Training Materials

TECHNICAL COMMITTEE ON PREPARATION AND WRITING OF THE
TRAINING KITS
Mr. Thomas B. Nzumbi ADB, PGDFM

Tanzania - India Friendship Association
Box 15645, Dar es salaam
M r . Bakari M . Ngawasya,. Dip Ed B E d

Institute of Adult Education.
P . O . Box 20679 Dar es salaam.
M s Elizabeth Lema, B A , M A
Tanzania Gender Networking Programme
P . O . Box 6637 Dar es Salaam
M r . Saudi Kweba, B . A .
Tanzania Gender Network Programme
P . O . Box 6637 Dar es salaam
M r . Andrew S. T . Mchonvu; Dip Ed. B A M A , (Ed)

National Social Welfare Training Institute
Mrs Specioza Shekilango

Taaluma W o m e n Group
P . O . Box 75720 Dar es salaam
M r . Adolph Kapinga, B . S c . M P H
Capacity Building Incorporation,
M s Esther Kiondo, B.Sc

TACOSODE
P . O . B o x 63196 Dar es salaam
M r . Rajab K . Kondo, B A , M A , Dip.Lib (Coordinator)

TACOSODE
P.O. Box 63196 Dar es Salaam.
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TABLE OF CONTENTS
No SECTION Page
BACKGROUND
ABBREVIATION
INTRODUCTION TO THE KIT
MAIN SECTIONS OF THE KIT
UNIT 1: INTRODUCTION SESSION
Session 1
1. Definition of Financial Management and Accountability
2. Functions and Goals of Financial Management
3. Financial Systems f o r N G O s / C B O s
4. Source of Income for N G O s / C B O s
5. Income Generating Activities as Sources of Income
Session 2
1. Budget and the Budgeting Process
UNIT 2:
Session 1
1. Financial Transparency
2. Financial Sustainability
3. Importance of Financial Independence and Autonomy

Session 2:
1. Importance if the Process of Auditing and the Production of Audit

Reports
2. Importance of Financial Reports
UNIT 3
Session 1:
1. Funding N G O Programmes and Projects
Session 2:
1. Fundraising Process
- Basic Types of donor Grants
- Project Financial vs Institutional Financing

UNIT 4:
Session 1 :
1. Bookkeeping and Accounting System for N G O s / C B O s
Session 2 :
1. Financial Statement and the Balance Sheet
3.0 REFERENCE
ABBREVIATIONS
CBOs Community Based Organization
NGOs Non-Governmental Organization
TACOSODE Tanzania Council for social Development
UNESCO United Nations Educational, Scientific and Cultural Organization.
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PREFACE
The Tanzania Council for Social Development (TACOSODE) has been implementing a
U N E S C O project on Basic Education Capacity Building For Local N G O s in Less
Developing Countries (LDCs) as part of implementation of Declaration of the Jomtien World
Conference on Education For All (EFA) of 1990. The project is being implemented in nine
countries, six in Africa and three in south east Asia namely Tanzania, Mozambique, Zambia,
Benin, Mali and Burkina Faso (Africa), Bangladesh, Nepal and Cambodia (Asia)
During implementation of the project 10 draft National Training Kits were developed by
T A C O S O D E under a technical committee of N G O s with expertise in relevant topics. The
training kits were pre-tested atfivestages
1. During Training of Trainers (TOT) Phase 1, held in January, 2000 for 25 N G O s
2. During Training of Trainers ( T O T ) , Phase 2, held in March, 2000 for 25 N G O s
3. During practical field work of the 25 trainees in the T O T programme w h o were
assigned the task of conducting two local training activities in their areas for in-house
training within an organization and out-reach training for other interested
N G O s / C B O s . The aims were to test ability of the trainees to impart the knowledge to
others and also to pretest the training kits at the grassroots levels.
4. During the International Workshop in Developing Training Kits for Local N G O s
Capacity Building in Basic Education held in Dhaka, Bangladesh, M a y , 2000
5. During Practical Field W o r k Supervision and Evaluation visits to 25 participating
N G O s by T A C O S O D E and U N E S C O in June - July, 2000.
6. During the Stakeholders Impact Assessment of the project in November, 2000.
Out of the lessons and experiences learned from the five stages of pre-testing the ten training
kits, T A C O S O D E embarked on the task of re-writing the training kits, based on the standards
and criteria developed during the Bangladesh International Workshop on Developing
Training kits and guidelines developed by U N E S C O . The T A C O S O D E Technical
Committee on training kits analyzed the lessons and experiences from the pre-test activities
and recommended that Kits should be reduced from ten to nine topics, after two training kit
were merged into one. The nine Tanzania National Training Kits are as follows;
No.l: Basic Education and N G O Capacity Building with Reference

to Tanzania
No.2. Facilitation and Report Writing Techniques
No.3 Strategies Planning and Organization Development
No.4 Project Design, Monitoring and Evaluation
No.5 Resource Mobilization and Fundraising Techniques
No.6 Financial Management and Accountability
No.7 Lobbying and Advocacy
No.8 Partnership and Networking
No.9: Gender Analysis and Mainstreaming
The Tanzania National Training Kits have two volumes for each topic. The volumes are
divided into A and B . A is for the course contents of the topic. B is for the reference notes in
details, designed to help N G O and C B O s in remote areas were such literature are very rare or
none existence. Since kit No.l is the foundation of this project users and readers in general
are advised and encouraged to read itfirstbefore consulting a specific kit. Similarly users
and readers are advised and asked to start reading volume A of the specific kit topic and end
with volume B . T h e former volume provides contents and package of the course for the
specific topic and the later volume provides detailed information as a reference tool to
complement handouts from volume A . Individual instructions on h o w each kits has been
written and h o w to use it is provided under each volume.
W e would like to take this opportunity to extend our thanks and gratitude to U N E S C O Head
Office. Paris and B M Z / N G O Project on Basic Education for L D C s for entrusting
T A C O S O D E to implement the project in Tanzania. Special thanks should go to M s Suzanne
Schnuttgen, U N E S C O Project Coordinator in Paris for her tireless efforts to coordinate and
facilitate this project since it started three years ago. W e are also extending our thanks and
gratitude to U N E S C O Dar es salaam Office, specifically to M s Moji Okuribidi, Current
Officer-in-charge and M r s Cathleen Sekwao, Education Specialist for their cooperation
throughout in the course of project implementation in Tanzania and for their valuable advice
to T A C O S O D E on the project. W e would also like to thank all 25 Tanzanian local N G O s
and trainees w h o have participated effectively in the project. W e also express our profound
thanks and gratitude to members of the Technical Committee for the work to write the draft
kits and subsequent work to re-write them after the pre-tests. Lastly, m a n y thanks should go
to M s Scholastica M r o p e for typing all the Kits at various stages.
INTRODUCTION TO THE KIT
Financial management as a course is becoming more and more important with each passing
day. T h e importance of financial management is premised on the fact that there is no
institution in the world which operates without the involvement of finances. O n e can then
say that finances, and by direct implication, the management of the finances of any
organization, is the backbone of any organization.
Financial management as a course started around the early 1900s. With the passage of time,
financial management as a course took on an increasingly complex and sophisticated outlook
especially after the introduction of the computer in the 1960, and the highly developed
quantitative methods of mathematical analysis.
Basically financial management concerns with the optimal use of the financial and real, or
physical resources of an organization to increase the value of the organization. In the case of
non-governmental organizations ( N G O s ) with their limited resource base this means
optimizing the use of the resources available to the N G O s so that each shilling used or
expended bears the m a x i m u m results to the operations of the N G O s concerned.
To drive the point h o m e , let us take the case of a business firm. Suppose a small
manufacturing company starts receiving orders to produce more than its facilities can handle.
The fundamental question then here is should the firm expand? W h a t should be the best way
to finance expansion? Other kinds of organizations must m a k e similar kinds of decisions.
To help managers and other people in authority to m a k e basic and informed decisions - what
services to offer, where and h o w and what prices to charge - finance scholars and
professionals have developed a body of theory and a set of tools called financial
management.
A s stated above, financial management as an academic discipline and as a subject has

