nce manual islamic relief, bangladesh - hris …

2013

Financial Manual

6/1/2013

FINANCE MANUAL ISLAMIC RELIEF, BANGLADESH

2

Finance Manual, Islamic Relief, Bangladesh.

01 June 2013

Finance Manual

Of Islamic Relief, Bangladesh (IR,B)

INDEX Section-1 ................................................................................................................................................... 7

A. Introduction: .................................................................................................................................. 7

B. Objective of the Manual: .............................................................................................................. 7

C. Relevance with other manuals of IR,B and IRWHQ: .................................................................. 7

D. Revision and updating procedures: ............................................................................................... 8

Section-2 : Financial Desk-Top Procedures ............................................................................................. 9

A. Authority Grid ............................................................................................................................... 9

A.1. Authority grid for approving PR, Advance Requisition, etc. ............................................. 9

A.2. Approval Authority for Travel Approval Form (TAF): In-country and international

Travel. 9

A.3. Authority for Approval of Voucher’s Top Sheet (IRB printed color vouchers) ............... 10

A.4. Authorized limit for Daily Petty cash. .............................................................................. 10

A.5. Per-diem and accommodation while in official travel. ..................................................... 10

A.6. Threshold for procurement. .............................................................................................. 11

A.7. Authority level for approval of other than mentioned above. .......................................... 12

B. PAYMENTS ............................................................................................................................... 13

B.1. Advance ............................................................................................................................ 13

B.1.1 Types of Advances: ....................................................................................................... 13

B.1.2 Common Rules for all Types of Advances other than PNGO & Vendor’s advances. ...... 14

B.1.3 Travel advance & its adjustment: .................................................................................. 14

B.1.4 Miscellaneous advances & its adjustment:.................................................................... 15

B.1.5 Advance for “Cash Transfer (cash for work, training allowance, subsistence allowance

and cash for productive assets) ” to the beneficiaries ................................................................. 15

B.1.6 Cash Advance for “Beneficiary Asset Transfer” . ............................................................ 17

B.1.7 PNGO’s advance (Fund) & its adjustment:................................................................... 20

B.2.1. Vendor/Party Payment .................................................................................................. 21

B.2.2. Payment for consultancy/evaluation/survey work/legal ............................................ 23

Advisor/External Auditor/video documentation. ........................................................................ 23

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B.2.3. Beneficiary Payment ..................................................................................................... 23

B.2.4. Office Rent ....................................................................................................................... 24

B.2.5. Payment for Utilities ........................................................................................................ 24

B.2.6.Staff payments ................................................................................................................... 25

B.2.7. Quarterly Orphan one to one payment to sponsored children. ...................................... 27

B.2.9. VAT and TAX deducted at source deposit to the treasury. .......................................... 27

B.3. Emergency Response Payment Procedures (Total Procedures; Authority to Payment)... 28

B.3.1. Authority ....................................................................................................................... 28

B.3.2. Process for Procurement: Spot Purchase for the above response: ................................ 28

B.3.3. Payment (for spot purchase). ......................................................................................... 28

B.3.4. Petty Cash limit for this response. ................................................................................. 28

B.3.5. Staff Advance and Adjustment of advance: .................................................................. 29

B.3.6. Approval of Voucher’s Top Sheet (IRW-B printed color vouchers) related to above

response. 29

B.3.7. Master List and Master Roll will be maintained for distribution of materials/foods

among the beneficiaries. ............................................................................................................. 29

C. Payroll: ....................................................................................................................................... 29

C.1. Payroll Procedures................................................................................................................... 30

C.1.1 Documents needed from the Staff by 18th

of the month; .................................................. 30

C.1.2 Document needed from Field office Finance by 18th of the month: ................................ 30

C.1.3. Document needed from HR by 18th of the month: .......................................................... 30

C.1.4. Finance will Do ................................................................................................................ 30

C.1.5. Sample of IR,B Payroll .................................................................................................... 31

D. Fund Management. ................................................................................................................... 32

D.1. Fund Transfer to the Field Office ........................................................................................... 32

D.2. Fund Transfer Request (FTR) to the IRW International Office (IRW IO). ............................ 34

D. 3. Petty Cash Management: ....................................................................................................... 34

D.3.1. Petty Cash Control Objective ........................................................................................... 34

D.3.2. Limit of Petty Cash Fund ................................................................................................. 35

D.3.3. Security Rules for Petty Cash/Cheque ............................................................................. 35

D.3.4. Procedures for Petty Cash Management .......................................................................... 36

D.3.5. Petty cash Book ................................................................................................................ 36

D.3.6. Replenishment of Petty Cash ........................................................................................... 37

D.4. Bank Management .................................................................................................................. 37

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D.4.1. Field office bank Account ................................................................................................ 37

D.4.2 Bank Account opening and Signatory .............................................................................. 37

D.4.3. Procedures for bank Payment .......................................................................................... 38

D.4.4. Receipts, Banking for Deposits and Inter Bank Transfer: ............................................... 39

D.4.5. Bank Ledger ..................................................................................................................... 40

D.4.6. Bank Reconciliation ......................................................................................................... 40

E. Budget ........................................................................................................................................ 41

E.1. Types of budget for Islamic Relief, Bangladesh. .................................................................... 42

E.1.1 Project Budget: .................................................................................................................. 42

E.1.2. Project Support Budget (IRPS): ....................................................................................... 43

E.2. Responsibility for preparation Budget..................................................................................... 43

E.2.1 Project Budget: .................................................................................................................. 43

E.2.2. Project Support Budget (IRPS): ....................................................................................... 43

E.2.3. Review of Budget before submission ............................................................................... 43

E.2.4. Time for preparation of Budget ........................................................................................ 43

E.3. Budget Format ......................................................................................................................... 46

E.4. Budget Monitoring/controlling ................................................................................................ 46

E.4.1Control Process:.................................................................................................................. 46

E.5. Revision of Budget .............................................................................................................. 46

E.6. Chart Of Accounts (COA) ....................................................................................................... 47

F. Reporting ................................................................................................................................... 47

F.1. Field Offices’ Financial Support and Reporting System ......................................................... 47

F.1.1 Financial Transactions of the Field/Area/Project Office of IR,B ...................................... 47

F.1.2 Monthly and Quarterly Financial Report from Field/Area/project Office to CO: ............. 48

F.2. Monthly Variance Report to the all Projects. .......................................................................... 49

F.3. Partner NGOs Financial Reporting .......................................................................................... 49

F.3.1 Selection of PNGO ............................................................................................................ 49

F.3.2. Reporting .......................................................................................................................... 49

F.3.3 Types of the PNGO Reports .............................................................................................. 49

F.3.4 Retention of voucher.......................................................................................................... 49

F.4. Financial Reporting to IRW HQ .............................................................................................. 50

F.4.1. Quarterly Financial Reporting and time frame ................................................................. 50

F.4.2. Types of Quarterly report ................................................................................................. 50

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F.5. Financial Reporting for Institutional Donors ........................................................................... 50

G. Fixed Assets’ Accounting For: ................................................................................................. 50

G.1. Fixed Assets Acquisition and Capitalization: ................................................................... 50

G.1.1. Budget Availability. ......................................................................................................... 50

G.1.2. Value for Capital Assets and Non-capital Assets: ........................................................... 51

G.1.3. Capital Expenditure related procurement of capital assets. ............................................. 51

G.2. Depreciation ............................................................................................................................ 51

G.2.1 The details of fixed assets and depreciation rate is as under:........................................ 51

G.3 Disposal (Sale) of Fixed Assets ........................................................................................ 53

G.3.1 Approval for disposal: ..................................................................................................... 53

G.3.2. Disposal value .................................................................................................................. 53

G.3.3. Accounting for sale proceed ............................................................................................ 53

G.3.4. sale procedures: ................................................................................................................ 54

H. Employees Future Fund (PF and Gratuity) ........................................................................... 54

H.1 Contributory Provident Fund ................................................................................................... 54

H.1.1. Procedures of inclusion of PF in Payroll ......................................................................... 54

H.2. Gratuity ................................................................................................................................... 54

I. Internal Control ........................................................................................................................ 55

I.1 Internal Control Process ............................................................................................................ 55

I.1.1. Budgetary Control (confirmation of budget availability) .................................................. 55

I.1.2. Organization Controls........................................................................................................ 55

I.1.3. Division of Duties .............................................................................................................. 55

I.1.4. Physical Control ................................................................................................................ 56

I.1.5. Internal Monitoring of Field offices (FOs)/PNGOs Books of Account ............................ 56

I.1.6. QuickBooks Electronic System ......................................................................................... 57

I.1.7.Financial Reports from QUICKBOOKS ............................................................................ 62

J. Overhead/Cross Charging Costs Calculation ........................................................................ 62

K. PNGOs Financial Management Capacity Assessment for Partnership............................... 63

K.1. Checklist to assess the financial capacity, but not least, for PNGO Selection. ...................... 63

K.1.1. Financial management ..................................................................................................... 63

K.1.2. What are the internal controlling mechanisms? ............................................................... 63

K.1.3.Procurement systems? Is there procurement policy? ........................................................ 63

K.1.4. HR .................................................................................................................................... 63

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K.1.5. Admin............................................................................................................................... 64

K.1.6. Sampling of bills/ vouchers, appointment and different register etc. .............................. 64

K.2. ABC format of IRW and PIN for the assessed partner. .......................................................... 64

L. Annual External Audit ............................................................................................................. 64

I.1 Process ....................................................................................................................................... 64

I.1.1For section of new audit firm .............................................................................................. 64

I.1.2. For audit by the existing external auditor .......................................................................... 64

I.2. Management’s Role in External Audit ..................................................................................... 65

I.3. Preparation of Accounts ........................................................................................................... 65

I.3.1. Process; .............................................................................................................................. 65

I.3.2. Source of Data for accounts; ............................................................................................. 65

I.4. Auditors to help the management team improve financial control .......................................... 65

M. Latest Chart of accounts developed by IRW ............................................................................ 66

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01 June 2013

Section-1

A. Introduction:

Islamic Relief, Bangladesh (IR,B) is an International Development Agency that has been

working in Bangladesh since 1991. After that the IR,B has been continuing development

activities for the uplift of the livelihood status of the poor and vulnerable group of Bangladesh

through implementing different projects in health, education, Income Generating Activities,

disaster response, human right, and many other essential sectors. Being an International

Organization, IR,B always maintains a higher standard of policy, procedures and discipline in all

level of its operation and management. Financial Resource is the most important factor of

operation and management of an organization. IR,B aims at proper transparency and

accountability in utilization it financial resource in view of achieving its goal, vision and mission.

IR,B has, therefore, prepared this manual formulating necessary policies, procedures to guide

the management as well as to the finance staff who are working for financial operation and to

other staff as concerned to understand and use the tools and techniques for proper

management and utmost utilization of financial resource.

B. Objective of the Manual:

The Objectives of the Manual are;

- To facilitate the management of IR,B to ensure optimum utilization and controlling of

financial resources of the organization to achieve its goal.

- To facilitate the finance staff of IR,B to understand the policy, procedures and practices of

the organization in its operation at all level.

- To facilitate transparent and fair practice in acquisition, utilization and handling of the

financial resource at all level of IR,B’s operation.

- To facilitate the finance staff in accurate recording of financial data/information, reporting

of them and presentation to the management for decision making purpose.

- To enhance transparency and accountability in financial management.

- To present and expose the overall system and mechanism of financial operation of IR,B to

the concerned stakeholder of the organization; such as; Management, Donor, Auditors

and to the Government.

C. Relevance with other manuals of IR,B and IRWHQ: The Financial Operation Manual contains all the current policies and procedures as required

and applicable for effective management of financial resources of IR,B. These policies and

procedures are fully in agreement with the existing policies and practices of other

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manuals/guidelines of IR,B and in line with the policy and practice of the Head Office, Islamic

Relief Worldwide. Finally, the policies and practices that stipulated in this manual are kept

consistent with the currently enforced financial rules of the Government of Bangladesh.

D. Revision and updating procedures: The policies and procedures of this manual will be effective from June 01 2013. However, these

are not perpetual but to be changed over time to adjust with the demand of time and

situation. IR,B will revise this manual at the outset of each financial year (if there is any addition,

deletion or edition of policies and procedures. The COMT (after consultation with the Islamic

Relief Worldwide HQ , where necessary) has the authority to introduce any new policy and

procedures or to edit or revision of the old policies to meet the demand of the time and the

interest of the Islamic Relief Worldwide HQ and IR,B.

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Section-2 : Finance Desk-Top Procedures A. Authority Grid

A.1. Authority grid for approving PR, Advance Requisition, etc.

A.1.1 In-Charge of Field Office /Project Manager /PC will approve any requisition up

to BDT 10,000

A. 1.2 Office Procurement Committee (Field Office) will approve any requisition up to

BDT 20,000. Chairman of the procurement committee will approve the

requisition.

A.1.3 Program Manager/National Program Manager/Program Coordinator/Deputy

Program Manager (deputy program manger will exercise this authority where

program manager is not appointed in the department) can approve any

amount up to BDT 20,000 if he/she is delegated by the Head of the respective

sector to control budget of the respective project/program.

A.1.4 RPC/RPM will approve any amount up to BDT 30,000 for the respective area

/regional office.

A.1.5 Head of sector/ section can approve any requisition up to BDT 30,000.

A.1.6 Expat can approve any amount up to BDT 50,000.

A.1.7 Deputy CD/Head of Finance can approve up to BDT 50,000 which is not for

his/her own department.

A.1.8 HOP/HoFA/FAM will approve any requisition up to BDT 1,00,000.

A.1.9 CD will approve the requisition for any amount.

A.2. Approval Authority for Travel Approval Form (TAF): In-country and international Travel. A.2.1 The CD will approve the Travel Approval Form (TAF) only for his/her direct supervisee.

A.2.2 The HOP/HOFA/FAM will approve TAF, Visit Plan and Visit report only for his/her direct

supervisee.

A.2.3 TAF for the staff other than above mentioned staff will be approved by the respective

Head of sector/section /RPC/RPM.

A.2.4 The CD will approve TAF for the staff for any kind of official International visit.

A.2.5 Any kind of Air travel will be approved by the CD.

