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Youth Empowerment Solutions Uganda

Financial & Administrative Procedure Manual]

YOUTH EMPOWERMENT SOLUTIONS UGANDA

FINANCIAL & ADMINISTRATIVE PROCEDURE MANUAL



APPROVAL OF THE MANUAL

This reviewed manual was approved at the Board Meeting held on the 1st Day of March 2017.

………………………………………………………… Chairperson – YES Board of Directors

………………………………………………… YES SEAL/ OFFICIAL STAMP



Table of Contents ACRONYM ....................................................................................................................... 5 Preamble ........................................................................................................................... 6 1.0 Introduction and Overview ................................................................................... 7 1.1 Organizational Background ............................................................................. 7 1.2 Introduction of the manual ............................................................................... 7

2.0 General Financial and Accounting Policies .................................................... 10 3.0 Financial Management Structure ..................................................................... 13 4.0 Fund Management ............................................................................................. 15 5.0 Financial Risk Management .............................................................................. 17 6.0 Budget and Budget Management .................................................................... 19 6.1 Basic principles on Budget preparation ....................................................... 19 6.2 Budgeting Processes ...................................................................................... 20 6.3 Budgetary Control ........................................................................................... 20 6.4 Budget Review ................................................................................................ 20

7.0 Receipts ............................................................................................................... 21 7.1 Receiving and recording organisation’s money .......................................... 21 7.2 Handling Receipt Books ................................................................................. 22 7.3 Treatment of Gifts and Other Donations ...................................................... 22

8.0 Payments ............................................................................................................. 23 8.1 Payment Processing ...................................................................................... 23 8.2 Payment of salaries and wages ................................................................... 25 8.3 Salary advances .............................................................................................. 25 8.4 Work related advances .................................................................................. 25

9.0 Managing Banking .............................................................................................. 27 9.1 Basic controls regarding Bank accounts ..................................................... 27 9.2 Signatories on Bank Accounts ...................................................................... 27 9.3 Control of Cheque Books ............................................................................... 28 9.4 Bank Reconciliation ........................................................................................ 28 9.5 Review and Follow-up Action ........................................................................ 29

10.0 Management of Cash ..................................................................................... 30 10.1 Custody of Cash .......................................................................................... 30 10.2 Petty Cash Imprest System ....................................................................... 31 10.3 Internal Security of Cash and Receipts books ........................................ 32 10.4 Movement of Cash ...................................................................................... 32 10.5 Lost cash ...................................................................................................... 32 10.6 Segregation of duties over cash and bank .............................................. 32

11.0 Accounting records ......................................................................................... 33 11.2 Source Documents ...................................................................................... 33 11.2 Books of Accounts ..................................................................................... 35

12.0 Accounting System ......................................................................................... 36 12.1 Manual Accounting System of Books of Accounts ................................. 36



12.2 A computerized Accounting system ......................................................... 36 12.3 Classifications of Accounts ........................................................................ 38

13.0 Financial Reporting ......................................................................................... 40 13.1 Monthly Reporting ...................................................................................... 41 13.2 Annual Financial Reports .......................................................................... 41 13.3 Donor Reporting ......................................................................................... 42 13.4 General Ledger Report and the Trail balance ........................................ 43 13.5 Other Statements & Supporting Schedules ............................................ 43 13.6 Consolidation of Accounts ........................................................................ 43 13.7 Reporting Cycle ........................................................................................... 43

14.0 External Audit .................................................................................................. 44 14.1 The expected outputs of the annual financial audit ................................ 44 14.2 Audit of Donor funds as required by various donors .............................. 46 14.3 Retention Period of Source Document and auditors .............................. 46

15.0 Procurement .................................................................................................... 47 15.1 Basic guidelines on procurement ............................................................. 47 15.2 How procurement shall be carried out ................................................... 47 15.3 Procurement documentation ...................................................................... 48

16.0 Fixed Assets (Non- Current Assets) Management .................................... 49 17.0 Asset disposal policy ..................................................................................... 53 18.0 Internal controls ............................................................................................... 55

18.1 Basic Principles of Internal Control ....................................................... 55 18.2 Control Environment ................................................................................ 55 18.3 Types of internal control procedures ..................................................... 56

19.0 Handing over system ...................................................................................... 57 20.0 Statutory Requirements ................................................................................. 58 21.0 Information systems management and security ......................................... 61 21.1 Information Security .................................................................................... 61 21.2 Archiving records ......................................................................................... 62 21.3 Record Retention Schedule ...................................................................... 64 21.4 Destruction Time-lines ............................................................................... 65

List of Annexes .................................................................. Error! Bookmark not defined.



ACRONYM Acrorynnoum Details AO Accounts Officer BoD Board of Directors CEO Chief Executive Officer COA Chart Of Accounts FAG Finance and Governance Committee FAO Finance and Administration Officer FC Finance Committee GA General Assembly GAAP Generally Accepted Accounting Principles HoD Head of Department HoFA Head Of Finance and Administration IAS International Accounting Standards IAS International Accounting Standards IFRS International Financial Reporting Standards JV Journal voucher NCA Non Current Assets NGO Non Governmental Organizations NPO Not for Profit Organization PV Payment Voucher URA Uganda Revenue Authority YES Youth Empowerment Solutions Ugandas



Preamble Youth Empowerment Solutions Uganda desires to facilitate strengthening of its

financial accountability and transparency. Updating its financial accounting

policies and procedures manual is one of the ways towards achieving this. This

manual is formulated as a guide to the entire organizations’ financial and

operational dealings. The increased focus on accountability and transparency

calls for NGOs to practice increased financial accountability before they could

attract public and donor funds and their financial sustainability. This coupled with

limited financial resources result in a need for attention to financial management.

The manual points out the need for improved financial management especially in

the quality of financial planning, monitoring, controls and reporting. The manual

aims to establish clear standards to inform the documentation, recording,

classification and reporting of accounting data to be able to treat and group all

the financial data in the same way. It provides a framework within which YES

could manage its finances better.

.

This manual has used simple language understandable by both finance staff at

different levels of technical qualifications and non finance staff. It is desired that

everyone involved in financial administration will resolve to take time to

familiarize themselves with the policies and procedures presented in this manual;;

to implement, adopt or adapt these policies consistently within the organization;;

and to continue to offer insights for improving the document. In revising this

manual, every effort has been made to use generally accepted accounting

principles and good financial management practices.

This manual has been drawn to provide guidance to staff and management on

good practice in the domain of finance and administration. It further lays down

procedures that ought to be adhered to in order to ensure that finance and

administration risks are adequately mitigated.



1.0 Introduction and Overview

1.1 Organizational Background

YES is a national voluntary, not-for-profit, non-governmental organization,

whose vision is a dignified, self-fulfilled, poverty free ageing Uganda, Its mission

is to champion the realization and perseveration of a dignified quality of life for

older persons in Uganda. YES is an umbrella membership organization which

implements. It was founded in 1991, registered with NGO board No. S. 5914/797

and by Guarantee No. 63986. YES is governed by a constitution.

Governance and Management of YES The General Assembly (GA) is the supreme decision making body composed of

all members of the Association. The GA elects members of the Board of

Directors (BoD) to which it delegates its powers where deemed appropriate. The

BoD is the policy making body. The BoD set up a BoD Finance and Governance

Committee as a consultative body to advise it BoD on the financial affairs of the

organization. YES has an established secretariat headed by a Chief Executive

Officer (CEO) supported by the Management Team. YES has a finance and

administration function that manages all finance, administration and human

resource day to day tasks.

1.2 Introduction of the manual

1.2.1 Purpose/ Objectives of the Manual This manual aims to provide clear and reliable financial and administrative

information accessible to staff and other members of the organization. It is

intended to be a comprehensive guide and while it may not answer every

possible question will provide a starting point for further reference.

The manual describes accounting, financial and operational guidelines to meet

the financial requirements of YES in line with the Generally Accepted Accounting

Principles, International Financial Reporting Standards and the International



Accounting Standards. It is also in conformity with the statutory regulations and

the companies act

It offers common working procedures within YES in respect to financial

transactions hence a uniform method of accounting and reporting across the

organization to maintain continuity in case of staff changes.

It acts as a reference for authorities in respect to financial transactions.

1.2.2 Who should use the Manual? The users of this manual will include:- • The management (decision makers) in planning and controlling YES • All administration and personnel staff directly involved in the collection and

processing of financial data. • All YES staff in their individual departments in particular. • Auditors in establishing compliance and suitability. • The BoD for reference to policy issues, enforcement and review

1.2.3 Structure of the manual Each section of the manual is arranged in the following order;; first, background of

the section giving the definition and the objective/purpose of the function Second,

it presents the policies in the subsections and a list of the activities included in

the function.

1.2.4 How to use this manual The manual was not designed to be read from cover to cover by all staff. Rather,

some sections are very relevant to particular staff, and it is recommended that

these sections be read by those concerned. The manual is designed as a

reference for staff to know the inter-working of YES, and / or, as a guideline in

carrying out activities identified in each function. Each activity contains details of

the tasks to be carried out which, may be performed at various times during the

year as follows.



Regular, ongoing tasks;; carried out on a routine, daily basis to record and account for financial transactions, such as: paying an invoice, drawing up

payment vouchers and recording the payments in the cash book, etc.

Monthly tasks ;; carried out at the end of each month which accrue monthly totals of transactions and the analysis by general ledger code. These include:

Preparing bank reconciliation report, Journal Vouchers (JVs), posting JVs to

the general ledger, extracting monthly trial balance, preparing monthly

financial reports and budget monitoring, etc.

Quarterly tasks;; carried out at the end of each quarter and mainly consist of reporting procedures and will include: preparation of income/expenditure

statements, balance sheet, and budget variance reports.

End of year tasks ;; carried out at the end of the year to satisfy statutory reporting requirements and to generate financial information for reporting to

the donors and other stakeholders. It involves;; preparing accruals and

prepayments, journal vouchers for necessary adjustments, extracting year

end trial balance, preparing end of year financial statements,

Computation of financial ratios, etc.

1.2.5 Availability of the manual YES have developed this manual in electronic form (PDF) for ease of access

and to facilitate updating, and it can be printed as hard copy on request and will

be filed loose for easy updating. Every staff and BoD member should get a copy

1.2.6 Updating the manual The manual may not possibly cover all the procedures within YES, therefore,

whenever there is expansion and increase in level of activities, these changes

should cause an update of the manual. The Manual will be updated and

maintained on a regular basis. Updates will occur as a result of: changes in

policies;; changes in functions in a task and/or structure;; audit recommendation

and decisions from management.



2.0 General Financial and Accounting Policies This section focuses on underlying fundamental policies and practices that are

generally accepted in line with the requirements of YES constitution and the

Companies Act. Good financial policies are important to provide reasonable

assurance that, obligations and costs comply with applicable law.