become more complex with each passing day. For our purpose howevers, w e will try to
concentrate on a few narrow areas which have a great impact on the operations of N G O s and
CBOs.
W H A T IS IN THE KIT
Therefore, this training manual will cover the following areas of competence :-
A section on the Course Outline and Facilitator's Guide and Notes which are broken d o w n
into units and sessions as follows:
Unit 1 of session 1 of this Manual will define what is financial management and financial
accountability, will look into the functions and goals of financial management, sources of
income for N G O s / C B O s and income generating activities.
Session 2 will look at the budget and the budgeting process as a whole.
Unit 2 will have only two sessions. Session 1 will look at financial transparency and
financial sustainability as well as the importance of financial independence and autonomy.
Session 2 will look at the importance of the process of auditing and the production of audit
reports as well as explaining the importance of financial reports.
Unit 3 has also two sessions. Session 1 will deal with funding of N G O programmes/projects
while session 2 will deal with the funding process.
Unit 4 - the last unit of the manual has also two sessions. Session 1 will deal with
bookkeeping and accounting systems for N G O s / C B O s whereby the issue of cash receipts,
payment vouchers, cash books, journal books, petty cash books, bank accounts, ledger books
and trial balance will be explained.
Session 2 will explain about financial statements, especially the balance sheet and their
importance to our organizations.
LIMITATIONS OF THE KIT
Lastly, this training manual will not be completely exhaustive in its presentation. The trainer
is expected to consult other reading materials if he/she is to create impact to his/her expected
audience.
UNIT: I N T R O D U C T I O N SESSION
Session 1:
1. Definition of Financial Management and Accountability
2. Functions and Goals of Financial Management
3. Financial Systems for N G O s / C B O s
4. Sources of Incomes and Resources for N G O s / C B O s
5. Income Generating Activities as sources of incomes
Session 2 :
1. Budget, budgeting processes and outline
UNIT 2:
Session 1:
1. Financial Transparency
2. Financial Sustainability
3. Importance of Financial Independence and Autonomy
Session 2:
1. Importance of the process of auditing and of the production of audit reports
2. Importance of financial reports
UNIT 3:
Session 1:
1. Funding N G O programmes/projects
=> Defining needs and resources
=> Defining main sources of income and funding
=> Planning for fundraising
Session 2:
1. Fundraising process
=> Basic types of donor grants
=> Project financing vs institutional financing
=> Alternative sources of Financing
UNIT 4:
Session 1:
Bookkeeping and Accounting systems for N G O s / C B O s
=> Cash receipts
=> Payment vouchers
=> Cash books
=> Journal books
=> Petty Cash books
=> Bank accounts
=> Ledger book
=> Trial balance
Session 2:
1. Financial Statements and the Balance sheet
UNIT 1: I N T R O D U C T O R Y SESSION
Session 1: Introduction to the concepts of financial management and accountability

as well as to other important issues related to the concepts.
Objective: B y the e n d o f the session, participants should b e able to k n o w the basic

concepts relating to financial m a n a g e m e n t and accountability.
Duration: 2 hours
Content: i. Definition of Financial M a n a g e m e n t and Accountability

ii. Functions and goals of financial m a n a g e m e n t
iii. Financial Systems for N G O s / C B O s
iv. Sources of Incomes and Resources for N G O s / C B O s
v. Income Generating Activities as sources of incomes
Activities: Trainer will ask trainees about what they know about financial management,
financial accountability, functions and goals of financial management,
financial systems sources of income and about income generating activities.
This is to gauge the level of understanding of the trainees.
Methodologies: Brief presentation, group discussion and discussion in plenary
Training Materials: Flip chart, stand, handouts, marker pens, masking tape.
S u m m a r y and conclusion: At the end of the sessions the facilitator will m a k e a summary
and conclusions of the session.
ILLUSTRATION: A picture showing about the importance of financial management to

organisations
Handout Bl
DEFINITION OF FINANCIAL MANAGEMENT A N D FINANCIAL

ACCOUNTABILITY
Financial strength is a necessary prequisite for survival and growth of any organisation, so
says Dr. Y . Gouthama Rao in his book on Financial Management in Public Undertakings.
This should be the goal for all organisations in the world. However, financial strength seems
to be an elusive goal to most organisations, notably to non - governmental organisations.
There are several reasons w h y financial strength seems to be an elusive goal to m a n y N G O s .

One of the major reasons w h y this is so, has to do with the funding of the N G O s . Most
N G O s do not have regular and continued sources of funding. Worse still, most N G O s do not
have income generating activities which can assure them of regular income for the
sustainability of their projects and programmes.
A good starting point in the study of financial management is to define what is financial
management and what is financial accountability. According to Dr. Benton E . G u p in his
book on the Principles of Financial Management, he defines financial management " as the
process of making optimal use offinancialor real, or physical resources to increase the
value of the firm or organisation". W h a t this means to N G O s and C B O s is to maximise
the usage of the resources available to N G O s and C B O s for m a x i m u m impact creation.
Whilefinancialmanagement has to do with the proper management of the resources of an

