ACCOUNTING MANUAL

THE ACCOUNTING SYSTEM Accounting Terms: Chart of Accounts (See Attachment) List of all the accounts with assigned account numbers categorized as per: Income and Expenditure Statement Account- rant Income! "#$ Income! "#$ %perating and & % Expenses General Ledger: 'wo (() Accounts:I) %perating ("ro)ect #anagement $nit) ii) Sub- rantee All Accounting 'ransactions will be recorded as per %perating or Sub- rant-"ro)ect Cash oo!s 'wo (() - 'o record all receipts and pa*ments for "ro)ect #anagement $nit! and Sub- rantee "ett# Cash $ournal - 'o record all pett* cash transactions $ournal %ouchers - 'o record )ournal entries &ecei't oo!s - one set for "ro)ect #anagement $nit! one set for Sub- rantee

"a#ment %ouchers: I) "ett* +ash ,ouchers for "ett* +ash transactions ii) +he-ue "a*ment ,ouchers for +he-ue "a*ments Che(ue oo!s - one set for each che-uing account oo! - 'o record purchases costing more than ./!000

"urchase Order

Statement o) Accounts - #onthl* 1inancial 2eports (Sub- rantee Ad3ance 2eport! Subrantee Li-uidation 2eport! 4 "#$ Li-uidation 2eport5 udgets - 1orecast of operating income and expenditure for Sub- rantee and "ro)ect #anagement $nit Asset &egister - A record of all 1ixed Assets Ac-uired E*ternal Auditor+s &e'orts - Annual 1inancial Statements of the Secretariat in compliance with the pro3isions of the +ompanies Act ,iling S#stem - A s*stem to secure and maintain accounting documents5

ACCOUNTING MANUAL
ACCOUNTING "OLICIES RECEIPTS ALL receipts of funds MUST be recorded in the receipt book of the respective account, immediate ! upon receipt of such funds" A consecuti3e pre-numbered receipt should be raised for all funds recei3ed5 2eceipts that are not used! for whate3er reason! should be clearl* labelled cance ed" 'he receipt boo6 is a source document from which data will be collected for recognition b* the accounting s*stem! with respect to the receipt of funds b* the Secretariat5 It is therefore important that the following procedures be adhered to and the necessar* information neatl* filled out to ensure that transactions are easil* understood5 2eceipts should be prepared in duplicate (original and carbon cop*) and should ha3e:a) A pre-numbered receipt number b) &ame of %rganization 7 Indi3idual pa*ing funds c) 8ate of receipt d) Amount being recei3ed (in words and numbers) e) "urpose of pa*ment f) If the amount being recei3ed is in cash9 the word cash should be stated on the receipt g) If the amount being recei3ed is b* che-ue9 the name of the ban6 the che-ue is drawn and the account number should be recorded5 'he receipt number should be noted on the reverse side of the che-ue5 'he "a*er will be gi3en the original receipt and the cop* will ser3e as source document for the accounting s*stem5 $nder no circumstances should cash remain in office for more than twent*-four hours! during the wor6ing wee6! without being lodged to the respecti3e ban6 account5 2eceipts must be lodged b* the next ban6ing da* or the same da* if the sum recei3ed is substantial (sa*! o3er .:0!000500) and ban6ing hours permit5 1unds recei3ed must be totalled and balanced with receipt boo6 dail* and prior to ma6ing lodgement5 Lodgement must be prepared and made dail*5 Lodgements slips must be in duplicate and should state amounts that are in cash or b* che-ue(s)! amounts that are in che-ues should indicate the che-ue number(s) and amount(s)5 Lodgement slips endorsed b* the ban6 are source documents from which data will be collected for recognition b* the accounting s*stem! with respect to funds deposited to the respecti3e ban6 accounts on the Secretariat;s behalf5 Cash #ook - &ecei'ts - 'o record all receipt transactions Source of Information - "re-numbered 2eceipt <oo6