2.1 Accounting Convections This section focuses on how the manual shall observe the underlying GAAP.

These are the assumptions and norms that guide the accounting process until

the preparation of financial statements. They shall include the following

accounting concepts:

The Historical cost rule: The accounts of YES should be prepared under the historical cost convention. Transactions shall be recorded at historical cost i.e.

the purchase price on the date of the transaction.

Going Concern: The annual accounts are prepared on a going concern basis which assumes that the YES will continue its operations into the

foreseeable future. The board shall evaluate the going concern annually.

Consistency: Annual accounts are prepared on a consistent basis implying that YES will follow the same accounting methods every year to the next.

Prudence: Means that no account will be taken of any promised incomes which has not yet been contracted or received;; conversely anticipated losses

should be included in YES accounts.

Accrual Basis;; Incomes are recorded when earned and expenses recorded when incurred and not necessarily when cash is received or paid out. The

cash basis of accounting shall be used only when required by a donor.

Materiality;; An item shall be material if its non-disclosure could influence the economic decision of the organization taken on the basis of the financial

statements.

Double entry Basis;; Every transaction will have a debit and credit side.



2.2 Basis of Accounting for Revenue and Expenditure Following the above principle of accrual adopted the revenue is recognized when

earned and expenditure when incurred. This principle will apply as follows:

a) Revenue recognition: Revenue is recognized when funds are received from the various sources of income and other donors. Thus:

• Contributions are recognized as revenues in the year they are received.

• Grants received intended for projects to be undertaken in future years are

accounted for as temporarily restricted net assets.

b) Expenditure recognition: Expenses will be recognized when incurred and in the period to which it relates, even if payment hasn’t been made. Appropriate

accruals are made for expenditure incurred and not paid for at the year-end.

2.3 Other Significant Accounting Policies • Financial year: This is the declared accounting year of an entity and not

necessarily a calendar year end. The financial year of YES shall run from 1st

January to 31st December.

• Foreign currency shall be any currency other than Uganda Shillings. All foreign currency transactions in the financial statements of the organization

shall be expressed and maintained in Uganda Shillings.

- Transactions in foreign currency will be converted into Uganda Shillings at the

market exchange rate prevailing at the date of each transaction.

- This should be evidenced by the bank or a financial institution’s advice

- Foreign currency assets and liabilities will be converted into Uganda Shillings

at the exchange rates prevailing at the balance sheet date. Exchange

differences arising from the conversion of foreign currency balances will be

dealt with through the income and expenditure statement.

• Fixed assets for YES are defined as tangible assets that have been acquired with the intention of being used on a continuous basis for a period exceeding

one year. Fixed assets have been grouped into the following classes: Land,



Building, Motor vehicles, Furniture, fittings and other office equipment and Computers and accessories

Fixed assets are stated at cost (i.e. purchase price), or market value, or net

realisable value, whichever is lower. And where an asset has been donated, its

cost value should be considered less accumulated depreciation.

YES fixed assets shall be depreciated at the following rates on a reducing

balance basis, with the exception of Freehold land which is not depreciated:

• Buildings 2.5% • Motor vehicles 25% • Furniture and fittings 12.5% • Office equipment 12.5% • Computers 30% ;;

Handling Insurance: It shall be YES practice to insure all assets where it’s statutory and prudent to insure considering the risks involved. The portfolio of

insurance shall comprise a) Fire;; b) Burglary;; c) All risks d) Group personal

accident;; e) Money in transit;; f) Public liability;; g) Motor vehicles insurance;; and

h) Staff medical insurance

2.4 General Policy/Broad Guidelines • YES HoFA is responsible for the administration of the Manual. It will be

shared with all relevant staff members to ensure sufficient understanding and

uniform application of policies.

• Donor policies and or requirements shall be implemented as per agreement

with the donor as long as the provisions in this manual are minimum.

• In case of a conflict between stipulations of the manual with the Laws of

Uganda, IFRS, IAS or GAAP, the later shall prevail. This will require an

update of the manual to accommodate such provisions/requirements.

• Adherence to the manual will be made a part of staff regulations and enforced

by the BoD. Non-compliance with the procedures should result in disciplinary

action as enshrined in the terms and conditions of service for every staff.



3.0 Financial Management Structure 3.1 Finance function objectives The finance function exists to provide financial support to all other functions of

the organization with the following consequent objectives:

• Manage organization’s financial resources. • Provide support to other departments to be able to make timely and

effective financial related decisions. • Administer assets and information systems in a manner that those

resources are deployed to result in outmost value to the organization. 3.2 Who is involved? The executive level of the organization shall comprise of;; The General Assembly

BoD, Finance and Governance committee and Management. Individual

personnel shall equally and separately be involved and responsible including in

the hierarchy include;; Chairman, Treasurer, CEO, HoFA and respective HoDs.

The specific roles will be: General Assembly;; will not involve itself in the day to day running of the organization and will therefore delegate the responsibility to the BoD.

The BoD;; One of the main responsibilities is to oversee / enhance financial management for improved impact, sustainability and accountability. The BoD

shall delegate some of its functions to a FAGC, however;; all members of the

BoD still remain responsible, and accountable for, the finances. The Board Finance & Governance (FAG) Committee is a consultative body established to advise the BoD on the financial affairs of the organization and

will be at least partially, comprised of individuals with backgrounds and/or

knowledge of managing an institution's financial affairs. Members can be

seconded by other agencies, appointed by the Board or co-opted.

The committee shall comprise of 5 members;; The Treasurer;; selected BoD

members;; CEO as a secretary and;; HoFA as ex-officio. The quorum shall be

any three members present.



Staff/ Management Finance Committee;; independent FC selected from each of the existing departments to assist the HoFA in technical financial

decision making. YES’s finance department is responsible for providing

statutory and financial information for decision making and for the control of

the financial activities of the organization.

3.3 Individual Personnel Responsibility in the Financial Functions • Chairperson of the BoD;; shall be the head of the BoD and therefore, shall

be involved in the activities of the BoD with no direct role to management.

The Chairman shall also be involved in signing of cheques, annual budgets

and the audited Financial Statements.

• Treasurer;; shall be the key person representing the BoD and management in all financial matters of the organization. S/he shall be one of the bank account

signatories of the organization. S/he shall be responsible for presenting the

annual audited financial statements to the AGM. S/he shall also be

responsible for verification of expenditures and requisitions.

• Chief Executive Officer (CEO);; shall be the Chief Accounting Officer of the organization, with the authority and power on financial and operational

matters. The person will be responsible for presentation of budget to the BoD

for approval. S/he shall be the principle bank account signatory. S/he shall

approve all payments in accordance with approval limits set by the BoD

• Head of Finance and Administration (HoFA);; shall ensure proper utilization of financial resources. S/he will be in charge of verifying requisitions, raising,

preparing the financial reports for review by management, keep proper

records. S/he shall play the advisory role on financial issues. S/he shall

ensure adherence to control mechanism in place;; and ensure proper use and

safe guarding the assets. S/he shall be assisted by other staff



4.0 Fund Management

Funds are an established fund of cash, securities, or other assets used to

provide income for the operations of the organization in the longer term. It can be

used for investment aimed at future organizational financial sustainability. They

cannot be used for present implementation of programmes. Funds including

yearend balances will appear on the bottom of the balance sheet.

4.1 Classification of funds The following types of funds will be classified in YES Financial reports.

General funds: locally generated, or donated for any use within the

objectives of the organisation.

Designated funds: Set aside for a particular purpose The BoD may decide to use that money for a different purpose if circumstances change.

Restricted funds: Given by a donor for a specific reason and restricted to that purpose cannot be used for a different purpose without the donor’s permission.

Capital funds :are equal to the net book value of fixed assets, and are created when an organisation needs to account for purchase of assets on a cash basis to

its donors, but still wants to retain assets on its balance sheet.

Asset Replacement Funds;; A fund set aside by the BoD a portion of their unrestricted net assets as a capital reserve fund to be used to replace any asset

or obtain a new asset, as it may deem necessary. Balance sheet should indicate

a separate asset account A financial savings plan should be established to

provide sufficient funds for the replacement/repair of specified fixed assets.

4.2 Management of funds • All payments made from donor funds shall be made as per the agreements

with the donor. Certain donors do not permit co-mmingling of funds (ie mixing



of thier funding with other donor’s funds), Where this is the case a separate

bank account for the donor must be opened.

• For payments of shared costs e.g. rent and salaries, transfers of the

computed shared cost must be made from the General account from which

the payment has been or is being made.

• Unusual gifts (have conditionality or require assuming specific liability) will be

reviewed by the CEO who may also need to consult with the BoD.

• Records should be maintained to support the Donor Restricted contributions

and subsequent disposition of those funds.

• The CEO with the recommendation of the board may designate unrestricted

monies for specific purposes like Capital Project Reserves.

4.2 Steps involved in the establishment of such a replacement fund i) Develop a list of major repairs & maintenance e.g. tiles and roof replacement.

ii) Itemize the last date and cost of replacement, estimated useful estimated date

of future replacement, and if possible, an estimated cost of future replacement.

Use current replacement cost adjusted for inflation until the date of replacement.

iii) A specific amount of annual receipts would then be placed into a separate

reserve account on a regular basis to build up funds for the future.

iv) YES could negotiate with donors for contributions.



5.0 Financial Risk Management

Risks are factors that impact on the achievement of objectives. They arise out of

activities or strategies deployed to achieve objectives. In other words, strategies

are risk drivers. Risks present themselves in forms of opportunities and threats.

Financial risk management is a process of anticipating risks, and proactively

designing financial procedures to prevent, or reduce threats, and adequate

manage opportunities.

5.1 Financial Risk Register

Risks mutate and impact organisations in different ways with the passing of time.

It is on this premise that this risk register shall be updated with changes in

financial risks periodically. Risk assessments at YES shall involve re-evaluation

of existing risks and determination of emerging risks. The procedures in this

manual shall evolve in order to remain relevant in mitigating the dynamic financial

risks respectively. The risks in the register are arranged according to the financial

objectives whose achievement they are deemed to impact on as indicated below.

5.1.1 Risks under managing organization’s financial assets i. Loss of organisation funds through irregular practices and transactions

resulting in inability to implement projects to the required expectations.

ii. Inappropriate record keeping that results into inaccurate information and

subsequently wrong financial decisions.

iii. Wrong or irregular support documents attached to vouchers resulting in

successful concealment of irregularities and loss of organisation funds

5.1.2 Risks under providing support to other departments i. Non compliance to donor conditions or grant agreements resulting in

soured relationships with donors or reductions/loss in funding



ii. Inaccurate accountabilities that reflect inappropriate or irregular utilisation

of funds resulting in failure to utilise resources to achieve objectives

iii. Inefficient budgeting processes that result in financial plans that fail to

adequately contribute to achievement of organisations objectives.

iv. Failure to critically monitor adherence to budgets resulting in budget

overruns or under expenditures that result in failure to achieve objectives.

v. Inadequate management of advances resulting in loss of funds that

cannot be accounted for advances that are diverted from original intended

uses to other unplanned activities or to personal benefit.

vi. Reliance on paper records and documents without questioning their

authenticity resulting in inaccurate accountabilities and subsequent loss of

funds.