organisation, financial accountability has a lot to do with the accountability aspect of the
resources of the organisation. Accountability has m a n y facets and faces. O n the one side, w e
have regulations which guard organisations against misuse or misallocation of the resources
of organisations. Such set of regulations include Financial Regulations, Staff Regulations,
etc.
O n the other hand, w e have standing instructions which require organisations to perform
certain actions at certain times. A n example in this regard maybe the production of financial
statements at the end of each year and submitting those accounts for auditing once they are
closed. These actions also enforces accountability on the part of management of
organisations.
GOALS OFFINANCIAL M A N A G E M E N T
Like all other forms of management financial management must start with clearly defined
goals and objectives. While in the business sector emphasis in the past w a s on the growth of
assets and earnings and maximisation of profits, n o w emphasis is on the maximisation of the
firm's total value. Translated into N G O language, this is to say that all the resources
available to non - governmental organisations must be put to effective use to serve the needs
of our target groups.
Again, going to the business world maximisation of the total value of the firm means
maximisation of the shareholder's wealth. Maximisation of the total value of the firm takes
into consideration the risk factor involved in the business, timing of expected returns,
measurement of the business and short - run versus long - term objectives of the business.
Even through not m u c h literature has been developed for the N G O world, it is however
important if the yard sticks developed in the business world can be adopted and then adapted
to suit the N G O world.
FUNCTIONS OF FINANCIAL M A N A G E M E N T
The goals of financial management are addressed through the functions of financial
management which can be placed in three broad categories, Investment decisions, financing
decisions, and analysis and planning.
1. INVESTMENT DECISIONS
Investment decisions involves the allocation of resources a m o n g various types of assets. This
calls for the determination of the right mix of resources to be invested a m o n g the various
assets of the organisation. H o w m u c h , where, h o w and w h e n to invest in each of the assets of
the organisation are some of the crucial decisions to be m a d e here.
2. FINANCING DECISIONS
Financial decisions involve raising funds for the organisation. Thus, while investment
decisions are related to the asset side of the balance sheet financial decisions are related to the
liabilities and equity/capital side - Fig. 1
W h e n an organisation makes financing decisions they must consider a number of factors

including capital structure, risk, cost of funds, availability of funds, timing and distribution of
earnings.
FIGURE 1
ASSETS LIABILITIES* CAPITAL
Investment Financial Assets Liabilities Financial Decisions

Decisions
-Cash - Creditors
- Securities - Notes
- Debtors - Bonds
-Physical Assets -Capital
- Inventory - Stock
-Plant - Retained
- Equipment -Earnings
Accumulated
Fund
3. ANALYSIS AND PLANNING

T o m a k e effective investment and financial decisions financial management must analyse and
plan. Analysis is the process of monitoring the current performance of the organisation.
Analysing trends and key financial indicators often helps financiáis managers to detect
potential problems. In addition to serving as an early warning system, analysis provides a
useful means, of comparing the organisation's performance with that of others in the same
line of operations.
Planning includes the evaluation of major opportunities and threats facing the organisation.
One benefit of planning is that it shortens the reaction time to events.
Another advantage of planning is that it lets the organisation k n o w w h e n financial decisions

will have to be m a d e e.g. w h e n a C A S H F L O W S T A T E M E N T has been prepared.
FINANCIAL SYSTEMS FOR NGOS/CBOs

The development of proper financial systems for N G O s / C B O s is an extremely important
task for the continued health of the N G O s / C B O s . G o o d and proper financial systems allow
for the rational use of the resources of organisations. They also hinder and prohibit the
misuse and embezzlement of the resources of organisations.
G o o d and proper financial systems are of interest to a number interested stakeholders

including members of the organisations, donors, financial institutions, auditors, etc.
Because of the nature of N G O s / C B O s the financial/ accounting systems to be developed need

not be very exhaustive and comprehensive like that of corporations. A t least the systems in
place should be able to have in place revenue and expenditure accounts which are the major
accounting aspects in any N G O , for mostly the transactions of N G O s are in the nature of
incoming revenue and the inevitable expenses.
However, the financial systems in place should, at the end of the day, be able to produce the
following statements:-
I) Trial Balance
ii) B a n k Reconciliation Statement
iii) A Statement of Payables and Receivables
iv) Cash Flow Statement
v) A Statement of Sources and Application of Funds
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vi) Income and Expenditure Statement
vii) The Balance Sheet
SOURCES OF INCOME FOR NGOS/CBOS

There are a number of sources of income for m a n y an N G O / C B O . The most notable sources
of income are however the following :-
I) Admission fees
ii) Annual subscription fees
iii) Government grants and submissions.
iv) Interest Income
v) Fundraising activities
vi) Funding from donors
vii) Bank loans
viii) Bequests,etc
INCOME GENERATING ACTIVITIES AS SOURCES OF INCOME

A n unpublished survey made on the importance of financial sustainability for non -
governmental organisations in the country suggested that N G O s / C B O s need to seriously
consider having income generating activities if they are to survive and realise some of their
developmental goals. This suggestion came about because not m a n y N G O s are assured of
adequate/ sufficient funding from reliable sources.
N G O s in Tanzania, like many N G O s in m a n y countries South of the Sahara depend to a great

extent on donor funding for their existence. If donor funding is not forthcoming, m a n y of
these N G O s will either be permanently crippled or die completely.
This is an extremely frightening situation because N G O s / C B O s are created in order to
address important needs in society which cannot be adequately dealt with by the government
or existing institutions
With this fact in mind therefore, it is imperative for N G O s / C B O s to consider establishing

relevant activities, basing on conditions prevailing in their respective areas of operations, as
income generating activities to augment, supplement and complement their other revenue
generating activities for the purpose of the smooth running of their organisations
Once efficiently run, these income generating activities will constitute a very important
source of income for the N G O s / C B O s .
EVALUATION EXERCISE
1. Define what is financial management ?
2. W h y do you think it is important to learn about financial management ?
3. W h a t is accountability as it relates to financial m a n a g e m e n t ?
4. Explain the functions of financial management.
5. W h y do you think that financial systems are important to N G O s / C B O s ?
6. Suppose you are an Investment manager. What kind of investment activities will you
suggest for your organisation to undertake.
Session 2: Introduction and discussion of the budget and its process
Objective: B y the end of the day/session, participants should be able to realize the
importance of budgets to their organizations and also they should be
able to develop simple budget proposals addressing the needs of their
organizations.
Duration: 1 hour
Content: i. Budget and the Budgeting Process

ii. Functions of a Budget
iii The Budget Process
iv Procedures for preparation of estimates
v. Approval of the Budget
Activities: Trainees Íare asked to explain about what is a budget and its processes. Then
trainees are asked to go into groups and c o m e up with hypothetical detailed
budgets on their organizations which are then discussed in plenary.
Methodologies: Brief presentation, group discussion and discussion in plenary
Training Materials: Flip chart, Flip chart stand, handouts, marker pens, masking tape.
S u m m a r y and Conclusion: At the end of the session, the facilitator will m a k e a summary
and conclusion of the session.
I L L U S T R A T I O N 2: S h o w a picture of the Minister of finance entering Bunge with the

Budget Portfolio
Handout B 2
BUDGET AND THE BUDGETING PROCESSES

BUDGET
A budget is a financial plan that shows what incomes and expenditures you expect over a
certain period.
USES OF BUDGETS
W h y budget ? W e budget to effectively and efficiently use our limited resources. Budgets
are valuable tools to us personally. They also are invaluable in helping managers become
more effective. Budgets are used as a planning tool and as controlling tool since they set
targets and limits.
TO M A K E REQUESTS FOR FUNDING

