financial guidelines for cyclone operation

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MYANMAR RED CROSS SOCIETY

Cyclone (NARGIS) Relief Operation

Financial Guidelines

For Hub offices

18th August 2008

I N D E X



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Chapter Contents Page No.

1. Introduction 3

2. Applicability 4

3. Guidelines Framework 5

4. Functional Responsibilities of Finance Section 6

5. Preparation of Budget 7

6. Funds Management 8 - 9

7. Books of Account 10

8. Financial Authorization 11

9. Cash & Bank Management 12 -14

10. Receipts and Payment Accounting 15 - 19

11. Procurement of Goods 20 - 24

12. Fixed Asset Accounting 25

13. Inventory Management 26 - 27

14. Losses & Write-offs 28 - 29

15. Financial Reports 29

16. Inspection of Books & Records and Audit 30

Chapter 1

Introduction



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Scope

1. These financial guidelines define financial procedures relating to recording and reporting of financialtransactions by the MRCS hub offices engaged in Cyclone (NARGIS) Relief Operations.

Objectives

2. The purpose of having financial guidelines in place is to -

(a) Ensure sound financial management practices, transparency, safeguard the assetsand utilization of financial and other resources in an effective and efficient manner during the Cyclone (NARGIS) Relief Operations.

(b) Bring about transparency and consistency in recording and reporting of financialtransactions to the Myanmar Red Cross Society.

(c) Be used as a reference book by Finance Officers and staff, Programme Officers andstaff of the township hub offices while dealing with day to day financial affairs andrecording of financial transactions in the hub offices carrying the Cyclone (NARGIS)Relief Operations.

Responsibility

3. The Hub Manager shall have the overall responsibility for the financial management of the hub inaccordance with these Financial Guidelines.

Chapter 2



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Applicability

4. The Financial Guidelines enumerated herein shall be applicable to the following Hub offices andtownships performing relief and recovery activities, and shall be restricted to the Cyclone (NARGIS) Relief activities being implemented by them.

1) Pathein Ayeyarwady Division2) Ngapudaw “ 3) Labutta “ 4) Mawlamyinegyun “ 5) Bogalay “ 6) Pyapon “ 7) Dedaye “ 8) Kyaiklat “ 9) Maubin “ 10) Myaungmya “

11) Wakema “ 12) Kunchangone Yangon Division13) Kawhmu “ 14) Twantay “

5. These Hub Offices shall report to the Operation Management Unit of Myanmar Red Cross SocietyHeadquarter.

6. The financial procedures included herein are based on the Financial Regulations approved by theMRCS Central Council and in case of any doubt on the interpretation, the MRCS Financial Regulationsshall prevail.

Chapter 3



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Guidelines Framework

Fundamental Assumptions

7. The fundamental assumptions of the Financial Guidelines are described below:

(a) These Financial Guidelines are intended to cover the recording and reporting of the financialtransactions related to Cyclone NARGIS Relief Operations.

(b) The Hub offices are the operational offices of MRCS HQ.

(c) The MRCS Headquarter shall provide the funds to the hub on Working Advance basis and theutilization of the Working Advance shall be reported by the Hub Manager to the MRCSHeadquarter in the specified format along with all the original bills, receipts, vouchers andrelevant records.

(d) Local donations earmarked for Cyclone (NARGIS) Relief Operations received or any interestearned from the bank from out of the funds received from Headquarters shall be included as areceipt in the financial report of the hub to the MRCS Headquarter.

Standards of Financial Propriety

8. Every Red Cross executive, staff or member/volunteer should comply with the following generalprinciples:

(1) The expenditure should not be prima facie more than the occasion demands. Every Red Crossstaff, volunteer and executive is expected to exercise the same vigilance in respect of

expenditure incurred from the Society’s funds as a person of ordinary prudence would exercisein respect of his/her own money.

(2) No executive or authority should exercise its powers of sanctioning expenditure to pass anorder which will be directly or indirectly to its own advantage.

(3) The Society’s funds should not be utilised for the benefit of a particular person or group of persons.

Chapter 4

Functional Responsibilities of Finance Section



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Organizational Chart

9. The Finance Section in hub offices shall be headed by Finance & Admin Officer. He will report to theHub Manager. He shall be supported by the staff as may be needed in relation to the volume of operation in

the respective hub offices.

10. The Finance & Admin Officer will render all services and advise the Program Sector heads onfinancial matters. The Organogram of Finance Section is shown below:

NB: The functional chart depicted above is only intended to be a guide. Actual functionalchart may differ due to the actual operational needs at each of the Hub office.

Functional Responsibilities of Hub Office Finance Section

11. The functional responsibilities of the Finance Section of the hub office are described below:

a. Maintaining proper account books, accounting all assets, liabilities, receipts, and payments atthe hub offices.

b. Keeping safely and securely the proper files and all accounting records.

c. Ensure submission of monthly financial reports along with original bills, vouchers and relevant

records and consolidated cash forecast / request in time to Head of Finance MRCS HQ for thenext two month’s proposed activities based on the approved operational plans of the huboffice.

d. Keep all the accounting books and records open for inspection by MRCS / IFRC authorizedofficials.

