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Aada financial rules and_regulations
 

Aada financial rules and_regulations

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    Aada financial rules and_regulations Aada financial rules and_regulations Document Transcript

    • AGENCY FOR ASSISTANCE AND DEVELOPMENT OF AFGHANISTAN (AADA) FINANCIAL RULES AND REGULATIONS (Policies and Procedures) Revised: June 2011 Approved by: President/CEO Date: August 2011
    • 2 CONTENTS Introduction ..................................................................................................................................................................3 1. Article 1: Applicability.........................................................................................................................................3 2. Article 2: Accountability .....................................................................................................................................3 3. Article3: Internal control.....................................................................................................................................4 4. Article 4: External Audit.....................................................................................................................................4 5. Article5: General framework .............................................................................................................................4 6. Article 6: Procurement of goods, services and authorization levels ...........................................................5 7. Article 7: Verification for payments ..................................................................................................................7 8. Article 8: Cash management ............................................................................................................................7 9. Article 9 Advance Payments.............................................................................................................................8 10. Article 10: Accounting ...................................................................................................................................8
    • 3 Introduction Excellent financial governance is a necessity for AADA and is the responsibility of the entire team. AADA’s policies are meant to provide a necessary structure, a basis for internal control mechanisms, and to maximize staff and Project Coordinator efficiency. Furthermore, they are meant to streamline the organizations’ operations. The financial and administrative policies and procedures ensure that accurate and reliable financial data is processed and generated by AADA on a timely basis in order to meet our funders’ strict reporting deadlines. In addition, they provide accountability to government, corporate and individual donors. Donors require 100% verification of expenses against receipts. If there are lapses in the system, it can cause concern about the financial integrity of the organization. This, in turn, can lead to greater issues (for example, disallowance of legitimate expenses) that could potentially harm AADA’s overall image with donors. The finance department of Agency for Assistance and Development of Afghanistan has attempted from the commencement of its establishment to contribute in successful implementation of programs as a strong supporting unit. Therefore, this department has developed Finance Regulations and policy with procurement procedures for further assistance to our program in line with internationally accepting accounting/financial principles. 1. Article 1: Applicability 1.1 These Regulations shall govern the financial management of the Agency for Assistance & Development of Afghanistan (AADA) and shall, unless otherwise provided by the General Director or as otherwise specified in these Regulations, apply to all resources, funds and programs managed and implemented by AADA. 1.2 Amendments and exceptions to these Regulations may be made on the recommendation of General Director andendorsement by President/CEO after consultation with Board of Director whenever needed. 1.3 These Regulations and its amendments shall become effective from date officially singed and stamped by AADA President/CEO. 1.4 In regard to any matter not specifically covered by these Regulations, the appropriate provisions of the AADA Financial Regulations shall apply. 2. Article 2: Accountability 2.1.Finance Department is fully responsible and accountable to the General Director for all phases and financial related aspects. 2.2.Proposed by management team, General Director may amend the Financial Regulations and Rules and shall circulate the amendments to these Rules to the central and provincial offices for information at least 10 days before it become effective. 2.3.AADA will open a Bank Account to which all receivable in cash shall be credited and against which all expenditures will be paid.Finance Manager under the direct supervision of General Director shall be responsible for the administrative maintenance of mentioned Rules and Regulations.