5.1.3 Risks for Administering assets, information systems, and HR i. Failure to facilitate recruitment of competent personnel resulting in lower

than expected productivity and poor realisation of performance results

ii. Ineffective background checks on job applicants resulting in recruitment of

staff with questionable backgrounds.

iii. Inadequate management of staff performance resulting in low productivity,

poor quality implementation of projects and poor project results.

iv. Physical loss or abuse of organisations assets resulting in reduced returns

v. Irregularities in procurement of services and goods resulting in unusually

expensive purchases, and /or organisation funds being wasted on

undelivered services or goods and on low quality inexpensive items.



6.0 Budget and Budget Management A budget is a financial plan to be pursued during a given period of time for the

purpose of attaining a given objective. It includes activities to be implemented

and costs of outputs that will be delivered under each of the activity.

6.1 Basic principles on Budget preparation

The budget shall be based on YES’s Strategic plan from the work plans.

All budgets shall be developed using activity based budgeting, and zero based

budgeting methodologies. No budget shall be developed on an incremental basis

with exception of administration activities that by default have to be implemented

every year should have their costs determined without due consideration of

previous years’ costs. However, the extent of engagement should be determined

on basis of new needs and should be assigned costs on basis of market prices.

Under activity based budgeting, activities within budgets should be justified and

approved as strategies that will contribute to achievement of project objectives

and subsequently to the achievement of YES’s strategic objectives. Costs drivers

or outputs for each activity should then be assigned market value costs.

The total department cost shall be based on the individual component’s Work

Plans, which shall be translated into a budget and presented as a component’s

budget for consolidation into the whole YES budget.

The budget for a particular year shall be finalised two (2) months before the

beginning of the Financial Year. The budget shall be divided into 12 months to

produce monthly budgetary control reports.

The FAG Committee shall be responsible for reviewing the budget estimates

before they are submitted to the BoD for approval.



6.2 Budgeting Processes

Budget preparation shall start by the HoFA sending out budget guidelines to the

various departments as follows:

• Detailed outline of how the budget preparation exercise shall be initiated,

conducted and co-ordinated including the role of Management.

• Outline of the methodologies for consolidating the individual departmental and

component budgets into the total master budget for the entire organisation.

• Indicate the time-table for the preparation exercise.

• The HoD shall submit their respective budget estimates to HoFA.

• The estimates shall be collated and aggregated by the HoFA and tabled for

discussion with senior management. After it is agreed, the draft budget shall

be sent to the FAG committee for further review. Finally the budget shall be

submitted to the BoD for approval.

6.3 Budgetary Control

Budgetary control is a system of controlling costs through ensuring that prior to

spending funds;; there are available budget balances;; there is authorisation from

the budget holders to spend from budgets under their domains;; expenditure is in

line with the budget and no anticipated budget overruns. Monthly Budgetary

Control Reports shall be produced comparing actual against budgeted

performance. A variance Analysis Report shall be produced as part of the

Reports with detailed explanations of variances between the budgeted and actual

amounts over/under 10% with strategies for corrective actions in time.

6.4 Budget Review

The budget review takes place after 6 months of implementation of the current

budget or whenever it is deemed necessary. The Funding is reviewed to

correlate it with the available resources. The Budget Review is also used to

correct any major errors and allow for any major changes in objectives and

outputs. The approval process for the budget review is similar to that for that

original budget



7.0 Receipts The sources of funds for YES include the following: grants from donors,

membership fees, Bank interest, locally fundraised and internally generated

funds.

7.1 Receiving and recording organisation’s money

Revenue shall be collected by officers authorised to do so by the Head of the

Secretariat. The HoFA shall ensure an official receipt is issued which is

numerically pre-numbered. The original shall be given to the payer;; the duplicate

attached to the revenue voucher, forwarded to the department concerned and filed

sequentially. The triplicate copy shall be filed sequentially as a record of the officer

issuing the receipt. Refer to annex…..for format of a receipt

No amendments shall be made on any generated receipt. When errors are

made, the receipt shall be voided by marking the original and copies “cancelled”

and filed in the relevant files. The officer cancelling shall sign his/her name

immediately under the cancellation.

Money received shall be deposited intact into YES’s bank accounts. The banking

should preferably be on the business day following the date of receipt. No such

cash or part thereof shall be used, lent, or advanced for any purpose. The funds

shall not be used at source for any purpose.

Direct transfers arise when a payment is made by a third party directly in YES’s

bank account either by electronic wire or by cheque. The bank notifies YES of

such receipts through “bank advice slips”. On receipt of such “advice”, an official

receipt shall be issued as described above immediately.

A ledger is where all particulars of all receipts are entered as soon as they are

received and maintained in the accounting records. The date of receipt, the name



of the person from whom payment was received, the item to be credited, the

reference number of the revenue receipt issued, project code and the amount

received must normally be shown.

7.2 Handling Receipt Books

Receipts must be used in sequentially pre-unique numbers in a consecutive

order. Only one receipt book must be used at a time for specific purpose. All

unused receipts shall be placed under lock and preferably under dual custody. A

new receipt to be issued after the previous ones are completely used and

accounted for. A register will hence be maintained showing the serial numbers of

the receipts that have been issued and how they are accounted for.

Any discrepancies noted between the receipt cashbook and the bank statement

credits should be investigated by a responsible officer. Care should be taken to

ensure that donor requirements regarding handling of their funds are strictly

observed and especially ensuring that all their grants and other receipts for

projects/programs are banked in separate bank accounts.

7.3 Treatment of Gifts and Other Donations

All contributions to YES must be acknowledged and records kept. Contributions

in kind e.g. services are not recognized until the services are rendered.

Contributed services must be given accounting recognition at their fair value.



8.0 Payments YES pays money out to implement its activities and the support operational costs

The main objectives of control over payments are to ensure that payments are

made only in respect of valid transactions and that they are suitably authorized.

The following control procedures will contribute toward attaining these objectives.

8.1 Payment Processing

The buying unit/project/staff should prepare a payment requisition voucher with

supporting documents appended such as;; original invoice , approved purchase

order and evidence of receipt for the item purchased or satisfactory performance

of the service OR a request for petty cash fund replenishment OR payroll OR

request for cash advances. This addressed to the budget holder then verifies that

the payment is within budget limits and budget line before approval. The

requisition is then forwarded to the HoFA.

The HoFA will verify the requisition, budget and supporting documents. Check

whether the calculations and castings have been verified and are arithmetically

correct;; that the classification of the expenditure is correct;; that there are

sufficient funds and available in the budget, funds;; that the persons named in the

voucher are those entitled to receive payment;; and that any supplies purchased

have been recorded and meets all procurement requirements. If all is satisfactory

then the requisition is approved by the CEO. This could be confirmed with a grid

stamp. Refer to annex…..for format

Thereafter the AO prepares the payments voucher (PV) for payment and cheque

when the Payment Requisition a duly approved and supported.

Preparation of vouchers The PV should be complete with the following information :voucher and cheque

number;; Date;; Payee;; Amount;; Description;; Account Codes;; Reference;;

Authorized signatures for preparer, reviewer and authorizer;; All PVs should be



pre-numbered and sequentially follow the cheque number used. They should be

carbonized Refer to annex…..for format of the payment voucher

The signature of officers on the P.V shall be in ink or ballpoint pen. Stamped

facsimile signatures shall not be used. Only the original PV shall be signed. The

name and designation of the officer signing a voucher shall be typed or written

legibly below the signature. The officer making the payment shall stamp "PAID"

across the face of the voucher and accompanying documents.

No officer shall certify a P.V for to himself or herself including the CEO.

PV shall be prepared in such a way as to prevent fraudulent alteration of, the

figures or details given on them. Any alterations on the PVs shall be initialled by

all the parties signing the voucher according to the part of the voucher in which

the alteration is made.

Separate PVs shall, as far as possible, be used for separate items of expenditure

or for the payment of different services, especially in cases in which each service

has been separately authorized. One voucher, however, may be used for

separate items if it is deemed necessary e.g. where the separate items or

services have been delivered by one payee and related items and codes.

All the PVs will be entered into the accounting system and into the cashbook

once approved. The entries must be reviewed by the HoFA before being finalized

in the system. Supporting documents to a payment should be duly perforated or

stamped “PAID” and dated to prevent re-use. All paid vouchers together with

original third party supporting documents shall be filed in chronological order.

All payments made from donor funds shall be made as per the

requirements/agreements with the donor. Separate files shall be maintained for



the donor payments and all voucher documents marked with the donor codes to

allow for unique referencing and posting to the accounting system.

8.2 Payment of salaries and wages

“Salaries and Wages” shall mean the consolidated emoluments of staff including

allowances received by employees at the end of the month for employment.

Payroll information shall be originated and generated from employees’

engagement records such as;; contracts, salary scales and any other subsequent

revisions. No action shall be taken on staff salaries until authorised from the

CEO. Staff shall be advised of payment of their salaries by means of salary

advisory or pay slips. The amounts payable to the employee shall be net of the

statutory deductions which shall include but not limited to PAYE and NSSF.

Deductions shall be made in accordance with the provisions of the applicable

law. The PAYE and NSSF amounts so deducted shall be submitted to the

respective authority at the stipulated time to avoid penalties.The payroll should

be authorized by the CEO not later than 24th of every month. Salary payments

should be made by cheque, or a transfer from the bank.

8.3 Salary advances

All salary advances should be approved by an authorized officer before funds are

released. Staff shall be allowed to receive salary advances subject to the

following rules:

• Approval by the HoFA • Up to a maximum of 50% of the gross monthly salary • Advances shall not be paid before the 15th of the month. • Advances shall be recovered in full at the end of the month, by means

of a deduction from the payroll.

8.4 Work related advances

In performing the day-to-day activities of the organisation, it is sometimes found

necessary to advance funds to staff on the basis of the estimated cost of the

activity to be carried out.



Advance Requisition and or Claim Form to the HoFA through one’s head of

department. After the authorisation, the requisition, it shall be forwarded to

accounts for processing in the same manner as for cheque payments. Advances

paid against claim/requisition forms shall be written to an Accountable Advance

Account in the general ledger and on to the relevant staff account in the

subsidiary ledger.