Chapter 5

Preparation of Budget

Hub Manager

Finance & Admin Officer

Finance Assistant Cashier



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Budget Procedure

12. Procedures for preparing budget are described below:

(a) The Operational Manager MRCS HQ shall be responsible to draw the yearly budget for therelief and recovery activities to be carried by the hub offices.

(b) The division heads shall submit the budget proposal for activities under their control to FinanceDivision after approval of the Operation Manager.

(c) The Head of Finance Division shall compile a consolidated budget for Cyclone (NARGIS)Relief Operation and submit to the Operation Manager for approval.

(d) Once the Cyclone (NARGIS) Relief Operation budget is approved, this shall be forwarded tothe hub offices for implementation.

(e) On receiving the approved budget from Operation Manager, MRCS HQ, the hub BranchManager shall draw a monthly plan of activities which shall be used while submitting theforecast of expenditure for next two months (8 weeks) to MRCS Finance Division.

BUDGET PROCESS

Chapter 6

Funds Management

Project Unit 1 (say Health)(For initial budget preparation)

Project unit3 say relief Project Unit 2 (Say Watsan)

(For initial budget preparation)

Project Unit 3 say Relief Unit(For initial budget Preparation)

Finance Division MRCS

(For checking and Operation Manager MRCS HQ

Hub Office Managers(For monthly break up and activities)

Hub Project Officers

(For implementation of activities)



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Transfer of Funds to Hub Offices

13. The following procedures shall be applied when transferring funds to hub offices:

(a) The hub office Finance & Admin Officer shall submit a cash request in specified format to theFinance Division of MRCS HQ by the 26 th of every month based on forecast received from thehub office Project Officers covering the current & subsequent month.

(b) After validation by the MRCS Finance Division, it shall be forwarded to the Operation Manager MRCS for approval.

(c) After approval from the Operation Manager, MRCS Finance Division shall forward the cashrequest to IFRC and shall transfer the funds to the bank account of the hub office after receiving funds from IFRC. In case direct transfer of funds is not possible the funds shall betransferred by a suitable mode like bank draft.

(d) Transfer of funds to the hub offices shall be in Kyat. In case of any need for payment by FECor foreign currency, a separate cash request shall be prepared by the hub for FEC and ForeignCurrency.

(e) Under very special circumstances cash can be transferred to a hub office with the expressapproval of the Honorary Treasurer, MRCS HQ. However, no cash shall be sent to the huboffice without obtaining Cash in Transit insurance from Myanma Insurance.

(f) A maximum limit of funds transferred from HQ shall be fixed for each Hub Office. Themaximum fund limits for the hub offices shall be fixed based on the estimated budget and theapproved plan of activities of the Hub.

Working Advance Clearance Report

14. Procedures for clearing of Working Advance are described below:

(a) Finance and Admin Officer of the hub office shall prepare a monthly Working AdvanceClearance Report (WA Clearance Journal) and submit the same to the Head of FinanceDivision MRCS Headquarter along with the original supporting documents by the last day of each month. The Working Advance Clearance Report shall be prepared in a standard format.Photocopies of the supporting documents certified by the Hub Manager shall be kept at thehub office.

(b) The Head of Finance MRCS HQ shall check and validate the Working Advance ClearanceReport of the hub office and forward it to the Operational Manager MRCS HQ for approval.

(c) After due approval of the Working Advance Clearance Journal, the same shall be sent to IFRCDelegation along with all the original vouchers, bills and records. The Working Advance isdeemed to be cleared only after validation by IFRC Delegation.



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(d) The Working Advance Clearance Report shall also accompany the Trial Balance giving theclosing balances as per books, statement of bank reconciliation and the cash count at themonth end duly certified by the Finance & Admin Officer and countersigned by the HubManager.

Fund Management Flow Chart

Chapter 7

Books of Account

MRCS Finance Division validates the ExpenditureForecast cum Cash Request; Financial Reports andsubmits these to the Operation Manager for approval.

Hub Manager submits the Financial Report andExpenditure Forecast cum Cash Request for Next

Two months to Finance Division MRCS NHQ

After approval by Operation Manager MRCS makesaccounting and sends to IFRC Working AdvanceClearance & release of funds for next two months.

IFRC checks the finance reports and the expenditure

forecast for transfers of funds to MRCS HQ.

FUNDS

TRANSFER

FINANCIAL

REPORTING



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15. Books and records of all financial transactions shall be maintained at the hub offices. The list of books and records include the following:

(a) Accounting Books

(a) Cash Book(b) Bank Book(c) General Ledger (d) Assets Register (e) Inventory Ledger (f) Purchase Book(g) Sales Book

(b) Accounting Records

(a) Working Advance Request(b) Invoices and Payment Vouchers(c) Pay Bills(d) Receipts(e) Working Advance Clearance Journal(f) Monthly Receipt and Payment Summary(g) Any other book or record deemed necessary by MRCS HQ

16. All financial records shall be maintained for at least 10 years. When the hub offices are closed atthe end of the operation period, all the financial books and records shall be properly handed over toFinance Division for safe custody.