The budget is one part of the information needed by funding organisations to justify the
granting of money. M o n e y is a finite source. Often our requests will be in competition with
other requests. So it is important to show clearly h o w the m o n e y requested will be used.
BUDGET AS A PLANNING TOOL

Since budgets are intended to show anticipated income, expenditure and the financial position
of the project at some future point in time, it forces one to think through in very specific
terms about what one intends to achieve.
BUDGET AS A CONTROLLING TOOL

B y the very fact that a b u d g e t contains line items with specific a m o u n t s , a b u d g e t also
b e c o m e s a useful control tool for limiting expenditures that w e r e not p l a n n e d for.
BASIC COMPONENTS OF A BUDGET

1. Admission fees
2. A n n u a l subscriptions
3. Project funding
4. Interest I n c o m e
5. Income from operations
6. Bank loans
EXPENDITURES/ COSTS
A. PERSONNEL COST
I) Salary
Ü) Employee benefits ( e.g medical etc. )
iii) Consultants and contract services
B. NON - PERSONNEL COSTS

I) Travelling expenses
ii) Rent
iii) Utilities (electricity, telephone, e-mail, etc )
iv) Materials (book, office supplies, etc )
v) Equipment (computer, generator, etc )
vi) Transport
vii) Contingency( 3 - 5 % of the total budget )
IMPORTANT CONSIDERATIONS W H E N MAKING A BUDGET

There are a number of important things to think about w h e n preparing a budget.
1. A budget is the best estimate of cost at the time of preparing the budget. Cost can
change after a budget has been prepared. However, one can m a k e an allowance for this
based on knowledge of factors like inflation and personal experience. It is not however to
m a k e an allowance of all changes. There will be changes in costs or plans in which one
cannot predict. For example, the government m a y suddenly impose a tax on something, or a
more distant village is flooded and as such there will be an increase in transport costs..
2. Budgets should be clear. A n organisation should show what it has estimated for, and the
assumptions underlying the budget. This is important for three reasons. First, it makes it
easy for someone else to check, in case one has forgotten to include something. Second, if
there are changes in cost or plan, it is easier to explain the changes and the reasons w h y
expenditure is not planned for. For example it is easier to justify extra transport costs if say
one has stated to work in village X , which is 10 k m away and have calculated the
corresponding costs, but then one is forced to work in village Y which is 20 k m away.
Third, it makes it easier to monitor costs. In six months time, one m a y not be able to
remember what was allowed for unless it is clearly written in the budget.
FUNCTIONS OF A BUDGET
Thefirstfunction of a budget is to specify in money terms the organisation's plan of action
for the future. Before a budget is developed, therefore an organisation needs to define its
goals, programme objectives and priorities. This organisational plan then provides a
framework for financial planning.
The second function of a budget is to establish guidelines for financial decision making
through the year. A budget is therefore an essential tool for managers w h o are responsible
for making financial decisions.
Financial decisions are m o r e likely to be sound w h e n :
i) A realistic budget has been prepared.
ii) T h e budget is broken d o w n into weekly, monthly and quarterly periods for
specific income and expense categories.
iii) Financial statements are produced on a timely basic during the year, which
provide comparisons to budget.
iv) Managers are prepared to m a k e decisions and take actions whenever actual
financial performance varies significantly from budget projection.
A budget does however need not to be complex. It does however, need to be accurate,
understable and presented in a form that m a k e it easy to compare projected and actual
performance. The typical budget period is one year.
THE BUDGETING PROCESS

Typical phases in the preparation of a budget will normally be :-
i) A n expression of the goals desired.
ii) A review of the environment to assess the likelihood of changes in N G O s operations
iii) A review of the previous year's operations to assess their effects on physical as well
financial resources which will be needed for the coming year.
iv A review of the N G O s policies to assess their relevance to the current and expected
environment.
v) Formulating programmes necessary to attain the goals desired, and indicating the
resources needed to implement the programmes
vi) Obtaining the prices of the resources to be employed in the operations.
vii) Expressing the goals, desired in financial terms in order to provide for the financial
implications of the plan as well as a basis for controlling the expenditures.
APPROVAL OF THE BUDGET

1. Once the budget has been prepared by the management team/secretariat, it should then be
submitted to the Board of Directors/ Executive Committee for their approval. The approval
of the Board / Executive to make the budget legitimate is a must and this approval should, as
far as possible, be obtained before the beginning of the next fiscal year.
2. Under no circumstances should the management team submit to the Board/ Executive a
Deficit Budget. The budget so presented should show a Surplus over Expenditure.
E V A L U A T I O N EXERCISE
1 What is a budget ?
2. Explain the uses of a budget ?
3. W h a t are the basic components of a budget ?
4. C a n you highlight the important steps w h e n preparing a budget ?
5. Explain the functions of a budget.
6. C a n you prepare a simple budget of your organisation basing on what you have
learned from this session ?
UNIT 2:
Session 1: Introducing the concepts of financial transparency

sustainability, and independence and autonomy.
Objective: B y the end of the session participants should be able to

understand the significant importance of these concepts to their
organizations
Duration: 1 hour
Contents:
Activities:
Methodologies: Presentation, probing questions and group discussion.
Teaching Materials: Case study, flip chart, marker pens, masking tape and handouts
Summary : Facilitator to summarize the session in relation to the objective

of the session
Handout B3
FINANCIAL TRANSPARENCY
According to the English Oxford dictionary, transparency is taken to m e a n open above the
board transaction or activity. Transparency is a term which has achieved a lot of prominence
during the last two decades and m u c h use of the term has been directed, to politics and h u m a n
rights abuses.
Almost everybody these days talks about the need of having open and transparent politics,
about the need of having clean and transparent governments, etc.
W h e n applied to the financial systems of m a n y an organisation, this places a transparency test

on the organisations to keep their financial transactions and accounts at the upper reaches of
the transparency alter. Not only accounts are to be measured by the transparency principle
but also all the other activities of the organisation. This places the onus of responsibility for
making sure that all the activities of an organisation are transparent squarely on the
management of organisations.
A s far as the accounts of organisations are concerned they should not, in any w a y be found
to be defective or wanting in any ways as to cast doubt their financial transparency.
A s N G O s / C B O s w e must, at all times, aim at having clean and transparent accounts.
FINANCIAL SUSTAINABILITY
Most Tanzanian N G O s / C B O s are weak because of lack of financial sustainability. O f the
more than 3,000 registered N G O s / C B O s , it is only a dozen or so, which can really boast that
they can stand on their o w n feet w h e n the worst comes to the worst.
W h y is the situation like this ? one can ask
There is no ready answer to this question. However, one can attempt a number of answers to
this question as, follows :
1. M a n y N G O s have been started with the notion that, at one time or another a
northern donor will be found to fund the operations of the N G O s .
2. M a n y N G O s have been started without a very clear focus on where funds will
be obtained to fund their activities/ operations.
3. M a n y N G O s lack committed and dedicated leaders with vision w h o can be a

source of inspiration to the N G O s .
4. M a n y donors dislike the idea of funding for income generating activities of
N G O s which could lead to financial independence and hence financial
sustainability
If N G O s are to attain financial sustainability, then this should be one of the primary goals of
N G O s and if possible the attainment of this goal should be enshrined in their constitutions.
Also it is important if this assignment on financial sustainability can be raised to a level
whereby everybody and everyone in the organisation will be judged on h o w well one has
enabled the organisation to attain the levels of sustainability required by the organisation.
More importantly still, it will be good if N G O s / C B O s will develop " comprehensive
investment policies " aimed at realising the policy on financial sustainability. Otherwise it is
high time for N G O s / C B O s to give this issue their m a x i m u m attention and consideration.
IMPORTANCE OF FINANCIAL INDEPENDENCE AND A U T O N O M Y

