Financial Management Training 10.20.2010


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Tips & Tools for NGO Financial Management presented by Denise Phelps, Treasurer for Maryland School for the Deaf and Civitan Club, on October 20, 2010.

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  • -Perform by 10 th of month – help to dispute any bank errors and avoid any additional charges from your error -Keep all bank statements, with the reconciliation to ensure you have records to research payments, deposits, etc.
  • -Reasonable – ordinary and necessary in conducting normal business for grant -Allocable – Costs are incurred to a line item in the budget/can only incur costs that match up to a line item in the donor budget -Allowable – grant has not restricted/excluded the expense
  • Financial Management Training 10.20.2010

    1. 1. Tips & Tools for NGO Financial Management Denise Phelps Treasurer MD School for the Deaf & Civitan Club
    2. 2. NGO Financial Management <ul><li>Do More with Less </li></ul><ul><li>Sources of Income Inconsistent </li></ul><ul><li>Mission-driven, not Financially-Driven Staff </li></ul><ul><li>Small Purchaser of Goods & Services </li></ul><ul><li>Comply with Donor Requirements </li></ul>
    3. 3. NGO Financial Tools <ul><li>Policies & Procedures Manual </li></ul><ul><ul><li>Record Financial Transactions </li></ul></ul><ul><ul><li>Monitor & Control Expenses </li></ul></ul><ul><ul><li>Satisfy Reporting Requirements </li></ul></ul><ul><ul><li>Ensure Timely & Accurate Reporting to Donors and Grant-makers </li></ul></ul>
    4. 4. NGO Financial Tools <ul><li>Record </li></ul><ul><ul><li>Revenues – all types </li></ul></ul><ul><ul><li>Expenses – all types </li></ul></ul><ul><ul><li>Assets – All things owned by NGO </li></ul></ul><ul><ul><li>Liabilities – Money owed to others </li></ul></ul><ul><li>Donors can see their money is being spent and decide whether to give more </li></ul>
    5. 5. Processes <ul><li>Programme Funding </li></ul><ul><li>Goods & Services Requisition </li></ul><ul><li>Cash Disbursements </li></ul><ul><li>Updating the Cash Book </li></ul>
    6. 6. Director/Finance Officer <ul><li>Responsibilities </li></ul><ul><ul><li>Make all general ledger entries </li></ul></ul><ul><ul><li>Verify information </li></ul></ul><ul><ul><li>Produce and distribute financial reports </li></ul></ul>
    7. 7. Monthly <ul><li>Record expenses by project </li></ul><ul><li>Record non-project expenses </li></ul><ul><li>Record grants/income received </li></ul><ul><li>Run trial balance </li></ul><ul><li>Record accrued expenses </li></ul>
    8. 8. Cash Management <ul><li>Cash is accounted for in General Ledger </li></ul><ul><li>Cash is deposited correctly </li></ul><ul><li>Separate cash handling from recording </li></ul><ul><li>Payments are verified and approved prior to disbursement </li></ul><ul><li>Vouchers and invoices are marked paid </li></ul><ul><li>Bank reconciliations are done timely </li></ul>
    9. 9. Bank Reconciliation <ul><li>Record bank charges into cash book </li></ul><ul><li>Record any other debits or credits that are not in the cash book </li></ul><ul><li>*Ensure they are all legitimate </li></ul><ul><li>Prepare Reconciliation </li></ul><ul><ul><li>Balance on bank statement </li></ul></ul><ul><ul><ul><ul><ul><li>- Unpresented cheques/charges </li></ul></ul></ul></ul></ul><ul><ul><li>+ Outstanding deposits/credits </li></ul></ul><ul><ul><li>= Cash Book Balance </li></ul></ul>
    10. 10. Donor requirements <ul><li>Expenses have to be: </li></ul><ul><ul><li>Reasonable </li></ul></ul><ul><ul><li>Allocable </li></ul></ul><ul><ul><li>Allowable </li></ul></ul>
    11. 11. Budgeting – Why? <ul><li>Most important part of Financial Management </li></ul><ul><ul><li>Where do you want to go and how do you want to get there? </li></ul></ul><ul><ul><li>Gives a tool for checkpoints along the way </li></ul></ul><ul><ul><li>Allows you to spot trouble areas and devise plans to address them </li></ul></ul><ul><ul><li>Provides a benchmark for donors to grade your performance against projections </li></ul></ul>
    12. 12. Budgeting – How? <ul><li>Gain input from everyone when creating budgets – expenses and income sources </li></ul><ul><li>Look at last year and decide what will stay the same and what will change </li></ul><ul><li>Break out monthly to prevent cash flows issues </li></ul><ul><ul><li>Income with date to be received </li></ul></ul><ul><ul><li>Expenses with date to be paid </li></ul></ul>
