Bank and Cash management of Save the Children International
(Bangladesh Country Office)
Save the Children is one of the best welfare organizations for children around the world. It was founded by Eglantyne Jebb on 1919 in England. At present it operates its activities in 120 countries around the world. In Bangladesh it has started its activities since 1972. The mission of this organization is to provide maximum benefits to the underprivileged children of the world. In order to do so they operate different programs around the world, most of these programs are based in the world’s poorest countries, where millions of children struggle to survive and thrive.
Health, Population and Nutrition (HPN), Education, Field Operations and Disaster Management are their program focus point. Save the Children has worked through direct implementation and partnerships in many parts of the country, including Dhaka, Chittagong, Barisal, Khulna, Rajshahi and Sylhet divisions. Save the children mainly collect its fund from the individual foundations, government and different corporations, and spends as much money as possible on programs which benefit children directly. To achieve the aim of Save the Children is the mission of finance department of the organization. They are committed to managing the funds in a fully accountable way. Effective administration does cost money, but they try to keep this cost as low as possible. Save the Children is working to align their financial processes, planning and reporting through the transition to one Save the Children where, instead of many member organizations delivering programs in a particular country, there is only one Save the Children organization – bringing significant cost efficiencies in-country as well as across the rest of the organization. This allows them to focus more on working for children.
SCI (Save the Children International) does all its financial activities through bank and cash management. So bank and cash management process is very important for running the financial activities efficiently as well as to achieve the goal of the organization. In SCI all bank & cash related activities are accomplished by the accounts & treasury section. SCI has its country office in Bangladesh to operate the regional activities, so after a certain period of time it has to top up its bank and cash balance according to the need determined by the budget & analysis department and operates its all necessary activities through bank and cash management by obliging the SCI fiance policy.
Besides as SCI is funded by different government, individual foundations and corporate organizations so to maintain the transparency of their expenditure on different program and activities is another important aspect of finance department. To maintain transparency in the financial activities financial management system (FMS) section records the transactions by using coding attribute in an online spreadsheet (Agresso) for keeping record and generating report for various users. This section also reconciles the bank account and the SCI account on order to ensure the accuracy of the financial activities of the organization.
Save the Children, is a globally active non-governmental organization which promotes children’s rights, provides relief and helps support children in developing countries. In order to improve the lives of children through better education, health care, and economic opportunities, as well as providing emergency aid in natural disasters, war, and other conflicts it was established in the United Kingdom.
In addition to the UK organization, there are 28 other national Save the Children organizations who are members of Save the Children International, a global network of nonprofit organizations supporting local partners in over 120 countries around the world.
In order to gain more rights for young people Save the Children promotes policy changes, particularly by enforcing the UN Declaration of the Rights of the Child. Alliance members organize emergency-relief efforts, helping to protect children from the effects of war and violence.
The Save the Children Fund was founded in London, England, on April 15, 1919 by Eglantyne Jebb and her sister Dorothy Buxton as an effort to alleviate starvation of children in Germany and Austria-Hungary during the Allied blockade of Germany in World War I.
The Fight the Famine Council was initially started earlier in 1919 in order to put political pressure on the British government to end the blockade. However, on April 15, 1919, the sisters succeeded in separating itself from the politics of the Council and creating a separate “Save the Children Fund”.
In May 1919, the Fund was publicly established at a meeting in London’s Royal Albert Hall in order to “provide relief to children suffering the effects of war” and raise money for emergency aid to children suffering from the wartime shortages of food and supplies.
In December 1919, Pope Benedict XV publicly announced his support for Save the Children, and declared December 28 ‘Innocents Day’ in order to collect donations.
The first branch was opened in Fife, Scotland in 1919. A counterpart, Rädda Barnen (which means “Save the Children”), was founded later that year in Sweden, and together with a number of other organizations, they founded the International Save the Children Union in Geneva on January 6, 1920. Jebb built up excellent relationships with other Geneva-based organizations, including the Red Cross who supported Save’s International foundation.
Jebb used many new ground-breaking fund-raising techniques, making Save the Children the first charity in the United Kingdom to use page-length advertisements in newspapers. Jebb contracted doctors, lawyers and other professionals in order to devise mass advertisement campaigns. In 1920, Save the Children started individual child sponsorship as a way to engage more donors. By the end of the year, Save the Children raised the equivalent to about £8,000,000 in today’s money.