Financial independence and autonomy should be the long term goal of all N G O s / C B O s in the
country. This should be so for the simple reason that with sufficient financial independence
and autonomy, an N G O / C B O will :-
I) B e able to implement and/ or cause for implementation most of the programmes or

projects under the calendar of the said N G O s / C B O s , and
ii) It will be able to operate under a free atmostsphere devoid of conditionalities

normally attached by donors w h e n extending assistance to N G O s / C B O s .
Financial independence and autonomy however, should be tied up with another longer term
aim; that of achieving financial sustainability of the N G O s / C B O s concerned. For without
financial sustainability an organisation will find it difficult to attain financial independence
and autonomy.
EVALUATION EXERCISE
1. W h a t do you understand by the term financial transparency ?
2. Is it important for our N G O s / C B O s to aim to attain financial sustainability? Discuss
3. W h a t is financial independence and autonomy ? W h y do you think it is important for
N G O s / C B O s to strive to attain this goal.
Session 2: Importance of Auditing and the Production of Financial

Reports.
Objectives: B y the end of the session, participants should be able to

understand and appreciate the importance of the process of
auditing and the production of financial statements to their
organizations.
Duration: 1 hour
Content: i. Importance of the process of auditing and of the

production of audit reports
ii. Importance of financial reports
Activities: A case study is introduced whereby a flawed audit report is

presented to the trainees to discuss in group work and later,
discussions will m o v e into plenary.
Methodologies: Brief presentation, probing questions and group discussions
Teaching Materials: Case studies, flip chart, marker pens, masking tape and
handouts
Summary: Facilitator to make a summary of the course session.
Handouts B 4
IMPORTANCE AND PROCESS OF AUDITING AND AUDIT REPORTS

Auditing normally comes under two headings, Internal auditing and external auditing. Most
large corporations maintain staffs of internal auditors with the responsibility of seeing to it
that company policies and established procedures are being followed consistently in all the
departments of the corporation. The Internal auditor in contrast to the independent or
external auditor is not responsible for determining the overall fairness of the company in its
annualfinancialstatements
The work of an auditor, be it an internal and external auditor, is to test the efficiency of the
instituted internal control systems. A system of internal control comprises of all the measures
taken by the organisation for the purpose of :-
i) Protecting its resources against fraud and inefficiency
ii) Ensuring accuracy and reliability in accounting and operating data
iii) Securing, compliance with the organisation's policies and
iv) Evaluating the level of performance in all the departments of the organisations
A basic principle of internal control is that on one person should handle all phases of a
transaction from beginning to end. W h e n business transactions are so organised that two
more employees are involved in the transactions of the organization this gives proof of the
accuracy of the work of another.
Because of the scope of their work most N G O s / C B O s do not need internal auditing
departments but what they urgently need are strong internal control systems. However, at
the end of the fiscal year, it is important for N G O s / C B O s to call in external auditors w h o will
endeavour to judge the efficacy and the adequacy of the internal control systems in each area
of the organisation's operations.
After an audit exercise has been conducted, the external auditor will normally come up with
an audit report. The report will either be positive ( in this case a clean Audit Report will be
issued) or negative ( in which case a Qualified or N o opinion Report will be issued )
A condition normally attached by auditing is that all audit reports must then be submitted to
the Board of Directors or Board of Trustees or Executive Committee or the Annual General
Meeting (whichever authorising body is given mandate by the governing constitution to
approve the audit reports ) for their deliberation and approval. However, organisations must
seriously endeavour to learn from the negative reports submitted to redress problems
identified.
IMPORTANCE OF FINANCIAL REPORTS AND REPORTING

Financial statements are the instrument panels of an organisation. They constitute a report on
material performance, attesting to management success or failure and flashing warning
signals of impending difficulties.
The major financial reports/statements in any organisation are basically two:-
i) The Balance Sheet, and
ii) The Income and Expenditure Statement
Financial reports are important due to a number of factors, the most important being :-
i) It assists organisations to make important decisions basing on the reports e.g
on asset acquisition, disposal offixedassets, etc.
ii It assists organisations to forecast/see impending difficulties and to take early

corrective measures to solve the problems.
iii) The reports serves as a measure of performance, in the sense that comparison
can be m a d e between actual performance and planned performance.
iv) The reports can serve as planing tools in connection to future planning
of the organisation's activities and programmes.
v) The reports can also serve as controlling tools by acting on deviations vis - a -
viz planned performance,
vi) Reports also satisfy the requirements of other interested stakeholders w h o
might be interested in the performance of our organisations.
For reports to be useful, they must be complete and must be produced in time.
Uncompleted reports and reports produced late (behind schedule) cannot have
the desired effects. They will at best be wasting the time resources and
efforts of organisations.
EVALUATION EXERCISE
1) Explain the functions of an auditing exercise.
2) Is it proper for any one single individual in an organisation to handle all phases of
the organisation's tranactions. Discuss.
3) W h y should w e call in an external auditor at the end of the year to audit our accounts
?Discuss
4) W h y arefinancialreports important. Explain
U N I T 3:
Session 1: Funding N G O programmes and project
Objective: B y the end of the session, participants should be able to realize

the importance of funding to their programmes and projects.
Duration: 30 minutes
Course content: i. Defining needs and resources
ii. Defining main sources of income and funding
iii. Planning for fundraising
Activities: Trainees are asked to define needs of their organizations and resources
required to meet those needs. This is done in group work before presentation
in a plenary discussion
Methodologies: Brief presentation, guided discussion and group discussion.
Teaching materials: Flip chart, marker pens, handouts.
Summary: Facilitator to summarize the session's proceedings
Handouts B4
FUNDING NGO PROGRAMMES/ PROJECTS