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A.3. Authority for Approval of Voucher’s Top Sheet (IRB printed color vouchers)

For IRCO

A.3.1 Head of Finance can approve up to BDT 30,000 if it is for own department’s approval

(and up to 50,000 which is not for own department)

A.3.2 HoFA/FAM can approve up to BDT 1,00,000

A.3.3 Country Director can approve for any amount.

A.3.4 Head of Finance can approve Journal voucher up to BDT 10,00,000 where related

supporting documents are pre-approved by the CD.

For Field Office

A.3.4 PC/ Project Manager /Area Manager as the in-charge of the field office can approve

up to BDT 30,000 (in case of more than one PC/PM/Area Manager working at the same

Field Office, only In-charge of the Field Office will sign) along with the Field Finance

personnel.

A.3.5 RPC/RPM can approve up to BDT 50,000.

A.3.6 For the amount higher than mentioned above can be approved by the Head Finance,

HoFA/FAM and CD as per authority grid.

A.4. Authorized limit for Daily Petty cash.

For IRCO

A.4.1 For normal situation, limit is BDT 150,000 and for emergency situation, limit is BDT 300,000.

For Field Office

A.4.2 For normal Situation, petty cash limit is BDT 10,000 for Single Project Field Office but this is

BDT 5,000 for each project under Multi-projects’ Field Office. Rangpur Area Office can

increase it up to BDT 10,000 per project based on the need assessed by the local

management. For Emergency situation, limit is BDT 100,000 for all field offices.

A.5. Per-diem and accommodation while in official travel. (for more detail pl refer to HR manual)

A.5.1 Per-diem for 3 meals and incidental is BDT 1000. Breakfast is 10%, lunch 35%, diner 35%

and incidental is 20%. Time for per-diem; breakfast if visit starts before 8 a.m, lunch

before 2 p.m and diner before 8 p.m. For returning from the visit timing will be AFTER the

mentioned times. Incidental will be entitled if at least one meal is entitled. In the case of

residential training/meeting/workshop, where per-diem is applicable, if food is provided

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by the office, incidental will be applicable. Per-diem will not be eligible if field trip does

not cover minimum 4 hours.

A.5.2 During field visit, the driver will be entitled only for one benefit, that is, per-diem except

visit on holiday & weekend. For holiday and weekend, they will be entitled for both per-

diem and overtime maximum 8 hours.

A.5.3 Maximum reimbursement against accommodation cost will be BDT 1,500 with receipt

and BDT 500 without receipt for all grades. Special permission can be taken from the

CD as need basis specially when staff visits in high cost area or visit with donor.

A.5.5 During field visit or travelling of lactating mother (5 years after given birth) can take an

attendant for her child. Attendant will get actual conveyance, food and

accommodation.

A.5.6 In case, any employee works with the permission of his/her supervisor in his/her

office/station after 8p.m, he/she will be eligible for diner within TK 300 only for the

working days.

For weekend/holiday, CTO, food (TK 300 if works beyond 8.pm) and local conveyance

(actual) will be entitled for all staff. Support staff can claim OT instead of CTO. OT will

be calculated only for actual working hour. OT & Per-diem will be considered based on

the reporting time (in/out) in the office. However, starting and ending time will be

considered for per-diem claiming those who will be picked-up or dropped-off at his

/her residence by IR Vehicle/public transport for field trips.

A.6. Threshold for procurement.

For Field Office:

A.6.1 Ceiling for purchase in cash and without quotation at field Office.

a) Up to BDT 10,000 for Single Items.

b) Up to BDT 20,000 for multiple items.

c) For RTC materials, it is up to BDT 30,000 for Multiple items

d) If purchase amount is above BDT 10,000, payment will be by A/C payee cheque.

A.6.2 Purchase by quotations at Field office.

a) Single item costing above BDT 10,000 up to 20,000 needs 3 quotations and CS. WO will

be issued by the Chairman of the Procurement Committee of the Field Office. Single

item costing above BDT 20,000, IRCO will procure as per policy.

b) In case of the field office where RPC/RPM is available, item costing above BDT 10,000

up to 30,000 needs 3 quotations and CS. RPC/RPM will issue WO up to BDT 30,000.

c) Multiple Items costing above BDT 20,000 up to BDT 30,000 need 3 quotations and CS.

Chairman of the Procurement Committee of the Field Office/RPC/RPM as per authority

level will issue WO. Multiple items costing above BDT 30,000 will procured by IRCO as per

policy.

For Country Office

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A.6.4 Ceiling for purchase in cash and without quotation at IRCO.

a. Up to BDT 10000 for single item.

b. Up to BDT 50000 for multiple items (individual item will be up to BDT 10000)

d. If purchased amount is above 10000, payment will be by A/C Payee cheque.

A.6.5 Purchase by quotations at IRCO.

a. Single items costing above BDT 10,000 needs 3 quotations and CS. WO will be issued by

the Head of Finance/Head of Procurement up to BDT 20,000(not for Finance/Procurement

department),by the HoFA up to 1,00,000 and above by the CD.

b. Multiple items costing above BDT 50,000 need 3 quotations and CS. WO will be issued

by the HOFA up to BDT 1,00,000 and above by the CD.

c. Food items will be considered as multiple items and procured as per policy mentioned

above. A.6.6 Donor compliance: If donor’s procurement policy for the particular project is stronger

than that of IR,B, IR,B will follow donor policy.

A.6.7 Above BDT 20,00,000, for single or multiple item procurement will be through press-

Tender.

A.6.8 Items costing BDT 10,001 to BDT 2,000,000 need at least 3 sealed quotations through

RFQ. Sealed quotation should be dropped in the Tender Box.

A.6.10 RFQ can be sent through email by procurement department. IR,B will use specific email

ID to receive quotations. Email password will be set up by at least two personnel; one is

from IT and second from Admin/log. They will check email and open quotations, sign

and handed over to the procurement department after the closing date and time of

quotations. Procurement will present all these to the Procurement Committee.

A.7. Authority level for approval of other than mentioned above.

A.7.1 Any kind of benefit/allowance like Mobile Phone Set, Modem Facilities with Limit &

ceiling, conveyance (extra), medical, hardship, and Financial Assistance to the staff as

a help from the organization, etc will be approved by the CD.

A.7.2 Payroll, Salary Increment, Appointment, Acceptance of Resignation, Staff Final

Payment at the time of separation will be approved by the CD. “No other Claim” and

joining letter (below officer level) will be approved by the Head of HR.

A.7.3 Donor’s Contract, Financial Reports to Donor, Partnership Agreements/ToR/DoA,

payment of installment, Appointment of Auditor, Acceptance of Audit report,

consultant agreement/contract will be approved by the CD. Financial report may also

be approved by the Finance Manager.

A.7.4 Contract with third party for hiring office /house with Landlord/ Office-owner, will be

approved by the Operation Support Manager, HoFA & CD as per their authority level.

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The value will be the total rent amount within the contract period mentioned in the agreement.

A.7.5 Disposal/sale and auction of assets, equipment, vehicle, etc will be approved by the

CD.

A.7.6 Banking issues: a/c opening, closing and signatory changing will be approved by the

CD

A.7.7 Fund transfer one bank to another will be approved by the CD

A.7.8 Budget will be approved by the CD.

A.7.9 Training external/abroad for payment will be approved by the CD.

A.7.10 Requisition for store and warehouse materials at the IRCO will be approved by the

OSM/HoFA/CD as per authority level. At the Field Office level, the same will be

approved by the Project Manager /office In-charge verifying the required materials.

B. PAYMENTS B.1. Advance

B.1.1 Types of Advances:

(a) Travel Advance- For Per-diem, Incidental, accommodation, transport and local

conveyance.

(b) Miscellaneous Advance- For miscellaneous small expense and the payment which is

beyond the bracket of petty cash payment.

(c) Advance for “Cash Transfer” to the beneficiaries

(d) Advance for purchasing of beneficiary’s Asset.

(e) Advance for “cash for work” /Cash for training of the beneficiary.

(d) Partner NGO Advance- Based on the signed Memorandum of Understanding

(MOU)/agreement and stipulated installment schedule as agreed on the MOU/agreement.

(e) Advance through “I-Owe-to-You” (I.O.U).: To meet up the day to day petty expenses

such as vehicle maintenance, food for training/ meeting/ workshop, daily labor, cleaning, flexi

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load/ scratch card for mobile phone/internet modem, office building repair and equipment

maintenance, etc staff admin staff can

B.1.2 Common Rules for all Types of Advances other than PNGO & Vendor’s advances.

Request for advance shall be submitted to the finance section at least 3 working days before

the required day. CD can grant exception to this for urgent requirement. Advance will be

given by cheque if the amount is above BDT 10,000 (Except cash for Work scheme, Beneficiary

Cash Transfer and Cash advance for beneficiary asset procurement).

Other than PNGO’s Advance shall be adjusted within 7 days (except in case of beneficiary

cash transfer and cash advance for procurement of beneficiary assets) after completion of the

activities. PNOG’s advance will be adjusted as per MOU/Agreement. Employees are strongly

discouraged to submit request for 2nd Advance before adjustment of 1st one. The bill will not be

paid or reimbursed if they cannot be read, with any alternation, not signed by the authorized

persons or if they are for any personal use.

Finance shall maintain a list of advance amount against each employee and the adjustment

shall also be made accordingly. If the respective staff fails to adjust the outstanding advance

within one month after returning from filed trip or completing of activities advance will be

adjusted from his/her salary. In case of termination of an employee, IR,B can deduct any

outstanding balance from that employee’s final payment..

All level of staff is allowed to be reimbursed their bill/invoice/perdiem and adjust their advance

only in their work station. For emergency situation, staff may be allowed to take only advance

from the visited IR office with the consent of his/her supervisor.

B.1.3 Travel advance & its adjustment:

Advance Payment Documents (duly approved by the respective approval authority):

- Advance Requisition Form (ARF).

- Travel Approval Form (TAF).

Adjustment Documents (duly approved by the respective authority):

- Summary of Expense Report (Top Sheet).

- Per-diem Form

- Supervisor’s acknowledging signature on receipt of Visit report on the expense report

- PR for Air ticket approved by the CD.

- Relevant receipts:

- Original accommodation bill.

- Bus/Air ticket. For air travel, boarding pass also.

- Local conveyance bill (with English)

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B.1.4 Miscellaneous advances & its adjustment:

Miscellaneous advance can be taken by the concerned office staff who usually deals with

miscellaneous office work that resulted to incur some expense. Any payment where the

amount is less than Tk 10,000.00 and the vendor/s or parties are reluctant to receive cheque

payment should also be paid from the miscellaneous advance. Miscellaneous advance

amount would be an amount of Maximum Tk 10,000.00. The employee can take a further

advance after adjustment of the previous one. Advance should be adjusted within a week

after completion of the subject work. Miscellaneous advance request shall be filled up with

necessary break up of expense of the requested amount by the requester and duly approved

by the respective authority.

Besides, the project staff can also receive miscellaneous advance for any occasional project

activities/events that requires cash payment duly approved by the respective authority.

Miscellaneous advance should also be given upon adjustment of the previous miscellaneous

advance (if any). However, if the purpose of the advance and the activities are different and if

it is found that the previous activities have not yet completed and the previous advance has

not yet exhausted but a further advance is required for another emergency activities, the

concern supervisor may recommend for another advance for the employee in an exceptional

ground.

Advance Payment Documents (duly approved by the respective authority):

- ARF (Advance Request form).

- PR (Purchase Requisition)

Adjustment Documents (duly approved by the respective authority):

- General Voucher(s).

- Original Invoice(s).

- Original PR.

- GRN (Printed)

- and Top Sheet.

B.1.5 Advance for “Cash Transfer (cash for work, training allowance, subsistence allowance and cash for productive assets) ” to the beneficiaries

B.1.5.1. Precondition of Cash Transfer –

- As per project proposal and organization policy, beneficiary master list will be

prepared. Muster list must be approved by the Country Director. Original copy of this

list will be submitted to the finance.

B.1.5.2 Procedure of Cash Advance

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- After approval of application (in case of SHG)/business plan (beneficiary) /cash transfer

plan by the respective Project Manager and endorsed by the respective Head of Sector,

assigned staff will prepare group/cluster base Cash Advance Request along with above

supporting docs. Group wise number of beneficiaries must be mentioned in the Advance

Request.

- Cash Advance must be checked by respective Account Officer/Assistant. She/he will

check availability of budget against advance request and proposed beneficiaries are

included in approved master list of beneficiaries of the project.

- Respective Project Manager/RPC/Head of Sector/CD whatever applicable will approve

Cash Advance Request according to respective authority grid ensuring proper level of

authority such as check, recommendation and endorsement as applicable.

- Cash advance must be submitted at least two working days before distribution so that

respective Account Officer/ Assistant and PM/RPC gets sufficient time for checking and

approval for issuing of cash advance.

- One staff will be eligible for one advance at a time.

- New advance will be issued after ensuring adjustment of previous one.

- In exceptional case or /situation, 2nd advance can be considered depending on proper

justification provided by the respective approval authority.

- Advance must be adjusted within 3 consecutive working days after disbursement among

the beneficiaries and in case of any special situation; duration can be extended for

another 2 working days subject to proper justification of respective approval authority.

B.1.5.3 Procedure of cash transfer/disbursement to beneficiaries

- The advance can be paid to respective staff through cash or cash cheque.

- Finance personnel will accompany with the respective project staff who will receive cash from

the Bank.

- In case of group/cluster base cash transfer at field level, finance personnel will be physically

present as a witness at the time of distribution. Vehicle support can be provided if required

and available.

- Before disbursement, on the top of the Master roll; there will be (i). prepared by the respective

project staff (APO/FF), (ii) verified by the project/program officer and (iii)recommended by

the project manager.

- After Disbursement, at the bottom of the master roll; there will be (i) paid by the advance

recipient, (ii) checked by the respective supervisor and by the RPC/RPM (as applicable), (iii)

witnessed by the Finance staff and LG Representative and (iv) Endorsed by the Head of

Sector.

- In case of failure of transferring any or few beneficiaries’ cash due to different reason;

respective staff will return the full amount to Field office finance with a short explanation and

- respective supervisor consent within 1 working day. Finance will give money receipt to the

respective staff.

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01 June 2013

- RPM/RPC can approve any amount up to BDT. 50,000 if proposed advance request is for

beneficiaries’ cash transfer.