Chapter 8

Financial Authorization



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17. The Executive Committee may delegate to the Operation Manager (and other senior officials of theSociety) financial powers as follows for the effective implementation of these Guidelines.

Chapter 9

Bank and Cash Management

SN Particulars Hub Manager Operation Manager MRCS EC

1

2

3

4

5

6

7

8

9

10

Pay & Allowances

Local Travel (within Township)

Local Travel (outside Township)

Disbursements for EmergencyExpenses for health and disaster

Programme ExpenseDisbursements (excludingemergency relief)

Office Expenses

Expenses paid in ForeignCurrency from MRCS fund

Capital Expenditure

Procurement of relief and other goods (As defined in ProcurementProcedure)

Consultancy Work

-

Full

-

Up to K 500,000

Up to K 500,000

Up to K 500,000

-

-

Up to K 500,000

-

Full

Full

Full

Up to K 2,000,000

Up to K 2,000,000

Up to K 2,000,000

Up to FEC 1,000

Up to K 2,000,000

Up to K 2,000,000

Up to K 1,000,000

Full

Full

Full

Full

Full

Full

Full

Full

Full

Full



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Responsibility

18. The Finance & Admin Officer shall have the overall responsibility for cash and bank management.

Bank Management

Opening & Operation of Bank Accounts

19. Procedures for opening of a new bank account and bank transactions are described below:

(a) No new bank account can be opened and no bank account can be closed without the specificResolution of the Executive Committee of Myanmar Red Cross Society.

(b) Hub Office shall open a current or saving bank account in the name of Myanmar Red CrossSociety Cyclone Nargis Relief Operation Fund Account with Myanma Economic Bank intheir respective towns.

(c) The bank account shall be operated jointly by any two of the authorized persons from amongstthe following three officials.

(a) Hub Office Branch Manager,(b) Treasurer of the Township Red Cross Executive Committee,(c) The Finance and Administration Officer.

(d) Cheques shall be jointly signed by two persons - the Hub Office Branch Manager and theTownship Red Cross Treasurer. When the Township Red Cross Treasurer is not available tosign cheques (due to a trip outside the town or on long leave), the Branch Manager shall signthe cheque with the Finance and Administration Officer.

(e) The Hub Office Manager / Township Hub Manager is authorized to forward the resolution andto make application to the bank for opening new bank account.

(f) All funds transferred from HQ will be deposited into the bank account of the Township HubOffice. All other receipts and refund of Working Advance balance will also be deposited into thebank account.

Safety and Control of Bank Documents

20. Procedures for safety and control of bank documents are described below:

(a) All communications relating to bank operations shall be kept securely in a file maintained byFinance Section. A register shall be maintained to keep the records of the opening and closingof banks accounts and cheque books received from the bank. Upon issue of a cheque book tothe Cashier for preparing cheques, the Cashier will acknowledge receipt of the cheque book.

(b) All unused cheques books shall be kept in a safe.

(c) The cheque counterfoil shall be retained as record and the signatory on the cheque shouldinitial it for record.



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(d) Cancelled cheques shall be attached with the counterfoil and retained as such.

Month End procedure

21. Month-end procedures are described below:

(a) Bank statement shall be obtained from the bank on every 25 th of the month. A bankreconciliation statement shall be prepared by the Finance and Administration Officer andsubmitted to the Branch Manager. The Finance & Administration Officer and the BranchManager shall sign the Bank Reconciliation Statement.

(b) The official reconciling the bank accounts should also investigate the appropriateness of eachof the above details and pass the accounting entries before finalizing the Bank ReconciliationStatement.

Cash Management

22. Cash management procedures are described below:

(a) The maximum cash limit shall be fixed by the Operation Manager MRCS HQ upon therecommendation of the Township Branch Manager.

(b) The Cashier shall be responsible for receiving all the money and deposit the receipts into bank,and cash payments against approved vouchers and supporting bills and invoices.

(c) The cash should be kept in a safe having two keys and one of the keys shall be with theFinance & Admin Officer.

(d) The cash should be adequately insured against all risks.

(e) The cash should be taken to the bank and vice versa in office vehicle with appropriate securitycommensurate with the amount involved.

(f) Losses of key of safe shall be reported in writing to the Branch Manager who shall inform theOperation Manager, MRCS HQ and the Head of Finance Division.

(g) At the end of the day the Cashier shall reconcile the closing balance of cash in hand and makecertificate of cash denominations.

(h) The Branch Manager or any other official delegated by him shall verify the cash balance atleast once a month and also conduct surprise cash checks. The verification report should besigned by the official making the verification.

(i) Cash losses (if any) shall immediately be reported to the Head of Finance Division and theOperation Manager.



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(j) The Head of Finance Division shall make a preliminary investigation of the loss and submit hisreport to the Operation Manager for further appropriate action such as filing a report withpolice, filing claim from Insurance Company, and make a full investigating regarding the loss. All cash losses shall be reported to the nearest meeting of the Executive Committee.

Petty Cash Management

23. Procedures for management of petty cash are described below:

(a) Petty Cash of K 50,000 can be held by the Cashier if holding petty cash is necessary for theimplementation of relief and recovery activities.