Implementation of N G O s / C B O s programmes and projects requires the existence of adequate
and sufficient funding. However, most of the N G O s / C B O s in existence are constrained by
lack of this fundamental resource. A n d even though many workshops and seminars are
undertaken to impart fundraising skills to these N G O s / C B O s however, the lack of adequate
funds remains a paramount problem.
One w a y of dealing with the problem of funding for N G O programmes/ projects is to

determine the needs of the concerned N G O s / C B O s . This can be done through the
commissioning of a needs assessment study. At the end of the day, the study will show what
needs need to be addressed and h o w they should be addressed.
At the same time there is also a need of defining the resources required in meeting the needs
identified. Resources identification should go hand - hand with the needs assessment study
Another way of dealing with the problem of funding for N G O programmes/ projects is to
define the main sources of income and funding and h o w these will be obtained. Defining
these sources is no big deal the major problem here is on h o w to obtain the said sources of
income and funding in order to fund the myriad activities of the concerned N G O s / C B O s
This is where proper planning for fundraising comes about. A s you are aware this topic has
been exhaustively covered when dealing with the topic on Resource Mobilisation and
Fundraising skills. Suffice it to say that if N G O s / C B O s will apply some of the methods
proposed in the foregoing topic, they can raise sufficient fund's to finance some of their more
important activities.
Session 2: Introduction of the fundraising process
Objective: B y the end of the session, participants should thoroughly

understand the fundraising process.
Duration: 1 hour
Content: i. Basic types of donor grants

ii. Project financing versus institutional financing
iii. Alternative sources of financing
Activities:
Methodologies: Brief presentation, probing questions, guided group

discussions.
Teaching Materials: Flip chart, handouts, marker pens, masking tape
Summary: Facilitator to m a k e a summary of the session.
FUNDRAISING PROCESSES
A s said above fundraising as topic has been adequately covered w h e n dealing with the topic
on Resource Mobilisation and Fundraising Techniques. W e will therefore not venture to
repeat what has already been reported.
However, wisdom dictates that w e touch briefly on the basic types of donor grants, project
financing vs. institutional financing and also on the alternative sources of financing.
BASIC TYPES OF DONOR GRANTS

There are basically two types of donor grants: O p e n , and Tied grants. O p e n grants are all
these grants that are basically free, and devoid of conditionalities. These types of grants are
becoming rare and rare as years go by. These types of grants can be found only in mature
relationships between recipients and donors. It is very difficult to find the application of
these grants to emerging relationships between recipients and donors.
Tied grants are the order of the day. That is w h y the term "conditionalities " has c o m e up to
con note the conditionalities attached by the different donors w h e n extending their assistance
to N G O s / C B O s . Tied grants range from those having very strict terms and / or hard
conditions to soft conditions. About 9 0 % of grants fall here.
Project financing as opposed to institutional financing deals with the financing of a single,
identified project from beginning to the end without regard whether the institution benefits or
not in the process. In order to m a k e sure that institutions also benefits from project financing
m a n y institutions these days charge institutional fee or attaches some of their staff to the
project and in the process get paid project salaries.
EVALUATION EXERCISE
1. Explain the difficulties involved in the funding of N G O programmes and project
2. W h a t are the basic types of grants ? W h a t are their main differences?
3. W h a t is the difference between project financing and institutionalfinancing?
UNIT 4:
Session 1: Introducing bookkeeping and accounting systems for

NGOs/CBOs
Objective: B y the end of the session, participants should know the basic
bookkeeping and accounting systems required to be in place for
NGOs/CBOs
Duration: 2 hours
Content: Introduction to:

=> Cash receipts
=> Payment vouchers
=> Cash books
=> Journal books
=> Petty Cash/Book
=> Ledger book
=> Trial balance
Activities: Trainees are asked what they know about - cash receipts, payment vouchers,
cash books, journal books petty cash/book, ledger and the trial balance.
Thereafter, a practical exercise is introduced whereby entries are entered into
the said books, journals and voucher to get a practical orientation of the
whole thing.
Methodologies: Presentation, group discussion and discussion in plenary
Teaching Materials: Flip chart, marker pens, masking tape and handouts
Summary: Facilitator to make a summary of the session proceedings.
Handouts B5
INTRODUCING BOOKEEPING A N D ACCOUNTING SYSTEMS F O R NGOS/CBOS

Accounting has often been called the " language of business " People in the business world -
owners, managers, bankers, stakeholders etc - use accounting terms and concepts to describe
the events that make up the day - to - day existence of every business, large or small.
Although accounting has made its most dramatic progress in the field of business, the
accounting function however is vital to every unit in our society.
The underlying purpose of accounting is to provide financial information about any economic
or project activity. Thefinancialinformation provided by an accounting system is needed by
managerial decision makers to help them plan and control the activities of their organisations
TRACKING YOUR ACTIVITIES ON PAPER
The first requirement in introducing accounting systems in N G O s / C B O s is to track d o w n
organisation activities on paper, especially any event which involves receiving or spending
money. Journals and a general ledger should hold the written records. In order to run our
organisations well, one must k n o w h o w m u c h m o n e y has been received, h o w m u c h has been
spent and in which w a y it has been spent.
In fact, it's important to write d o w n these events on a regular basis, even every day. B y
writing everything d o w n , one will have a record in which, one can refer in the future.
Complete information removes guesswork from the organisation.
All the information written d o w n must be organised by date or the type of activity
undertaken. All activities should be recorded in two different documents: the general ledger
and ajournai.
GENERAL LEDGER
All the financial transactions of the organisation must be entered in a single book called a
general ledger. Fig. 2 shows h o w a simple general ledger looks like.
FIG. 2
DATE ACTIVITY NO CASH UTILITIES WAGES SUPPLIES
1/2/2001 Received grant 1 10,000
3/2/2001 Stationery purchase 5,000

10/2/2001 Advance salary 3,000
15/2/2001 Consultancy 50,000

services
17/2/2001 Water bill 5,000
20/2/2001 Electricity bill 7,000
The general ledger gives the " big picture " of the financial transactions of an organisation.
JOURNAL
Specific information about teach type of activity ( e.g. Consultancy services offered, supplies
purchased, etc ) will be recorded in books called journals. T h e journal, or book of original
entry is a chronological record, showing for each day the debits and credits from transactions.
At convenient intervals the debits and credits are transferred to the accounts in the ledger.
RECORDING BOTH PARTS OF EVERY FINANCIAL TRANSACTION.