- It is highly encouraged to disburse beneficiaries’ cash transfer through beneficiaries’ individual

bank accounts which is a requirement of the government.

-

- The cash disbursement spot will be selected by the respective the project personnel as

convenient. Numbers of spot will be determined based on the availability of finance staff

under the respective project/filed office so that finance staff can be witnessed.

- Revenue stamps should be used in master role as per government rules/procedure.

- One Master role sheet could not be used for disbursement of 2 group’s cash.

B.1.5.4 Advance Adjustment

- Original master role with all respective people’s signatures and revenue stamp for BDT 10 for

each beneficiary.

- Photo copy of advance request (finance will attach)

- Attendance sheet (required for Cash for Work or Cash for Training)

- Before submitting bill to the finance, it must be properly checked and endorsed by the

respective authority.

- Respective finance staff will check all papers according to finance guideline and settle/adjust

bill.

- Project team will give sufficient time to proper checking of bill documents (at least two

working days)

B.1.6 Cash Advance for “Beneficiary Asset Transfer” .

B.1.6.1Precondition of Asset Transfer –

- Approved master list of beneficiaries will be considered for this advance.

- Proposed asset must be based on TNA or IGA skills and agreed by respective beneficiaries.

- In case of SHG, group resolution mentioning the name of proposed beneficiaries and

IGA/Asset must be attached with application.

- A signed agreement/bond form must be attached with application mentioning payment of

regular installments and proper management of IGA.

- The format include the name of beneficiary, name of respective dependent (if any), address

of beneficiary, name of Samity/group, type of IGA, quantity of asset, expected value of

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01 June 2013

asset/goods, maximum amount allocated from project, signature of group/samity president

and secretary and attached photographs.

- After fulfilling above things, assigned project staff including Community Officer/Organizer (CO),

Social Mobilizer (SM), Field Officer (FO), Branch Manager (BM), Procurement Assistant (PA) and

Project Officer (PO) will forward application with relevant papers to respective

Supervisor/Manager where applicable.

- Respective Supervisor will check proposed beneficiaries name with approved master list,

IGA/TNA report, application format information, group resolution, agreement and other

information and forward to respective Project Manager.

- Respective Project Manager will further check and approve it.

B.1.6.2 Procedure of PR and Cash Advance

- After approval of application by the respective Project Manager, assign staff will prepare

Procurement Request (PR) and Cash Advance based on approved application.

- PR and Cash Advance must be checked and signed by respective Account Officer/Assistant.

She/he will check availability of budget against advance request and proposed beneficiaries

are included in approved master list of beneficiaries of the project.

- Respective Project Manager/RPC whatever applicable will approve PR and Cash Advance

according to respective authority grid.

- PR and Cash advance must be submit at least one working day before so that respective

Account Officer/ Assistant and PM/RPC get sufficient time for checking, approval and issuing

of cash advance.

- One staff will be allowed for one advance at a time.

- New advance will be issued after ensuring adjustment of previous one.

- Special case/situation can be considered for issuing 2nd advance subject to satisfaction of the

respective approval authority.

- Advance must be adjusted within 3 consecutive working days after receiving advance and in

case of any special situation; duration can be extended for another 2 working days subject to

satisfaction of respective approval authority.

B.1.6.3 Ceiling of Advance and Approval Authority

- Respective project staff including CO and SM can be received maximum of BDT. 35,000 at a

time and PA, PO and BM can be received maximum of BDT. 50,000 at a time.

- The advance can be paid to respective staff through cash or cash cheque.

- In case of field office based staff where finance personnel are not available, project office

finance will provide cash against advance request through visiting field office, respective

- project manager or any senior staff of project will accompany with finance staff. Vehicle

support can be provided if required and available.

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01 June 2013

- In case of failure of procuring asset; respective staff will return the full amount to office with

explanation and respective supervisor consent within given time frame of retaining advance.

- Respective Project Manager/RPC can approve any amount up to BDT. 50,000 if proposed

expense requested for beneficiaries cash transfer. (Only RPC/RPM will exercise this approval

limit where RPC/RPM position is available).

B.1.6.4 Procedure of Beneficiaries Asset Procurement

- Assigned staff will facilitate to purchase beneficiaries asset from community/village or nearest

market/hat.

- The procurement spot must be chosen by respective beneficiary/committee members and or

facilitated by respective staff.

- Asset must be purchased through and by active participation of procurement committee

consisting of 2 members from respective group, respective staff and respective beneficiary.

- Staff role should be a facilitator throughout the procurement process.

- The rate of asset must be fixing up by the committee member and agreed by respective

beneficiary.

- Respective beneficiary can nominate/accompany her any male/female personnel during

procurement of assets.

- Purchase will be made in cash/cheque and payment must be settled in presence of

committee members.

- Respective beneficiary can provide additional amount if selected/chosen asset value exceed

project allocated budget and it must be documented in invoice.

B.1.6.5 Bill Adjustment

- Original PR

- Original invoices (printed) must be submitted in case of asset/goods are procured from

market/shop/vendor with signature/thumbprint of seller/shopkeeper.

- If live asset procured from cow hat/bazar, hasil must be attached with the bill.

- If any asset procured from village farmer/community peoples, respective staff can use IR, B

prescribed invoice and handover format.

- This format will be treated as procurement bill/invoice signed by the respective purchase

committee members. The buyer name will be X beneficiary of Y SHG and Z project of IR,B. the

beneficiary’s name and ID number also be written on the voucher. Beneficiary also will sign

mentioning that “She/he has received the goods/asset in a good and functional conditional

condition as well as the written purchase value of asset is actual /accurate”.

- Revenue stamps should be used in this bill/format as per government rules/procedure.

- Signature of procurement committee members must be ensured and properly checked before

submitting bill to finance.

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01 June 2013

- Project team will give sufficient time to proper checking of bill documents (at least one working

days).

- If the said assets are procured through competitive bidding process, following documents are

needed to pay vendors; Original PR, at least 3 quotations, CS, WO as per authority level, IRB

GRN, Beneficiary master roll duly signed, stamped, endorsed by local government, etc.

Payment will be by account payee cheque.

B.1.6.6 Assets Hand Over to the Beneficiary:

- The prescribed handover format (Asset Transfer Form) will be used for this and beneficiary or

his/her nominated person will sign hand over documents. Details of the assets such as; value,

date of purchase, comments/ condition, signature of beneficiary, signature of respective staff,

signature of procurement committee member etc, must be mentioned in the handover

format.

- After hand over the asset/goods, the respective beneficiary or her nominated person will be

responsible for any kind of loss or damages. SHG project will not take any responsibilities for any

kind of loss or damage after hand over the goods/asset.

B.1.6.7 Asset’s recording:

- Asset transfer register would be filled up by the respective staff/project according to

prescribed sheet. Respective Manager will ensure the entry of this register.

- Respective Community Organizer/project assistant/officer/Social Mobilizer/Field Officer, where

applicable, will ensure proper entry of asset in respective beneficiary Pass Book after transfer of

assets.

B.1.7 PNGO’s advance (Fund) & its adjustment:

Partner NGO (PNGO) advance will be made according to the signed Memorandum of

Understanding (MoU)/Terms of Reference (ToR)/Agreement/Contract and the stipulated

schedule of Installments payment of the committed fund. Finance will maintain a list of the

PNGO and their payment schedule provided by the respective program(s). In case of PNGO

advance, the adjustment would follow the terms & conditions outlined with the clauses of the

MoU/ToR)/Agreement/Contract. Installments will be paid by account payee cheque in the

name of the PNGO or through bank transfer. To receive fund, PNGO must have separate bank

account in the name of the project in the scheduled bank.

Advance Payment Documents (duly approved by the respective authority):

- MoU/ToR)/Agreement/Contract.

- Written request by the ED/CEO of the PNGO in official pad.

- Recommendation of the respective Head/Head of Sector of IRB.

- Terrorist screening result sheet (Ensured before signing of MoU)

- Approval of the CD of IRB.

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01 June 2013

- Fund will be transferred as per MoU.

Adjustment Documents (duly approved by the respective authority): -

- monthly/quarterly fund statement (Cash flow statement) as per books of accounts.

- Expense Report (budget – Expenditure variance Report)

- Statement of Clarification for 10% of over/under spent.

- Bank statement with reconciliation statement

B.1.8. Advance through “I-Owe-to-You” (I.O.U).

To meet up the day to day petty expenses such as vehicle maintenance, food for training/

meeting/ workshop, daily labor, office cleaning, flexi load/ scratch card for mobile

phone/internet modem, office building repair and equipment maintenance, etc, admin and

procurement staff can take advance through I.O.U slip.

Preconditions;

i) I.O.U slip will be renumbered and printed. One I.O.U slip will have 3 copies; one is for

customer copy, one is for voucher copy and last one will be with I.O.U book.

ii) Expense will be within BDT 10,000.

ii) Advance will be adjusted within 2 days from receiving of advance.

Documents for advance.

i) Approved PR (Photo Copy).

ii) Approved I.O.U

Adjustment documents

i) copy of I.O.U

ii) Original copy of PR

iii) SGRN

iv) Invoice

v) Attendance sheet/participants list as applicable.

vi) 10-Taka-revenue-stamp is for expense of Tk 400 and above.

B.2.1. Vendor/Party Payment Vendor will directly submit their invoice/bill to the finance department. Finance will inform

procurement/admin department to submit related documents for processing of payment.

Within five (5) working days finance will make payment after having related documents from

procurement Department. Finance will make payment as per terms and conditions mentioned

in the work order but following clauses are mandatory but not limited to mention in the Work

Order as terms and conditions;

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01 June 2013

- Last date of delivery

- Penalty for each delayed day

- Payment by cross check if amount is above our Cash purchase limit

- VAT and Tax Issue

- Partly payment issue (highly discouraged as it is risky to keep records of previous payment

and records of tax/vat deduction at every partial payment).

- Child safety and anti bribery polices.

If vendor make invoice in Musak-11, finance will not deduct VAT at source. Also, if the vendor

deposits related tax in the government treasury in advance and submits finance the deposit

challan with the invoice, finance will not deduct tax at source.

Any bill made against purchases of capital assets/Fixed assets/Office equipment/Non capital

assets will have inventory/register record of the item. Procurement will attached this record

with document for payment. The bill will not be paid or reimbursed if they are unclear, altered,

not sign by the authorized persons of if they are for personal use.

Payment documents (must be original copy and duly approved)

- Invoice/bill

- Delivery Chalan

- GRN/SRN

- Purchase Requisition

- ID number in case of Fixed assets (capital/non-capital) as per asset register.

- 10-Taka-revenue-stamp is for expense of Tk 400 and above.

- Anti-terrorism screening result sheet.

If procurement is made through quotations in addition to above following documents are also

required;

- RFQ

- Quotations original copies

CS with Procurement Committee approval

- Paper cutting if it is through advertisement in the Daily newspapers

- Work Order

- Valid Trade license

- Valid VAT registration certificate

- Valid TIN Certificate

- Letter to unsuccessful vendors.

- Photocopy of the Bank Grantee/Pay Order/Bank Draft against earnest/security money, if

applicable.

- VAT /tax chalan , if available, to avoid VAT/tax deduction at source.

Finance will attach following documents with invoice:

- VAT calculation sheet.

- TDS calculation sheet.

Regular/Enlisted Vendor Payment

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01 June 2013

- Vendor’s/supplier’s payment shall be made by a/c payee cheque irrespective of amount.

Vendor will receive cheque giving acknowledgement of receipt.

B.2.2. Payment for consultancy/evaluation/survey work/legal Advisor/External Auditor/video documentation.

HR will hire consultant as per project/section’s need following the same procurement

process applied for procuring of service (ToR, PR, Collect proposal from the respective parties,

profiles, CS and WO, etc). Payment could be made either by installments Or the whole

contract value could be paid after submission of the final report. Consultant will submit final

report for final payment

If the payment is by installments, schedule may be as follows: 20% payment as signing

money, 30% payment after starting field work and the remaining 50% payment will be made

after submission of the final report. Inclusion of reimbursement of travel/filed visit costs like ticket

fare, hotel/accommodation bill, per-diem and local conveyance in the agreement is highly

discouraged.

For Hiring legal or Tax advisor, payment may be paid on the basis of specific assignment/task

or monthly basis. In this regard, retainer-ship can also be considered.

For External auditor, enlistment with NGOAB is must.


- PR with ToR - Proposals/profile/quotations with profiles - CS - Interview sheet, if applicable

- WO/agreement - SRN (Service Received Note) - Draft Report with project/section certification for payment of second installment. - Final report with project/section certification for final payment. - Other travel documents like Ticket for fare, accommodation invoice, per-diem and local

conveyance if agreement includes the clause (should follow IR, B policy/procedures) of

reimbursement of these costs.

B.2.3. Beneficiary Payment

B.2.3.1 Cash Transfer, Cash for work/training and Beneficiary assets transfer

Please see sections B.1.5. to B.1.6

B.2.3.2 Payment of Microcredit (MC) Loan -


-

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01 June 2013

- We will follow micro credit operation guidelines/policy. As the minimum requirement

following documents will be required for sanction of MC Loan.

- Group resolution.

- Application for loan duly signed by the beneficiary and approved by the IR MC

management.

- Invoice or Hasil or seller acknowledgement on IR format with revenue stamp in case of

procuring beneficiary asset/goods from market/haat/village.

-

- GRN: beneficiary will sign for acknowledgement on the application form after receiving of

goods/assets. This will serve as GRN.

-

-

B.2.3.3. Orphans One-to-One Sponsorship Transfer

HQ will send breakdown showing individual BAN/orphan allocation and sponsored donor/IR

Partner. After receiving of the TRANSFER from HQ, Finance will provide program with the actual

exchange rate to disburse sponsorship money among the orphans.

-

- Payment documents (must be original copy and duly approved)

- Sponsorship Transfer Break Down.

- Orphan Wise Transfer Sheet Signed by Program Officer, Head/Head of Sector and the CD

- Bank Transfer Advise Letter signed by the signatory. Top sheet voucher will be approved.

- Issued cheque for the district where bank requires in addition to Advice Letter.

-

B.2.4. Office Rent

IR will have written agreement on stamp paper with landlord for its each office approved by

the authority mention in clause # A.7.4. Admin is the key section for dealing with this. Finance

section will preserve the Original copy of the agreement for audit reference.