(b) Petty Cash Book shall be maintained by the Finance & Admin Officer.(c) Petty Cash shall be maintained by imprest system.(d) All transactions shall be recorded immediately in the Petty Cash Book.(e) Petty Cash Book and petty cash balance shall be checked and verified at least once a month

by the Branch Manager or any other official delegated by him who will sign in the Petty Cash

Book.

Chapter 10

Accounting of Receipts & Payments



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Receipts Accounting

24. Procedures for accounting of receipts are described below:

(a) All funds transferred from HQ will be deposited into the bank account of the Township BranchOffice. All other receipts and refund of Working Advance balance will also be deposited into thebank account.

(b) Interest earned, donation received locally and any miscellaneous receipt on account of disposal of unserviceable items, sale etc. shall be included as an income in the financial reportsubmitted to the MRCS HQ.

(c) For all donations received and other miscellaneous receipts, the Cashier shall issue a receiptto the donor. The receipt shall be in four copies and shall be distributed as below:

(a) Original to the Donor (b) First copy to the project unit(c) Second copy shall be attached with the voucher (d) Third copy shall be attached in receipt book as a reference copy.

Payment accounting

25. Finance & Admin Officer shall be responsible to ensure that the expenditure incurred from thefunds of the Society is governed by the following essential conditions:

(a) There is an approved budget for the expenditure,

(b) The expenditure incurred conforms to the relevant financial rules and regulations,

(c) There is sanction or approval by a competent authority,

(d) The expenditure is supported by adequate bills, vouchers and receipts,

(e) Expenses are recorded to the correct classification as per the chart of account provided by theHead of Finance, MRCS HQ.

Payment procedure

26. General provisions regarding payment procedures are described below:

(a) No payment shall be made without a written authorisation by a responsible person to whomauthorisation for expenditure has been delegated.

(b) Payment shall be made only if there is sufficient balance of budget at the time the payment isauthorised.



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(c) When there is partial delivery of goods or when delivery is short shipped, payment shall bemade only for goods actually received as per Goods Received Note.

(d) All Bills / Invoices shall be stamped “Paid” after payment is made in order to avoid duplicatepayment.

Categories of payments

Pay and Allowances

27. The Executive Committee shall prescribe the pay, leave salary and other allowances admissible toemployees of the Society.

28. Salary for hub office employees shall be released by MRCS Finance Division.

Travelling Allowance

29. Travelling allowance shall be applicable if the travel has been undertaken due the operationalneeds, there is a budget provision and it is authorized by Branch Manager.

30. The rates of local travelling allowance admissible for staff such as mode of travel, means of conveyance, per diem (daily allowance) and accommodation shall be as prescribed by the MRCSExecutive Committee.

31. Per Diem is a compensation for expenses towards meals and out of pocket expenses incurredwhile performing duties outside the normal workplace. For per diem calculations, the day will be of 24 hoursand shall start at midnight. Per Diem for travel of more than 12 hours shall be equal to one day, and less

than 12 hours shall be entitled for half day. No per diem shall be allowed for less than four hours. Rate of local per diem fixed at present is Kyat 5000 (Five thousand).

32. Per Diem for international travels undertaken on account of the work of the IFRC, ICRC andbilateral donors shall be governed and paid as per the rates agreed between the donor and MRCS.

33. Public transport such as rail and bus shall be utilised as much as possible. For air transport theEconomy class and lowest priced carrier shall be utilised.

34. Travel claim shall be submitted on the MRCS standard format along with all original bills in respectof the travel undertaken, accommodation and other expenditure claimed for reimbursement. Wherever receipts or invoices are not given by the recipient for some petty expenses like conveyance bill etc, aCertificate of Payment form shall be used. When Certificate of Payment format cannot be utilised aCertificate of Expenditure duly signed by the recipient shall be used which shall be checked and approvedby the Head of Division. Such certificate should not exceed value equivalent to more than K 10,000 for onetravel claim.

35. Advance taken against the travelling allowance shall be adjusted in the bill while claiming travellingallowance for the journey.

36. Travelling allowance bills shall be countersigned by the following persons:



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(a) Hub staff Branch Manager (b) Branch Manager Operation Manager MRCS HQ

Training and Workshop Expenses

37. Training and workshop expense include travelling expenses, accommodation, per diem, stationery,hand-outs, venue charges, and honoraria.

38. Staff of the Society receiving salary shall not be awarded honorarium for performing as facilitator or resource person.

39. The following points shall be observed for claims for training and workshop expenses:

(a) The names and titles of participants and facilitators shall be approved by the hub BranchManager.

(b) Participants residing at the town/city where the activity is held are not entitled to per diem.

(c) Venue charges shall be supported by an official receipt from the landlord.

(d) Accommodation charges shall be supported by an invoice mentioning the names of participants and facilitators and by an official receipt from the hotel.

(e) Payment for return journey of participants shall be made only upon submission of originalreturn tickets for the inward return journey. A photocopy of the ticket for the return journeycertified by the person in charge of the training/workshop or Branch Manager shall be obtainedand accepted as supporting document.

