Financial Policy

Draft

Vikas Sahyog Pratishthan 13/98, Unnat Nagar no 3, near shabari hotel, M.G. Road, Goregaon (w), Mumbai 400062

Vikas Sahyog Pratishthan

An Alliance for Social Justice & Sustainable Development

Our Approach Vikas Sahyog Pratishthan [means Development Collaboration Foundation] is established in 1990 by voluntary development organizations, working in the rural areas of Maharashtra for the upliftment of poor and deprived sections of society. While working for the basic issues of deprived communities especially dalits, nomadic tribes, destitute women and other resource less poor in rural areas we feel it is important to ensure transparency and accountability of in transactions. Thus while doing all the transactions even in case of financial matter it is our approach to qualitatively expand and deepen our value base. Following are some of the procedures that would ensure our financial accountability, financial management, fulfilment & ensure the compliance towards the organisation. Financial policy manual cover accounting policies system and procedures of the organisation . SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The financial statements are prepared on accrual basis under the historical cost convention. Fixed Assets Fixed Assets are stated at cost. Cost comprises cost of acquisition, cost of improvements and any attributable cost of bringing the asset to the condition for its intended use. Investments Investments are stated at cost Revenue Recognition 1. Contractual Grants received from Funding Organization has been considered as income to the extent of its utilization. 2. Interest if any, on these grants has been credited to Grant in Advance Account.

1. ACCOUNTING NGO Bank Account: Project Funds will be transferred by VSP to the FCRA bank account of the NGO partner. 2.1 ACCOUNTABILITY: Money receipts: All partners are requested to send a receipt of funds received by funders from within a week time.

Vikas Sahyog Pratishthan

An Alliance for Social Justice & Sustainable Development

Bank Reconciliation: To be prepared on a monthly basis & submitted with the quarterly reports.

2. REPORTING MECHANISM 4.1 Annual Audited Accounts: It will be necessary for the Partners to submit annual audited accounts for each of the financial years covered by the grant. These must be signed by the Finance officer of your organization and be certified by an independent firm of professional auditors as being a true reflection of the organizations finances at the relevant time. The following documents are required to be submitted by the partner organizations on annual basis: Yearly project audited financial statements Audited Financial Statements of the Organisation Copy of the FC-3 Copy of Income Tax return file AUDIT All accounting records maintained by the INGO partners will be subject to audit and certification by an independent firm of Chartered Accountants. All audited financial statements shall be signed by the Finance Officer of the organization and be certified by an independent firm of professional auditors as being a true reflection of the organisations finances at the relevant time. These accounts must show The VSP grant as a separate item of income. Three copies bearing original signatures must be submitted to the Organisation. Annual Audited Accounts for the organization must be submitted within 4 months from the end of the financial year i.e. before July 31 every year. Overall objective of the audit is to: Ensure that INGO has complied with all the terms and conditions of the Accountable Grant Agreement Ensure that INGO complies with all project accounting procedures and controls Review and comment on the budgets and reports submitted by INGO partner. ACCOUNTING 3.1 Disbursement of Funds to INGOs VSP will make funds available quarterly in arrears upon receipt of utilization report for the actual expenditure incurred during the quarter. 3.2 Advances
Vikas Sahyog Pratishthan
An Alliance for Social Justice & Sustainable Development

All Partner Organization would receive an advance for the first quarter only, after that funds will be disbursed to INGOs on quarterly basis on submission of utilization report. 3.3 Annual Audit Once a year, within 4 months from the close of the Financial Year, all INGO Partners would be required to submit Project Audit Statements to the respected authority 3.5 NGO Bank Account Some of the NGOs working under the Foreign Contribution so they are Responsible into their FCRA registered bank account. 3.6 ACCOUNTABILITY Registered under the Societies Registration Act, Indian Trust Act and Companies Act (Sec 25) All reports submitted by INGO, shall be certified by any Authorized Person on the letter head as follows: I certify that all the amounts detailed above have been actually and necessarily expended under the grant, in accordance with the terms and conditions outlined in the accountable grant arrangement and that the accompanying estimate of expenditure for the period to {INSERT DATE} is a realistic forecast based on existing information. 3.7 Annual Budgets and Revision Based on the sanctioned budget, INGOs will provide annual project budgets with quarterly break up and submit to Management Team by February 28 every year. Depending on the project progress and ground realities, INGOs will have the flexibility to revise their annual project budget within the overall value of the project by submitting a revised budget to the Board for approval & submitted to charity commissioner. 3.8 Balance Reconciliation INGO partners can follow their internal documented policies with regard reconciliation of balances with partner organizations. Procedure of Advance requisition Project coordinator has to submit Program preparation note (Activity plan) to Program Director with Advance requisition form. In this advance requisition form Program Coordinator has to fill up the Budget provision about the activity and require budget. Also how much amount he/ she want in cash and cheque on which date & date of account submission. This advance requisition form will b reach before 7 8 days in Mumbai office Program director has to cross check the amount of budget require and provision then he approve and pass to Account department.
Vikas Sahyog Pratishthan
An Alliance for Social Justice & Sustainable Development

Account department account assistant has check the total amount and the status of advance then he pass to Account Executive for verification and approval from account department. After his approval he passes it to CEO to get approval for release the require amount. Chief Executive Officer check approval of Program Director & Account Assistant also the attach notes than he approve the requisition. Once the instruction received from CEO to Account department Account assistant has release the money or deposit it to related project coordinator account. The cycle of Advance requisition Note
CEO Advance requisition