In Bangladesh, Save the Children started its activities in1972. Today, in more than 120 countries, Save the Children is transforming children’s lives by providing families and communities with the tools they need to break the cycle of poverty. While their programs are diverse, their mission is singular – to create lasting, positive change in the lives of children in need around the world. Save the Children sees its role as that of a catalyst in community evolution. They favor a multi-disciplinary approach, acknowledging that the problems we address — poverty, illiteracy, poor health — are complex and interrelated. Innovation and experience have been the keys to Save the Children’s success.
In partnership with individuals, foundations, corporations, governments, national and international agencies, their programs focus on results and proven solutions.
Programs in Bangladesh
The Education sector includes two core programs: Early Childhood Development and Primary Education. The goal of the education sector is to ensure the rights of children by enabling their parents, as well as community members to meet their basic learning needs including knowledge, skills and attitudes for better living in their own environment.
Early Childhood Development: The Early Childhood Development program includes Home Based Early Learning Opportunity Centers (HBELO) and Home Based Preschools (HBPS) in Nasirnagar. In these home based centers, children are involved in indoor-outdoor play, rhymes, songs and storytelling sessions. Parents and caregivers are offered ECD related training to increase their knowledge and confidence on child rearing.
Primary Education: The Primary Education program includes both in and out of school children in the range of 6-15 years for more accessibility to and availability of primary education opportunities. The out of school children in the same age range along with some adolescents are involved in the child-centered program Child-to-Child (CtC). The CtC program uses the 6-step approach to build their own capacity to identify problems and issues, plan intervention, implement and evaluate them. “Lokokendra” have been established to organize social awareness campaign. These are basically community learning and resource centers where children come to read books and learn developmental skills.
Health, Population and Nutrition Program: The overall goal of the Health, Population and Nutrition programming is to bring about sustainable improvements in the health status of individuals, families and communities, with special attention given to women and children, particularly the disadvantaged.
School Health and Nutrition Program: The goal of the School Health and Nutrition program focuses on school going children is to improve their health and nutrition status. The key activities include provision of health services including de-worming, Vitamin A and iron supplementation and first aid kits are provided to school-going children. Health Education on sanitation, hygienic behavior, nutrition and reproductive health issues are provided to school children. To create a safe and healthy learning environment and a supportive learning atmosphere, arsenic free water and proper latrines are provided. School Management Committee and Parent Teachers Associations are mobilized to maintain the general health and hygiene of the students.
Adolescent Reproductive and Sexual Health program: The Adolescent Reproductive and Sexual Health program, also known as “KAISHAR” (Knowledge and Attitude Improvement of Sexual Health for Adolescents’ Responsibility) targets adolescents of 10-19 years to improve their reproductive and sexual health. The key activities under the KAISHAR program are peer education, development of tool box, life skill training in school, training for service providers, provision of ARSH health services and establishment of information outlets and workshops for gatekeepers.
Nutrition and Child Development Program (NCDP): Nutrition and Child Development Program (NCDP) addresses nutrition problems for children below three years. The NCDP uses the positive deviance approach under which a mother practicing good nutrition and hygienic behavior is used as a model for other mothers to follow.
SCI is working in partnership with Government on Expanded Program of Immunization (EPI) and National Immunization Day (NID) to improve the routine immunization coverage. This program focuses on children who are not vaccinated and in hard to reach areas. In addition, the adolescents of KAISHAR program will utilize the Tetanus Toxoid (TT) and reproductive health services through the Government facilities.
The Saving Newborn Lives (SNL): The Saving Newborn Lives (SNL) initiative in Bangladesh funded by Gates Foundation is working to strengthen and expand Essential Newborn Care (ENC) in the country since 2000. The initial focus is on provision of ENC for all newborns. BFO is implementing cost-effective, sustainable essential newborn care package at community and household level through partnership with the government and several leading NGOs (CARE, BRAC, BPHC and ICDDRB).
The BFO has been working on HIV/AIDS since 1995 and implements a preventive strategy in the rural areas, which promotes safer sex behavior to reduce vulnerability of adolescents as the primary target with an additional focus on HIV/AIDS/STD awareness across all programs. SCUSA has also building capacity of its own staff members on HIV/AIDS related issues in Bangladesh.