Supplier of Goods

40. Upon safe receipt of goods and an invoice from supplier, the Procurement Officer in charge shallforward the payment request form to the goods requisitioning department for verification. The paymentrequest form shall be accompanied by the following documents wherever applicable:

(a) Original invoice(b) The Goods Received Note (Finance copy)(c) Purchase Requisition form(d) Copy of the purchase order with all documents like comparative bid analysis.

41. Upon verification and due check, the requisitioning department head shall forward the same to theFinance & Admin Officer for final checking and release of payment after due approval of the BranchManager.

42. The payment shall be sent to the supplier directly with a payment advice indicating the deductions,if any, made from the invoice and the reasons for such deduction.



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43. No payment to any supplier for supply of goods exceeding K 500,000 shall be made in cash.Payments exceeding K 500,000 shall be made by cheque only.

Transport and Handling

44. Transport and handling charges include expenses for transport of goods, customs clearingcharges, handling charges, loading / unloading charges, dock dues, ware-housing expenses, etc.

45. Selection of transport and clearing service provider shall be by competitive bidding as per theprocurement procedures.

46. Claims for transport of goods shall be supported by an acknowledgement of receipt of goods by theconsignee / a responsible official the Red Cross hub.

Repair and Maintenance/ Insurance Expense

47. Prior approval must be obtained for repair and maintenance works from the Branch Manager.

48. If the estimate cost of repair is more than K 500,000 the Branch Manager shall form a committee tosupervise the repair and maintenance works.

49. Expense for repairs shall be only for those necessitated by fair wear and tear and by accidents.

50. For repairs necessitated by negligence or carelessness of an employee, the liability of theemployee shall be determined and payment should be made only for those items not included in the liabilityof the employee.

51. Payment shall be made only on the basis of verification of performance of work by the projectofficer and countersigned by the Branch Manager.

Other Expenses

52. All other expenses shall be paid on the basis of claim bills / invoices duly authorised by the proper responsible person.

Advance to supplier

53. No advances to the suppliers for supply of goods should released. However, if it is inevitable, thatadvances shall be released as per the terms & conditions of the agreement / purchase order, payment shallbe subject to submission of Bank guarantee from a reputed bank for equivalent amount.

Working / Travel Advances to Staff

54. Advance will be granted for activities such as workshop, training, and other programme-relatedactivities.55. Request for Advance shall be submitted well in advance, preferably a week before thecommencement of the activity or travel. The request shall contain a detailed estimate of the expense items.Project code, activity code and account code shall also be mentioned in the request.



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56. Standard cost shall be used for estimation of expenses. The following is a list of standard cost for atraining activity:

(a) Transport cost for facilitators and participants(b) Per diem for facilitators and participants

(c) Accommodation for facilitators and participants(d) Training and IEC material(e) Stationery(f) Other expenses directly related to the training activity

57. Advance Request duly signed by the project officer and countersigned by the Branch Manager shall be sent to Finance and Admin Officer. Finance and Admin Officer shall verify the request with the planof action, the budget, and whether the expenses are in accordance with Financial Regulations, proceduresand directives.

Settlement of Working Advance

58. All advances shall be settled as soon as possible, 7 days after completion of the activity. Unspentcash balance shall also be refunded to Finance Section immediately after the completion of the activity.

59. All expenses paid from advance shall be supported by original vouchers / invoices and receipts.The expenditure should also conform to the approved request.

60. A new working advance shall not be disbursed until the previous advance is totally settled. Partialsettlements shall not be accepted for disbursement of a new working advance.

61. If the advance is not settled within 30 days after completion of activity, the advance shall bededucted from the salary, and no further advance shall be entertained.

62. The accounting routine will require adjustment of the advance to the actual expenses account byway of journal which should be done once the claim is approved.

Loans to Staff

63. The loans to staff shall be governed by the Human Resource Policy approved by the ExecutiveCommittee of the Society.

Chapter 11

Procurement Procedures



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Scope

64. Procurement means and includes purchases of goods and services for the Society. Purchase of goods includes purchase of relief supplies, office equipment, workshop and training material, informationeducation and communication material, care and support goods, etc. Purchase of services includes hiring

of consultants, lease of property, transport of goods, construction of buildings, etc,

65. The Hub Office Procurement Committee shall be responsible for all procurement of goods andservices upon receiving a purchase requisition. The hub office procurement committee shall comprise of :

(a) Hub office Manager (b) Hub Project Officer (Secretary Member)(c) Finance & Admin Officer (member)

Purchase Procedure

66. The user project shall initiate the request for purchase of the goods by filling the standard PurchaseRequisition Form which shall contain the following information:

(a) Particulars of goods required with technical specifications.(b) Quantity required;(c) Delivery period.(d) The expenditure code to be charged i.e. the account code, project code, activity code and the

donor code;(e) Date & signature of person requesting the purchase of the goods,

67. The Purchase Requisition shall be validated by the Finance & Admin Officer to ensure that there issufficient budget provision for the purchase.