At the time of initiating renting of office building/guest house;

- PR

After signing agreement;

- Photo copy of the agreement

- Finance will prepare monthly payment list in Excel Sheet for all Offices’ rent– Finance

Manager and Country Director will authorized the sheet.

- Finance will issue cheque/or pay cash as per policy or agreement.

- Tax will be deducted at source as per government rules.

B.2.5. Payment for Utilities

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01 June 2013

Admin will submit photocopy bill to finance immediate after receiving from WASA/DESA etc for

payment within deadline to avoid penalty for late payment. Admin will preserve original bill to

handover to the landlord at the time of final termination Office Rent agreement.


- Finance will attach photo copy of the bill with the Voucher sheet for approval and issue

cheque.

B.2.6.Staff payments

B.2.6.1. Reimbursement of Travel Expense

Payment to a staff is required mainly when a staff travels for official visits. For this

purpose, a staff can take advance and after finishing the visit (s)he can adjust. In this case,

payment will be made against adjustment of advance stated in clause B sub clause 1.3.

But if a staff travels without advance, he/she can claim reimbursement after finishing the visit.

In this case, he /she will submit same documents mentioned in clause B sub clause 1.3 (except

ARF) to claim reimbursement of the costs.

B.2.6.2. Monthly Mobile Phone Bill

Staff will be reimbursed for monthly mobile phone bill maximum up to his/her entitlement as per

the policy. Excess amount will be booked as his/her personal advance and adjusted with

monthly salary if staff does not pay the office. Approved policy for mobile phone bill will be

followed for this payment.

-

Payment documents if it is office provided SIM (must be original copy and duly approved)

-

- Summary sheet signed by desk officer, Head of Operation Support, Head of finance

manager and approved by the CD.

- Company produced individual bill.

-

Payment documents if it is not office provided SIM but eligible for reimbursement of phone bill

(must be original copy and duly approved).

- Approved memo mentioning staff name for entitlement.

- PR

- Flexi load bill/ payment invoice

B.2.6.3. Internet bill for using internet modem

As same as mentioned above in clause No. 2.5.2

B.2.6.4 Overtime payment

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01 June 2013

The staff, which nature of work is driver or office guard or cleaner or cooks or massager is

eligible for Overtime payment. Overtime will be paid once in a month. Payment will be

calculated as per admin manual. Respective support Staff/driver may work after his/her

working hour on the basis of requisition from the Requester. OT payment will be for the actual

hours worked. During field visit, driver will get OT maximum 8 hours per day on holiday.

Calculation: (Basic salary per month X12 for calculating yearly basic salary)/ 2496 yearly hours

X2 X Actual hours worked as OT.

Per week working hours for above staff: 48

Per week working days: 5

Per year working hours: 2496

Per year working days: 263

Payment Documents (duly approved by the respective authority):

- Requisition for Overtime Form signed by requester

- Overtime Register Form duly filled up by the attendance information from Daily attendance

sheet. Approved by the section manager.

- General bill mentioning BDT amount approved by the section manager.

B.2.6.5 Medical- Hospitalization Expense Reimbursement

Reimbursement will be only for the case of hospitalization and maximum amount will BDT

50,000 per case accept maternity case. Maximum two cases will be reimbursed. In case of

maternity, maximum BDT 30,000 will be reimbursed if hospitalized. For detail please refer to

Medical manual.

Payment Documents (duly approved by the respective authority):

- Hospital admission documents

- Doctor prescription for medicine taken.

- Discharge certificate and bill for accommodation/cabin/ward

- Diagnosis report and related bills

- General bill mentioning total BDT approved by the CD or Head of HR as per authority level

with signatures of Head of HR and respective program/section manager.

B.2.6.6 Salary Payment

HR will prepare initial payroll. Then Finance will calculate tax, PF, deductions (if any), etc and

incorporate in the Payroll. Salary will be paid monthly. Payday will start from 25th of the month

but it is encouraged to pay within the month. Payday for Salary for the field/project based staff

may be on 1st or onward of the following month but in this case there will be written instruction

from the respective Head of Sector. Payroll for all IR field/Upzila/team offices/project/section

will be prepared centrally at IRCO, Dhaka and must be approved by the CD.

Salary details are stated in the payroll section-C

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01 June 2013

B.2.7. Quarterly Orphan one to one payment to sponsored children.

IR, Bangladesh disburses quarterly an amount to the sponsored orphan Children donated by

the different sponsored donors. IR,B Finance will send FTR (Fund Transfer Request) to the IRW

Finance after receiving donor-wise and sponsored-children-wise break down from the IRW

Child Welfare Department.

Documents needed from IRW:

- Donors and sponsored children wise break down from the IRW Child Welfare Department.

- Fund transfer from the IRW Finance

Finance will provide actual rate for disbursement among the sponsored children.

Documents needed from CWP of IR,B:

- (i) Fund Request to transfer to the district IR,B bank accounts for orphan disbursement.

Approved area-wise break-down of fund amount equivalent to the total amount to be

disbursed among the orphan children in that particular area.

- (ii) Forwarding letter for disbursement with the Country Director’s approval.

- (iii)Area-wise list of orphans mentioning BAN, Name, Sponsor fund raising Partner Office, per

orphan amount, orphan bank a/c number, bank name, Gratian name and a/c titled, etc.

Transfer process by the Finance:

- Finance will first transfer fund to the respect district IR,B bank accounts as per above

request by the program. Finance will prepare Bank Transfer Advice from IRCO mother

account/other account to IR,B district bank accounts after approving by the CD on the

payment voucher and signing by the signatories on the advice.

- Finance will also prepare Bank Transfer Advice for transferring money to the individual

orphan bank account. An area/district wise list of orphans will be attached with the transfer

advice.

B.2.9. VAT and TAX deducted at source deposit to the treasury.

VAT and Tax as per government’s rules are deducted at source at time of payment to vendors

and staff and create a liability (Expense or salary debit and Tax/Vat payable credit) for the

organization. This payable VAT/tax is deposited in the treasury twice in a month.

Documents to deposit in the treasury;

- A summary sheet mentioning details of VAT /Tax with approval of Head of Finance and

finally of the CD.

- Fill up treasury challan and deposit in the Sonaly Bank/Bangladesh Bank.

- Fortnightly deducted amount will be deposited to the GoB treasury.

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01 June 2013

B.3. Emergency Response Payment Procedures (Total Procedures; Authority to Payment).

Following authority and procedures are initially applicable for one month from starting of

the Emergency Operations. Period is renewable. For this response, a person designated as The

Emergency Response Team Leader will lead the whole emergency operation.

B.3.1. Authority

- The Central Emergency Response Team Leader can approve any requisition up to BDT

500,000 related to above response.

- The Field Emergency Response Team Leader can approve any requisition up to BDT 50,000

related to above response.

- TAF related to the above response can be approved by Emergency Response Team

Leaders.

- Staff Advance up to BDT 100,000 related to the above response can be approved by the

Central Emergency Response Team Leader.

- Staff Advance up to BDT 50,000 related to the above response can be approved by the

Field Emergency Response Team Leader.

- Bill/voucher up to BDT 500,000 related to the above response can be approved by the

Central Emergency Response Team Leader.

- Bill/voucher up to BDT 50,000 related to the above response can be approved by the Field

Emergency Response Team Leader.

B.3.2. Process for Procurement: Spot Purchase for the above response:

In addition to IR,B’s regular procurement policy following system can be used for above

response up to BDT 500,000;

- A spot procurement committee consisting one finance staff and at least other two staff

will be formed. Where finance staff is not available, 3 staffs will be in the team.

- Quotations will be collected on the spot.

- A spot procurement form will be used (IRCO procurement will provide this format).

B.3.3. Payment (for spot purchase).

- It is highly encouraged to pay a/c payee cheque for above BDT 50,000.

B.3.4. Petty Cash limit for this response.

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01 June 2013

- Limit for IRCO is BDT 200,000.00

- Limit for Field office is BDT 100,000.00

- Every Thursday or day before holiday/strike, normal petty cash limit (BDT 150,000 for

IRCO and BDT 10,000 for FOs) will be replenished so that on holiday/weekend/strike-day

cash is available. Fund can be transferred through mobile banking/Bikash System

during emergency period to the Field offices where emergency occurred. Field Office

In-charge will have official Bikash registration to receive the said fund.

B.3.5. Staff Advance and Adjustment of advance:

- Up to Tk. 100,000 as advance and can be given in cash.

- Advance will be adjusted in the office from where it was received.

B.3.6. Approval of Voucher’s Top Sheet (IRW-B printed color vouchers) related to above response.

- The Central Emergency Response Team Leader can approve up to BDT 500,000.

- The Field Emergency Response Team Leader can approve up to BDT 50,000

B.3.7. Master List and Master Roll will be maintained for distribution of materials/foods among the beneficiaries.

C. Payroll: Initial payroll will be prepared by the HR section

IR,B employees’ payroll for IRCO and Fos will be prepared by the finance department centrally

in its country office. IR,B always pays its employees’ salaries through bank account.

HR department will notify Finance for any changes regarding monthly salaries such as; joining

of a new staff, confirmation, separation, leave without pay etc by 20th of each month so that

Finance can make necessary adjustment in monthly payroll. Any changing information

received after 20th of the month will be entertained in the next month’s payroll.

Finance will send Salary Transfer Letters mentioning name and net take-home salaries of each

staff under the respective Country/ Area/Field Offices to the respective banks. The Bank will

transfer salaries to the respective staff’s bank account accordingly.

PF and other deductions will be made directly from head office and to be deposited to the

concerned bank A/C for staff future fund directly. Finance will issue a payroll slip for each

individual employee furnishing the earnings and deduction. All the staff of IR,B should preserve

the payroll slip for future reference particularly for earnings, deductions, savings and income

tax issues. Staff Salary will be transferred to the individual staff’s bank A/C not before the 25th of

each month.

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01 June 2013

C.1. Payroll Procedures

C.1.1 Documents needed from the Staff by 18th of the month;

- Bank account number for new staff

C.1.2 Document needed from Field office Finance by 18th of the month:

- Staff information regarding resigning, transfer, joining etc.

C.1.3. Document needed from HR by 18th of the month: - Accepted joining letter for the new staff

- Appointment letter/ Contract for the new staff

- Photocopy of JAC approved hiring requisition form for the new staff.

- Salary held up letter/memo/mail, if any, for the existing staff.

- Transfer letter, if any, for the existing and transferred staff

- Resignation letter for the separated staff to held up salary, if any.

- Suspension letter for the staff under investigation, if any.

- Termination letter for the staff under disciplinary action, if any.

- Attendance information for cross charging.

- Memo mentioning allocation of time for the shared staff, if any.

- Letter related to promotion or increment.

- Letter related to any deduction from the salary such as leave without pay, loan repayment

etc.

C.1.4. Finance will Do

Payroll Officer (PO) or designated will prepare payroll (finance part) as per letters from HR for

the month. PO will send payroll to the Head of HR first for his/her check and signature. Head of

Finance will verify the disbursement which will be finally approved by the country director.

PO prepares and sends of Bank Transfer Letters for salary after obtaining signatures from the

bank signatories.

C.1.4.1 Calculation Monthly Gross salary:

Monthly gross salary consists of following components:

- Basic salary

- House rent

- Medical allowance

- Transportation allowance

- PF contribution (organization part)

C.1.4.2. Monthly Deduction of salary Monthly deductions from salary are as follows;

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01 June 2013

- PF contribution (both organization & staff part).

- Income tax as per GoB rules

- Any penalty approved by the CD

- Leave without pay approved by the CD

- Staff welfare fund contribution

- Others, if any, approved by the CD.

C.1.4.3 The procedure of transferring salary to the employee’s bank account is given below:

- “Save as” the last moth salary for following month.

- Make addition in the employee’s list if any staff is newly appointed last month, but subject

to the availability of his / her signed contract, joining report and account number

information from HR department.

- Retain the staff salary if any mail or information is receive in written from HR. ( Sometimes we

can retain the salary on verbal discussion also, but later on HR will have to provide it in

written)

- Put the staff advances/loan deduction amount in column “This Month Loan deduction” but

after checking the staff advance/loan balance from Quick Books.

- Put the staff advances/loan deduction amount in column “This Month Loan deduction” but

after checking the staff advance/loan balance from Quick Books.

- Put the staff personal charges regarding (Mess, Vehicle usage, Telephone, Mobile etc) in

column “Other deductions”.

- If there is any other addition of amount like repayment of excessive deduction to our

employee, it would be inserted in the column “Other addition”.

- If there is any amount of arrears, for example, in case of new appointee arrears for few

days of last month or annual increments arrears. This amount would be entered in column

field “Arrears”.

- The final figure would be available now in the column “Net Salary”.

- After the above steps, get the project wise salary sheet prints by using filter function in

column “Project”.

- Sign that sheet first, and then get the signatures from Finance Manager and finally send it

for CD’s approval.

- For bank letters hide all the columns except Sr. No, Name, Account No, Bank / Branch and

Net salary columns.

- Use same filter function in column “Bank/Branch” for bank wise transfer letters.

C.1.5. Sample of IR,B Payroll

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01 June 2013

D. Fund Management. D.1. Fund Transfer to the Field Office

Monthly advance(s) to run project activities under the Field Office(s) can be taken by the field

office management through the Field Office Current A/C. Field Office sends monthly fund

requisition giving details, that is, name of activities, quantity of activities, rate of cost per

activity, total amount, name of the month, etc, where applicable. Requisition should be

justified by existing approved budget. Requisition should be submitted to the Finance Officer at

least 3 working days before the starting of implementations.

Field offices will close monthly books of accounts by 25th of each month (reporting period is 26th

to 25th of following month).

Field Office will adjust advance by sending Monthly Expenditure Report or by sending Original

Invoices duly approved by the respective authority within 30th of the month.

Documents needed for FO fund transfer:

- (i) Money Requisition Detail sheet showing columns of donor & IRW account code, heads,

budget, expense up to date, budget balance up to date and requested amount for the

month, etc. (Budget- Expense-Balance-Request).

- (ii) Break-down of money requisition showing columns of donor & IRW account codes,

heads, requisition column with sub columns: unit, unit price and Total (unit X unit price).

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01 June 2013

- (iii) If there is more than one project in the same FO, a summary sheet is also required.