ACCOUNTING MANUAL
'he cashboo6 is a columnar )ournal that will record all receipt transaction gi3ing pertinent information5 ,or E*am'le: -ate &ec. Name Name Name Name Name Name Lodgement o) o) o) o) o) No. / Acct. Acct. Acct. Acct. Acct. 000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000 Lodgements must reconcile with receipts5 +ash boo6 must be totalled and balanced monthl* and postings made to the general ledger5 PA$ME%TS A disbursement of funds MUST be recorded a& Pa!ment b! Cash ' Pett! Cash All pa*ments of two hundred dollars (.(00500) or less should be administered through the "ett* +ash S*stem5 "ett* +ash 1loat - 1ifteen hundred dollars (.:/00500)5 A pett* cash 3oucher must be prepared for each disbursement stating: - the name of the recipient (where appropriate) - the date of disbursement - the purpose of the disbursement - the amount being disbursed - the signature of the person disbursing the funds - the signature of the recipient of the funds <ills or written re-uests should be attached to these 3ouchers5 Petty Cash Journal: A pett* cash report should be done monthl* or when funds (pett* cash float) are almost depleted! as a re-uest for reimbursement5 'he pett* cash report should be a record of all the pett* cash transaction for the period and should record the pett* cash transactions in chronological date order5 1or example:- pett* cash 3oucher number - date of transaction - name of recipient 7 t*pe of transaction - amount of pa*ment - t*pe of account to be charged 'he total disbursement for the period will be the amount to be reimbursed5 At all times tota cash plus tota pett! cash vouchers must be e(ua to the f oat ) imprest" b& Pa!ment b! Che(ue ' Che(ue *isbursement All pa*ments for more than two hundred dollars (.(00500) are to be made b* che-ue5 Amount

ACCOUNTING MANUAL
Requests for Cheque disbursement: I) 2eimbursement of expenses incurred A formal written re-uest with rele3ant supporting documents should be submitted for appro3al5 ii) 2egular monthl* expenses In3oices! bills or re-uests for pa*ment should be submitted for appro3al5 iii) "urchases on behalf of the Secretariat (Please refer to the Procurement Manual for procedures in the purchase of commodities and services) Processing of Cheques: +he-ues will normall* be disbursed once per wee65 I) Appro3ed purchase order and in3oice or re-uest for reimbursement should be submitted for pa*ment5 ii) 'he recei3al date should be stamped immediatel* on the documents5 iii) A che-ue pa*ment 3oucher should be prepared after the following steps are ta6en: - the in3oice is compared to the purchase order to ensure that the goods7ser3ices ordered correspond to those on the in3oice - 3erif*! b* the certification of the goods7ser3ices recei3ed! that -uantit* on in3oice was recei3ed5 - double-chec6 for mathematical accurac* of the in3oice5 %#" If an error is found (in iii) abo3e)! a notation should be made on the che(ue 'a#ment 1oucher. '=E S$""LIE2S I&,%I+E MUST NOT <E 8E1A+E8 <> A&> %11I+E2 %1 '=E SE+2E'A2IA'! under an* circumstances5 A corrected in3oice should then be re-uested from the supplier5 i3) 'he che-ue pa*ment 3oucher should indicate: - &ame of "a*ee - 8ate of pa*ment - Amount of pa*ment - <rief description 7 t*pe of transaction - +ost +entre 7 Account to be charged - Signature of person preparing 3oucher 3) +he-ues will be prepared from the information on the che-ue pa*ment 3oucher5 'he che-ue number must then be added to the designate section on the che-ue pa*ment 3oucher5 3i) 'he signing officers must re3iew the che-ue pa*ment 3oucher as well as the documents attached before signing che-ues5 3ii) +he-ues for deli3er* should be recorded in a register! with a section for the signature of the recipient of the che-ue5 3iii) 'he che-ue pa*ment 3oucher should be placed in a holding file until the che-ue is deli3ered 7 recei3ed5

ACCOUNTING MANUAL
ix) ?hen che-ue is deli3ered 7 recei3ed! the che-ue pa*ment 3oucher must be stamped "AIto a3oid duplication of pa*ment5 x) 'he "AI- che-ue pa*ment 3oucher should then be filed b* che-ue number order as per the respecti3e ban6 account5 All che-ues are to be signed b* two (() authorized persons5 A notice of the signatories on the accounts as well as signing limits (if an*) must be 6ept on record at the Secretariat5 Cash #ook ' Record a che(ue disbursement5 Source of information - +he-ue "a*ment ,oucher 1iles in con)unction with che-ue boo65 'he +ash boo6 is a columnar )ournal that will record all che-ue pa*ment transaction5 ,or e*am'le: -ate Che(ue "AYEE Amount Name Name Name Name Name Name o) o) o) o) o) o) No. / Acct. Acct. Acct. Acct. Acct. Acct. 000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000 +ash boo6s must be totalled and balanced monthl* and postings made to the general ledger5 SU#'PR+,ECTS- ACC+U%TS : A subsidiar* ledger should be maintained to record funds disbursed to finance sub-pro)ects5 An account should be opened in the subsidiar* ledger when the first pa*ment is made to the sub-pro)ect5 'he following information should be recorded on the initial page of the account: I) 'he name of the Sub-"ro)ect ii) 'he name and address of the "roposer of the sub-pro)ect iii) 'otal amount appro3ed to finance the sub-pro)ect i3) Schedule of pa*ment Each pa*ment on the account would be entered in the debit column5 'his ledger should be balanced monthl* and reconciled with the Sub-"ro)ect Account in the eneral Ledger5 'he sum total of all the sub-pro)ect accounts should be e-ual to the balance on the Sub-pro)ect Account in the eneral Ledger5 #A%. REC+%CILIATI+%/ :5 A monthl* ban6 reconciliation is to be prepared for each of the Secretariat;s che-uing account5 (5 An* irregularities should be in3estigated immediatel*5 @5 $nresol3ed irregularities should be reported to the "rogramme 8irector immediatel*5