68. The Purchase Requisition Form shall be pre-numbered.

69. Upon validation from Finance & Admin Officer and approval by the Branch Manager, the user project shall forward the original and the duplicate copy to the Procurement Committee and the triplicateshall be retained by the project.

Purchase Authorization

70. The Table below provides authorization levels which apply to purchase as well as the contractingof services including those generating recurrent costs. For purchases which are in the approved budget or cash request the following authorization will apply:

Requisition value Procedure Supplier Authority level

Level I (Up to K 500,000) No quotation Any one Branch Manager



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Level II (Up to K 2,000,000) At least 3 quotations Registered supplier Operation Manager

Level III (Above K 2,000,000 ) Tender Open Procurement & Disposal Committ

Registration of Suppliers

71. The Society shall keep a list of registered vendors who are short-listed and approved for supply of goods and services on the basis of the following criteria:

(a) The firm is registered with appropriate authorities as per local laws.(b) The firm has a bank account.(c) The firm is reputed, reliable and deals in goods that are likely to be procured.

72. The registration of suppliers shall be approved by the Procurement and Disposal Committee. TheProcurement and Disposal Committee shall update the list of registered vendors every six months.

Tender Procedure

73. The tender procedure requires –

(a) Publication in minimum two leading newspapers about the work required and tender terms andconditions at least 7 days in advance of sale of tender documents.

(b) The submission of tenders with Earnest Money Deposit at 1/2% of the proposed contract pricefailing which the tender shall not be accepted.

74. The tender document should mention about the time, date and place of the opening of tender.

75. Tenders received shall be opened by the Procurement & Disposal Committee members at the timeand date mentioned in the tender document.

76. The Society shall not recognize the tender/ bids / quotations in case of the following:

(a) It is not submitted within the prescribed time(b) It is not submitted in prescribed format(c) Earnest Money Deposit / Bank guarantee is not attached.(d) The bid / tenders submitted do not contain the signature and stamp of the bidder.(e) Conditional tender.

Selection of Supplier

77. The selection of supplier shall be made in accordance with the following procedure:

(a) Bids submitted by suppliers shall be analyzed using the Comparative Bid Analysis form.Purchase order should be placed only to supplier which has quoted the best appropriatequality goods with the lowest possible price.



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(b) Preference is to be given for procurement of goods manufactured locally and supplies readilyavailable locally in the quality and quantity required at competitive prices.

(c) Procurement Committee shall record the reasons for selection in writing.

(d) When supplies and materials are not readily available in-country in the quality and quantityrequired at competitive prices, the Procurement shall be as per the standard procedure andwith the approval of the Executive Committee MRCS.

Purchase Order / Contract

78. After selection of supplier in accordance with the above procedure the Head of Procurement shallissue a Purchase Order on the approved supplier for supply of goods mentioning:

(a) Purchase Order number and date(b) Particulars of goods ordered

(c) Quantity(d) Price basis(e) Place of delivery and packing of goods if any(f) Insurance / Risk(g) Time frame of delivery

79. The Purchase Order shall be raised in four copies and distributed as below:

(a) Original and duplicate to be issued to supplier with the direction to the supplier that theduplicate copy of the purchase order duly signed and stamped by him as a token of acceptance be given back to the buyer.

(b) The triplicate copy should be sent to Finance & Admin Officer ’s accounts copy.

(c) The fourth copy shall be retained by the Procurement Section as a matter of record for reference.

(d) For purchase of Kyat 5,000,000 or above a purchase contract shall be signed with the selectedsupplier. The contract shall mention penalty for non-performance, and terms of payment.

(e) For consultancy engagements a service contract should be signed with the contractor.

Receipt of Goods

80. When goods are received, the Purchasing Committee or any person authorized by the hub BranchManager shall inspect and check the goods promptly and carefully as soon as they are delivered to ensurethat they fully conform to the purchase order or contract.

81. The Stores Officer shall prepare a Goods Received Note (GRN) which shall have a pre- printedserial number. It is the responsibility of the Purchasing Committee and Stores Officer/ user divisionreceiving the goods to ensure that:



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1. Goods received agree with the purchase order delivered together with the goods;2. the goods appear undamaged and are received in good condition;

82. In case goods are short or damaged, it should be mentioned in the GRN as well as the DeliveryNote of the supplier.

Receipt of Suppliers’ Invoices and Payment

83. The supplier shall submit the invoices to the Head of Procurement. Upon receiving the supplier’sinvoices, the procurement section will:

1. Extract the respective Purchase Order (PO) / Purchase Contract and Goods Receipt Note (GRN)from files and match them with the invoices.

2. Invoice numbers should be endorsed on the PO and the GRN. The GRN number, together withLPO number are endorsed on the invoice;

3. Compare the invoices with the appropriate PO and GRN to agree the quantity invoiced with thequantity actually ordered and received;

4. Compare the invoice price and payment terms with those indicated on the Purchase Order. If thereis any disagreement the matter should be referred and rectified with the supplier; and

5. Recompute the invoice.

84. On receipt of goods or services and suppliers’ invoices, the Head of Procurement shall forward toFinance & Admin Officer a request for release of payment to the supplier attaching therewith:

1. original suppliers' invoices2. Account’s copy of the Purchase Order 3. Goods Received Note (GRN)4. Copy of the approved Purchase Requisition5. The codes to which the purchase is to be charged

85. Payment shall invariably be made by an account payee cheque. However, in circumstances wherethe purchase does not exceed Kyat 5,000,000 the payment can be released by order cheque. Payment for purchase for less than K 500,000 can be released by cash with the approval of the Operation Manager.