When the purpose for which an advance was requested has been accomplished,

the individual concerned shall forward, to the finance department, receipts and

other relevant supporting documents using the accountability statement through

the head of his or her HOD. Checked by the AO and approved by HoD, after

which it shall be serially numbered. A member of staff shall not be granted

additional accountable advance for whatever reason, before accounting and

retirement of the previous advances.

The approved accountability statements for each month shall be summarized

and expensed to the relevant accounts from Accountable Advances Control

Account using a journal voucher. The JV shall reverse the original entry by

crediting the personal account of the individual concerned. In the event of failure

to retire an Accountable advance within the allotted time, such advance must be

treated in accordance with the previous of section of staff loan recoverable

above.



9.0 Managing Banking Banking refers to transacting business with a financial institution known as a

“Bank”. The transactions would entail depositing or withdrawing funds or

requesting a loan etc. YES makes use of banks in transferring funds from its

development partners and utilization within the country. The objective of this

policy is to ensure good management the funds held in the bank

9.1 Basic controls regarding Bank accounts

• The BoD must authorise the selection of a suitable bank for YES

• Opening and closing Y’s bank accounts shall be authorised by the BoD.

• No private money should be kept in the organisation’s bank accounts, safes.

• No private transactions shall be conducted through an official bank account.

• It is prohibited to overdraw YES bank account or to obtain any advance or

loan from a bank, without the prior authority of the BoD through the CEO.

• All direct bank payments e.g. telegraphic transfers and bankers’ cheques

shall be subjected to the above procedures of payment and will be authorized

after the necessary supporting PV and documents have been approved.

• All payments in excess of an greed amount must not be paid in cash. Refer to annex…..for current rates

• All bank charges posted to the YES accounts must be reviewed against the

transactions they relate to by the HoFA to ascertain their eligibility.

• In order to prevent duplicate payment of invoices, cheques are issued on

original invoices only.

9.2 Signatories on Bank Accounts

YES shall have three signatories to its bank accounts with the CEO as the

principal signatory. Two signatories must sign at any one time. Other signatories

shall include the Treasurer and Chairperson of the BoD. When need arises other

signatories will be approved by the BOD.



9.3 Control of Cheque Books

The BoD shall authorise a requisition for blank cheques from the banks. When are cheque books are immediately received from the bank, they should be

examined by a responsible officer to ensure that no cheque leaves are missing.

S/he shall initial the reverse of the last leaf in each cheque book in a series as

evidence that the examination has been made.

Cheque books that are not required for immediate use shall be stored in a safe

Cheque books that are currently in use shall be similarly stored in a safe after

each time of use under key and lock for security, preferably under dual custody.

Any cancelled cheque must be left in the Chequebook and the reasons for

canceling annotated. Spoiled or voided cheques should be properly marked

CANCELLED, retained and filed in the cheque payments file with the voucher

clearly stating the reason for canceling. If the cheque was already signed,

signature should be mutilated, Cancelled cheques should be posted to the

accounting system, to reflect their status to avoid future reuse of such cheques.

All stale cheques must be recalled and write to the bank to `stop payment’.

Postdated cheques must not be used

9.4 Bank Reconciliation

The main objective of bank reconciliation is to ensure that the bank transactions

in the General Ledger bank account tally with the bank statement, during a

defined period, normally a month. All bank accounts must be reconciled with

bank statements by an officer, who, if possible, shall take no part in the receipt or

disbursement of funds monthly. Bank reconciliations shall be prepared and

submitted to the HoFA by the 10th day of the subsequent month for approval



Cheques that remain un-presented for more than two months shall be followed

up and the evidence of such action documented. Those over six months shall be

written back and the corresponding expenditure reversed. The HoFA shall file

reconciliation statements for audit purposes and future references.

9.5 Review and Follow-up Action

The bank reconciliation statements shall be reviewed and approved by the HoFA,

who shall:

• Ascertain that the reconciliation is supported with a list of outstanding cheques.

• Review the reconciliation and seek explanations for any significant or long outstanding items.

• Ensure that proper adjusting entries have been made. • Check that follow-up letters in respect of unidentifiable items have been

written to the banks and attended to.



10.0 Management of Cash Cash is the most risky yet inevitable asset. Cash transactions should as much as

possible be discouraged since it could not only lead to temptations, but also to

great loss. The recommended mode of payment is thus by cheque.

10.1 Custody of Cash

• One person preferably the cashier should be assigned custody of petty cash

and it should be kept in a safe under lock and key. The safe keys should not

be held by the HoFA.

• Cash balances shall be checked at least once a month to see if they agree

with the cash book reconciliation. The officer in charge of petty cash shall be

required to explain any difference arising. Failure to explain the discrepancies

shall result in taking disciplinary action against that officer.

• Surprise cash counts shall be done at least once a month documented by

designated employee. The result of cash count shall be reported to the HoFA

• The CEO shall provide a safe for the custody of cash and for storage of other

organisation money and valuables.

• The safes should not be repaired or new or copy keys be cut without the

HoFA’s prior authority.

• In the event the safe keys are lost, the officer responsible for the custody of

the key shall immediately report and obtain the duplicate key from the HoFA

and extract the contents of the safe Duplicate keys will only be issued for the

purpose of extracting the contents of safes. The safe shall thereafter not be

used without the sanction of the HoFA The officer responsible for the lost key

must report in writing to the HoFA stating the full circumstances, giving his or

her opinion as to whether the lost key might come into the hands of some

unauthorised person, and his or her reasons for his or her opinion.

• The HoFA shall then forward a report the CEO for his or her decision as to

the action to be taken. This report shall include a statement as to whether or



not the cost of replacing the lock is to be recovered from the officer

responsible for the loss.

10.2 Petty Cash Imprest System

Petty cash float shall be operated. It shall be maintained on an imprest system

basis whereby a maximum amount is determined by the BoD on the advice of the

CEO through from the HoFA from time to time. See Annex - current rates... The float shall be checked periodically to ensure that it is properly utilised.

The petty cash float shall be replenished periodically when exhausted. It shall

only be used for the purpose for which it was established. No payments above a

certain limit shall be made out of petty cash. See Annex - current rates....for the current limit.

All petty cash payments shall only be made on the basis of an authorised petty

cash claim forms and petty cash payment vouchers. After the payment, the petty

cash payment vouchers shall be stamped “PAID”, allocated a sequential number

and filed under a petty cash payment voucher file in chronological order.

Process of replenishment petty cash i. Complete a payment requisition form equal to the vouchers paid.

ii. A Petty cash reconciliation report attached with paid vouchers shall be

attached to the payment requisition form and passed to the AO for

checking and the HoFA’s approval.

iii. When the report is approved, it will be the basis for the preparation of the

petty cash cheque voucher which goes through the normal cheque

approval procedures.

iv. The cheque should be drawn in the name of the authorized banking agent.

v. An overall Petty Cash reconciliation should be done every last day of the

month after all transactions for the month are posted in the system and

cash counts agreed to the figures.



vi. At the end of each month, the petty cash book is totaled to determine the

balance. The balance shall be reconciled with the physical cash counts.

10.3 Internal Security of Cash and Receipts books

Cash, unused receipt books and other numbered forms shall not pass from the

custody of one officer to another, either without written acknowledgement being

given by the receiving officer. Serially numbered forms not in use shall be kept

under key and lock.

10.4 Movement of Cash

YES shall undertake a cash-in-transit insurance cover for the cash being moved

from the bank to the field or office. Cash in transit shall be carried by only

authorised officers. The Sums being moved shall not exceed see Annex....on current rates. The BoD shall review the limit prescribed above as and when it deems fit. Officers must keep strict confidence any intention to dispatch

consignments of money. The regular conveyance of money at the same time of

day or on the same day of the week or month, or by the same route, must be

avoided. Travel in the night with official money must not be undertaken.

10.5 Lost cash

Any loss, fraud, theft or irregularity affecting cash shall be reported immediately

through the HoD of the officer-in-charge to the CEO. The CEO will use his or her

discretion in regard to the action including repayment.

10.6 Segregation of duties over cash and bank

Splitting duties between different people helps in prevention & detection of fraud

and errors. Important duties relating to cash & bank that should be segregated:

Drawing and depositing cash ≠ Cashier / book-keeper

Keeper of cash ≠ the one sourcing and procuring items

Cheque signatory ≠ Keeper and prepare of cheques

Checking accountabilities ≠ Cashier



11.0 Accounting records Bookkeeping is defined as writing a story of what;; happened, is happening and what will happen in future in financial terms. It is the process of keeping books of

accounts where information of financial transactions are recorded and

summarized to facilitate the production of financial reports. They can be physical

manual books or computerized.

A financial transaction is an event involving the exchange of resources within the organization, between organization and another party with a present or future

monetary implication i.e. receipts of money, payments, sale of an items.

11.1 Financial Records Financial Records are of two types: the source documents and books of accounts.

11.2 Source Documents

The source document is the basis for the initial recording of a transaction and

serves as supporting evidence for the transaction. No funds should be paid out,

or deposited and no entries should be made in the books without appropriate

supporting documentation of the transaction. The following source documents

must be used as minimum to the YES financial management system. The

support documents should be headed, dated, authorized and serially numbered.

i. Receipts All cash or cheque receipts for YES shall be acknowledged by issue of an official

receipt at the time of the occurrence of a transaction. See annex ........ for format of the YES Receipt.

ii. Journals Vouchers Journal Vouchers (JVs) shall be used to substantiate and explain the recording of

various miscellaneous transactions that are not documented via by actual

movement of cash. These will include;; bank charges, adjustments, corrections of



wrong entries, closing and opening entries, non cash transaction like

depreciation expense and all, other miscellaneous transactions. See Annex...... format of the YES Journal Voucher.

iii. Invoices These are used when the customer purchases goods or uses services on credit.

see Annex.... format of the YES Invoice. iv. Payment Vouchers This is prepared when the organization pays cash for items or services. Each

payment voucher must have attached to it appropriate supporting documents

serving as evidence of authority to pay. See Annex for format of YES Payment Voucher. Other sources documents include Procurement support documents include:

delivery note, local purchase order (LPO), proforma invoice, requisition forms,

delivery note, goods received note, receipts and invoices. Refer to annex ….for formats

Support documents are additional papers from the suppliers and other people

outside the organization to act as additional evidence of the occurrence of the

transaction. An acknowledgement receipt signed by the supplier for services

where you cannot obtain a receipt i.e. taxis, items from the market

Custody of Source Documents Source documents are cancelled after processing to provide assurance that it will

not be reused and shall not result in recording transactions more than once. All

printed but unused source documents shall be kept under lock and key and any

receipts and issues shall be recorded in a Register of Source Documents. See

Annex.... format of YES Register of Source Document kept by the HoFA. Their issue shall be subjected to requisitioning by the responsible Officer, who

shall in turn keep all such documents under safe custody. The HoFA shall only



authorize the issue of new source documents after receiving full accountability for

those previously issued.