Approval process: Prepared and signed by the respective project manager or coordinator or

by the field office in charge with the help of local finance < ----------- > recommended by the

Head of program department (also approved by Head of sector if amount is within Head’s

authority) < ------------------- > reviewed and certified by the head of finance < -------- > or/and

Approved by the CD (if amount is beyond the Head’s authority level).

Deadlines for of Fund Request:

i. Project monthly fund requisition for the next month should reach to the local

finance within 28th of the month on the basis of forecasted expenditure.

ii. The Accountant will verify and compile the monthly requisitions and send to the

Head of sector signed by the Project and Area manager within 30th of each month

for verification and approval.

iii. After critical review the fund requisition by the Head of sector, he/she will send the

requisition to the Head of Finance manager for fund review within 2nd h of the next

month.

iv. Finance Manger will certify and arrange to transfer the fund to the Area

Office/Project Office on or before 5th of the next month.

The procedure of transferring funds to the field offices is given below (for finance):

i. Check the field office funds position that how much funds are available there.

ii. Also, consider the availability of funds in country office bank account for these

transfers. It is prohibited by the IRW to transfer fund one project to another project

without IRW Finance permission.

iii. For Ramadan and Qurbani Programs, HAER will give formal request to transfer fund

to implementing NGOs. Since these funds are committed from IRWHQ, so we

process by adopting the same internal payment procedures.

iv. Same action is taken when we receive the request from Orphan department.

v. If it is needed to inter projects fund transfer for the project running short of fund due

to delay of fund transfer from IRWHQ, get first approval from IRW through their

prescribed form.

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01 June 2013

D.2. Fund Transfer Request (FTR) to the IRW International Office (IRW IO).

IRW IO does not transfer fund automatically other than first month’s cash requirement of the

newly approved project. The country office requests for fund transfer (FTR) monthly to the IRW

IO. FTR is prepared for Individual project which contains Fund Request, Expense report, Cash-

flows/budget of the project , up-to-date customized P&L account extracted from the

QuickBooks .

Documents for FTR;

- Fund Request Sheet in Excel mentioning ; Project Pin, Project Duration, Project Name,

Budget in Original Currency, Budget in GBP, Budget in BDT, Funds Received-to-date (BDT),

Expenditure-to-date (BDT), Fund Balance In BDT,, Cash-flow Requirement in BDT,

Comments/explanation if amount requested is not in line with cash-flow forecast.

- Customized P&L accounts from QBs.

- Cash-flows of the project (Budget in IRW format)

Deadlines for submission of Fund Request:

- By 5th of each month.

The procedure of submission:

Upload this FTR project wise in the AX enterprise portal. See Ax guideline with Finance Depart.

D. 3. Petty Cash Management:

Petty Cash type expenses are defined as expenses that are small and repetitive in nature such

as minor building repair & maintenance expenses, office equipment, IT equipment repair &

maintenance, meeting expense, vehicle maintenance, toll plaza expenses, utility bills and

employees medical bills. However, if the requisition for such an expense is more than BDT

10,000 both for IRCO and Field Office, then payment will be made through cross-cheque. Petty

cash disbursements are not for payment of regular vendors because such payments are

generally made through cheque. Vendor/supplier’s payment shall be made in cheque

irrespective of amount as per GoB rule.

D.3.1. Petty Cash Control Objective

“To ensure that petty cash funds are disbursed only for proper Purposes and adequately

safeguarded and properly recorded.”

Assigned Petty Cashier will prepare a summary daily basis indicating total cash disburse and

cash in hand.

Petty cash withdrawal from bank must be through a single cheque.

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01 June 2013

Assigned Petty Cashier will entry daily petty expense in the petty cash ledger on a regular basis

and at end of the day he/she will close ledger denominating the cash in hand.

Sr. Accounts Officer/Deputy Finance Manager/HoF will surprise count the cash in hand.

D.3.2. Limit of Petty Cash Fund

The petty cash fund is based on the imprest system in which the fund is periodically reimbursed

by a single cheque for the total amount expended from petty cash.

D.3.2.1 Petty Cash Limit for IRCO

- For normal situation petty cash limit is BDT 1, 50,000.

- For emergency situation petty cash limit is BDT 2,00,000.

D.3.2.2 Petty cash limit for single project’s field office.

- For normal situation, limit is BDT 10,000.00

- For emergency period, limit is BDT 100,000.00

D.3.2.3 Petty cash limit for multi-projects’ field office.

- For normal situation, limit is BDT 5,000.00 per project.

- For emergency situation, limit is BDT 100,000.00 overall.

-

D.3.2.4 Petty cash limit for Rangpur Area office.

- For normal situation, limit is BDT 5,000.00 per project. But it can be increased up to BDT

10,000.00 per projects based on the need assessed by the Area Office Management team.

- For emergency situation, limit is BDT 100,000.00 overall.

D.3.3. Security Rules for Petty Cash/Cheque

Petty cash shall never be lying around. Cash/Cheque should be kept in a lockable metal box

during petty cash hours and after the close of the workday, the cash box should be kept in a

locked cupboard/ steel almira which is in a properly secured area.

The key must be held by the assigned accountant. Arrangements must be made when the

assigned accountant is absent. One copy of the key should be kept by the finance manager

for CO/office in-charge for Fos, or his/her designated.

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01 June 2013

Petty Cash shall be denominated by the assigned accountant and re-checked and counter-

signed by the finance/accounts officer daily basis using daily cash count sheet after close of

the workday.

Two persons shall count the cash and sign the cash reconciliation before a new imprest is given

out.

The assigned accountant should never mix petty cash with personal money.

In the event of a theft, the loss must be reported to the IRCO and the Local authorities.

D.3.4. Procedures for Petty Cash Management

Employee can ask for the reimbursement through “General Bill”. The person who is making

cash payments generally follows the process given below:

- Check whether the request is properly prepared and signed by the employee.

- Request for Payment is duly signed and verified by the departmental manger or originator

immediate supervisor.

- Check the authorization of Country Director for payment.

- Check the project name and donor name.

- Budget is available & budget code is properly mentioned.

- Amount mentioned in the requisition duly matched with the supporting bills.

- If the request for payment form fulfills all the above requirements, cashier will put his/her

signature in a relevant box named “Payment prepared by” and handover the Form to the

finance Officer for further verification.

- Finance officer will further check all the bills in detail, if satisfied put his signature in a

relevant box named “Checked by”.

- Before payment assigned petty cashier shall make checked and approved the invoice or

bills by the Finance Manager.

- After that, payment is made to the employee and the bill will reimbursed out of the Petty

Cash Fund.

- Get the signatures of the person who is receiving the cash.

- Affix the rubber stamp “Paid” on all the supporting documents.

The procedure for making cashing payment will remain same but the requirements vary with

the nature of expense.

D.3.5. Petty cash Book

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01 June 2013

The assigned person of the petty cash will maintain a Petty Cash Book and give entry regularly.

He/she will post all the receipts in the debit side and all the payments in the credit side of the

petty cash book. Cashbook must result in a debit balance.

Before leaving office at end of the day, he/she will do balancing of the cash book and

according daily cash count sheet will be prepared.

D.3.6. Replenishment of Petty Cash - The pertly cashier will prepare a cash status sheet/cash count sheet showing the cash in

hand and requirement of cash to replenish the petty cash limit.

- At IRCO the status/count sheet will be checked by another finance/accounts personnel

,who will be finally approved by the HoF or his/her designated.

- At the field office level where only one finance person is not available, Field office in-

charge will be responsible for verification and approval of petty count sheet.

- Petty cashier will prepare voucher and make it approved by the respective authority as per

authority level through HoF or his/her designated.

D.4. Bank Management

All bills/invoices should be produced to the Finance Section for processing of payment at least

five (5) calendar days before the expected date of payment. Finance Section will process the

bill/invoices in accordance with the budgetary provision, accuracy and authenticity of the bill,

necessary approval from the concerned authority and then finalize the bill for payment. In an

exception, emergency payment will be made with the desecration and approval of the

Country Director. Recipient/s of payment (vendor/parties/employee) should receive the bill

directly from the Finance Section. Payment of cash and/or cheque will be made always up to

3.30 P.M. of every working day. Cheque signing and Bank transaction scheduled will be as

follows;

Cheque Signing Bank Transaction

Day Time Day Time

Sunday 11.00 a.m Monday 10.00 a.m

Tuesday -do- Wednesday -do-

Thursday -do- Sunday -do-

This schedule may be changed time to time by the decision of the management. But the

above one will remain valid until further written notice.

D.4.1. Field office bank Account

Every filed office must have bank account if the management wants to do transaction through

that Field Office.

D.4.2 Bank Account opening and Signatory

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01 June 2013

IRW Finance Approval: For opening new bank account or changing signatory or closing any

bank account, prior approval of IRW Finance through Desk officer is must. There is a prescribed

form (BAF)to request IRW Finance for approval.

Common signatory and minimum number of signature on the cheque: The Country Director will

be the common signatory for all bank accounts all over Bangladesh where IR,B project is

running. For signing any cheque minimum any two (2) signatories’ signatures are must.

Nomination for signatory: The country director is the prime authority to approve the name of

the signatory. For field offices, respective head of sector will nominate the person from the field

office where his or her program is running. If more than one project is running under the same

field office, any project can propose name but finally the Country director will approve the

name for signatory. Program/respective department will inform the Head of finance about

nomination by e-mail or letter.

Procedure for inclusion as the signatory: The assigned finance person will collect signatory card

from the respective bank and include all the old and proposed signatories, take specimen

signature of all in the card, collect photographs and management resolution letter with

signature, prepared bank forwarding letter , take signature of the existing signatories, if any, or

of the country director for new bank account and finally submit to the respective bank.

Custodian of cheque book: finance is the custodian of the bank documents including cheque

books.

D.4.3. Procedures for bank Payment

Accountant will submit bills/vouchers to the CD by 11.00 a. m. for obtaining approval of the

Country Director, if it is beyond staffs’ CD’s authority level.

Bank Payments Payment of regular vendors is generally made through cross cheque by following the

procedure given below:

- Check, whether the Payment Request is properly prepared and signed by the person who

prepares it and is duly signed and verified by the departmental manger as per authority

along with the date.

- Check the authorization of Country Director for Payment.

- Check Project name donor name.

- Verify the budget code.

- Whether the budget availability was confirmed from finance before purchase , if it was not,

then payment will be stopped and relevant manager will be informed in writing.

- Amount mentioned in the requisition duly matched with the supporting bills.

- Invoice will be original.

- Bid Evaluation Sheet (BES/CS) will be attached if the purchase is of more than BDT 10,000.

- The amount written on the cheque is exactly matching with the amount given on WO.

- Original Work Order (WO) issued to supplier will be attached.

- Name of payee written on cheque will be exactly matching with the name given in

Payment Request payee’s field.

- Purchase request (PR) in original will be attached with Payment Request duly signed by the

originator, the admin officer and by the admin coordinator.

- Verify the criteria for selection of supplier in BES.

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01 June 2013

- Check whether the prices given in quotation are matching with original invoice.

- Appropriate VAT/tax deduction, for example in case of supplies 2.25% VAT will be

deducted however in case of consultant (10+4.5) 14.50% will be deducted. Standard VAT

rate 15% is some cases applicable need to check before payment. These rates are

changeable time to time. So, for current rate please always communicate with IRCO

Finance.

- Check the signatures of the person who prepared the cheque.

(33)

- Verify from the counter file of cheque whether it is matching with Payment Request or not,

the person who prepared the cheque should sign the counter Cheque Register.

- Verify and cross cheque the amount in word and in figures.

- Cheque prepared for supplier should be marked as “Payee A/c Only”.

- Cheque number will be written on Payment Request.

- Name of bank of which the cheque is issued should be written on Payment Request.

- Signatories should sign right beside the cheque number on Payment Request.

- Make a photocopy of this cheque and attach it with Payment Request.

- Get the signatures of the person who will receive the cheque. All the cheques will be

mailed to the suppliers by the procurement department and to the payees directly by the

finance department.

- Affix the rubber stamp “Paid” on all invoices and on the purchase request form. After this

whole process, the expense will be recorded in the Quick book and the Payment Request

will be filed.

D.4.4. Receipts, Banking for Deposits and Inter Bank Transfer:

IR,B mainly receives fund from its head office; IRW-HQ. It also receives local fund from local

donors. Besides; IR,B earns some local incomes from training venue, guesthouse, bank interest,

etc. All these are direct inflow of fund. Apart from these, there are different types of receipts

but these are not fund flow, such as; Adjustment of Advances, etc.

In case of sales proceeds of old items, , sales of qurbani animal’s skin, etc, which are related to

income, must be supported by proper documents.

All cash/cheque received must be banked on a regular basis (Defined as next day of

receiving of money).

D.4.4.1. Procedures for Receipts and Deposit cash/cheque in Bank

Two individuals under all circumstances should undertake all banking of cash/cheque

(defined: the two individuals, driver may be one individual, who may drive the individuals to

and from the Bank).

The Accountant/s shall provide money receipts for all receipts, other than bank transfer, duly

approved by the Finance Manager or by the Country Director. The Accountant(s) shall

prepare a credit voucher supported by the money receipt/s and the voucher must be

approved by Area manager, Office Inn-charge, Finance Manager and Country Director,

where applicable, as per their authority level.

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01 June 2013

D.4.5. Bank Ledger

Bank Ledger is a subsidiary ledger like Cashbook. Bank ledger includes all transactions made

from bank account and that already entered into the General Ledger. Bank Ledger is very

important ledger to know the up to date fund position at bank account. This is also essential for

checking the entries with the bank statement supplied by the bank for reconciliation purpose.

A bank ledger contains both the debit & credit side as usually like other subsidiary ledger. All

disbursements are entered into the credit column while all receipts are entered into the debit

column. Bank Ledger is normally entered on daily basis.

IR,B is maintaining its bank ledger in the QuickBooks.

D.4.6. Bank Reconciliation

This is a statement by which reason(s) for difference between balance as per bank book and

balance as per bank statement is reported.

Obtaining bank statement from the bank; the assigned person of the finance department will

collect bank statement for the each account from the bank by 3th of the following month.