    13. 13. Budgeting Tips <ul><li>Once budget is created: </li></ul><ul><ul><li>Increase expenses and decrease income by 10% to see if there would be any trouble areas created </li></ul></ul><ul><ul><li>Look for opportunities to </li></ul></ul><ul><ul><ul><li>Buy in bulk for lower cost </li></ul></ul></ul><ul><ul><ul><li>Prepay for cost savings </li></ul></ul></ul><ul><ul><ul><li>Set-up payment plans to spread out cash payments </li></ul></ul></ul><ul><ul><li>Share with staff/board/donors to see if they spot trouble areas </li></ul></ul><ul><li>Gain necessary approval and record </li></ul>
    14. 14. Budget change approvals <ul><li>Change in scope of project </li></ul><ul><li>Change in key personnel to carry out project </li></ul><ul><li>Need for additional funds, due to unforeseeable events </li></ul><ul><li>Transfer of funds from one line item to another </li></ul><ul><li>Costs prohibited by the grant agreement are incurred </li></ul>
    15. 15. Fixed Assets <ul><li>Ensure they are recorded on balance sheet </li></ul><ul><li>Reflect any changes in them as soon as they happen </li></ul><ul><li>Asset examples </li></ul><ul><ul><li>Vehicles </li></ul></ul><ul><ul><li>Office Equipment </li></ul></ul><ul><ul><li>Office Furniture </li></ul></ul><ul><ul><li>Computer Equipment </li></ul></ul><ul><ul><li>Property/Real Estate </li></ul></ul>
    16. 16. Fixed Assets <ul><li>Tag & Inventory all fixed assets (Donor/Type/#) </li></ul><ul><li>Record in Asset Register/General Ledger </li></ul><ul><ul><li>Opening Balance (cost-purchase/market-donate) </li></ul></ul><ul><ul><li>+ Additions to asset category (purchase/donated) </li></ul></ul><ul><ul><li>Subtractions (depreciation/dispose/sell) </li></ul></ul><ul><ul><li>= Closing balance </li></ul></ul>
    17. 17. Fixed Assets Tips <ul><li>Verify and inventory all fixed assets at the end of the period </li></ul><ul><li>Make sure you are personally seeing the inventory at least once per year (vehicles, laptops, etc.) </li></ul><ul><li>Keep receipts of all fixed assets with any applicable warranty information </li></ul><ul><li>Decide whether to sell any assets that you are not using or will need to use in the future </li></ul>
    18. 18. Travel <ul><li>Travel is planned for in advance for budget and discount purposes </li></ul><ul><li>Travel expenses are approved before incurred </li></ul><ul><li>Travel expenses are accounted for with receipts before paid </li></ul><ul><li>Travel adheres to donor requirements </li></ul><ul><li>Travel should be at lowest cost - economy class, travel on non-holiday weekdays, etc. </li></ul>
    19. 19. Goods & Services <ul><li>Procurement principles </li></ul><ul><ul><li>Competitive Bidding </li></ul></ul><ul><ul><li>Transparency </li></ul></ul><ul><ul><li>Supremacy of the tender committee/procurement officer </li></ul></ul><ul><li>Excluded parties </li></ul><ul><ul><li>Employee, officer or agent of NGO </li></ul></ul><ul><ul><li>Specification development contractor </li></ul></ul><ul><ul><li>Excluded by donor agreement </li></ul></ul>
    20. 20. Goods & Services <ul><li>Request for Bid </li></ul><ul><ul><li>Responsibilities/specifications/type of service </li></ul></ul><ul><ul><li>Minimum qualifications </li></ul></ul><ul><ul><li>Terms of Service </li></ul></ul><ul><ul><li>Deadline for submission </li></ul></ul><ul><ul><li>Deadline for completion </li></ul></ul><ul><li>Compare at least 3 Suppliers </li></ul>
    21. 21. Goods & Services Tips <ul><li>Annual goods and services needs </li></ul><ul><li>Collective buying opportunities </li></ul><ul><li>Bulk or early payment terms discounts </li></ul><ul><li>Monthly commitment discount </li></ul><ul><li>Consolidate suppliers </li></ul><ul><li>Referral discounts </li></ul><ul><li>Lock-in prices/contracts </li></ul>
    22. 22. Reporting Requirements <ul><li>Determine each donor’s requirements </li></ul><ul><li>Keep each donor/grant accounting separate – through bank accounts </li></ul><ul><li>Quarterly </li></ul><ul><ul><li>Disbursements </li></ul></ul><ul><ul><li>Cash Flow/Disbursement </li></ul></ul><ul><ul><li>Director/Accounting Officer Statement </li></ul></ul>
    23. 23. Annual Reports <ul><li>Government requirements </li></ul><ul><li>Donor requirements </li></ul><ul><li>Independent auditor </li></ul><ul><li>Submitted 30 days after audit to Donors </li></ul><ul><li>Financial reports 90 days after end of fiscal year </li></ul><ul><li>Include impact reports, explanations, etc. with financial statements </li></ul>
    24. 24. Additional Information <ul><li>Payroll </li></ul><ul><li>Corporate Governance </li></ul><ul><li>Computer Information Systems </li></ul><ul><li>Appendix </li></ul><ul><ul><li>Bank reconciliation </li></ul></ul><ul><ul><li>Budget Book </li></ul></ul><ul><ul><li>Fixed Asset Register </li></ul></ul><ul><ul><li>Comparative Quotation Chart </li></ul></ul>
    25. 25. QUESTIONS??? <ul><li>Thank you for participating today! </li></ul><ul><li>Contact information – </li></ul><ul><li>Denise Phelps </li></ul><ul><li>[email_address] </li></ul>