st
- Nameof Bank First Bank Nigeria Limited
- Nameof Auditor Oseni Ismaila and
- Allbank accounts must be in the name of the organization.
- Noaccount may ever be opened in the name of an individual or
- Neworganizational accounts may only be opened by a decision of the Board of Trustees, which must be minuted.
- ProjectAccounts may be opened by the ED and in turn, reported to the Board of
- Changesto the bank mandate may only be made by a decision of the Board of Trustees, which must be
- Twopeople must be involved in counting and accounting cash
- Allcheques must be signed by two
- Thesignatories are responsible for examining the cheque for accuracy and
- AllInternet Bank Transfers must be authorized by the
- TheFinance and Officer is responsible for ensuring accuracy and completeness before transmission.
- Thesignatories are responsible for examining the payment documentation (purchase invoice ) before signing the cheque or authorizing an Internet Transfer.
- Blankcheques must never be
Signatories to the accounts: Role/Job Title: Executive Director Role/Job Title: Chair of Trustees
Role/Job Title: Secretary of Trustees
- An annual budget, setting out the organization’s financial plan for the year, will be prepared sothat the Board of Trustees can approve it before the start of each financial year.
- Thedraft budget will be prepared by the following personnel:
- Financeand Officer
- Inputfrom Project Leads
- Amonthly Management Accounts report and a Cash Flow Report will be prepared for every Board of Trustees
- Thereport will consist of:
- Incomeand Expenditure Accounts
- Notesto the accounts and commentary
- Reportswill be disseminated 10 days in advance of each board meeting to enable Board members to scrutinize in readiness for discussion at the next Board meeting.
- Allreports will be prepared by the Finance and Officer and ED.
Accounting and other Financial Records
The organization has procedures in place to ensure that all legal and statutory responsibilities are upheld.
The organization maintains an accounting system that records:
- Chequesand cash received and
- Chequepayments, Internet Banking Transfers, and other amounts paid from the bank
Every transaction will be entered into the appropriate system and will include:
- Thedate of the
- Thename of the person or organization money was received from or paid to and the full amount
- Abrief description of why the money was received or paid
Authorization and Payment
- APurchasing Policy is in place to set out guidelines for staff that are engaged in purchasing activity, to ensure compliance with any statutory requirements whilst allowing the organization to meet its objectives. To help ensure that all purchasing is undertaken using the same principles and the most effective use of funds. It also aims to show that quality of service and the ethos of the organization still have their place alongside ‘best price’ practice in the purchasing of all goods and services.
- Purchase orders MUST accompany all purchases including those made on the credit card.All purchase orders MUST be approved before an order is placed by the ED (or Finance Officer in their absence). In exceptional circumstances where it is unlikely that either the ED or Finance Officer will be available the next working day and not making the purchase will have a negative impact upon service delivery then the Programme Manager’s approval can be sought).
- Allpurchase orders must be recorded and allocated a Purchase Order reference.
- ThePurchase Order reference must be given to the Supplier and quoted on their
- Purchasesof items may be approved as per below:
- Upto 10 thousand naira or its equivalent – Finance Officer
- Upto 500 Hundred thousand or its equivalent – ED
- Over500 Hundred thousand or its equivalent – Board of Trustees
- NoTrustees or staff may solely authorize payment to themselves, their partner, or
- Staffor Trustees may be provided a credit or debit card if a clear need can be demonstrated, after approval by the Board
- Provision ofa card can be withdrawn by the Board or by the CEO at any time.
- Ifa card user ceases in their role with the charity, their cards will be retrieved, cancelled and destroyed with immediate effect
- Allstatements will be sent directly to Compass Disability Services registered offices
- Allexpenses incurred using a card must go through the usual authorisation processes
- Therewill be a six monthly review of card use to ensure proper practice.
Regular Bank Payments
There will be a quarterly review to ensure no redundant regular payments (standing orders or direct debits) are being made. If any redundant payments have been made, then a refund will be requested from the payee.
Reimbursement of Expenses
- Acommon set of financial controls is applied to all expense payments, without exception, to all those involved with FAME Foundation whether staff, trustees or other
- Allexpenses will be authorized and reimbursed in line with FAME Foundation Expenses
- Allemployees (including full time and part time employees) are paid through bank
- Allstaff changes and changes to terms and conditions of employment need to be approved by the ED and will be processed by the HR Officer.
- Payrolland all calculations will be made by the Finance and Officer and authorized by the ED.
- FAMEmight issue loans or salary advances under critical
Collections, Donations and Gift Aid
FAME is aware of and will ensure that all fundraising activities are carried out in line with its legal responsibilities and best practice guidance.
A Collections, Donations and Gift Aid procedure is in place to outline what must happen to ensure that money raised is managed securely and transparently.
All fund raising and grant applications undertaken on behalf of FAME will be done in the name of the organization with prior approval of the ED, Board of Trustees or in urgent situations the approval of the Chair, who will provide full details at the next Board Meeting.
FAME has identified a series of good practice principles which can be used as a standard in developing proper financial management systems. These principles will guide behavior and help in the development of policies and procedures. Using these principles as a checklist to identify relative strengths and weaknesses in the systems.
FAME would look upon each of these Seven Principles of Financial Management as goals to work towards;
- Custodianship:This refers to the safekeeping of the organization’s FAME’s custodians hold the assets and funds in trust and must ensure that they are used following the constitution and any contractual agreements.
- Accountability: Those who have invested not just money but also time, effort, and trust in theorganization, are interested to see that the resources of the organization are used effectively and for the purpose for which they were
- Transparency: Systems must be established whereby all financial information is recordedaccurately and presented clearly, and can be easily disclosed to those who have a right to request
- Consistency: The financial systems of FAME should be consistent over the years so thatcomparisons can be made, trends analyzed and transparency facilitated. This does not mean that the systems may not be refined.
- Integrity: The integrity – or honesty and reliability – of FAME and the individuals within it,has to be beyond question for proper financial management. There must be no doubts about how funds are being utilized, hence, the records must be a true reflection of reality, and proper procedures are set up and followed by all staff.
- Non-Deficit Financing: FAME should not set out to achieve its objectives until it is confidentthat it will have sufficient funding to cover all of its activities.
- Standard Documentation: The system of maintaining financial records and documentationshould observe internationally accepted accounting standards and
The confidentiality of employees’ financial circumstances will be respected at all times.
Board members, volunteers, and employees will at all times act in the best interest of the organization and if they experience a conflict of interest they must follow the Conflict of Interest Policy.
This policy will be reviewed every three years and amended as necessary, or earlier in accordance with any forthcoming legislation or changes to the operations or premises of the organization. All employees should pass suggestions or recommendations for the revision of any aspect of the policy through normal channels to the ED.