Reconciliation: The assigned person of the Finance department will prepare bank

reconciliation statement within 10th of the following month for each bank account. Finance

manager will check and finally the CD will approve. The assigned person after approval of the

CD will maintain it in the respective file for future audit or donor reference.

Field office finance will follow the same procedure but after local approval by the local office

–in-charge, the assigned person of the local finance will send it to the IRCO finance

department to incorporate it in the central reconciliation system.

D.4.6.1 Procedures for reconciliation:

a. Start with the bank book. Tick each amount (receipts, then payments) in the bank book

when the same item is found again on the bank statement. Tick the figure on the bank

statement as well.

b. Then examine the bank statement. Look at each item that has been ticked. Check again

that it is not in the bank book, or that you have not forgotten to tick it. It could have been

in the bank book in a previous period and the item will then appear on your previous bank

reconciliation.

c. If the un-ticked item is not in the bank book, and you are satisfied that is not a mistake by

the bank, the item in question should be entered into the bank book. Such items would

include :

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01 June 2013

• Bank charges or interest.

• Standing orders (amounts paid automatically by your bank as instructed by you).

• Returned/dishonored cheques (amounts you have received and banked, and

originally entered as a receipt by the bank, but then cancelled by an entry on the

payments side of the bank statement; you will also need to enter this as a payment in

your bank book, unless the cheque is successfully “represented”).

(35)

• Finally, re-examine the bank book. There will be a number of un-ticked items. These will

include cheques issued by you, or payments into the bank which do not yet appear on

the bank statements. These items should be recorded on your bank reconciliation.

D.4.6.2. BANK RECONCILIATION FORMAT

BANK RECONCILIATION FORMAT

AS ON

Name of the Bank : Account No.

Balance as per Statement

ADD : Deposited but amount not yet credited by the bank

ADD: Bank charge or any payment deducted by the bank but not posted in bank book

Less: Interest credited/amount deposited by bank but not posted in bank book

Less; Cheque issued/payment done by cheque but not placed in bank by vendor/staff

Balance as per bank Book

E. Budget

Budget is the numerical/financial expression of the programming commitments and future

action plans of a particular project /organization for a particular period. Respective

project/section will prepare budget with the help of the finance section.

Zero Base Budgeting (ZBB): All project budgets will be developed by using the Zero-base

Budgeting System which requires a justification for the all expected expenditures. The logic of

ZBB is that specific projected activities provide the basis for specific project expenditures.

Therefore, all project expenses accounts code/ line items are said to begin at zero and are

increased based on activities rather than according to the level of previous year’s

expenditures.

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01 June 2013

E.1. Types of budget for Islamic Relief, Bangladesh.

E.1.1 Project Budget: This is prepared to submit to the donor with specific project proposal. This may also be multi-

year.

E.1.1.1. Different costs of the project Budget

The project budget consists of two types of costs;

i) Total project cost: Summation of the total direct cost and the total indirect costs is the total

project cost.

ii) Direct Project Cost: It is the cost which is fully dedicated for a specific project, for example;

salary of the project manager. If a finance officer is fully dedicated for a specific project, his or

salary is a direct cost for that project.

iii) Indirect Project Cost: This is the cost which is for more than one project. That is, it is not

dedicated for one project but for many. This cost is charged to a specific project at a

percentage of the total cost of a line item, for example, Finance manager salary, Country

office rent, etc. It is also known as the shared cost.

- Indirect cost for Islamic Relief Fund Raising partner Office (IRFPO): Indirect cost for the

project funded by the IRFPO is of two categories; one is the 7% of the total project cost and

second one is the 8% of the total project cost.

-

- Indirect Cost for Institutional Donor funded Project: This is based on the specific donor policy

and system. For example, EU, ECHO, DFID etc allow only 7% of the total project cost.

-

- Calculator of the indirect cost for IRFPO funded project:

-

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01 June 2013

E.1.2. Project Support Budget (IRPS):

It is prepared to support, but not limited to, the core administrative expenses like support staff

salaries, country office rent and other office running cost, etc. This budget is yearly base. In

August, PS budget for the next year will be submitted to IRW.

E.2. Responsibility for preparation Budget

E.2.1 Project Budget:

Respective Head of Sector is responsible to prepare the budget for his/her project/section.

Finance will provide technical and other necessary assistance for this. The CD will finally

approve to submit to the respective donor.

E.2.2. Project Support Budget (IRPS):

Head of Finance is responsible to prepare the IRPS budget consulting with the CD and other

sections. The CD is the approval authority for submission to IRW.

E.2.3. Review of Budget before submission

Finance will finally review the budget getting information from the respective support service

departments like HR, Admin, Media, procurement etc and prepare review sheet. Review sheet

will be finally sent to the Desk officer of Bangladesh at IRW IO after duly signed by the Head of

Finance and the respective Head of Sector.

E.2.4. Time for preparation of Budget

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01 June 2013

Normally Budget is prepared annually. In IR,B also, budget is prepared annually. In IR,B budget

is prepared for three sources of funds; i. fund from IRW HQ for IR,B regular projects, ii. fund from

different institutional donors for specific/emergency/need based projects and iii. fund from

local (Bangladesh) donors. In case of IRW HQ fund the financial year begins from January 1.

So, budget prepared by 20th of August and submitted to the Head Quarter. However,

emergency and need based budget is also prepared as and when needed for emergency

and need based projects. Besides, normally at the eve of designing of a new project, when

project proposal is submitted to the donor, a multiple year budget is also prepared for the

project life. The Multiple Year Budget is prepared as and when any new project proposal is

developed.

Sample of Review sheet

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01 June 2013

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01 June 2013

E.3. Budget Format Both the Project and IRPS budgets will be prepared on the IRW format with monthly cash flows

for IRW approval. Every budget is link with Final Budget sheet, Operational Budget sheet, cross

charging sheet, DCHE Costing sheet, Calculator sheet and working sheet. Budget format also

includes cash flow time frame for whole the project period.

Sample IRW budget form

Please communicate with IRCO finance.

E.4. Budget Monitoring/controlling

Budget monitoring is an important part of internal controlling of financial system of an

organization. IR,B has also the practice of budget monitoring. IR,B prepares a Budget Variance

Analysis Report (BVAR) on monthly basis. The BVAR format contains the Budget line items,

Budgeted amount for the year, previous month’s expense, current month’s expense, Year to

Date expense, annual budget balance and Notes & Remarks column. In case of IR,B the

monthly financial closing is done at the 30th day of each month and the BAVR is prepared

project/department wise and circulated to the concerned management for their review and

future action (if needed) by the 10th of the following month.

E.4.1Control Process:

1. Program will submit finance the approved agreement and budget prior to the start of the

project(s).

ii. Before purchasing any goods or services Finance Manager will confirm the availability of the

fund in the Procurement Requisition (PR).

iii. Following the confirmation by the Head of Finance for IRCO, finance personnel for Field

Offices, the CD will approve the PR as per authority level..

iv. Finance will provide the Head of Sector monthly budget expenditure variance statement

and Head of Sector will according take control measures.

v. Finance will provide the Head of Sector exchange gain/loss statement monthly, where

applicable and Head of Sector will take actions according to revise the budget.

E.5. Revision of Budget

Budget can be revised if respective program/project/IRPS thinks necessary. But as all the

projects are pre-approved and agreed by line items by the donors, donor approval/consent is

required every time if the revision by line items varies above 10%.

Following is procedure for donor approval on revision;

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01 June 2013

“For Project support, approval from desk. For ODS, approval from orphans department IRW. For

everything else, approval from the donors via the desk”.

E.6. Chart Of Accounts (COA) Account(s): it is the head of a specific expenditure under which forecasted future expendable

amount for a specific activity is budgeted. IR,B (also all other IRW country programs) has one

single code for each single specific activity/account. IR,B’s all accounts’ codes are of 4

categories in terms of accounting principle;

- Expenditure accounts codes

- Revenue/income/grants accounts codes

- Assets/recourses accounts codes

- Capital fund/Liability accounts codes

Chart of accounts: COA is the list of all above accounts. IRW all country programs follow a

unique chart of accounts developed by the IRW IO consulting with the country offices. Unique

is required as the IRW is using AX ERP software where different account codes for one line item

is accessible.

COA is attached as an annexure

F. Reporting These types of reports IR,B finance produces;

-

- Monthly variance report

- Quarterly variance report

- Donor report.

- PNGO Report

F.1. Field Offices’ Financial Support and Reporting System

F.1.1 Financial Transactions of the Field/Area/Project Office of IR,B

With reference to the clause no D.5.1. of this manual, there will be a bank A/C in each

individual Filed Offices to support its operation. The field office will maintain accounting records

and prepare monthly financial reports. Main transactions related to the project activities will be

are made from Filed Office’s Bank A/C. Also, expenses like office utility, office supplies,

motorcycle/vehicle fuel & maintenance, travel, per-diem of the field office staffs and other

monthly office running costs will be made from this Bank A/C, if cash payment limit is

exceeded. Bank Cheque book will be maintained in the Head Office , if there is no

finance/accounts personnel based in the particular field office. For the above transactions,

cheque will be signed and sent from country Office to the field office.

Except CAP and Core admin of Rangpur Area Office, bills/invoices shall be sent to CO monthly

basis . The field office shall prepare monthly Receipts & Payments A/Cs and send to the

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01 June 2013

Finance duly signed by the proper authority (as same as fund requisition). After closing of a

project, related documents like bills/invoices/master roll will be sent to the CO.

F.1.2 Monthly and Quarterly Financial Report from Field/Area/project Office to CO:

Accounting period: as the fiscal year of IR is 1st January to 31st December, IR,B monthly

accounting period will close on the 25th of the respective month.

F.1.2.1. Monthly Financial Reporting: (Receipts and Payments A/C)

All staff will submit or adjust their bills/invoices and advance to the project accountant by the

25th of the each month before closing of business. Field office finance person will submit the

monthly financial report to the IRCO on 30th of the each month.

FOs will submit complete reporting package. Schedules of this package are self explanatory

or where explanation is required can be found in the report footnote. The entire package is

required to complete the quarterly financial reporting.

If the schedule is not applicable or there has been no reportable activity, submit the schedule

with an “N/A”.

SCHEDULE SCHEDULE NAME COMMENTS

Schedule-1 Bank reconciliation for each bank account and bank

statement.

Schedule-2 Fixed assets register

Schedule-3 Receipts and payment

Schedule-4 Monthly Fund request.

F.1.2.2. Every month on 30th of the month, one finance person from each filed office will come to IR,B Country Office with the following documents, where applicable:

Monthly financial Reports supported by all bank statements with bank reconciliation

statements according to IR,B existing formats and check and verify by the respective

manager.

Finance accounts for IGA projects (including balance sheet, income & statement/Profit & Loss

a/c, Trading A/c and trail balance etc).

Cash in hand in monthly financial report to be shown with details in a separate sheet (Purpose

of cash to be shown).

Bank Reconciliation must be reviewed by the Area manager/office-in-charge and must be

signed off on a monthly basis. Reconciliation must be prepared for each bank account.

Regular monthly reconciliation of bank accounts must be performed to ensure all remittances

and payments have been deposited / withdrawn into/from the Islamic Relief bank accounts as

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01 June 2013

expected and properly recorded in the general ledger. Any discrepancies must be disclosed

to the manager and resolved immediately.

F.2. Monthly Variance Report to the all Projects.

After reconciliation of the filed transaction and report, IRCO Finance will provide monthly

financial variance report showing burn rate to the concerned program staffs by the 10th of the

following month.

Format:

A/c

code

particular Budget expense variance Burn rate

F.3. Partner NGOs Financial Reporting

F.3.1 Selection of PNGO

PNGO will be selected after assessing by a prescribed assessment form developed jointly by

the management ( PDMFER and programs and support services). An ABC Form developed by

the IRW will also be filled up and sent to IRW. Finally agreement will be signed between PNGO

and IR,B.

F.3.2. Reporting IR,B shall receive monthly financial reports from the PNGOs. IR,B shall report to its head quarter

based on the expenses incurred by the IR,B itself along with the financial reports sent by the

PNGOs. Necessary adjustment for PNGOs reports will also be made if any discrepancies found

during internal audit by IR,B. Adjustment should be made immediately after the findings i.e. in

the next quarterly financial report. PNGOs will submit their financial report using the prescribed

format provided by the IR,B. The PNGOs will report in two sheets, one showing fund flow

statement and the other to show budget variance.

F.3.3 Types of the PNGO Reports i. Receipts and payments accounts (cash flow)

ii. Budget –Expenditure Variance Statement showing accumulated expenditure for the

previous period.

iii. Bank Reconciliation Statement with bank statement

F.3.4 Retention of voucher

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01 June 2013

Original invoices will be retained by the PNGO for 10 years or as per NGOAB regulation if it has

NGOAB’s approval for the respective project. But if PNGO does not have NGOAB’s approval, it

will send all original invoices quarterly to the Islamic Relief, Bangladesh country office.

F.4. Financial Reporting to IRW HQ

F.4.1. Quarterly Financial Reporting and time frame

IR,B reports to its head quarter on quarterly basis. The reporting quarter is Jan-March, Apr-Jun,

Jul-Sep and Oct-Dec. Reporting deadline is the 20th of the following month after ending a

quarter. The Quarterly Financial Report (QFR) includes, the fund flow statement, Budget

Variance Report, QuickBooks produced Trial balance, QuickBooks transaction details.

Format for reporting:

i. QFR formats are prescribed by IRW available with finance .

F.4.2. Types of Quarterly report

i. Quarterly variance report like monthly variance report stated above.

ii. Quarterly cross-charging report

iii. Fund Statement

F.5. Financial Reporting for Institutional Donors

IR,B shall send financial reports to the institutional donors through HQ on their projects as per

MoU/ToR agreed and signed by the both IRW/IR,B and Respective Donors. Reporting Format in

this regard will be as per instruction given in agreement.

G. Fixed Assets’ Accounting For:

IR,B will consider Fixed Asset consisting of anything which the organization owns or buy for use

within the organization and which still retains a value at year end. They usually consist of major

items like Land, Building, and Furniture & Fixture, Equipment, and Vehicle. The term Fixed can

be translated as ‘Long term’ and by that we mean an item which will still retain a significant

value.

G.1. Fixed Assets Acquisition and Capitalization:

G.1.1. Budget Availability.