Documentation of Procurement

86. All procurement activities must be fully and transparently documented.

87. A complete purchase must be supported with a fully referenced file. The procurement file shouldcontain the following:

1. Purchase Requisition.2. Company names and contact persons for vendors solicited.3. Copy of the invitation to bid or request for quotation.4. Original proposals/offers from vendors.



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5. Comparative Bid Analysis and the selection of vendor and the price.6. Copy of Purchase Order / Purchase Contract.7. Copy of Invoice from vendor.8. Payment Receipt.9. Other documents and correspondences related to the procurement.

88. Documents regarding procurements shall be maintained by Procurement Section.



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Chapter 12

Fixed Assets Accounting

89. No Fixed Assets for hub office can be purchased without the written approval of the Operation

Manager, MRCS HQ and following the standard procurement procedure.

90. Expenditure on the purchase of all fixed assets as well as donated fixed assets received in-kind asgift or donation valuing more than Kyat 100,000 shall be capitalized. All cost incurred till bringing the assetto a usable condition shall be included in the cost of the asset.

91. Fixed asset received as donation shall be recorded at the value indicated in the shipmentdocuments at the first instance. In case where no shipment documents are available it shall be recorded ata value approved by the Procurement and Disposal Committee.

92. All assets shall be given an identification number which shall be affixed to the asset.

93. The physical count of the fixed assets shall be done at least once a year in coordination with theFinance & Admin Officer and any shortages shall be reported to the Operation Manager who shall in turninform the Executive Committee.

94. When there is a change of Branch Manager, Project Officer or management personnel responsiblefor custody and maintaining of assets, the assets shall be physically verified and shall form part of thehand-over process.

95. All the assets shall be adequately insured against all natural and human risks.

96. A Fixed Asset Register shall be maintained by the Finance and Administration Officer for thebranch in a standard format which shall contain the following details:

1. Cost and date of purchase with invoice details.2. Location.3. Quantity and the make.4. Estimated life, rate of depreciation.5. Accumulated depreciation and written down value at a given date.

97. No fixed asset can be sold by the hub Branch Manager without the written approval of theExecutive Committee, MRCS HQ

98. Depreciation shall be charged on fixed assets by the MRCS HQ at the end of each fiscal year atthe rates and method of depreciation as may be prescribed by the State Law.



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Chapter 13

Inventories Management

Responsibility

99. The Warehouse Officer in the hub has the overall responsibility over stocks under his custody asdefined in the following procedures.

Receipt of Stock

100. The Stores Officer receives all goods purchased into the store. The Stores Officer shall examinethe goods for any visible damage and in collaboration with the user division, ensures that the goods are of good quality and agree with the Purchase Order or Material Transfer Note in case the goods are receivedon transfer from other warehouse.

101. On being satisfied with the physical condition of goods received, the Stores Officer prepares aGoods Received Note (GRN) as evidence of the receipt of goods. He / she issue copies to supplier andProcurement section and the requesting division.

102. The Goods Received Note (GRN) should be raised in four parts on pre-numbered and pre-printedforms as per format attached. GRNs shall record the following:-

1. GRN number;2. Description of goods;3. Quantity received;

4. Purchase Order reference number and date;5. Supplier’s name;6. Remarks as to the condition of goods;7. and Signature of Stores Officer.

103. The Stores Officer should distribute copies of GRN as follows:-

1. Original: to supplier;2. Duplicate: to the Procurement Section,3. Triplicate: to the user division, and4. Quadruplicate: is a book copy.

104. The Stores Officer then records receipts per the GRN on the bin cards.

Issue of goods

105. Goods are issued from the Stores when the Stores Officer receives a duly authorized MaterialRequisition & Issue Note (MRIN) from the requesting division.

106. The Stores Officer updates bin cards on every issue and receipt of the goods.



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107. Each month a physical stock count of selected items is taken by the Stores Officer and sends amonthly stock report to the Branch Manager with a copy to the Operation Manager.

108. On receipt of a MRIN, the Stores Officers shall issue the goods and complete the followingdetails on the MRIN:

1. date goods are issued;2. quantity issued;3. name and signature of the Stores Officer and

4. stock balance;

1. The Stores Officer shall ensure that persons collecting goods sign for them on the spaceprovided on the MRIN.

110. The Stores Officer shall distribute copies of MRIN as follows:-

1. Original: to the Head of Stores who use it as a source

document for posting to the stores ledger cards,2. Duplicate: to the requisitioning division; and3. Triplicate: retained by the Stores Clerk to update bin cards

with the quantity of stock transferred out of Stores.