Field Operations and Disaster Management
Disaster Management Program Section: The Disaster Management Program Section focuses on children and women to ensure that specific child and gender issues are highlighted and given due attention during emergencies. Save the Children US is leading the Save the Children Alliance to ensure support in all kinds of emergencies and disaster in Bangladesh. Save the Children US emphasizes rapid response to emergencies in order to save children’s lives and protect their well-being.
Over the years, Save the Children International in Bangladesh has positioned itself as a national player through its development programs to participate in national strategic responses to emerging threats, such as arsenic and HIV/AIDS. Save the Children International believes both collaboration and partnerships are necessary for achieving scale and impact and has focused attention on contributing to national, regional, and local level form. SCI also has an excellent collaborative partnership with MOHFW, MOE and MOA. Save the Children is a member of various Networks of Bangladesh.
The Bangladesh Country Office made significant progress in improving the quality and innovation in its programs in the recent years. There have been new initiatives to provide the office a strong base with a new look — more impressive to the external audience, searching for new strategic opportunities and ensuring quality program activities.
Mission and Vision for the Future
Ninety years ago Eglantyne Jebb, started a worldwide movement. She was driven by the belief that all children – whoever they are, wherever they are – have the right to a healthy, happy & fulfilling life. And the belief that changes is within reach, if courage, determination, imagination and good organization are there. Save the Children’s experience in changing children’s lives for the better in the past decades is the foundation for what they do today and tomorrow to build a better future for children.
Mission of Save the Children
The mission statement of Save the Children is “To inspire breakthroughs in the way the world treats children, and to achieve immediate and lasting change in their lives.”
Vision of Save the Children
The vision statement of Save the Children is “A world in which every child attains the right of survival, protection, development and participation.”
Description of the Project –
Save the Children International (SCI) is a donor based leading welfare organization of the world. The mission of the finance department is to support the mission of SCI in order to do that finance department always try to minimize the expense of SCI by properly manage the financial activities of the organization.
SCI does all its financial activities through bank and there are certain activities for which they have to go for cash management. So bank and cash management process is very important for running the financial activities efficiently as well as to achieve the goal of the organization. In SCI all bank & cash related activities are accomplished by the accounts & treasury section.
Besides as SCI is financed by government, different individual foundations and corporate organizations so to maintain the transparency of their expenditure on different program and activities is another main objective of finance department. To maintain transparency in the financial activities financial management system (FMS) section uses an online spreadsheet (Agresso) for the recording of the expenditure and support the grants section to generate donor report. This section also reconciles the bank account and the SCI account on order to ensure the accuracy of the financial activities of the organization.
Objective of this report includes two types of objectives. They are broad objective and specific objectives. A broad objective and some specific objectives are included in this report. They are:
Broad Objective: To describe the information gathered from practical experience of working in an international NGO’s Finance Department.
The specific objectives of this report are given below:
- To have a practical idea about financial activities and management of an international NGO.
- To relate the practical knowledge with theoretical knowledge.
- To work in an accounting software “Agresso”.
- To discuss about the Bank & Cash management procedure.
- To discuss about the General accounting and record keeping process of financial transaction of SCI.
- To find out problems faced for conducting the procedure.
Methodology describes the manner in which data is collected, analyzed and interpreted. The data that will present in this research paper would collect from primary and secondary data source. The sources are mentioned below:
Primary Data Source: Primary data are those data which is originated by the author for the specific purpose of describing or analyzing something. In this report the primary data source would be raw data gathering from own observation. The primary data source that will be used in this report is data obtained through practical involvement with job responsibilities.
Secondary Data Source: Secondary data are data collected for some purpose other than the main facts. Secondary data are quick source of background information. In this report the information collected from indirect source will be considered as secondary data sources. The secondary data source that will be used in here would be:
- Interview with the Manager of FMS.
- Interview with the Payables Officer
Save the Children receives income from a wide variety of sources including individuals, foundations, governments and companies. These valuable contributions make it possible for them to secure improvements for children all over the world. They have a clear responsibility to the world’s children, and to all of their supporters, to make the best possible use of these resources.