Fixed Assets additions must be purchased within the budget set for / by Islamic Relief where

appropriate approval must be followed.

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01 June 2013

G.1.2. Value for Capital Assets and Non-capital Assets:

Fixed asset which costs above BDT 5000 and expected longevity of which is more than 1 year

will be treated as Capital Asset (CA). Fixed asset which costs BDT 2000 and up to BDT 5000 and

expected longevity of which is more than 1 year will be treated as Non-Capital Asset (NCA)

but like paper basket, stapler (other than heavy duty), punch machine, pen holder etc will be

treated as consumable items though their longevity is more than 1 year.

G.1.3. Capital Expenditure related procurement of capital assets.

The invoiced net of any supplier discounts, plus tax freight and all other significant cost

necessary to prepare an asset for use should be capitalized. Other capital costs may include:

Initial inspection and testing, installation cost and other similar expenses only if material in

amount.

The cost of maintenance of contract on equipment and software should be expensed when

paid.

G.2. Depreciation

i). Depreciation will be charged as per reducing balancing method.

ii) As the IR,B fiscal year is from January to December, the asset procured anytime/date before

June will be charged for full (100%) of the depreciation rate for that particular asset as

depreciation and the asset procured anytime/date after June will be charged for half (50%) of

the depreciation rate for that particular asset as depreciation

G.2.1 The details of fixed assets and depreciation rate is as under:

Head of Accounts Particulars

Capitalized Assets

Land & Land

Development

Purchase of land and development work of land as land filling

etc.

Building Every kind of construction work, boundary wall, pillar, piling

work, instillation of electric line, seawares line, drainage, gas

line, WASA line, etc.

Depreciation on

Building

Rate will be 2.50%

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01 June 2013

Vehicle All kind of transport vehicle, van, rickshaw, Motorcycle,

Motorcar, cycle, etc.

Depreciation on

Vehicle

Rate will be 20%

Furniture & Fixture Furniture-Wooden, plastic and steel furniture as Cot, bed, chair,

table, file cabinet, Almira, rack, patient bed, TV stand, TV box,

dining table, Alna, dressing able, tool, ladder, hanger, bench,

self, trolley and all kind of fan etc.

Fixture-Carpet, curtain, Bed cover, pillow, Blanket, Cover

fittings, internal decorations, window screen, etc.

Depreciation on

Furniture & Fixture

Rate will be 10%

Office Equipment AC, refrigerator, photocopier machine, microwave oven,

generator, Still Camera & Memory Card, Print Calculator, Video

camera, overhead projector. Multimedia Projector, ?Stabilizer,

TV, VCP, Hand mike set, Tape Recorder, Charger, Fire

Extinguisher, Sillier machine, etc.

Depreciation on

Offices Equipment

Rate will be 20%

Medical Equipment All surgical instruments, First Aid Box, Blood Pressure Machine,

Ultra Sonogram Machine, Weight machine, Surgical Tray,

Diagnostic Box, Spirit Lamp another medical related instrument,

pathological instrument.

Depreciation on

Medical Equipment

Rate will be 20%

Computer Computer, Monitor, CPU, Printer, UPS, IPS, Scanner, Software,

CD Writer, etc.

Depreciation on

Computer

Rate will be 20%

PABX & Telephone

Set

PABX system and all kind of telephone and PABX line

installations, Mobil set, hand phone set, fax machine, etc.

Depreciation on

PABX Telephone Set

Rate will be 20%

Rain Water Harvest Vegetable cultivation, etc.

Depreciation in Rain

Water Harvest

Rate will be 20%

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01 June 2013

Training Materials All kind of materials related to Training like bags, letter piece,

etc.

Depreciation on

Training materials

Rate will be 20%

Books & Journal Journals, Reference books, Subject/Project related CD, books,

Documents, etc.

Depreciation on

Books & Journal

Rate will be 20%

Tube well Deep, Shallow and all kind of tube well.

Depreciation on Tube

well

Rate will be 20%

Slab Latrine

Depreciation on Slab

Latrine

Rate will be 20%

Mobile Phone If the cost price is above BDT 5,000 it will be treated as the fixed

asset. Depreciation rate will be 30%.

Non Capitalized

Assets

Non- depreciable items

Biological Assets This kind of assets like Cow, Bull, Fish, Calves, Nursery & Sapling,

etc.

Kitchen Utilities Plate, Glass, Dish, Knife, Spoon, Water Filter, Gas Burner with

Cylinder, etc.

Other Assets Bathroom Scale, Battery for Mike, View Chart, Packing Materials

for milk, Signboard, white Board, fabric panel, towel, Etc.

G.3 Disposal (Sale) of Fixed Assets

G.3.1 Approval for disposal:

Fixed Asset must have a zero net book value at the time of retirement’s and disposal. If there is

any remaining value, the asset shall first be written off to the appropriate account. All disposal

of fixed asset must be approved by the Country Director of Islamic relief prior and Gain/Loss will

be recorded in accounts. A disposal committee will be formed approved by the CD.

G.3.2. Disposal value

All assets should be disposed at market value regardless of the book value.

G.3.3. Accounting for sale proceed

The individual sale of fixed assets should be recorded under sale of Fixed Asset (disposal)

account. The proceeds should go to the cashbook and should be analyzed separately for

each assets sold. Sales proceed of assets sold will be treated other income or adjusted fixed

assets cost under PSB.

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01 June 2013

G.3.4. sale procedures: As per manual an asset will be disposed / sold but following are at least.

- Authorized staff (admin manger/OSM) or his/her designated will propose for the disposal of

a fixed asset to the CD using the Assets Disposal Form or preparation of note.

-

- OSM/Admin manager will send proposed information to the HQ on prescribed form.

-

-

- A disposal committee will be formed on approval of the CD.

-

- Procure/admin personal on behalf of the committee will assess the minimum market value

of the said asset.

-

- Procure/admin personal on behalf of the Committee will collect quotations/sale offer by

advertisement/RFQ.

-

- After preparing CS, sale order will be given to the highest quoted vendor signed by the

CD.

-

- OS department will update the Fixed Asset Register and Finance will update the Asset

Account and report profit or loss in the Income and Expenditure Account.

H. Employees Future Fund (PF and Gratuity)

H.1 Contributory Provident Fund

Provident Fund is a part of the compensation package. In IR,B, all the regular employees

receive this benefit. Confirmed staff is paid 10% of basic salary monthly as the organization’s

contribution to the provident fund. This 10% of basic salary (organization’s contribution) plus

further 10% of basic salary (staff contribution) is deducted from the staff monthly payroll and

deposited into the Provident Fund A/C. Provident fund amount (both contributions) is payable

only at the event of separation of a staff from the organization as final payment. For easy &

quick understanding of the IR,B PF system, please refer the bylaws/Regulation for the

management of the Provident fund and admin manual.

H.1.1. Procedures of inclusion of PF in Payroll

- HR will submit Finance confirmation letter as regular staff

- Finance will add 10% of basic salary as IR,B contribution in the payroll and deduct 20%

of basic salary to deposit employee PF A/c in the name of the respective staff.

H.2. Gratuity

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01 June 2013

IR,B has a provision of gratuity payment to its employees. Gratuity allowance is equivalent of

one month’s gross salary of the individual employee that is normally charged to the respective

project(s) and deposited in the gratuity account. IR,B settles its staff gratuity in every year for

charging/reconciliation purpose. The gratuity amount does not pay to the staff every year,

instead it is paid to the employees at their separation from the organization as the final

payment if the separated staff has completed at least 1 year of uninterrupted service with IR,B.

For easy and quick understanding please refer the HR manual.

I. Internal Control

This is the system of controls established by management in order to;

- Carry on the business of the organization in an orderly and efficient manner.

- Ensure that management policies are strictly followed.

- Safeguard assets.

- Ensure the completeness and accuracy of the accounting records.

- Inspire confidence in the organization by its funding partners and beneficiaries

I.1 Internal Control Process

I.1.1. Budgetary Control (confirmation of budget availability)

All transactions should be in accordance with the activities that are stated in the donor

approved budget. Expenditures should not exceed budgeted amount. Internal overspent is

accepted up to 10% of the line item but the bottom line budget is not allowed to exceed by

any amount. However, with donor’s approval this is allowed. Respective program manger is

the budget holder and responsible for budget controlling. Finance manger’s confirmation on

the availability of the budget is mandatory before any expenditure. The CD’s approval is

needed if the requisitioned amount is above the Head of Sector’s authority level.

I.1.2. Organization Controls

These include division of the organization’s activities and operations into appropriate

departments, and the appointment of persons to assume responsibility for different activities.

There should be clear lines of authority, and division of responsibility between these persons

and the governing body. Management should ensure good overall coordination of the daily

activities and operations. For example, all procurement will be done by the procurement

department, staff will hired by the HR department and payment will done by the Finance, etc.

I.1.3. Division of Duties

Segregation of duties reduces the risk of fraud and error. For example, finance will pay the

vendor, so finance will not be engaged to the direct procurement to avoid the conflict of

interest.

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01 June 2013

I.1.4. Physical Control

These include restricting physical access to cash, stocks and other assets. For example, is cash

banked regularly and a minimum kept on the premises? If the organization holds large

amounts of cash (or stores) than a small amount sufficient for daily needs should be kept in one

(50)

place, while the bulk of cash (or stores) not immediately required is held elsewhere with

extremely tight controls as to access.

I.1.5. Internal Monitoring of Field offices (FOs)/PNGOs Books of Account

I.1.5.1 Monitoring of FO Finance:

As the IR,B has number field offices to implement its projects directly by its staff, therefore,

internal monitoring to the FOs is an important task of the IR,B. The finance section is primarily

responsible for conducting internal monitoring to the FOs books of accounts for optimum

utilization of fund and ensures transparency in each stage of financial operations. The finance

section will report to the management for necessary action. Each FO should be visited and

monitored by finance staff at least once in every 3 months. Besides, the Head of Sectors are

also responsible for monthly financial monitoring of their projects under the respective filed

office. The purpose of the internal monitoring is to find out any irregularities in financial

operations as well as some sorts of capacity building of the FOs finance/program team in

better financial management.

I.1.5.2. PNGO finance monitoring

The finance section will also monitor the PNGOs for IR,B fund and report to the management

for necessary action. Each PNGOs should be visited by finance staff at least once in a quarter .

Besides, the project Coordinators/Managers are also responsible for monthly financial

monitoring of PNGOs under their respective Field office. The purpose of the financial monitoring

is to build the capacity of the PNGO financial management and find out any irregularities in

financial operations of IR,B’s fund.

I.1.5.3. Process for visit

i. Finance will prepare an annual visit plan and make approved from the CD.

ii. Before going to the field office, finance will inform respective Head of Sector about the visit’s

objectives.

iii. After coming back respective visitor will give visit report to his /her supervisor.

iv. Supervisor will inform respective Head of Sector as well as CD about the reports.

I.1.5.4. Books of Accounts/Records to be reviewed during financial monitoring

I.1.5.4.1. Financial Report

- Arithmetical accuracy of the financial report (summation, balancing etc.).

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01 June 2013

-Review of total receipts, expenditure and balances to be matched with cash book/Bank pass

book.

-Current month’s expense review head wise proofing their matching with the head wise entry

into the Ledger book.

-Expense to date column as resulted after addition of current month’s expense with the

previous months expenses.

(51)

-Budget balances in accordance of the total budget and total expense to date.

I.1.5.4.2. Ledger book

-All the head of transaction should be reviewed

-Expense shown in the financial report for the month under monitoring should be matched with

the head wise ledger entry

-The transactions made in the month under monitoring should be corresponded with the entry

reference with cashbook and voucher

I.1.5.4.3. Cash book

-Each individual transaction, of the month under monitoring, should be reviewed

-Receipts and disbursement should be corresponded with the individual head of expense of

the Ledger book as well as the monthly financial report

-Transactions should be corresponded properly with voucher reference, date and amount

-All receipts and disbursement should be corresponded with the Bank pass book

I.1.5.4.4.Bank Pass book

-Each individual transaction of the month under monitoring should be reviewed

-Deposit and withdrawal should be matched with the transactions entered into the cash book

-Deposit and withdrawal should be absolutely ADP activities related

-Total withdrawal of fund for a month should be corresponded with total monthly expenses as

mentioned in the financial report

I.1.5.4.5 Voucher

-All vouchers should be reviewed with date, amount, supporting and their correspondence

with the ledger book, cash book and financial report.

-Vouchers amount should be matched with the transactions mentioned in the cash book and

bank passbook

-All vouchers should be properly supported by original bills/receipts and these are properly

approved by the management.

I.1.6. QuickBooks Electronic System

Islamic Relief uses QuickBooks, customized accounting software for its recording, reporting of

financial transactions. For the convenience of same accounting practices and procedures in

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01 June 2013

the country offices of the Islamic Relief , it has supplied the QuickBooks CD in all country offices

like Bangladesh. IR,B has started using QuickBooks in its financial operation since Jan 2007. IR,B

has designed its Standard Chart of Accounts for the QuickBooks GL in accordance of its

requirement of tracking of Assets, Liabilities, Revenue and Expenses for different sources of fund

and its outlay in different activities.

I.1.6.1. Financial documents used in supporting to QUICKBOOKS operation

I.1.6.1.1.Vouchers

A voucher is a form used in an internal control system to document information about and

authorization of accounting transactions. All transactions, such as; receipts, disbursement, or

adjustments, must be initiated by preparation of vouchers. Vouchers are the supporting

documents of Journal Entries. IR,B uses four (4) categories of vouchers for journal entries into

QuickBooks; Paymnet Bank Payment, Cash Payment, Receipts Voucher and Journal Voucher.

Vouchers are normally prepared using printed prescribed format. All vouchers carry a serial

number and date. For example BPV 04, where “BPV” represents Bank Payment Voucher, “04”

represents the receipt number represents the voucher’s SL no. Voucher Serial Number starts

from the beginning of a Financial Year. In the vouchers there is a space for explanation of

details of the transactions. Vouchers are duly prepared, checked and approved by authorized

persons.

Procedures

i. Accountant will prepare a voucher based on the supporting documents available.

ii. Finance/accounts officer will check

iii. Finance manager will confirm rechecking

iv. Finally this will be submitted to the CD for approval as per authority level.