Damaged and Obsolete Goods

111. Damaged stock must be clearly marked and kept separately from the other stock. The StoresOfficer also maintain a list of damaged materials which records in a statement that contains

1. item code,2. number,3. name & description,4. location,5. unit of quantity,6. quantity,7. cost, and

8. total value of the damaged stock.

112. The Stores Officer should report the nature, quantity and existence of damaged stock to the mainuser project, Stores Officer and the Finance & Admin Officer, so that they can advice on the action to betaken. Obsolete stock is also identified during the annual stock-take when all bin cards are reviewed. If anitem has not been moved during the year, the user project is required to comment on the possibility of thegoods being obsolete.

113. After consultation with the user project, the Stores Officer must compile a schedule of the obsoletestocks and present it to the hub Branch Manager for review. The Branch Manager will, with the approval of the Operation Manager MRCS HQ, then pass on to the Finance & Admin Officer who prepare a schedulefor proposal for the Executive Committee to write off the obsolete goods.



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Chapter 14

Losses & Write-offs

Losses of Cash and Assets/ Properties

1. The following shall be included in cash losses:

1. overpayment of salary and expenditures while in cash disbursements / cheque payments2. unutilized/ unreported working advance3. Advances paid to vendors but not received the services/ goods

4. losses by another way

115. The following shall be included in Assets & properties:1. Storage Stocks2. Selling Stocks

3. Raw and products4. Fixed such as Building, Machinery, Furniture, equipment etc.

116. The term losses will mean to include the following:1. Reduction2. Damage3. Spilling over, and4. Lost

Investigating the Losses

117. The Branch Manager shall start initial investigation to know the cause of losses and the amount,when the losses were occurred. The Branch Manager shall report any loss to the Operation Manager MRCS HQ.

118. The Operation Manager in consultation with the MRCS Honorary Treasurer shall form aninvestigation committee after receiving the report.

119. The Investigation Committee shall investigate for fraud, misappropriation or negligence in line withrelated Laws, Procedures, Regulations. The investigation committee shall report to the ExecutiveCommittee as soon as possible with its recommendations for ways of regaining the losses items or valuefrom the person who was responsible for the loss, and action upon him.

120. After receiving the report, the Executive Committee shall make a judgment for the purpose and theamount of losses and concluded for cancellation from the list, if it is under coverage of the committee. If it isnot under coverage of the Executive Committee, it shall be submitted to the Central Council. Theinvestigation of Police and Courts shall be attached where ever applicable. The reporting of loss shall notend even if the responsible person has made good the losses.

121. The receiver of goods shall report to the head of logistics department who will in turn report to theExecutive Committee, if loss by reduction / shortage, damage, and spilling occurred during transporting.



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Write offs

122. Branch Manager cannot write off any loss of cash or assets without the express written approval of the Executive Committee as per the MRCS Financial Regulations.

Chapter 15

Financial Reports

Responsibility:

123. The Hub Finance and Admin Officer is responsible to send the financial statements along with allrelevant details, bills vouchers and other documents every month by every 26th of the month and to bereceived by MRCS HQ by 27 th of every month.

124. The monthly financial reporting cycle shall comprise of period 26th

of last month to 25th of currentmonth of reporting.

125. The Financial reports shall be signed by the Finance & Admin Officer and countersigned by thehub Branch Manager.

126. The following Financial Reports are required to be sent to the Head of Finance Division MRCS HQ.

SN Financial Reports Format

1. Monthly Working Advance Journal with Bills , Vouchers andRelevant documents as per IFRC format2. Monthly Receipt and Payment Statement3. Cash Forecast Statement for the next two months4. Budget Vs. Actual Expenditure Statement5. Physical Cash Count statement at the close of the month6. Bank Statement of the relevant period with Bank Reconciliation7. Statement with explanations to the items appearing in the

Reconciliation Statement.8. Monthly Asset Purchase Statement9. Outstanding Staff Working Advance Statement.

10. Copy of MRCS HQ account in the hub books11. Statement of outstanding invoices at the close of the month.12. List of Rented Assets13. Approved Working Advance and Actual Comparison



Chapter 16

Inspection & Audit

127. The Internal Auditor or Internal Audit team formed by the ExecutiveCommittee of Myanmar Red Cross Society shall perform internal audit of the hub offices.

128. The Internal Auditor or internal audit team shall have access to the books and records of thebranches at all times. The internal audit report shall be addressed to the President of Myanmar Red CrossSociety.

129. Myanmar Red Cross Society and / or IFRC shall appoint an External Auditor to perform audit of thehub offices.

130. The External Auditor shall have free access to the books and records of the hub offices at all times.

The auditor shall be entitled to such information or explanation from any employee of the branch or anyother person deemed necessary by them.

131. The Hub Branch Manger shall be responsible for facilitating the inspection and audit of the financialtransactions as may be decided by the MRCS and the IFRC.

132. The Finance and Admin Officer will coordinate all the activities relating to inspection and audit.

133. The audit report or inspection report shall be submitted to the President of the MRCS and a copy tothe IFRC in case the audit / inspection agency was appointed by the MRCS. In case audit agency isappointed by the IFRC, it shall submit its report to the appointing authority and a copy to MRCS.