The purpose of this section is to establish the minimum standards necessary to achieve consistency in the financial and Operational administration of every Organization, being International Non Governmental Organizations, Corporate Organizations, Non Profit organizations, Manufacturing, Fast Moving Consumable Goods Organizations etc.
Standard Finance Department Systems
Could be the Accrual method of Accounting System or Cash base Accounting System depending on the type of the organization or Institution which provides a clear and concise audit trail from the Finance Department records to the certified fiscal report.
The minimum standards for the financial management system should include the following:
- Accurate, current and complete disclosure of the financial results of all activities authorized.
- Records that identify adequately the source and application of Income.
- Effective control over and accountability for all Income, property, and other assets.
- Comparison of actual expenditures with budget amounts for each activity (budget line item).
- Finance Department records that are supported by source documentation.
Finance Department Records, Forms and Organization Files.
The following standard Finance Department records should be maintained to properly account for Income, expenditure and other assets under the organization:
A. General Journal
The purpose of the general journal is to record day-to-day transactions as they occur, with a brief description of each transaction.
B. General Ledger
The general ledger summarizes all entries made in the books of original entry (cash receipts book, cash disbursements, journal voucher, etc.) These books are the basis for the preparation of the financial statements.
C. Subsidiary records
The subsidiary records must be maintained as a minimum requirement that correspond to the chart of accounts.
D. Standard Forms
- Finance Department Forms
Finance Department forms serve as the method of documenting transactions, which are recorded in the Finance Department records. The following list identifies Finance Department forms that provide the basis for an efficient Finance Department system:
a. Cash receipt voucher
b. Cheque Disbursement voucher
c. Petty cash Payment Voucher
d. Per-diem Form
e. Purchase Order/ Cash Requisition Form
f. Certificate of Honor
- Personnel Forms.
a. Time Sheet.
b. Travel Approval Form
c. Travel Expense Claim
d. Interview and selection forms
e. Standard contract/employment forms
f. Performance evaluation forms
g. Annual/sick/other leave forms
i. Employee pay record slips
j. Overtime authorization forms.
- Procurement Forms.
a. Purchase request order form
b. Purchase order form
c. Receiving and inspection report form
d. Warehouse receipt/issuance form
e. Procurement of expendable supplies form
E. Organization Files
Files should be maintained in an orderly manner to facilitate easy & prompt retrieval. The following list identifies the basic files that should be maintained to ensure proper accountability of an organization:
1. Original agreement files and amendments, including related corresponds.
- Budgets and their modifications.
- Voucher and/or payment document files by sequential number and period covered.
- Personnel files.
- Purchase order and contract files.
- Financial policies and procedures files or manuals.
- Payroll and time attendance files.
- Audit files.
- Financial reports.
- Other files as the activity may require facilitating reference.
F. Supporting Documentation
Transactions must be supported by original documentation, as noted below:
1. Small Purchase Transactions
Original receipt or/and invoice
2. Major Procurement
(a) Purchase requisition
(b) Tender offers (Evidence of competitive bids)
(c) Purchase order
(e) Receiving and inspection report
- Overseas Travel
(a) Original ticket
(b) Hotel receipts for lodging
(c) Travel vouchers / Per-diem forms
(d) Receipts for other miscellaneous expenses.
- Surface Travel
(a) Original cancelled ticket from common carriers,
E.g., buses or trains
(b) Car rental contract and original receipt
(c) Travel voucher / Per-diem forms
(d) Fuel Receipts
- Leased Office Space
(a) Original signed lease agreement
(b) Original receipts for rent paid
- Salaries and Benefits
(a) Original contract or appointment letters with employee
(b) Time sheets
(c) Signed payroll sheets indicating receipt of payment i.e. pay slips.
(d) Evidence of withholding of taxes & Social Security, imposed by host country and remittance of these with drawings to the proper authorize Disbursement of Organization Income.
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