11.2 Books of Accounts

The books accounts are where accounting information is recorded. These include: cash book, bank book, cash analysis and Ledgers. The cashbook is

used to record all money coming into or going out of the organisation. There is

normally one cashbook for each bank account. An analysis cashbook has extra

columns where each receipt and payment can be analysed according to what it

was for to facilitate easy production of reports.

It is the duty of the HoFA to ensure that various accounting records are

maintained to keep track of YES’s finances, assets and other transactions and to

facilitate preparation of the required reports. These same records shall be used

in respect of projects/programs in as much as they are applicable, they should be

adjusted to suit the circumstances of a particular project.

The following books of accounts and any other accounting records required to

record business transaction, shall be kept and maintained, but shall not be

restricted to the list here bellow;;

• Main Cash Book for each Bank Account maintained by YES

• Petty Cash Book to record all ‘small’ office expenses of YES

• Subsidiary Staff Loan Ledger to monitor Loan disbursements and

recoveries.

• Journals as books of original entry

• Main and General ledger

• Donations/ Grants

• Asset Register



12.0 Accounting System The purpose of an accounting system is to process transactions in order to

maintain financial records. It should be able to identify, assemble, calculate,

classify, record, summarise and report on transactions and balances over a given

period or at a specific date.

The accounting system can either be a manual system or computerized.

12.1 Manual Accounting System of Books of Accounts

A manual accounting system is a bookkeeping system that processes data

(entering and adding up), in the books of accounts to facilitate production of

reports The following books of accounts and any other accounting records

required to record business transaction, shall be kept and maintained, but shall

not be restricted to the those mentioned in 11.2 above.

12.2 A computerized Accounting system

A computerized accounting system is a bookkeeping system that processes data

in the spreadsheet programmes to produce varied reports faster and easily to

allow for many different financial scenarios to suit the needs of the organization.

Computerization or use electronic banking/ payment facilities must be approved

by the BoD after consultation with YES’s auditors in writing.

Cautions to computerizing the accounts to take care of:

• It takes time to set up a computerized system and for a while you will probably need to run a manual and computerized system together, to prevent disasters in the transition.

• The person inputting data still needs to understand bookkeeping. • The record-keeping/ bookkeeping process still has to be followed and

supporting documentation must be kept. • You need up-to-date software and someone in the organization needs to

have a good understanding of the computer software.



12.21 The current computerized system in YES

YES is currently using “Quickbooks ” accounting software. It is a software with

high capability to process input financial data using the General Ledger

Accounting systems to produce relevant output products such as cash book

journal, trial balance, ledgers, sub-ledgers, summary financial statements, budget

monitoring, special audit request reports, etc. The HoFA is responsible to ensure

that the computerized accounting system is efficient and effective, and serving

the rightful purpose.

12.22 Guiding principles on Integrity of the computerized system Management decisions relating to financial information can only be meaningful if

they are derived from complete and accurate financial report. In this regard

management must ensure that:

• Only authorized financial data (cash receipts, cash vouchers and journal entries) are entered into the computer system.

• Only authorized corrections for errors, casts, entry reversals, etc. are entered into the computer system.

• All authorized vouchers entered into the computer system must be signed and marked “entered” by the person who entered the data into the computer system.

• A print out should be made and checked against the vouchers to confirm correct and accurate entry, and then proceed with the back-up.

• Once input data has been backed–up, no attempt should be made to alter the back-up data base files, and if found the culprit should be disciplined.

The manual accounting system will run along side the Accounting Software as a

back up during the time of testing the Software’s operation ability with the system

of YES in the first three months in the current fiscal year. The closing audited

balance sheet for the year ending December 31st shall be used as the opening

balances to start up the up dating of all the next financial year transactions.

12.23 Security of the Computerized Accounting Information Major security concerns in a computerized accounting environment are physical

security controls and systems security controls



a) Physical security controls to be instituted include: • Strict control over access to the accounting computers. Accounting staff

should have secret passwords not known by staff outside the department. • The password must be changed when staff leaves office. • The location of the computers should be such that it will be difficult for

unauthorized persons to have access to them. • The location of the computer room should be such that it is away from such

hazards as;; (a) direct heat from the sun, (b) rain water through the nearby window, (c) fire risks from nearby high heat energy source.

• There should be well established emergency procedures, i.e. in event of fire, and also there should be alternative power supplies like standby generator.

• There should also be remote facilities for security copies of data. b) Systems security controls to be instituted include: • There should be strict controls and verification of all input data into the

computer systems, only authorized data should be entered into the systems • There should be adequate controls to ensure that amendments to programs

are properly authorized, checked and made up to date before use. • For the sake of Quickbooks , daily backups will be maintained on :

- back-up which is built into the software package - re-writable CDs which will be locked up in a fire proof safe at all times. Some copies should be kept off-sit e in case of fire and theft

12.3 Classifications of Accounts

YES’s expenditure shall be classified as capital and revenue and accounting

procedure for capital expenditures does not differ

Capital Expenditures: are those that benefit more than one accounting period and are recognized as balance sheet items. This include Fixed Assets and Investments;; including all intangible expenditures which confer a legal claim of the organization for a refund of the principle and a return on that principle on the

basis of the terms of each investment;; i.e treasury bills and fixed deposit

Revenue Expenditures;; are those expenditures whose benefit does not exceed more than one accounting period and is aimed at offsetting the day-to-day

operational costs such as;; Administrative, financial and Personnel costs. All

NGOs have five basic accounts: assets, liabilities, fund balance (Net Assets),

revenue and expense. The above classification is done through the chart of

accounts.



12.31 Accounting Codes & Classifications (Chart of Accounts) A chart of accounts (COA) is a list of all the account names that an organization

needs to analyze its transactions. This will vary depending on the activities.

Proper allocation through the coding system shall be important for ensuring

proper and accurate organization reports. Accounts are numbered, coded,

identified, and grouped consistently throughout the COA to facilitate both

functional and operational analysis and comparison its discrete operational units.

The structure of the COA allows new and additional accounts to be included

without major change or the consistent nature being compromised.

All the organization staff, especially the Program staff, Finance staff and other

key Administrative staff must get acquainted with the organizations codes. This

will enable them to classify the activities and appropriate them into codes used in

the COA at budgeting, making transaction entries and when making reports.

The following people should have a copy of the COA;; anyone who allocates

transactions to accounts;; anyone who codes transactions;; anyone who is

involved in budgeting process;; anyone who requisitions or authorizes

expenditure and anyone who prepares or uses financial reports.

The Finance department shall institute and apply an acceptable classification of

accounts. This classification recognizes the distinct nature of transactions with

respect to specific donor funds, direction of funds flow (inflow or outflow), and

other sources of financing.

12.42 Alterations to the chart of accounts Changes to any of the above COA must not be made without the agreement of

the entire management team and approval by the CEO through the HoFA.

12.8 Excel Cash Books An excel cash book file will be maintained with a daily running balance. The two

cash books (QuickBooks and Excel) must give the same closing cash and bank.



13.0 Financial Reporting A report is an account of performance and monitoring of progress against plan.

Accountability is a key feature of the financial systems this is exercised through

preparation of timely operational and financial information in form of various

reports. These include monthly, quarterly and operational activity reports. YES

information needs must always be taken into account while reporting.

Financial reports are used for internal and external purposes. Managers need an

up-to-date budget monitoring reports to monitor projects and make operational

decisions. The BoD needs reports to confirm that the funds have been used for

the desired objectives of the organization and make strategic decisions. Donor

agencies need reports to confirm that the funds have been used for and comply

with accountability requirements to their organizations and governments. It is

often a precursor for further funding. Increasingly, organizations are sharing

financial information with beneficiaries and other stakeholders to increase

transparency and confidence. One of the statutory requirements is preparation of

annual financial reports

The purpose of this policy is to provide a framework for monitoring, reporting and

controlling financial performance and incentives for good financial management

and penalties for inadequate financial management.

• Financial reporting shall be done as per approved formats and account codes

to ensure a uniform accounting practice across the organization

• Financial reporting formats are to be consistent with the budgets and budget

formats for tracking purposes.



13.1 Monthly Reporting

The budget is the financial plan for the year. It is essential to monitor actual progress against this plan to ensure that the desired fiscal result will be achieved. The organization has a monthly reporting and monitoring program to facilitate this. The monthly reports are the main tool of financial control enabling management to monitor income and expenditure against budget.

All financial performance will be measured against the budget. Management will monitor the financial results of the organization monthly and will take corrective action where necessary.

The following steps to be taken:

• The AO compiles report for the previous month’s transactions after the

accounting records have been closed on the last day of the month by the

first week of the next month and submits it to the HoFA approval.

• The HoFA submits the approved report to the report users (CEO and the

management team) by the second week of the following month.

• The monthly reports shall include a) Statement of income and expenses

for each department (donor, project);; b) Consolidated balance sheet;; c)

Consolidated income and expense report which shows all

departments/projects combined;; d) Budget-to-actual report for all projects

included in the annual operating budget;; and e) Cash flow projection.

• Within the first two weeks senior should meet and discuss the financial

report. It should be part of their agenda. Explanations of the variances

above 10% shall be done.

• Narrative reports detailing the activities of the project as implemented shall

accompany such reports for review and synchronization by finance.

Monthly report approval schedule is as follows:

13.2 Annual Financial Reports

YES shall in conformity with the International Accounting Standards (IAS) and

International Financial Reporting Standards (IFRS) publish a statement of



financial position, a statement of cash flows and a statement of income and

expenditure at the end of the financial year. The annual reports shall be audited

before being published to final users.

13.21 Balance Sheet/Statement of Financial Position • A balance sheet provides relevant information about the organization’s

assets, liabilities, and equity and about their relationships to each other at a moment in time (its net worth).

• It should clearly report the amount for reserves and whether these are restricted or unrestricted based on (non) existence of donor restrictions.

• Assets include such things as cash, investments, receivables, property and equipment, net of accumulated depreciation. Liabilities include such things as accounts payable, mortgages payable, funds held in trust, etc.

13.22 Income and Expenditure Account • The report of income and expenditure reflects actual revenues collected

and expenses paid during the reporting period but can also be designed to

show year-to-date budget versus actual expenditure information.

13.23 Statement of Cash Flows • The primary purpose of this statement is to provide relevant information

about the cash receipts and cash payments of the organization during a period.

• The difference between this statement and the income and expenditure report is that it excludes items that do not involve an actual payment of cash such as depreciation.

13.3 Donor Reporting

• Financial reports requested or required by the donors should be submitted

to them by the due date and per the agreed formats. A schedule of the

reporting dates will be maintained by YES. All financial reports must be

agreed to the General Ledger. Accounts

• The HoFA will discuss the Donor report with the Unit heads and the CEO

before submission to donors. Separate financial reports should be

prepared for each project and consolidation done for YES as a whole.