ACCOUNTING MANUAL

,+UR%AL E%TRIES/ A )ournal entr* is an accounting instrument used to record non-cash transaction that affects the accounting s*stem5 Aournal entries should be recorded on speciall* designed )ournal 3ouchers5 A )ournal 3oucher is the source document from which data will be collected for recognition b* the accounting s*stem5 'herefore! the preparation of )ournal entries should be limited to the person(s) responsible for the maintenance of the accounting s*stem! and sub)ect to the appro3al of the "rogramme 8irector5 &arrati3es on )ournal entries should be clear and precise and gi3e specific references and explanations7rationale for the entries5 +opies of all documents pertaining to the )ournal entr* should be attached to the )ournal 3oucher5 Aournal 3ouchers should be filed b* the month and in date order5 0ILI%1 S$STEM/ All accounting documents should be filed b* the month and in date order5 1E%ERAL LE*1ER/ "osting to the general ledger should be done monthl*5 Source of entries for the eneral Ledger:

a) 'he +ash <oo6 - 2eceipts - "a*ments b) "ett* +ash Aournal c) Aournal ,ouchers 2eference71olio &umbers should be used to identif* origin7source of entries5 %n completion of posting to the eneral Ledger! a 'rial <alance should be extracted to determine and confirm accurac*5 SU#SI*IAR$ LE*1ER ACC+U%TS/ See Sub-pro)ect Accounts5 STATEME%T +0 ACC+U%TS/

ACCOUNTING MANUAL
A5 Statement of 8isbursement - A detailed monthl* statement of disbursement to be submitted to +I8A in order to recei3e reimbursement5 <5 Sub-"ro)ect 2eports - A schedule of funds disbursed to finance Sub-"ro)ects5 'otal +osts to finance Appro3ed Sub-"ro)ects5 <alance of funds to be disbursed5

#U*1ETS/ Expenditure <udgets should be prepared for both %perating and Sub-"ro)ect Accounts5 A5 Administration and #anagement Expenditure <udgets <5 8e3elopmental "o3ert* "rogramme (Sub-"ro)ect) <udgets E2TER%AL AU*IT+RS/ External Auditors should be appointed and consulted on the o3erall 1inancial S*stem5

ACCOUNTING MANUAL
"ACT CHA&T O, ACCOUNTS #ALA%CE S3EET ACC+U%TS Current Assets +ash in <an6 - Account &o5 : +ash in <an6 - Account &o5 ( +ash on =and - "ett* +ash "re-paid Expenses Loan 0i4ed Assets E-uipment Accumulated 8epreciation 1urniture and 1ixtures Accumulated 8epreciation #otor ,ehicles Accumulated 8epreciation Leasehold Impro3ements Accumulated 8epreciation - E-uipment - 1urniture and 1ixtures - #otor ,ehicles - Leasehold Impro3ement (%perating Account) (Sub-"ro)ects Account)

LIA#ILITIES and CAPITAL Current Liabi ities Accounts "a*able Accrued 'ax ( +') Accrued 'ax ("A>E) Accrued 'ax (Ed5 'ax) Accounts "a*able - =EA2' Accounts "a*able - &=' Lon5'Term Liabi ities Loans "a*able #ortgage "a*able Capita I%C+ME and E2PE%*ITURE ACC+U%TS Income ++% 1unds +I8A 1unds 1unds - %ther 8onor Agencies

ACCOUNTING MANUAL
Imprest Account ' 1unds for Administrati3e Expenses #embership 1ees Interest Earned Income from In3estments #isc5 Income E4penditure ' Sub'pro6ects fundin5 Sub-pro)ects Account E4penditure ' +peratin5 E4penses "ersonnel and Staff: Salaries - 1ull 'ime Staff 1ees - "art 'ime Staff %utside +onsultants: Audit Support Ser3ice %perational +osts: %ffice 2ental 2epair and #aintenance %ffice Supplies - Stationer* etc5 #otor ,ehicle Expenses - Insurance! "etrol! Ser3icing etc5 +ommunications - telephone! fax! "hotocop*ing! postage and courier Local 'ra3el Insurance - 1urniture and E-uipment Staff and #embership 'raining <an6 +harges 8epreciation - 1urniture and 1ixtures - #otor ,ehicle - Leasehold Impro3ements