    • 4 2.4.All personnel of AADA are responsible for the regularity of their actions taken by them in the course of their official duties to the Program Managers and General Director. Any staff member who takes any action in breach to these Financial Rules and Regulations or to the instructions, which may be issued in connection therewith, may be held personally responsible and financially liable for the consequences. 3. Article3: Internal control 3.1. Finance Manager directly supervised by General Director shall maintain an Internal Financial Control mechanism, which shall provide an effective current examination and review of financial, management, and operational activities, in order to ensure:  The regularity of the receipt, custody and disposal of all financial resources administered by AADA.  The conformity of commitments and expenditures with the allocations, appropriations or other financial provisions decided upon by General Director, with allocations decided upon with agreements of concerned parties or other entities.  The effective and efficient management of AADA and the effective, efficient and economic use of all resources managed by AADA. 3.2. General Directorin consultation with President/CEO shall be responsible to assign a committee to have free access to all finance books whenever it is required. The assigned committee will have the authority to audit the performance if it is necessary. The reviews of the assigned committee will be conducted in accordance with generally accepted auditing standards, and shall provide comments and recommendations to the Program Managers and General Director on financial and management activities, in respect of:  The regularity of the receipt, custody, expenditure, accounting and reporting of all financial resources administered by AADA, and the effectiveness of existing internal control and accounting systems.  The conformity of expenditures with the purposes for which funds were appropriated or otherwise provided by the Board of Directors and the financial authorizations issued there under, or with the purposes and rules relating to other funds managed by AADA or with agreements of the funding agencies and other entities.  The compliance of all financial activities and transactions with established regulations, rules, policies, procedures and administrative instructions.  The effective and efficient management of AADA and the effective, efficient and economic use of AADA resources, funds managed by AADA. 4. Article 4: External Audit 4.1 The External Financial Audit will be conducted annually with consultation of AADA Board of Director by the Board of Auditors, and the board of auditors will provide AADA reports together with the audited financial statements. 5. Article5: General framework
    • 5 5.1 Program Managers and General Director are responsible and accountable for planning and use of AADA resources and issuing financial authorizations effectively and efficiently in furtherance of the policies, aims and activities of AADA. 6. Article 6: Procurement of goods, services and authorization levels 6.1 The Procurement/Logistic Officer under Operation Unit is responsible and accountable for carrying out the procurement functions of AADA effectively and efficiently in furtherance of its mandate and activities. 6.2 The procurement functions include all actions necessary for the acquisition, by purchase or lease, of property, including products and real property, and of services, including works; 6.3 The following general principles shall be given due consideration when exercising the procurement functions of AADA:  Best value for money;  Fairness, integrity and transparency;  Timely provision of goods  Effective competition to purchase the best quality with low price; 6.1 Authorizes for Approval: For the purposes of smooth and quick purchase, the following personnel in the following conditions are authorized to approve the purchases up to the limit mentioned below:  All expenses more than AFS 500,000 or USD 10,000 which are supposed to be posted through single transaction or a voucher must be approved by General Director and President/CEO or Director of the Board of Trustees.  All expenses up to AFS 500,000 or USD 10,000 which are supposed to be posted through single transaction or a voucher must be approved by General Director.  All expenses carried out for AADA main office and posted through single transaction or a voucher and come under, or are equivalent to AFS 250,000 or USD 5000 could be approved by Senior Program Manager.  All requests or procurements carried out by AADA provincial offices for any project activities in the field which are posted through a single transaction or a voucher, and are above AFS 50,000 or USD 1000 must be verified / or approved by Senior Program Manager and / or General Director.  All requests or procurements carried out by AADA provincial office themselves in the field for any project activities that are posted through single transaction or voucher, and are less than AFS 50,000 or USD 1000 should be verified by relevant department of sub-office and approved by Project Manager.  Lease, rentals, supply or any other type of contracts or agreement – except staff employment contracts of health facilities– at provincial level, which exceed AFS 50,000 or USD 1000, must be approved by authorized signatories at AADA main office.
    • 6  Payment against any type of approved contract at provincial and main office levels is exempted from limits of approval and authorization.  If there is any special requirement or terms of donors regarding the above mentioned levels of approval authority, it must be considered for each specific donor and project.  All partnership agreements, contracts, MoUs must be signed by Director General or his/her designee at main office. 6.2 Purchase Procedure: Employees, who need goods or services, have to fill and completed a Goods/Services Requisition Form and then the form should be submitted to Logistics/Procurements Department. The Logistics/Procurements unit will forward the requisition to Stock keeper; the stock keeper will check for the availability of the requested item in the store. In order to save time and reduce paperwork, office materials and supplies will be provided twice a month; however emergency needs can be issued on urgent basis. If the requested items are not available, Storekeeper will send back the Requisition Form to Logistic/Procurements Department that will initiate the purchase. The Logistic/Procurements Department may purchase regular supplies for office from an approved regular supplier. Regular suppliers should be canvassed at least bi-annually to ensure the best quality is being obtained with the lowest price. If after researching available options, a higher-cost vendor is chosen, then a written justification must be submitted to Purchase Committee guarantee the choice of vendor and the reasons behind it. If the amount of a single item exceeds USD 100 or AFS 5,000 or equivalent then the purchase will require obtaining three written quotations. And a Bid Summary or comparative statement must be prepared. This document summarizes the obtained quotations to enable purchase committee to make the final decision for further process. Purchase committee will check the price, quality, time of delivery and other terms and conditions accordingly. Logistic/Procurement Department will place a purchase order for each procurement which are more than or equal to USD 500 or AFS 25000 to approve a supplier for the desired quality and quantity. Approved PO will authorize the purchase committee to procure the requested item. When the procured goods are received, Storekeeper or authorized technical person from the department placed request must check the quality and quantity of goods. Stock-keeper will register the items in the Stock register book. All supplies, equipment or other property received by AADA shall immediately be inspected to ensure that the items comply with the specifications of the purchase contract and that their condition is satisfactory. As an item is received, an appropriate receiving report shall be issued and the item shall be entered. 6.3 Members of Purchase Committee: A Regular Purchase Committee of three persons will be appointed by General Director at main office level and by Project Manager at provincial level. The Committee members will be changed every six months or as required for each individual purchase. Purchase Committee will be responsible to review the documents, crosscheck the obtained quotations and recommend the best supplier who can provide the best quality with reasonable price.