13.4 General Ledger Report and the Trail balance

• This report should be prepared by the HoFA prior to producing the

balance sheet. The General Ledger Report should include all accounts

that have registered activity during the current fiscal year.

• The General Ledger helps check bank statements for correct balances,

ensuring that revenue/expense account balances are correct and in

spotting unusual activity in accounts.

13.5 Other Statements & Supporting Schedules

• Schedule of program Expenses (shows all expenses and costs incurred). • Monthly Cash Report/Bank reconciliation • Schedule of Grants and incomes received • Schedule of Advances to Officers & Employees • Schedule of YES Debtors (accounts receivable) • Schedule of Property and Equipment (asset register) • Schedule of Deposits, prepaid Expenses and Other Assets • Schedule of Accounts Payable and Accrued Expenses • Schedule of gifts and donations

13.6 Consolidation of Accounts

• Consolidated accounts refer to the combined financial statements of all

activities under YES. It will include all activities within the various

units/programs thus gives the total picture of all the financial transactions

of YES. It is a good practice and is now a requirement by many donors.

• Consolidated accounts should however be accompanied by schedules

(annexes/notes to the accounts) that give details for each and every donor

and or project. When combining expenses and income, do not double

count any transfers between the different organs of YES e.g. interproject

borrowings and interdepartmental transfer.

13.7 Reporting Cycle

YES should develop financial reporting cycle that will guide them on meeting the

required deadlines see format in annex……. y



14.0 External Audit Audit is an independent inspection of the accounting procedures and records by

a trained accountant to enable them express an independent opinion. This will

confirm whether the financial statements of an organization give a true and fair

view, for the period under review, and have been properly prepared in

accordance with the applicable reporting framework. Detection of fraud, errors

and irregularities may arise as a result of audit work, but is not the primary

objective of auditing. The prime responsibility for the prevention and detection of

errors, fraud and irregularities rests entirely with the organization’s management.

There are 2 types of Audit Internal and external. For the case of YES we look at

the later

There two main types of audit;; Financial Annual Audit and any audit as may be requested for by any donor or any other person

14.1 The expected outputs of the annual financial audit The financial statements as required by (IAS) or IFRSs including;; A balance

sheet to report status of affairs;; An Income and Expenditure to report the

performance;; A Cash flow statement to track the movement of cash;; A fund

statement to report the donor funds and A management letter to state financial

weakness that management has to address the respective donor reports.

14.11 Selection of Auditors The following criteria should be considered to select a suitable auditor:

• The firm is a recognised and respected audit firm in the country;; it would be desirable that they are recommended by the Institute of Certified Public Accountants of Uganda (ICPAU).

• The audit staff’s doing the work is suitably qualified in accordance with the standards and norms of the country.

• The fees paid should be comparable to other firms. • It is desirable that the firm has formal links with other international

accounting and auditing firms



14.12 Process of External audit External audits are conducted annually within the first quarter of the preceding

years to review the YES accounting system and internal controls with an aim to

ensure that:

a) The Financial Statements fairly, in all material respects, presents the financial

position of YES and the results of each activities & cash flows for the year then

ended;;

b) The Financial Statements comply with statutory requirements the GAAPs;;

c) The Financial Statements have been prepared using appropriate accounting

basis and policies applied, consistently from year to year;;

d) Proper accounting records have been maintained;; and

e) The Financial Statements agree with the accounting records and reflect a true

and fair picture of the operations of YES over that accounting period.

14.13 Basic Year-End Audit Requirements • Financial Statements • Trial Balance • Supporting Schedules

- Schedule of Income - Schedule of Accounts Receivable - Schedule of Advances to Officers and Employees - Schedule of Prepayments and other Assets - Schedule of Accounts Payable and Accrued Expenses - Schedule of Other Liabilities - Summary of Expenses - The general ledger - Bank reconciliations - Confirmation request for banks, grants receivable, accounts receivable, advances, accounts payable and accrued expenses. - Roll forward of property & equipment (summary of additions and disposals for the current year). - Assets register - Summary of Revenues received (e.g. from grants, sales and other income)

- Memorandum of Agreements, Budgets, Grant Agreements etc - Other documentary requirements (rental agreements, insurance policies, bank statements, collaborating agency agreements, etc.)



14.14 Follow up External Audit Recommendations A good auditor will recommend ways to improve the organisation’s financial

systems and procedures in a management letter. This is a very useful document that should be reviewed by the board. It can even be shared with

donors. The CEO must report regularly to the Board on the progress of the

recommendations.

The accounts should be checked by the CEO and then submitted to the Board

for approval and signing. When the accounts are signed hey are no longer draft

accounts and become final accounts. The accounts should not be signed unless people understand them. If anything is unclear, ask the auditor for

clarification. You can ask the auditor to attend the meeting at which the Board

discusses the accounts.

14.2 Audit of Donor funds as required by various donors

Occasionally different donors may call for specific audit of their funds. The golden

rule is to include it in the budget or request them to pay for it directly. Efforts

should be made to ask them to honour the current verified audited statement

since auditing exercise is laborious.

14.3 Retention Period of Source Document and auditors

• The source documents shall be retained for a period of not more than six months.

• It is recommended that an auditor should not audit an organisation for more

than five years consecutively. This is because frequent changes are laborious

as new auditors take enormous management’s time to learn the systems. On

the other had retaining an auditor for long may breed “familiarly “which may

be a threat to the organisation. They may also become stale and complacent

and no new ideas



15.0 Procurement The purpose of the procurement policy is to prescribe guidelines and procedures

for the procurement of goods and services by YES The guideline shall act both as

a reference point and a training guide for the staff of YES and will ensure

transparency and value for money. The CEO shall have overall responsibility for

the execution of the procurement.

15.1 Basic guidelines on procurement

Competitive bidding: The essence of this principle is that all persons have un

impended opportunity to bid and win. The market should be broadly defined.

Transparency: means processing tenders must involve more than one person.

No contractor involved in developing specification requirements, selection and

administration of a contract if a real or apparent conflict of interest involved.

Consideration for the Aged Supplier or People with disability;; Priority will be given

to the aged supplier or people with disability with special consideration

Procurement ethics will entail;; Value for money should be achieved in all aspects,

Staff will not use their positions for personal gains, confidentiality of all quotations

should be respected and contractors must not be told the names of other bidders

to avoid price fixing and orders should be awarded on the basis of fair competition

15.2 How procurement shall be carried out

You can select one on the following depending on the amount involved:

Tendering: All goods and services over UShs five million shall be procured by

tendering. The tender must include complete, clear and accurate information on:

• Responsibilities of the contractor • Minimum qualifications • Terms of service • Time frame for the proposed order, from issue of order to final delivery

Quotation: Goods and services between Ushs1-5 million should be procured

through a quotation, using the following procedures:

• Obtain a list of known, reputable and visible suppliers who offer best prices for goods or services



• Obtain quotations from at least 3 different suppliers from the list above • Fill in Comparative Quotation Chart (CQC) appendix (xvii) to analyse • Provide justification to recommend a particular vendor • In the CQC in (iii) above, in addition to prices other factors such as

reliability, previous satisfactory experience, quality products and delivery schedules will be considered.

Direct purchase: Goods less than UShs one million should be obtained by

seeking approval from the CEO in the normal approval process YES should

develop a list of suppliers and their price list to expedite future purchases.

Selecting Suppliers In selecting a supplier consider these factors: price, discounts, warranty,

guarantee, payment terms, quantity, quality, delivery period, after sales services,

ethical considerations, previous experience, after sales service and availability of

spare parts and any other terms. The lowest quotation may not be selected due

to any of the above reasons, or any other cause which should be mentioned.

Preferred suppliers may be used for day-to-day purchases or purchases that take

place on a regular basis. Preferred suppliers should be approved The list should

be derived from the service providers that YES has dealt with and approves the

quality of their service. The list should be reviewed annually

15.3 Procurement documentation

It is noted that if documentation is incomplete payment must not be processed. The following original documentation must accompany the voucher: • Local Purchase Order (Appendix (xvi) • Solicitation for quotation, or such documentation as appropriate • Quotation from vendors • Summary Bid Analysis or Comparative Quotation Chart (Appendix (xvii)) • Vendor confirmation • Goods received note (Appendix(xvi) • Other supporting documentation: such as;; memos, letters, invoices,

delivery notes, etc. These should all be attached to the payment voucher. • Upon completion of procurement, the purchasing personnel shall submit

the original paperwork to finance for payment and thereafter finance will store those documents to retain a copy for his/her file.

• Procurement documents should be kept for a period of ten years



•

16.0 Fixed Assets (Non- Current Assets) Management Fixed assets include all tangible items owned by YES acquired with intention of

being used on a continuous basis for period exceeding one year. The major risk

associated with fixed assets is undetected misappropriation, lack of record for

fixed assets being held by the organization. The purpose of this policy is to

ensure that all assets are safeguarded by recording their details and monitoring

their location and condition. These procedures provide guidance in introducing a

manual asset register and updating it for additions and disposals.

Acquisition and disposal of major classes of assets (such as land, buildings, and

motor vehicles) must be approved by the BoD.

Responsibility for Non Current Assets (NCA) shall be the respective department

in which they are deployed. Each HOD shall ultimately be responsible for the

proper use of assets. However, It is the responsibility of the CEO to safeguard

assets and protect them from abuse, misuse and not sold illegally.

16.1 Fixed Deposits and Investments Where there are excess liquid funds, the finance department shall appropriately

recommend the commercial investment of such funds in gilt securities that offer a

reasonable rate of return to the organization. With the approval of the BoD.A

record of all such financial assets shall be maintained by the finance department.

16.2 Depreciation of Non-Current Assets- (NCA) NCA shall be depreciated using a straight line method. The annual charge for

depreciation shall be raised by the HoFA and approved by the CEO. The

depreciation charge shall then be “expensed” in the Income and Expenditure

Statement and the corresponding accumulated depreciation amount subtracted

from the book value of the assets in the balance sheet account.



16.3 Maintenance and Insurance for Non- Current Assets The HoFA must ensure that, all insurable risks on YES’s NCA are covered by

adequate insurance policies. Where NCA require maintenance, such service

shall be procured through the procurement procedure.

16.4 Revaluation of Non-Current Assets The NCA of YES may be revalued whenever it is deemed desirable by

Management. The results of such revaluation shall be reflected in the accounting

records in line with YES’s Accounting Policies, but generally any profit or loss on

revaluation shall be carried directly to reserves in accordance with (IAS).

16.5 Custody of Titles and Control of YES Assets • Proof of ownership to NCA e.g. title deeds, lease deeds, organizational seal

and log books shall be kept in the safe for custody by the HoFA.