Every financial transaction consists of two parts: one part that " gives " and one part that
"receives ". A s an illustration of this, let us take the payment of wages by cash. This
transaction will involve two separate accounts cash and wages. Say wages paid total shs.
50,000/= In this particular case, cash to the tune of shs. 50,000/= goes out of the organisation
and cash to the tune of shs. 50,000/= is received by employees.
The cash and wages accounts can graphically be depicted as follows :-
CASH ACCOUNT WAGES ACCOUNT
Debit Credit Debit Credit
Side Side Side Side
W h e n cash goes out, w e normally credit the cash account signifying a decrease in cash. In
the case of the W a g e s Account the same will be debited signifying an increase in a liability
account.
W h e n the two transactions are recorded in their respective accounts, the accounts will n o w
look as follows:-
CASH A/C W A G E S A/C

Shs. 50,000.00 Shs. 50,000.00
Credit Debit
Let us take another example whereby our organisation receives a donation from a donor to
the tune Shs, 1,000,000/=. Again this transaction will involve the aspect of receiving m o n e y
and another aspect whereby someone has parted with m o n e y .
Again two accounts will be involved, the Cash Account and the Donor Account. W h e n this
transaction will be recorded in the respective accounts, the financial picture of the transaction
will look like this.
CASH ACCOUNT DONOR ACCOUNT

Sh. 1,000,000.00-Debit 1,000,000.00-Credit
Credit Debit
MAJOR ACCOUNTS IN ORGANISATIONS

The major accounts in any organisation are five. The three major accounts are found in the
balance sheet while two are found in the income and expenditure statement.
The three major accounts found the balance sheet are :-

i) Assets
ii) Liabilities
iii) Capital/ Retained Earnings/Accumulated Fund.
The two major accounts found in the income and expenditure statement are :-
i) A whole range of revenue accounts
ii) A whole range of expense accounts.
BALANCE SHEET ACCOUNTS

The major balance sheet accounts are assets, liabilities and equity accounts. In between these
major groups of accounts, w e have a whole range of specific accounts as follows :-
ASSETS
W e have financial assets and non- financial ( fixed ) assets. Financial assets include cash
debtors, stocks, securities, etc. while non -financial ( fixed ) assets include buildings, lands
equipment, etc.
All assets adhere to two fundamental principles as follows :-

i) Increase in an asset accounts is recorded by a debit
ii) Decrease in an asset account is recorded by a credit.
2. L I A B I L I T I E S
Liabilities are debts of the organisation. They show h o w m u c h the organisation o w n s to
outsiders. Liabilities are broadly defined into two categories: Short - term liabilities and long
- term liabilities.
Liabilities also adhere two accounting principles :-

I) Increase in liability account is recorded by a credit,
ii) Decrease in a liability account is recorded by a debit.
3. EQUITY / CAPITAL
Equity or capital in a business sense is what the owner or owners have contributed to run
their business. The principles applying to liabilities also apply to Equity or Capital that :-
i) Increase in capital account is recorded by a credit
ii) Decrease in capital account is recorded by a debit.
INCOME AND EXPENDITURE ACCOUNTS

Income and Expenditure Accounts are also subject to the foregoing accounting principles.
1. INCOME ACCOUNTS
i) Increase in income Accounts are recorded by credit entries,
ii) Decrease in Income Accounts are recorded by debit entries.
2. EXPENDITURE ACCOUNTS
i) Increase in Expenditure Accounts are recorded by debit entries,
ii) Decrease in Expenditure Accounts are recorded by credit entries.
EQUAL DEBIT AND CREDIT ENTRIES

O n e of the fundamental accounting principles is that for every debit entry, there must be a
corresponding credit entry. The equality between the debit entries and credit entries shows
the two sides of the coin, that to every single transaction, there is the giving and the receiving
end.
In the case of the balance sheet items, whenever there is a decrease in the asset accounts,
normally there is either an increase in a corresponding asset account or there is an increase in
a liability or capital accounts connoting an increase in liability or additional capital put up by
the owners of the organisation or viceversa.
Similarly, liabilities and the capital accounts experience decreases w h e n either a liability is
extinguished or reduced and w h e n there is a capital shrinkage and vice versa.
THE ACCOUNTING EQUATION

One of the fundamental characteristics of every balance sheet is that the total figure for
assets always equals the total figure for liabilities and the capital. This agreement or
balance of total assets with total equities is one reason for calling this statement of
financial condition the B A L A N C E S H E E T . Simply explained is that
ASSETS = LIABILITIES + C A P I T A L
(please seefig.3 expressing this equation)
À
A B
ASSETS LIABILITIES ASSETS LIABILITIES
CAPITAL CAPITAL
+
ACCUMMULATED FUND
CASH RECEIPT
Cash receipt (either due to services rendered or grant ) in the form of currency and coins
shall be received by the designated officer. The officer will then count the amount
received and then issue a cash receipt for the exact amount received. Cash received then
shall recorded in such a way that it indicates the source of income.
All cash received shall be banked intact on the following banking day. A typical cash
receipt would look like the following :-
Tanzania council for Social Development ( T A C O S O D E )

Cash Receipt S .No
Date
Received
From
Being the payment of
Signature
PAYMENT VOUCHER
Under normal circumstances, every payment shall be supported by a payment voucher
which shall be completed in all respect, detailing the authority, appropriate coding of
expenditure, full description of the transaction or reason of payment, quotation of
numbers of bills invoices so as to ensure the correct identification of the payment is m a d e
even if supporting documents were lost. Original invoices, bills, statements, etc, relating
to the payment must be attached to the payment voucher.
A typical payment voucher would look like the following :-

Tanzania Council for Social Development ( T A C O S O D E )
PAYMENT VOUCHER
VOUCHER N O DATE
NO DESCRIPTION OF PAYMENT AMOUNT OF
PAYMENT
Prepared by
Approved by
Authorised by
Date
PETTY CASH / BOOKS

Under normal circumstances, all payments of an organisation are supposed to be paid by
cheques supported by payment vouchers. However, this is sometimes a tedious and
cumbersome procedure in a situation where large number of payments have to be m a d e
every day. In such a situation, a petty cash system is developed where minor payments
are made out of an imprest system which is replenished soon after the funds are
exhausted.
TRIAL BALANCE
Before using the account balances to prepare a balance sheet, it is desirable to prove that
the total of accounts with debit balances is in fact equal to the total of accounts with
credit balances.
The proof of equality of debit and credit balances is called a trial balance. A trial
balance is a two - column schedule listing the names and balances of all the accounts in
the order in which they appear in the ledger. The debit balances are listed in the left -
hand column and the credit balances in the right - hand column. The total of the two
columns should agree.
A mythical trial balance of Juma Ndombolo would be as follows :-
JUMA N D O M B O L O
TRIAL BALANCE
SEPTEMBER 30,1999
T. SHS. T. SHS
Cash 7,500.00
Debtors 1,500.00
Land 5,000.00
Office Equipment 1,800.00
Building 12,000.00
Creditors 7,800,000
Juma Ndombolo Capital 20,000.00
TOTAL = 27,800,000 27,800,00
The trial balance provides proof that the ledger balance is in balance. The agreement of
the debit and credit totals of the trial balance gives assurance that :-
1. Equal debits and credits have been recorded for all transactions
2. The debit and credit balance of each account has been correctly computed.
3. The addition of the account balances in the trial balance has been correctly
computed.
Session 2: Introducing the concept of Financial Statement and the