    • 7 The Purchase Committee will conduct a committee meeting as per requirement of the purchases. An emergency meeting of purchase committee can be convened any time; however, such emergency meetings will require approval from General Director or Project Manager and minutes of the named meeting must be forwarded to them on the same day. In addition Purchase Committee will maintain an appropriate record facilitating its work, including list of suppliers, quotes, budgets, etc. Purchase Committee may ask a supplier for presentation and/or survey the market independently. 7. Article 7: Verification for payments 7.1 Finance Department verifies all payments made on behalf of AADA; because all payments should to be made on the basis of supporting vouchers and other documents which ensure that the services or goods have been received, and that payment have not previously been made. 7.2 The authorized signatories which are already mentioned in section of authorization levels shall have authority to approve all payments under all accounts as per budget. 7.3 The General Director and Program Managers designate certain staff in other business units as verifying officers, where appropriate. 7.4 Those staff designated shall have the responsibility to verify any payments and other financial transactions may be carried out on behalf of AADA. The responsibility assigned to a verifying officer cannot be delegated. 7.5 A verifying officer shall approve a voucher for payment when 7.5.1 It has been determined that payment had not previously been made. 7.5.2 It is supported by documents which indicate that the goods or services for which payment 7.5.3 claimed have been received or rendered in accordance with the terms of the contract and the related obligation. 8. Article 8: Cash management 8.1 The Finance Department under the authority delegated by General Director or Program Managers is responsible and accountable for the effective and efficient management of cash resources in AADA custody. 8.2 Cash management includes all actions necessary for receipt, deposit, advance, investment and disbursement of cash, including the designation of banks and opening and closing of bank accounts. 8.3 Funds shall be provided to all AADA offices from the AADA Bank Accounts. 8.4 The specific advance approval of the Board of Directors shall be required for any advance of AADA resources not authorized under the provision of these Regulations. 8.5 General Director shall designate the initial signatories to operate AADA bank accounts as well as the General Director is authorized to amend the signatory panels. 8.6 All disbursements shall be made by cheque or bank transfer, except to the extent that cash disbursements are authorized by the Finance Department or by a duly authorized staff member in main office. Cheques or payments instruction letters to banks shall be signed by two authorized signatories. 8.7 AADA Main Office may obtain funds through remittances from Donors. Such remittances shall be limited, unless otherwise justified, to the monthly cash-advance level established for each project. 8.8 Petty cash accounts may be made available to officials designated by the General Director or his/her designate. These cash accounts shall be maintained on an interest basis. The amount and purposes of each account shall be defined by the Finance Department; the amount shall be held to the minimum compatible with working requirements.
    • 8 8.9 All bank accounts shall be reconciled on a regular basis, at least quarterly, with the statements submitted by the banks. 8.10 It is strongly encouraged that all payments for goods and services especially – more than 100,000 AFS or equivalent to AFS 100,000 be paid through cheque or bank transfer. 8.11 AADA Main office is authorized to keep maximum AFS 500,000 and USD 5,000 in Cash in Hand (Safe of the office). 8.12 Administration and Procurement sections of AADA Main Office are authorized to make request in advance for monthly Petty Cash which must not exceed AFS 100,000 and USD 1,000 per month. Next advance request for petty cash by Administration and Procurement sections of the organization will only be valid when they clear and adjust the advance petty cash for the previous month. For details of expenses which should be made from petty cash and calculation of advance request for monthly petty cash, please refer to Organization Operation Manual. 8.13 AADA provincial offices are authorized to keep AFS 500,000 and USD 3,000 in Cash In Hand (safe of the office). 8.14 Administration and Procurement sections of AADA Provincial Offices are authorized to make request in advance for monthly Petty Cash which must not exceed AFS 100,000 and USD 1,000 per month. Next advance request for petty cash by Administration and Procurement sections of the Provincial offices will only be valid when they cleared and adjust the advance petty cash for previous month. 9. Article 9 Advance Payments 9.1 Except where normal commercial practice or the interests of AADA so require, no contract shall be made on behalf of AADA which requires a payment or payments on account in advance of the delivery of products or the performance of contractual services. Whenever an advance payment is agreed to in accordance with AADA administrative instructions issued by the comptroller, the reasons therefore shall be recorded. 9.2 Progress payments may be permitted pursuant to normal commercial practice or in the interests of AADA, in accordance with administrative instructions issued by the controller. 9.3 In addition to advances specified above, no any staff member is allowed for receiving more than his/her three months salary as official or personal loan or advance. In case of advance request for payment or procurement of any pre authorized amount, the above mentioned limit will not govern. 9.4 In order to be eligible for receiving any personal loan or advance salary, any staff member should come with a written request and justification to AADA management, which has to be verified by his/her immediate supervisor and guaranteed by one of staff member of the organization. In case of any special conditions, General Director of AADA will authorize receiving more than three months salary in advances. 10.Article 10: Accounting 10.1 The Finance Department shall submit financial statements in respect of the AADA Regular Resources Account, the Other Resources Account and in respect of all Funds and Programs administered by AADA, in accordance with the Accounting Standards showing:  Income and expenditures.  Assets and liabilities, reserves and resource balances.  Statement of cash flows.