• YES assets shall be used for YES activities. Any private use, misuse, or

abuse shall attract disciplinary measures in accordance with the HR policy.

16.6 Fixed Asset Register A record of NCA shall be maintained to indicate details about it. These could be

recorded in a fixed asset register or inventory list. A fixed Asset is a hard back

book (or soft) maintained with a separate page for each asset showing;; date of

receipt, description and serial number, year of acquisition, location cost of the

asset. Put a table of contents for easy reference It is updated with relevant,

details of disposals, transfers of assets for use by other organisations, including

reference to authorisation in the minutes. The lowest price of assets to be

included in the asset register will be determined by the BoD from time to time.

See Appendix (xxi) for current rates. 16.7 Non – fixed asset inventory Assets whose cost is below this value are not included in the register but

monitored through the inventory list. Non-fixed asset inventory includes office

supplies such as;; reams of papers, pens, computers and copier supplies, etc.



Their records are maintained through stock cards. Each stock card is for a

specific item. The number of items stated at the balance column must be equal to

the physical stock in storage. The HoFA should carry out audit of stores to check

stock cards against receipts and issues of stores materials every month.

Differences found must always be investigated and reported to management.

16.8 Labeling of Non –Current Assets YES assets shall be identified by way of engraving, using the name YES/ name

category code/ ### example: for computers YES/ COMP/ 001.

16.9 Motor Vehicles The management of YES’s vehicles shall be vested in the HoFA. Vehicle

management shall include insurance, repairs and maintenance, fuelling, control

of movement, boarding and disposals. Vehicles shall be kept in good state of

repair at all times. Prior to any repairs being undertaken, quotations shall be

solicited from reputable garages solicited following the procurement guidelines.

Drivers shall ensure that vehicles are taken for regular service as recommended;;

ensuring that vehicles are parked overnight in safe and secure places free of

pilferage of accessories like spare wheels, jacks, windscreens, etc.;; ensuring that

the vehicle devices are in good operational order;; ensuring that the tools, first aid

kits and fire extinguishers are in good working order;; checking oil and water

adequacy and;; cleanliness of the vehicle.

YES’s vehicles shall be insured against third party and comprehensive.

The driver shall make a record of the mileage at the time of fuelling the vehicle

and maintain the fuel slips appropriately. Periodic analysis of fuel consumption

versus the odometer mileage reading shall be done by an independent person

within the finance and administration function. The results of this analysis shall



be a basis for seeking technical checks on vehicles in case of exceptions in

consumption and subsequent investigation of fuel abuse.

Each vehicle shall have a Log Sheets recording its history, performance,

servicing, overheads, repairs, etc. in sufficient detail for periodic assessments to

be made of its performance compared with its cost of upkeep.

Where the use of an official vehicle for un official purposes is required, an official

vehicle requisition form shall be used to apply for transport, signed by the

respective HoD and forwarded to the HoFA for authorisation and arrangements

for release of the required vehicle. Private use of YES’s vehicles shall be

restricted guided by procedures outlined in the terms and conditions of

employment.



17.0 Asset disposal policy Once the used assets have outrun their economic usefulness they may become

costly to an organization in terms of the administration costs associated with their

custody and management. It is often desirable to dispose off such assets before

these costs accumulate. The disposal shall take place only in cases where the

asset has completed its useful life (Nil Book Value) or is incapable of efficient

performance of its functions, whichever comes first. The standard useful life will

be as follows;;

- Vehicles and Motorcycles - 5 years

- Furniture and Office Equipment - 6 years

Before a decision to dispose an asset is made, a Technical Report to attest asset

conditions should be sought, from a reputable person or firm approved by

management such as suppliers. Alternatively, guidance may be obtained through

output records like number of copies made, in case of copiers, kilometers

traveled for vehicles. The assets should be assessed annually and disposal of

assets should be done after exhausting all options of repair. The policy should be

administered in a transparent manner and no fraud in the process

As a last resort these items will be given out free to YES partners and

beneficiaries after approval by the BoD.

17.1 How to dispose i). Disposal as scrap with no value When the FC deems fit, it may decide to dispose off assets with very low or

insignificant value, or for which no further economic usefulness is envisaged, and

whose disposal costs may exceed its possible recoverable value.



ii). Disposal asset with value A closed tendering process (where staff only is eligible) will be used. Closed

tendering procedure is opted for because of the envisaged low volume of activity

and few assets to dispose off. This may be waived if disposal involve vehicles

and or whole computer equipment. Terms and conditions for each tender will be

drawn by the FC and this may vary from tender to tender.

The Committee will open the bids, when all bidders or their representatives are

present, during which time each bid will be read. Each representative will sign up

his or her presence .The committee will evaluate each bid for compliance,

accuracy and all other relevant information regarding the tender, after which a

successful bidder will be selected and announced. Success will be based on the

degree of compliance with tender terms and conditions. Should the successful

bidder fail to complete the transaction, the runner up and the next runner up are

offered the opportunity to buy, in that order. If they also fail to complete the deal,

the process is repeated with revised terms and conditions, if deemed necessary.

YES may wish to set a reserve price below which a tender is not accepted. YES

is not obliged to accept the highest, lowest or any tender. This is to avoid, among

other things, challenges to the decision of the Finance/Tender Committee and or

eliminate canvassing.

17.2 Proceeds from sale of assets It is an accounting requirement to disclose the result of any disposal of an asset

in the accounts of the year during which the disposal occurred. Proceeds from

the sale of asset should be used for replacement of such asset.

Any other supporting documents, e.g. receipts from disposal and BoD consent

shall be used to write the asset (s) disposed off the books of account. The profit

or loss arising out of a disposal of assets shall be carried to the Income and

Expenditure Statement for the period in which assets are disposed.



18.0 Internal controls Internal Control is defined as: "all the policies and procedures adopted by the

management of an entity to assist in achieving management's objective of

ensuring, as far as practicable, the orderly and efficient conduct of its business,

including adherence to management policies, the safeguarding of assets, the

prevention and detection of fraud and error, the accuracy and completeness of

the accounting records, and the timely preparation of reliable financial

information."

18.1 Basic Principles of Internal Control

Internal controls are put in place to manage risk and hence to help ensure that

the organization resources are used efficiently and effectively. Risks should be

continually assessed and controls put in place which ensures that the risks are

minimized. Internal controls will not eliminate all risks but the controls should

reduce the risk to an acceptable level. The objectives are met by creating a good

control environment, and by implementing good control procedures.

18.2 Control Environment

The internal control environment is defined by the attitude, awareness and

actions of management, for example:

• Management approach in terms of philosophy and operating style

• Organisational culture, in terms of shared values

• Organisational structure (including segregation of duties and supervision)

• Internal audit and personnel / recruitment policies

Although the elements above are difficult to quantify, they are crucial in

establishing the framework in which specific control procedures operate.

YES aims to have a participatory / consultative management style, where all

employees share the vision of the mission statement, where there is an

appropriate level of segregation of duties and supervision, clear lines of



accountability, and where employees are recruited and rewarded according to

merit.

18.3 Types of internal control procedures

There are seven major types of control procedures as follows:

i. Approval and control of documents ii. Checking the arithmetical accuracy of records iii. Maintaining and reviewing control accounts and trial balances iv. Comparing physical data to accounting records (eg stock, cash) v. Accounting reconciliations vi. Controls over computerised applications and the IT environment vii. Limiting direct physical access to assets and records

The system of internal control will be operationalised as follows: Training and Supervision of Personnel and Definition of Responsibilities: It is essential that personnel are given clearly defined lines of responsibility and authority. It is also essential that personnel are trained

and supervised in the tasks that they are asked to perform.

Adequate Segregation of Duties: The ability to adequately segregate duties depends upon the staffing levels and circumstances of each cost centre.

However, as a guide to best practice the following may apply:

• Separation of the authorization of transactions from custody of assets

• Separation of operating duties from financial record-keeping

• Separation of custody of the assets from maintenance of the related

accounting records

Existence of Adequate Documentation and Records: Compliance with the policies for the procurement and the payment of accounts will help ensure

that documentation is maintained to a suitable standard.

Internal Audit Recommendations;; The organization’s Internal Audit considers that the major financial controls that managers should be

concerned with are in the areas of receipting, order/invoice authorization and

the control of fixed assets and inventories as seen in the earlier sections.



19.0 Handing over system Checklist for handover and exit of: CEO,HoFA,Programme managers all account

signatories & other staff where applicable 19.1: ACCOUNTS: At the time of handover from anyone of the above positions to another, the accounts of the organization must be up to date to facilitate the

following handover procedures.

19.2: BANK ACCOUNTS: Where bank accounts are held, the signatories should be changed with the approval of the outgoing member of staff. The bank balance

according to the bank should be signed and agreed by both the outgoing and the

incoming staff members, with the appropriate supporting documentation available

(that is bank and cash reconciliation reports prepared for the purpose)

19.3: CASH: All cash balances held must be counted and agreed and signed by both the incoming and outgoing member of staff as evidence of handover.

19.4: FIXED ASSETS: The fixed asset register should be checked and signed by both the incoming and outgoing member of staff as evidence of handover.

Similarly, both should sign a list of documents relating to fixed assets, such as

vehicle log books, vehicle registration documents, assets held by staff , work in

progress, and keys as evidence of hand-over.

19.5: OFFICE RENTAL PREMISES: All documents, keys etc, relating to office rental premises should be listed and signed by both incoming and outgoing

members of staff as evidence of handover.

19.6: ADVANCES/LOANS: All lists of advances and loans (salary advances and staff loans) should be signed by both incoming and outgoing members of staff to

ensure the incoming member of staff is fully aware of all such advances.



20.0 Statutory Requirements This section deals with the statutory requirements by the government including;;

taxation that will affect YES and/or its employees

20.1 Types of taxation and other statutory obligations are: • Value Added Tax (VAT) • Income Tax made up of: Pay As You Earn (PAYE) &Corporate Tax • Withholding Tax (WHT) • Stamp Duty • Import Duty • N.S.S.F • Workmen’s compensation

20. 11.Value Added Tax (VAT) YES will suffer VAT on its goods and services. (The organization can go ahead

and make voluntary registration) for it to be able to claim for VAT.

VAT is in two forms, output tax and input tax.

Output tax: where VAT charged to a consumer. It is only the taxable person who will charge VAT in the course of affecting their supplies.

Input tax: where VAT payable when buying goods or services which are not exempt, but if the buyer is registered for VAT it can normally be claimed for credit

for the VAT charged on business purchases and expenses. VAT claimable is that

on: office equipment for business;; commercial vehicles used in the business for

the carriage of goods;;

Other VAT claimable cover: the supply of electricity for the business;; telephone bill for the business;; and Payments for services to the business.