Balance Sheet
Objective: B y the end of the session, participants should be aware of

the importance of financial statements to their
organizations.
Duration: 1 hour
Content: Financial statement and the Balance sheet
ii. Budget versus Expenditure
Activities:
Methodologies: Presentation, Group Discussion and Discussion in plenary
Teaching Materials: Case studies, Flip chart, marker pens, masking tape and
lecture notes/handouts.
Summary: Facilitator to make a summary of the sessions proceedings.
Illustration: S h o w a picture of an auditor going over the financial statements of an

organization which has just submitted its accounts to the auditor.
Handout B6
FINANCIAL STATEMENTS
The preparation of financial statements is not thefirststep in the accounting step. It is
almost the last step. Thefinanciáisstatements are the means of conveying to the
management and to interested outsiders a concise picture of the financial condition of the
organisation at any particular time.
There are two major financial statements, the B A L A N C E S H E E T and the I N C O M E

A N D E X P E N D I T U R E S T A T E M E N T . Together, the two statements, perhaps a page
each in length, summarise all the information contained in the hundreds or thousands of
pages comprising the detailed accounting records of an organisation.
THE BALANCE SHEET

The purpose of a balance sheet is to show the financial condition of an organisation at a
particular date. Every organisation prepares a balance sheet at the end of the year, and
many organisations n o w prepare one at the end of the month. A balance sheet consists of
a listing of the assets and liabilities of the organisation plus the equity / capital provided
for by the organisation.
The following balance sheet portrays the financial condition of T A C O S O D E at

December, 31,2000.
TANZANIA COUNCIL FOR SOCIAL DEVELOPMENT ( TACOSODE )

DECEMBER, 31,2000 ( IN 000 )
ASSETS TSH LIABILITIES + E Q U I T Y C A P I T A L TSH
Cash 6,500,00 LIABILITIES
Debtors 3,000.00 Creditors 10,000,00
Land 7,000,00 Total Liabilities 10,000.00
Building 15,000.00 CAPITAL
Office Equipment. 1,000,00 Capital 25,000.00
Motor Vehicles.. 2,500.00
TOTAL - 35,000.00 TOTAL - 35,000.00
BUDGET VERSUS EXPENDITURE

A s explained earlier on, a budget is a financial plan which is supposed to guide our
organisation's expenditure pattern during an one fiscal year. However, a budget is not a
rigid d o g m a which cannot be changed in the course of implementation. A budget is a
guide to our organisations
Sometimes legitimate expenses, over and above the approved estimates, m a y occur
during the year. These, over expenditures so to speak, should be accommodated if they
are to assist our organisations to o forward.
If it happens that the variance between actual expenditure and the budget is great,
supplementary budget estimates must be prepared to take into consideration the increases
in expenditure.
EVALUATION EXERCISE
1. Explain what is the general ledger.
2. W h y is it important to record both parts of every financial transaction ?
3. Which are the major accounts in organisations
4. Explain about the major items in the balance sheet.
5. W h y is it that to every debit there must be a corresponding credit entry ?
REFERENCES
1. J. Fred Weston and Eugone F. Brigham - Managerial Finance.
2 Walter B . Meigs, A . N . Mosich and Charles E . Johnson - Accounting: The Basis
for Business decisions
3. Dr. K . G . Munshi - Financial Management Techniques.
4. Y . Gouthama Rao - Financial Management in Public Undertakings
5. Benton E . Group - Principles of Financial Management.
6. Bookeeping and Accouting - Geoffrey Whitehead.

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TECHNICAL COMMITTEE ON PREPARATION AND WRITING OF THE

Mr. Thomas B. Nzumbi ADB, PGDFM

M r . Bakari M . Ngawasya,. Dip Ed B E d

M r . Andrew S. T . Mchonvu; Dip Ed. B A M A , (Ed)

Mrs Specioza Shekilango

M s Esther Kiondo, B.Sc

M r . Rajab K . Kondo, B A , M A , Dip.Lib (Coordinator)

1. Definition of Financial Management and Accountability

2. Functions and Goals of Financial Management

4. Source of Income for N G O s / C B O s

5. Income Generating Activities as Sources of Income

1. Budget and the Budgeting Process

3. Importance of Financial Independence and Autonomy

1. Importance if the Process of Auditing and the Production of Audit

2. Importance of Financial Reports

1. Funding N G O Programmes and Projects

- Basic Types of donor Grants

- Project Financial vs Institutional Financing

1. Bookkeeping and Accounting System for N G O s / C B O s

1. Financial Statement and the Balance Sheet

NGOs Non-Governmental Organization

TACOSODE Tanzania Council for social Development

UNESCO United Nations Educational, Scientific and Cultural Organization.

No.l: Basic Education and N G O Capacity Building with Reference

No.2. Facilitation and Report Writing Techniques

No.3 Strategies Planning and Organization Development

No.4 Project Design, Monitoring and Evaluation

No.5 Resource Mobilization and Fundraising Techniques

No.6 Financial Management and Accountability

No.7 Lobbying and Advocacy

No.8 Partnership and Networking

A s stated above, financial management as an academic discipline and as a subject has

LIMITATIONS OF THE KIT

Session 1: Introduction to the concepts of financial management and accountability

Objective: B y the e n d o f the session, participants should b e able to k n o w the basic

Content: i. Definition of Financial M a n a g e m e n t and Accountability

Methodologies: Brief presentation, group discussion and discussion in plenary

ILLUSTRATION: A picture showing about the importance of financial management to

DEFINITION OF FINANCIAL MANAGEMENT A N D FINANCIAL

There are several reasons w h y financial strength seems to be an elusive goal to m a n y N G O s .

Whilefinancialmanagement has to do with the proper management of the resources of an

W h e n an organisation makes financing decisions they must consider a number of factors

ASSETS LIABILITIES* CAPITAL

Investment Financial Assets Liabilities Financial Decisions

3. ANALYSIS AND PLANNING

Another advantage of planning is that it lets the organisation k n o w w h e n financial decisions

FINANCIAL SYSTEMS FOR NGOS/CBOs

G o o d and proper financial systems are of interest to a number interested stakeholders

Because of the nature of N G O s / C B O s the financial/ accounting systems to be developed need

SOURCES OF INCOME FOR NGOS/CBOS

INCOME GENERATING ACTIVITIES AS SOURCES OF INCOME

N G O s in Tanzania, like many N G O s in m a n y countries South of the Sahara depend to a great

With this fact in mind therefore, it is imperative for N G O s / C B O s to consider establishing

Content: i. Budget and the Budgeting Process

Methodologies: Brief presentation, group discussion and discussion in plenary

I L L U S T R A T I O N 2: S h o w a picture of the Minister of finance entering Bunge with the

BUDGET AND THE BUDGETING PROCESSES

TO M A K E REQUESTS FOR FUNDING

BUDGET AS A PLANNING TOOL

BUDGET AS A CONTROLLING TOOL

BASIC COMPONENTS OF A BUDGET

B. NON - PERSONNEL COSTS

IMPORTANT CONSIDERATIONS W H E N MAKING A BUDGET