I.1.6.1.1.1 Receipt Voucher

Receipt vouchers are prepared for each deposit of funds into the bank account: cash, check,

pay order, demand draft etc. Receipt vouchers are of two categories; Bank receipts and

Cash receipts.

I.1.6.1.1.2 Disbursement Voucher

Disbursement vouchers are prepared for each disbursement of fund from the bank account;

for example advance to partner NGOs, payment of vendors, staff, withdrawal of petty cash

fund etc. Disbursement vouchers are of two categories; Bank disbursement and Cash

disbursement

I.1.6.1.1.3Adjusting/Journal Voucher

An Adjusting Voucher is a voucher that is prepared in order to adjust an original book of entry;

disbursement journal, receipt journal etc. Adjusting Vouchers are prepared for any non-

financial transaction i.e. no financial transaction is made but any previous transactions

adjusted. Normally Adjusting Vouchers are prepared for the following cases; (i) Adjustment of

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01 June 2013

an advance where the expense is equal to the amount advanced (ii) Accruals (iii)

Rectification of any error in proper classification of expenses etc (iv) Cross charging.

Process:

Adjustment/journal voucher will prepared by the Sr. Finance/Accounts Officer.

I.1.6.1.1.4 Journal Entry

Journal entry is the primary entry in the books of Accounts. A journal also known as the Book of

Original Entry in which accounting transactions are primarily recorded in chronological order

before being posted to a ledger. Journal voucher supports each transaction. In computerized

accounting system, journal entry is the only task to get all report and information regarding

financial transactions. Once the journal entry is completed, all the entry should be verified

carefully in terms of date of entry, period of the FY, Source code, appropriate charging etc. if

all the entry is correct, the journal entry can be posted. Once the entries are posted, in no way

it can be changed. Therefore, prior to posting, all entry must be checked properly. Once the

journal entries are posted into the General Ledger (GL), all the reports are updated with

transactions, and any sorts of report can be produced after posting the entries.

I.1.6.2. Data Entry in Quick Books When the payments are made to the supplier or to the payee then we have to enter the

expense in our accounting software known as “Quick Books”.

I.1.6.2.1. General points of Data Entry:

A single individual does not perform the task of entering data into the quick books.

The following points must be keeping in view before entering the data:

- All the entries should be cross checked and verified by operations supervisor.

- Receipt vouchers (RVs) can enter only by the person other than the cashier.

- Data entry of Bank Payments and JV’s should be processed by the person other than bank

payments processing staff.

- The person other than cashier should perform data entry of Cash payments.

I.1.6.2.2. Entering Cash Payment

The procedure for entering the Cash payment is given below:

- Open the quick books go to “Chart of Accounts” in the main menu list.

- A new window will open, then go to the “Activities” and click on the “Make General

Journal Entries” a new window will appear on the screen.

- Put the date in “Date” field.

- Assign a voucher number in the “Entry No” field.

- Enter the expense head in the “Account” field and debit amount in the respective field.

- In “Memo” field put the code of the relevant expense and a little description regarding the

expense.

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01 June 2013

- If the expense relates to Medical, then write down the name of the employee in the

“Name field”. Otherwise, write the name of the donor in name field like IRHQ, DFID, or EC.

ix. In the “Class” field write the name of the project like DIPECHO-V,HELP-UP, CAP, ICAP

etc and in case the expense are not charged to specific project which are being charged to

admin then write “PS-Bangladesh/IRCO/RAFO etc” in class field.

- On credit side enter “Cash in hand” in “Account” field.

Write the credit amount or total amount of the Payment voucher (cash) in the allotted field

- In “Memo” field write the Cheque no, press the space bar twice (Double space) and then

write the narration “Petty Cash reimbursement”.

- In “Class” field write Core Admin-Bangladesh.

- Affix the rubber stamp “Posted” on the Payment Request.

I.1.6.2.3. Entering Bank Payment

All the payments, which relates to the supplier or vendors, should be entered into the quick

books by using option “Enter Bill” and “Pay Bill”.

The procedure is given below:

- Open the quick books go to “Suppliers” in the main menu list and click on the option “Enter

Bills” a new window will appear on the screen.

- Enter the supplier name in the “Supplier” field.

- Enter the date in the next field.

- Assign the voucher number in the “Reference No” field.

- Then enter the cheque number in the “Memo” field.



expense.

- Write the name of the donor in “Name” field like IRHQ, DEC, or EC.

- In the “Class” field write the name of the project like HELP-UP, Sid Livelihood,etc and in case

the expense are not charged to specific project which are being charged to admin then

write “Core Admin-Bangladesh” in class field.

- On the credit side, enter the “Withholding tax payable” in the “Account“ field and credit

the amount in the respective field.

- Then in “Memo” write down the supplier name and the total amount as a reference.

- In “Class” field write Core Admin-Bangladesh.


After that, this particular voucher will be shown as payable in the quick books. So in order to

pay we follow the procedure given below:

- Go to “Suppliers” in the main menu list and click on the option “Pay Bills” a new window w ill

appear on the screen.

- Select the payment and enter specified bank from where the payment is made like “IBBL”

in the “Payment Account” field.

- Enter the date in the “Payment due” field, and then click on the “Pay & New”.

- Enter the cheque number in the blank field and click “Ok”.

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01 June 2013

I.1.6.2.3. Payment through “General Journal Module”:

By following the above procedure, the payment will be entered into the quick books and

the expense will be recorded. On the other side, all the payments, which relates to the

employees regarding “Advances” (above Rs. 10000) should be entered by using “General

Journal”.

The procedure is given below:

- Go to “Chart of Accounts” in the main menu list.

- A new window will open, then go to the “Activities” and click on the button named “make

general journal entries” a new window will appear on the screen.





expense.

- As the expense is relates to an employee so enter the name of the employee in the “Name

field”. Otherwise, write the name of the donor in name field like IRHQ, DEC, or EC.

- In the “Class” field write the name of the project like HELP-UP, Sidr Livelihood etc and in

case the expense are not charged to specific project which are being charged to admin

then write “core Admin-Bangladesh” in class field.

- On the credit side, put the name of the specified bank from where the payment is made

like “IBBL” etc in “Account” field.

- In case the payment is being made in foreign currency, then change exchange rate

according to conversion rate of that particular voucher.

- Write the credit amount in the allotted field.

- In “Memo” field write the Cheque number and then press the space bar twice (Double

space) and then write the narration.

- In “Name” field write IRHQ and in “Class” field write core Admin-Bangladesh.


-

I.1.6.2.3. Entering Receipt Vouchers

The process of entering a receipt voucher is given below:



- On debit side put the bank name in “Account field” and then amount in debit field.

- Put the deposit slip number in the memo field and then press space bar twice and write the

narration of that receipt.

- Put the name of the donor to whom receipt relates in the “Name” field.

- Put the project name in “Class” field like IRHQ etc.

- On credit side write the account to be credited for example Local donations, Advance

against salary or supplier, or Institutional donations, then enter the amount.

- In “Memo” field write the receipt number issued by IR and then writhe the narration.

- In case receipt is in foreign currency then change exchange rate from the field below.

- Affix the rubber stamp “Posted” on the RV.

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01 June 2013

I.1.7.Financial Reports from QUICKBOOKS

Normally the Trial Balance, GL listing/transaction details etc. can be automatically printed for

any information and report preparation. Besides, Sort income statement and Balance Sheet

can be produced from the financial reporter option. There is also the option to design

customized financial report using the Financial Reporter option of QUICKBOOKS in which one

can generate financial report as one desire.

J. Overhead/Cross Charging Costs Calculation

The basis of calculation may be the time factor i.e. the time spent by the shared staff for

support to the individual-service-receiving project or may be the number of staff of the

project(s) divided by the total staff. For IR,B regular projects funded by the IRW HQ, IR,B does

not calculate any OHC ratio for allocation of shared cost allocation to those projects as the

whole OHC budget is met from PSB budget.

However, for emergency and need based projects, IR,B will charge OHC as per ratio based on

budget, duration and staff.

Sample:

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01 June 2013

K. PNGOs Financial Management Capacity Assessment for Partnership

PNGOs selection is an important factor for pertaining a good partnership and ensures proper

fund management. IR,B has some basic criterion for PNGO selection. This criterion is defined

both in programmatic and financial management aspect. Proper fund management is the

most important criteria for using donor’s money and it is the responsibility of both the fund

providing and the fund receiving partners to ensure effective utilization of the fund. Therefore, if

the PNGOs which have sound financial set up, transparency and accountability are selected

for partnership, the grant management of the funding agency become easy and vise versa if

a PNGO with weak financial set up and poor financial management capacity is selected. IR,B

shall assess the NGOs capacity in financial management through practical visit of the NGOs

financial set up, reviewing & cross checking their previous financial practices with other donors

fund etc.

First of all, the Country Director will form an Assessment Committee consisting at least 3

persons; where one program personnel, one finance personnel, one HR person is mandatory.

K.1. Checklist to assess the financial capacity, but not least, for PNGO Selection.

K.1.1. Financial management

01. What is the finance system in place? Is there a finance/HR/Admin manual?

a) Whether the organization maintains cashbooks, ledger books?

b) Whether the organization prepares receipt and payment A/C, income/ expenditure a/c,

balance sheet

c) Whether the organization maintains separate books of accounts and prepares accounts for

different donors?

K.1.2. What are the internal controlling mechanisms?

a) Approval and payment systems?

b) Types, Advance approval, limit, and adjustment duration?

c) Store keeping and asset management?

d) Staff salary payment systems (cash or bank),

K.1.3.Procurement systems? Is there procurement policy?

a) Procurement committee (Number of members, authority level for Work Order etc)

b) Steps for Quotations?

K.1.4. HR

a) Recruitment committee

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01 June 2013

b) Advertisement process

c) Terms and conditions of appointment (JD, appointment letter etc.)

d) Is there any salary structure?

e) Existence of personnel file

f) Leave management

g) Perdiem/lodging rate?

K.1.5. Admin

Internal control-staff attendance register, charging of shared cost if any? etc,

K.1.6. Sampling of bills/ vouchers, appointment and different register etc.

K.2. ABC format of IRW and PIN for the assessed partner.

After finalization of assessment, respective appraisal committee will fill up the ABC format of

IRW and send it to the IRW Finance through Desk Officer. IRW will assign a unique PIN for the

partner. Without this PIN from HQ, fund will be transferred to The partner.

L. Annual External Audit

This is a routine job of each country office of Islamic Relief to submit an external audit report to

its head quarter. In case of IR,B, alongside the requirement by its head quarter, the external

audit is also a statutory obligation to the Government. IR,B conducts the external audit by a

chartered accountants firm that enlisted under the NGO affairs Bureau. IR,B conducts its

external audit for a consecutive 3 years by a selected firm to maintain consistency of the audit

report. In each 3 years, IR,B changes its auditors, if not otherwise advised by its head quarter

and others concerned authority, to ensure transparency in auditing. In selecting audit firm, IR,B

collects firm profile from more than 5 reputed audit firms through its procurement department

and select one from them based on various criterion such as; Enlisted by NGOAB, Number of

principles, number of article ship students, fees etc. Prior to start the audit, IR,B and the audit

firm sign a Terms of Reference (ToR) and determine the overall scope of work, manner, report

submission time frame, payment procedures etc.

I.1 Process

I.1.1For section of new audit firm

- Respective department/program will submit requisition for audit to the procurement.

- Procurement will collect audit proposals from at least 3 audit firms

- Respective dept/program will prepare ToR.

- Procurement will give work order for starting audit signed by the CD.

I.1.2. For audit by the existing external auditor

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- Respective department/program will submit requisition for audit to the procurement.

- Procurement will prepare ToR and give work order for starting audit.

I.2. Management’s Role in External Audit

This is management’s responsibility to conduct external audit for its financial statements and

accounts. The management shall hire external audit with its own initiative as per the

requirement of the COMT/board, head quarter, donor and the Government. In conducting the

external audit, a standard Terms Of Reference (TOR) shall be developed. Before going to

contract an external auditor the TOR can be shared with the head quarter (if necessary). The

TOR will be the basis of the audit. Besides, it is the management’s responsibility of full disclose of

all the facts and figures to the auditors as relevant and concerned with the audit. The

management shall also provide necessary logistics support to the auditors as agreed in the

ToR.

I.3. Preparation of Accounts This is the responsibility of the organization to prepare necessary Accounts for the organization.

The auditor’s role is to verify the accounts and its different statement along with all-

corresponding documents in support of the authenticity of financial transactions. The

organization shall have to prepare the accounts statements as per their requirement and

following the Generally Accepted Accounting Principles and the International & Country Audit

Standards. In case of IR,B, all accounts statements are prepared by the IR,B and the external

auditors verify as per the ToR and the audit standards. In preparation of the Accounts

statements IR,B shall also keep in mind the requirement of the NGO Affairs Bureau of the

Government of Bangladesh.

I.3.1. Process; i. Finance will prepare project wise final accounts

ii. Finance will prepare a list of accruals for the payments of goods or services which have been

received but not paid during the year.

I.3.2. Source of Data for accounts; i. QuickBooks; Class wise P&L, balance sheet, trial balance, etc.

ii. Finance will follow Last year audit reports for the continuing projects.

I.4. Auditors to help the management team improve financial control

As the audit work is carried out, the auditor may identify weaknesses in the system, or mistakes

in the records. The auditor will make a note of these and will decide whether they are matter,

which are material. That is, important or substantial enough to be included in the audit report.

In most cases the weaknesses will be of a fairly minor nature, and the auditor may not consider

it necessary to mention them in the formal audit report.

However, the concerned management will be interested to have details of all weaknesses or

mistakes found by the auditor, however small: this is an opportunity to improve controls and

procedures which they should not miss. The management should insist that the auditors discuss

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all their findings with the management team, however trivial. The auditor should be willing to

offer this service. In addition the auditor should prepare a written report listing all findings,

together with recommendations, in a management letter.

A good procedure is to arrange a meeting between the auditors and the management team

towards the end of the audit. The auditor should give management a draft report, preferably

before the meeting. And go through the matter raised. This gives management the opportunity

to ask questions, or to give the auditor further information which has not been brought to the

auditor’s attention or has not been taken into account in the drat audit report.

The management should ensure that the recommendation as made by the auditor should be

addressed for future improvement of the identified weakness.

M. Latest Chart of accounts developed by IRW

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Thank you

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