Account Executive

Program Director

Account Assistant

After project activity completion voucher has to come on date which date mention in advance requisition note in following arrangement. (Annexure 1 Advance requisition form ) Main cash voucher Name of the person who submits the account, date, project name with code, amount in word and number, receiver signature must require, pre-sanction by regional project coordinator in narration Activity date, activity name, mention expenses travel, food etc Exam: Being amount paid towards travelling, food, stationary & communication charges for district level workshop on in sex selection issue held in Chiplune on 12th & 13th August 2010. (Annexure 2 Main Cash Voucher) Summary sheet Summary sheet help to calculate all head wise expenses. (Annexure 3 Summary sheet) Supporting Cash voucher (Annexure 4 Supporting cash Voucher) Supporting Cash voucher is use for following purpose
Vikas Sahyog Pratishthan
An Alliance for Social Justice & Sustainable Development

1) Food: In food bill proper date require, if the duplicate (Kaccha) bill, name of the hotel, hotel / SHG s stamp & also paid stamp require, number of person with backside signature in bill ,if it is more than 5 person that time main 2 person sign must include, if food amount is more than Rs.50/proper bill is required, 2) Stationary: proper bill attach for stationary & Xerox, mention purpose, number of Xerox, pen, diaries, price of each Xerox, pen etc... 3) Communication charges: fax, net surfing, mobile recharge, camera, LCD appropriate bill require. Travel sheet Name of the person who travel, travel purpose need to feel, clearly mention date Arrival place & departure place , receiver signature or thumb if he travel by private vehicle has to mention kilometre & number. if the person travel by private bus and the ticket amount is more than Rs.100/- so it is compulsory to attach the ticket (Annexure 5 Travel Voucher) If the people hire car or use his/ her personal car so he has to provide bill and car number respectively. Travel vouchers need to be check by Project coordinator or field coordinator he or she has to verify the amount It is good if one bunch of all travel, food and other vouchers, but the Supporting material is too much such as 25 travel vouchers so prepared separate travel, food & other vouchers Account department Process on Voucher 1) Vouchers submit to Account Assistant . 2) Account Assistant will check supporting with total as per requisition if he found any queries he write all queries and give to sanction authority for clear and sanctioning voucher. 3) After sanctioning vouchers forward for enter in tally to Account Assistant Enter vouchers match with their advance status 4) Meanwhile when advance transfer into respective project coordinator or field coordinator or partner organization Account Assistant manually feed in advance register, when he collect vouchers he clear their advance against the vouchers. What precaution need to take when account submit 1. Advance requisition has to submit before 7 -8 days of activity to Program Director. 2. Voucher submit on date given in advance requisition with proper supporting 3. After voucher submission Project Coordinator has to demand advance status at least monthly basis. 4. Each staff has to maintain their personal record of advance against expenses project wise. 5. Community contribution has treated separately than advance, when person submit vouchers that time he has to give community contribution amount.
Vikas Sahyog Pratishthan
An Alliance for Social Justice & Sustainable Development

Petty cash advance Daily based closing of petty cash with Finance Manager and Accountant. If anyone need urgent advance for admin expenses its not given more than Rs.1000/Preplanning work no instant advance from petty cash such as if person know that he is going to field tomorrow and his requisition come on one day before evening. General Procedures Procedures to verify the Eligibility of Expenditure claimed by INGOs / Partner Organisations / Liaison offices in the Financial Report The Auditor verifies that the Financial Report complies with the conditions of the Agreement The Auditor examines whether the INGOs / Partner Organisations / Liaison offices have complied with the rules for accounting and record keeping as per the Agreement: To assess whether an efficient and effective expenditure verification of the Financial Report is feasible; and To report important exceptions and weaknesses with regard to accounting, record keeping and documentation requirements so that the INGOs / Partner Organizations / Liaison offices can undertake follow-up measures for correction and improvement for the remaining implementation period of the Action. The Auditor reconciles the information in the Financial Report to the INGOs /Partner Organisations / Liaison offices accounting system and records (e.g. trial balance, general ledger accounts, sub ledgers etc.). Computer system backup process Finance Manager is responsible for backing up the data of account system at the end of each day Sanctioning Authorities:
Authority Executive Committee Members Name of the person Primarily President, Secretary, Treasurer Budget Sanctioning As per the organizational budget decided by resolution The expenditure proposed by CEO for specialize initiative As per the provision in the projects For the other organizational activities up to 1 lakh Up to 25,000/Up to Rs. 1000/Expenditure Sanctioning As per the organizational budget decided by resolution The expenditure incurred by CEO under project/ organizational programs. As per the provision in the projects especially for the Administration and personnel Up to Rs. 80.000/Up to Rs. 15000/Up to Rs. 500/-

Chief Executive Officer Programme Director Administration

Mohan Surve

Anant Kadam Nayanawati More

Vikas Sahyog Pratishthan

An Alliance for Social Justice & Sustainable Development

The above mention policy is accepted by governance and follows up accordingly. Salaries & advances to staff Account department has opened the salary account of each staff. On the basis of salary clearance note receive from respective coordinator account department clear the salary before 5th. Each staff has to submit their Monthly work report to their respective coordinator. Coordinator is prepared salary clearance note Pay slip will be issued to each staff every month which is showing his/her net salary.

Legal Compliances: Legal compliances Change report, annual Budget, audit report has submitted time to time to the charity commission. Under the Society registration act & Bombay public trust act. Income tax, staff provident fund is dually submitted on time to time.

Vikas Sahyog Pratishthan

An Alliance for Social Justice & Sustainable Development