To improve their cost-effectiveness, Save the Children International works together with partner organizations where feasible. SCI spend as much money as possible on programs which benefit children directly. Most of these programs are based in the world’s poorest countries, where millions of children struggle to survive and thrive.
Save the Children national organizations also operate domestic programs to meet the particular needs of children in their own country.
They are committed to managing the funds in a fully accountable way. Effective administration does cost money, but they try to keep this cost as low as possible. Save the Children is working to align their financial processes, planning and reporting through the transition to one Save the
Children where, instead of many member organizations delivering programs in a particular country, there is only one Save the Children organization – bringing significant cost efficiencies in-country as well as across the rest of the organization. This allows them to focus more on working for children.
Structure of Regional and Central Finance Departments
The Save the Children International finance function is headed by the Chief Financial Officer who has overall responsibility for the organization’s financial activities. Based in London, the CFO is supported by the Finance Director International Programming, the Chief Accountant, the Director of Financial Strategy, Planning and Reporting, and the Head of Global Assurance.
The Finance Director International Programming works through the regional finance directors who are responsible for the support and oversight of the country office financial activities.
Grants & Awards: Save the Children International (SCI) is a donor based welfare organization. So maintain a good relation with donor by providing necessary and clear financial information of expenditure and report is very important. On the other hand SCI works with different national and international organizations to accomplish its activities properly. The partner organizations with which they achieve their activities are called Sub-grants. Grants are those projects in which donor are donate directly. Grants & Awards division has these two part Grants & Sub-grants.
Grants division is responsible for grants management, grants development and donor compliance of the Global funded HIV/AIDS project including ensuring grant is developed and managed in line with SCI and donor Grants policies, support in preparing/overseeing cost proposals, overseeing amendments or modification to donor contract or budget, supervising tracking of all communication with donors, monitoring grant budget, record keeping and updating all grant related documentation, and preparing reports as per Global Fund requirements.
Sub Grants is mainly responsible for partners’ contracting and partners’ financial monitoring of Bangladesh Country office program Partners including formulation of procedures in line with global policy, ensuring preparation of partner contracts and amendments, preparation of partners budgets and phasing of budgets, accounting and tracking of partner payments, preparation of partner disbursements and supporting payables unit in estimating the fund requirement for partners. This will ensure financial monitoring of partners at field level, desk review of Partners financial reports, coordination with other finance units and budget holders on partner related issues, preparation of partner performance reports for internal decision making and ensure review of monitoring reports of partners.
At present SCI has 68 Grants. A list of Grants, donor of those grants, partner NGO’s of those Grants (Sub-grants) and location are given in the Appendix.
Financial Management Department consists with three sections. They are FMS (financial management system), Accounts & Treasury and Financial Analysis & Budgets Financial Management System: FMS is responsible for FMS management (Agresso) and accounting and internal reporting of the Country Office including maintaining Fund Management System (FMS) master data. It ensures the review and checking of data, set codes, maintain the finance calendar as per HQ guidelines, and complete the procedures regarding the month end process. FMS prepare management reports as per schedule and also support the Grants section with required information for donor reporting, maintain compliance with local laws, legislations and procedures, and prepare monthly control checklist.
Accounts & Treasury: The major responsibilities of Accounts & Treasury include documentation and cash management of the Country Office as well as ensuring all payment processing in time and approving to process payments, overseeing the maintenance of cash flow in line with center guidelines, responsible for the transfer of funds from center and to sub offices, responsible to monitor and control For ex gain/loss. It also ensures all record keeping of all documents related to payments, responsible for keeping bank account related documents and maintaining liaison with bank/bank personnel.
Financial Analysis & Budgets: This department is responsible for budgeting, budget monitoring and Government reporting of the Country Office including preparation of master budget for the country program, ensuring update information on budget availability for all grants, preparation of required NGOAB budget and reports, monthly budget monitoring, maintaining and complying the Scheme of Delegation chart, building capacity on budget preparation and budget monitoring especially for budget holders.
Capacity Building & Support: Responsible for pre-award assessment of partner’s capacity, sharing findings to respective senior managers, documenting, analyzing gaps with cost effective plan to address those gaps, coordinating with Sub Grants Monitoring team, coordinating with Partners and staff as needed, designing and developing training manuals/materials, delivering trainings as per plan, providing technical support and ensuring follow ups.