VAT return is due each month. VAT is calculated by comparing the output tax

with the input tax. If the difference between output tax and input tax is positive,

then the difference shall be paid to URA but if it is negative, the amount shall be

claimed from URA.

20.12 Income Tax Income tax shall be levied on the total income of every taxpayer. Income tax

payment comprises Pay As You Earn (PAYE) and lump sum corporation tax.



a) PAYE PAYE is a system where the employer deducts from his liable employees’

monthly pay and remits it to the internal revenue department every month.

The effect on PAYE on the organization and employees The employer shall make sure that PAYE is deducted from employee’s monthly

pay which includes wages, salaries, any cash allowances received in respect of

employment and benefits in kind paid by the organization. This has to be done

within the time frame set by the law or else it would attract penalties.

Basis of calculation Tax tables for income tax rates are provided each year as the tax rates may change from year to year. PAYE deducted from the employees’

monthly pay requires to be remitted before the 15th day of the month following the

month of deduction.

Penalties are levied to a person who fails to pay any tax on or before the due date for payment shall be liable for interest at a rate as would be stipulated at the

prevailing time on the amount unpaid calculated from the date on which the

payment was due until the date on which payment is made.

A person who fails to furnish a return within a stipulated time required by the law

commits an offence and is liable on conviction to a fine as would be set.

Accounting treatment;; PAYE deducted shall be debited to salaries & wages control account when payment is effected and YES cash/ bank account credited.

b) Corporation tax Corporation tax is tax charged on the net profits of the organization after

deducting depreciation and other expenses. However, corporation tax does not

apply to YES because this is not a profit making organization.

20.13 With Holding Tax (WHT)



When the organization pays a dividend to a shareholder, interest or rent,

payment for services contracted, WHT on the total payment shall be deducted.

Accounting treatment;; The WHT shall be debited to the WHT account, and the YES cash or bank account credited.

Rates of WHT;; The current withholding tax rate applicable for various transactions can be obtained from URA office.

20.14 Stamp Duty Accounting treatment;; When stamp duty is paid, it shall be treated as cost of the item. Debit capital asset account and credit YES cash account.

20.5 National Social Security Fund (NSSF) NSSF provides for four major benefits namely: Old age , Retirement, Invalidity

and Survivor’s benefits Early retirement is paid at 50 years and emigration grant

is paid to members leaving the country permanently. 5% of the workers’ gross

pay is deducted, plus, the employer on behalf of each worker contributing 10% of

that pay. Payment must be received before the 15th day of subsequent month in

which deductions were made. Penalty;; The deadline for receiving NSSF is 15th of the next month. If an employer does not meet this deadline, there is a requirement to pay a penalty of

10% of the total contribution remittance that was late

20.6 Workman’s Compensation As a statutory requirement YES will enter into an insurance policy to cover the

staff compensation for accidents got while on duty.



21.0 Information systems management and security

21.1 Information Security Information is an important asset in the organisation that securing it is vital. Since

information is core to decision making at all levels within an organisation, it

should be accurate, and available.

21.11 Availability Availability of information means that it should be accessible to the users of the

information whenever they need it. Risks that may affect availability of

information should be managed with the following procedures:

Computer data must be safeguarded against loss by backing up data regularly.

The back up schedule is determined by considering the computer workload

• Back up options are tapes, flask discs, removable hard drives, and writable CDs.

• Prepare additional back ups monthly, using two media, alternating them • Backup all information on computers, make copies of data and store them on

hard disks or compact disks every after a quarter on local drives. Some copies should be kept away from office in case of fire and theft.

• Install antivirus software, and use that software to prevent virus attacks. The software should be updated periodically.

• Each year end, after all corrections, adjustments, and closing entries have been entered;; perform a back up

• Service the computers and cover them with dust covers when not in use. • Enable passwords on computers and on applications and ensure that users

change their passwords periodically. • Install fire extinguishers and take staff through fire drills • Keep computers away from water • Lock away hard copy documents • Fumigate offices to ensure bugs do not eat up hard copy papers that contain

information

21.12 Confidentiality YES shall ensure confidentiality of her information as below;;



• Enable passwords on computers and on applications and ensure that users change their passwords periodically.

• Implement security policies within operating systems of computers. A technical personnel can be of help in implement this procedure. and train staff

• Monitor distribution of outputs like reports and sensitive data. Only authorised staff should have access to that kind of information

• Monitor the disposal of confidential information • Lock away computers if possible or keep intruders out of office.

21.13 Integrity Integrity of information means that data should only be modified after

authorisation, and that data should not be manipulated in any unmonitored, un

authorised manner.

• Unauthorised changes to data changes what that data represents when it is processed into information, the outcome will be different.

• The following procedures should be implemented in order to preserve the integrity of data.

• Backup data before making changes to it. • Enable passwords on computers and on applications and ensure that users

change their passwords periodically. • Install antivirus software, and use that software to prevent virus attacks. That

antivirus software should be updated periodically.

21.2 Archiving records

This chapter aims to outline the methods for filing, retaining and destroying YES

records. The procedures apply to all documents of YES but do not necessarily

cover internal or certain day to-day correspondence

YES will retain records in an orderly fashion for time periods that comply with

legal and governmental requirements and as needed for general YES

requirements. Measures must be taken and means must be found to insure that

appropriate records are retained at least per the minimum requirements.

21.21 Invoice Files • YES must keep for each year all invoices to support all disbursements and

file them alphabetically by vendor or by any other logical filing method



• Accounts office must maintain the master invoice file containing originals

of all invoices. If other areas need invoices, they make own copies.

• Since the life span of capital items exceeds a year or two, invoices for

these assets may be filed as a group of fixed assets.

21.22 Minutes

• Records of FC meetings should be kept to provide historical notes for e.g.

future legal actions, program analysis, and or new personnel education.

• Minutes should reflect both approval and dissent on all votes and include

financial recommendations and amounts, if any.

21.23 Payroll Files

• URA regulations have established specific requirements for retaining

payroll record found in annual tax publications (it is often updated).

• Personnel returns forms are prepared each year for each employee and

provided to them by January 31st of the following year.

21.24 Personnel Files

• Complete individual personnel files need to be maintained and carefully

safeguarded due to their highly confidential nature.

• Access should be restricted to the CEO, HoFA and designated accounting

personnel only.

• The files should not leave the room where they are stored but may be

viewed by the respective owner in presence of authorized staff. Copies of

individual documents may be made for them.

• Minimally, the files should contain the employee's entire employment

history from employment application to final interview including application

letters, resumes, recommendations, job description, contract, salary

increments, Bio data, NSSF, , PAYE, PIN number, copy of certificates,

leave form, passport pictures, copy national ID card, performance

appraisal form and evaluation form.



21.3 Record Retention Schedule • Storage of archival records will be maintained in a secure area safe from

theft, fire and water damage. Each file box will be labeled on the front with the

contents, dates covered, and destruction date if applicable.

• Ideally files should be stored only in boxes with similar items, dates and

retention periods to allow for easier access and purging of records.

• The following schedule is designed to safely reduce the current records and

consequently the amount of floor or cabinet space needed for files. These are

the minimum number of years that these documents should be retained.

However, always keep those items that you feel should not be destroyed.

1. Accident reports and claims (settled cases) 8 yrs 2. Accounts receivable and payable ledgers & schedules 7 yrs 3. Articles of Incorporation Permanently 4. Audit reports of accountants permanently 5. Bank Deposit Slips 6 yrs 6. Bank Statement and Reconciliation 7 yrs 7. Budgets 3 yrs 8. By-Laws Permanently 9. Cash books 7 yrs 10. Charts of Accounts Permanently 11. Cheques (cancelled but see explanation below) 8 yrs 12. Cheques (including cancelled ones) for important payments. Permanently 13. Cheque registers 5 yrs 14. Claim Files (against us) 7 yrs 15. Claim Files (by us) 3 yrs 16. Computer disk back up – financial data as of 6/30 Permanently 17. Computer disk back up – payroll data as of 12/31 Permanently 18. Contracts and leases (expired) Permanently 19. Contracts and leases (still in effect) Permanently 20. Correspondence (routine) with vendors 1 yr 21. Correspondence (general) 3 yrs 22. Correspondence (legal & important matters only) Permanently 23. Credit Files 7 yrs 24. Deeds, mortgages, and bills of sale Permanently 25. Depreciation schedules Permanently 26. Donations acknowledgements 5 yrs 27. Duplicate deposit slips 1 yr 28. Employee Personnel Records (after termination) 8 yrs 29. Employee applications (after termination) 8 yrs 30. Engineering & Scientific records Permanently 31. Accounting Policies and Procedures Manual - permanently



32. Expense analyses & expense distribution Schedules 7 yrs 33. Financial statements (end-of-year, other months are optional) 34. General & private ledgers (and end-of-year trial balances) Permanently 35. Insurance policies (expired) Permanently 36. Insurance records, policies, etc. Permanently 37. Internal audit reports (in some situations, longer retention may be desirable) 3 yrs 38. Internal reports (misc.) 3 yrs 39. Inventory records 7 yrs 40. Investment Statements 10 yrs 41. Invoices for fixed assets Asset Life + 4 yrs 42. Invoices from vendors 7 yrs 43. Job Descriptions (after superseded) Permanently 44. Journals Permanently 45. Leases (land and buildings) Permanently 46. Leave of Absence Forms 4 yrs 47. Licenses & Permits 5 yrs 48. Loans (after payment in full) 7 yrs 49. Minutes of finance council meetings Permanently 50. Notes receivable ledgers and schedules 7 yrs s 51. Payroll records & summaries including payments to pensioners 4 yrs after separation 52. Petty cash vouchers 3 yrs 53. Plant cost ledgers 7 yrs 54. Property appraisals by outside appraisers Permanently 55. Property records including costs, depreciation etc. Permanently 56. Purchase Orders (except purchasing dept. copy) 1 yr 57. Purchase orders (purchasing dept. copy) 7 yrs 58. Goods Receiving sheets 1 yr 59. Rental agreements & insurance certificates 3 yrs 60. Restricted contribution notification letters (after restriction lapse) 3 yrs 61. Stock & bond certificates (cancelled) 7 yrs 62. Subsidiary ledgers 7 yrs 63. Support for endowment contributions Permanently 64. Tax returns & worksheets, KRA reports and other tax documents - Permanently 65. Unrestricted contribution notification letters 7 yrs 66. Voucher register and schedules 7 yrs 67. Voucher for payments to vendors, employees, etc. 7 yrs

21.4 Destruction Time-lines

• Three to six months after each year end, the officer concerned with filling

will proceed with destruction of all files that have exceeded their

recognized holding period.



• Department heads will be informed that the destruction of specified files

will be taking place within thirty days

• Destruction of the files will be performed by YES personnel. Care must be

taken to have all documents that contain personal information such as

phone numbers, addresses, and account numbers, etc. shredded before

disposal.