    • 9 The Finance Manager shall also give such other information as may be appropriate to indicate the current financial position and shall maintain such accounting records and other records as are necessary to report to the Program Managersand/or General Director on the financial status of Funds and Program administered by AADA. 10.2 The financial statements shall be presented in Afghani. Accounting records may, however, be kept in such currency or currencies as maybe required or deem necessary. 10.3 Separate accounting records shall be maintained for all reserves within the AADA Accounts. 10.4 The financial period for the purpose of incurring and accounting for expenditures in respect of AADA program activities, shall consist of a single calendar year, which is solar calendar starting from 1st of Hamal and ending on 29th or 30th of Hoot. 10.5 AADA Finance Manager may, after full investigation, authorize the writing-off of losses of cash, stores and other assets, provided that a statement of all such amounts written off shall be submitted to the Program Managers and Board of Directors with the accounts. The Finance Manager may establish, from time to time, an amount below which full investigation and formal write-off are not required. Such amounts shall, for administrative efficiency, be charged directly to the relevant allotment/budget line. 10.6 The financial statements shall be submitted on monthly basis or when ever required by the management for examination and opinion. 10.7 The accounting and other financial records and all supporting documents shall be retained for such periods as may be agreed with the Donor and Board of Auditors, after which, on the authority of the Controller, such records and documents may be destroyed. 10.8 A record of pledges shall be maintained in the currency pledged. Pledges made in currencies other than U.S dollars shall be reported in the equivalent of U.S dollars converted at the AADA’s operational rate of exchange in effect on the date of the report or, if paid, on the date of payment. 10.9 Gains or losses resulting from exchange adjustments shall be recorded separately as an offset to these contributions. 10.10 Exchange adjustments arising from other financial transactions shall be recorded separately as miscellaneous income or expenditure, as appropriate. 10.11 The proceeds from the sale of property shall be credited as miscellaneous income to the source of funds originally charged with the purchase thereof, except:  Where a property survey board has recommended the application of these proceeds directly against the purchase price of replacement equipment or supplies, any excess shall be taken into account as miscellaneous income.  Where normal practice is to secure and use certain material or equipment in connection with a contract and to salvage and sell such material or equipment at a later stage, the Finance Manager may authorize the crediting of these proceeds to the account from which they were procured, provided that the account has not been closed;  When the proceeds from the sale of surplus project equipment shall be credited to the accounts of that project provided that they have not been closed  Where equipment is transferred from one project for use in another and the accounts of the releasing project are open, the fair market value of such equipment shall be credited to the accounts of the releasing project and charged to the accounts of the project receiving the equipment. Prevention of Internal and External Theft(read the attached and adapt procedure). The protection measures for theft in an office build include:
    • 10 1. Over all site element- measure of security in over all building and surrounding. Here we are in better position in our office where there is a security system in the building but in the field we need to look to better measure like barriers etc 2. Building element: the most important here is the access like doors, windows and roof etc 3. Detection element: to detect intruders, explosive etc. They include intrusion alarm, and detectives, guard, receptionist, lock and key etc 4. Procedure element- these are proactive protective measure like security standard operation procedure ( I have sent you the guide). For example reporting incident will help to review the procedure. These element provide foundation for development of the other three elements Prevention of Fraud: Fraud is a deception deliberately practiced in order to secure unfair or unlawful gain  Fraud can be prevented when there is an internal control system and every one follow the Internal control systems and avoid any obvious, gaping holes in the system.  Fraud can be prevented if every Supervisors and management are doing their jobs properly and managing on the basis of “trust” along with the “sound internal controls” Accountability After approval of President/CEO, Director General and Senior Program Manager and Provincial Managers are accountable for safeguarding employees and assets under their area of responsibility and for implementing this policy and procedure.