Bank and cash management
Save the Children operate its all transaction through both Bank and Cash transactions. To operate all the activities every country office of Save the Children International has to top up the bank and cash balance.
After observing the entire financial need regional finance director request for the bank and cash balance. Each country office should agree with the regional finance director maximum and minimum balances of bank and cash. These should be sent to treasury at the centre for approval.
These balances are the amounts above and below which the total amount of cash in hand and at bank should not move. Between the maximum and minimum levels should be set for amounts held in the safe, rather than at the bank.
The amount and the reasoning for choosing these amounts should be documented and kept on file, along with the approval of treasury.
The aim is to minimise the cash held in country, while ensuring there is sufficient for operational and security purposes. There are a number of reasons for wanting to keep low balances in country:
- SCI (Save the Children International) does not receive all its funding at the start of the year, so only has a limited amount of cash at any one time for use in programs
- keeping cash at the centre until needed maximizes SCI flexibility to respond to any urgent need
- foreign currency (i.e. non-USD) balances held in country offices at the month-end are subject to revaluation and therefore potential foreign exchange losses
- high balances can be a security risk for staff (although balances that are too low can also be a security risk)
- Keeping high balances in-country exposes SCI to the risk of loss should there be instability in that country.
The amounts will vary by country office, and are affected by factors such as the speed at which cash can be transferred into the country, the security level of the country, the nature of the programme (emergency v development) etc.
The maximum level is likely to be the minimum plus one month’s average in-country payments. If higher balances are required for a declared or non-declared emergency this can be authorized by the regional finance director (with onward notification to treasury).
The country director should agree maximum and minimum levels for each sub-office and this should be documented.
Save the Children International (SCI) performs its most of the transactions by bank. All vendor payments as well as the fund request above BDT 10,000 of the staffs are operated by bank. At present Standard Chartered Bank is the treasury approved bank of SCI.
There should not be separate bank accounts for each grant. The number of bank accounts must be minimized to reduce risk. The accounts should be opened in the name of Save the Children International. If there is a legal or regulatory reason to hold the accounts in a different name, authorization must be received in advance from the regional finance director and the treasurer at the centre. Bank accounts should be in the currency in which the country office will undertake expenditure transactions.
The country finance team performs an annual review of bank accounts as part of the year-end process to ensure that:
- all accounts are still needed
- All institutions that SCI banks with are still financially stable/ reputable and are consistent with guidance from treasury.
Any accounts identified as being no longer needed should be promptly closed.
Where banks used are not the treasury-approved bank, it is best practice to review banking arrangements at least every 5 years through competitive tender. This will ensure they reflect best practice and represent best value for money. The details and results should be notified to central treasury.
Payments should only be signed when accompanied by auditable documentation and relevant authorization in line with the scheme of delegation. The list of authorized signatories should be reviewed by the country director on a monthly basis to ensure it is up-to-date and appropriate.
All payments (cheque, cash withdrawal or transfer) require two signatures and must be accompanied by auditable documentation
Appropriate controls need to be in place around physical cheques. If the fund request is more than 10000 Tk. then only cheques has been issued
Where the country office has to issue a letter to instruct the bank to transfer funds or make payments, all such transactions must be carried out on a pre-printed and pre-numbered form.
This form will need to be produced locally to ensure it meets local bank requirements regarding content. The stock of these forms should be under the control of someone who is not an authorized signatory.
Country offices must make every effort to obtain bank statements on a timely basis and once a month as a minimum. Month-end bank statements should be kept on file as part of the accounting records.
All bank accounts and transactions affecting the accounts must be recorded in the finance system.
The bank statement balance must be reconciled with the balance in the finance system monthly and action taken to resolve differences promptly. The person performing the reconciliation must not be a signatory on the account.
Bank reconciliation compares the balance at the bank, as shown on the bank statement, with the balance at the bank as recorded in SCI records at the same date. It is often the case that the two balances are not the same, and differences could be for a number of reasons:
- Outstanding cheques – SCI has paid a supplier by cheque and reduced the bank balance accordingly. However the supplier has not yet taken the cheque to the bank or it has not yet cleared the bank, so the money is still included in the bank statement balance
- outstanding deposits – SCI has paid funds into the bank but they have not yet cleared and so are not included in the bank statement balance
- payments from the bank that the SCI office did not know about e.g. bank charges
- bank mistakes
- SCI mistakes in entering information.
It is essential to identify and resolve these differences for every single bank statement i.e. the bank reconciliation process.
Offices with access to Agresso should do online bank reconciliations as follows:
- ensure all bank payments for the month have been posted through the system
- obtain the bank statement as at the month-end
- reconcile the balance on the system to the balance on the bank statement, using the bank reconciliation process in Agresso (see Agresso manual)
For offices using cash and petty cash offline spreadsheet (CAPCOS) bank reconciliations should be completed using the bank reconciliation template as follows:
- check that any reconciling items from last month have cleared (e.g. if there was a payment that had not cleared the bank, check that it cleared this month and so is included in this month’s bank statement)
- compare the transactions on the bank statement to the bank transactions recorded in CAPCOS – tick off those that match
- any items left in either CAPCOS or the bank statement will be reconciling items for the bank reconciliation
- complete the manual reconciliation template
A copy of the bank statement should be attached to the payment voucher as supporting documentation, and approval is required as per the scheme of delegation. This should occur before finalizing the month-end accounts.
All reconciling items (such as outstanding cheques or deposits) appearing on the reconciliation for more than 1 month must be investigated and the reason for delay in their clearance must be stated on the reconciliation.
Any un-reconciled differences must be investigated immediately. If they cannot be resolved they must be brought to the attention of the country director and the regional finance director.
The difference should be posted to the suspense account while it is investigated. This will avoid misrepresenting the bank balance. This posting needs the authorization of the country director.
The bank reconciliation should be reviewed and authorized as part of the month-end process.
The person who prepared the reconciliation and the authorizer should sign the reconciliation.
This should be filed along with the bank statement and supporting documentation in relation to reconciling items.
The finance team in each country should maintain a documentation file for each bank account.
The file should include all agreements and account related correspondence, excluding regular transactions, with the bank (transaction information and bank statements should be maintained separately in the accounting files)
The following standard information should be found in the file:
- approval to open account
- bank agreement
- date account was opened
- authorized signatory list
- fee schedule (original and updates)
- all correspondence and authorizations related to changes in signatories
- For closed accounts, date closed and a copy of the bank confirmation of closing.
Electronic banking has specific risks. Country offices must agree their use of electronic banking with the centre on a case-by-case basis.
There is certain fund requests for which SCI has to keep cash holding. In order to minimize the risk and to hold proper control over the treasury according to the policy of SCI the number of cash transactions and amount of cash on hand should be minimized. Cash holdings are approved for offices which rely on cash payments to suppliers and for program advances for projects. These should have a designated cash account code in Agresso. Bank transfer or cheques are used in place of cash whenever possible.
There are certain key points which have to keep in mind for cash holding:
- Cash balances must be counted and reconciled to the finance system on at least a weekly basis, as well as on the last working day of the financial period.
- Cash withdrawals should be made by a minimum of two staff members. They should travel by vehicle to and from the bank to and once the cash has been withdrawn they should return directly to the office.
- The days and times of cash withdrawals should be varied, to reduce the likelihood of being targeted by thieves. As far as possible the fact that staff members are undertaking a trip to the bank to withdraw cash should not be made public knowledge in the office.
- If available at a cost-effective rate, cash should be insured ‘in transit’.
- A cash hand-carrying limit should be set. This needs to be approved by the country director, in consultation with the regional finance director, and documented in writing. If cash-in-transit is insured, the hand-carrying limit should be set so that this does not exceed that set by the insurer.
Importance of sound cash management practices
It is critical to the efficient operation of country offices that they have access to the level of cash needed to fund normal operations, however excess cash balances leave SCI exposed to a number of risks, including theft/loss.
Good cash management requires planning and budgeting skills – the ability to accurately forecast needs and maintain appropriate levels of funds on hand. In addition, adequate controls must be in place to minimize the risk of funds being lost or stolen.
Cash in emergencies
Higher levels of cash-holding can be justified in emergency situations where rapid access to cash may be difficult. New limits for maximum safe-holdings, programme advance amounts and cash hand-carrying, as well as mitigating control procedures will be included in the emergency preparedness plan. In the event of an emergency, the country finance director and the country director will reissue the limits and finance control procedures within one week to ensure that cash is appropriately managed and controlled during the high-risk emergency response.
High cash holdings also increase the likelihood and impact of a security incident, so emergency limits need to be well through and documented with the advice of the regional finance director.
In the event of an emergency it may be necessary to transfer cash to areas of the country where SCI does not currently operate. If operations will continue in this area the country office should look to set up a bank account in this area as soon as possible. Until this time cash should be transferred using one of the methods below:
- set up agreements with banks whereby recognized individuals can pick up transfers specifically sent for their attention – “pay on application and identification”, and can take a couple of days to set up
- use a specialist agent (e.g. Western Union), who charge a commission
- use travelers cheques if accepted by local banks
- ask staff to hand carry a cash advance (by car, plane, helicopter) from country head office or the nearest SCI office with a bank account
Cash Account Opening
Identify a requirement:
Identify why the cash holding is needed, how it will be used.
Seek authorization to proceed:
Seek approval from the country director and country finance director. A cash holding opening request form should be completed, which should contain the following information:
- reason for the cash holding request
- currency to be used
- the maximum and minimum level of cash holding
- All individuals who will have access to safe.
Establish safe location and keys
Set up in Agresso. The accounting entry to establish a cash account is to debit the cash in-hand account (1050) and credit the bank account (1000) from which the funds were transferred.
Receipt of funds into cash
When funds are received into cash, the transaction is to be recorded on a three-part cash receipt voucher with the following information:
- date of receipt
- name of individual or organization from whom the funds were received
- amount received
- reason the funds were received
- complete budget code to be credited
- Signatures of the person paying and receiving the cash.
The cash received should be counted by the cashier in the presence of the person paying the money before the receipt voucher is signed. The top copy of the voucher is filed as documentation of the receipt, the second copy is given to the person who paid the money and the third copy is retained in the receipt book as a record.
Cash received from any person/external organization should only ever be received by the finance department.
Cash reconciliation is the procedure of checking that the amount of physical cash in the safe agrees to the value recorded in the accounts. The total of all cash in the cashbox and safe (plus the value of all outstanding programme advances where off-system programme advance control has been authorised) must equal the value of the account on the finance system.
Cash counts must be reviewed and authorized by a member of staff who is not involved with the issuing or recording of cash, so that segregation of duties is maintained.
If the cash balance does not reconcile to the value recorded in the accounts then the difference needs to be investigated. Possible problems are as follows:
Cash has been incorrectly counted – count again
There has been an error in recording transactions – check the following:
- Have all transactions been recorded?
- Do the amounts recorded agree to supporting documentation?
- Have receipts been recorded as payments or payments recorded as receipts?
- Have the transactions been recorded against the correct cash account?
If there is still a difference after investigation then the country finance director / sub-office manager should be notified for further investigation.
In many offices certain staffs (usually administration and logistics) have frequent small purchases to make, for efficiency these staff may be given a small amount for petty cash purposes. Petty cash should be used only for small purchases, such as supplies or local transportation, where cheques cannot be used. This fund is not to be used to issue personal advances to any member of staff.
It must have a fixed maximum value which should never be exceeded, and a limit should be set which no individual payment can exceed. All disbursements must be recorded on petty cash vouchers. The vouchers and supporting documents are stored until the petty cash is ‘topped-up’ to its original limit.
Country director and sub-office managers are responsible for:
- Ensuring that appropriate controls over petty cash are in place.
Country finance director is responsible for:
- Effective implementation of controls over petty cash.
Petty cash holder is responsible for:
- obtaining appropriate authorization for petty cash payments before the payment is made
- ensuring the petty cash is kept in a lockable box in a lockable drawer, and that these are locked when the petty cash is not being accessed
- Accounting for petty cash on a monthly basis as a minimum.
Process for opening petty cash accounts
Identify a requirement
Identify why the petty cash is needed, how it will be used.
Seek authorization to proceed
Seek approval from the country director and country finance director. A petty cash account opening request form should be completed, which should contain the following information:
- reason for the cash holding request
- currency to be used
- the maximum and minimum level of cash holding
- all individuals who will have access to the petty cash
- Location of the petty cash box.
Establish petty cash box
Set up in Agresso. The accounting entry to establish a petty cash account is to debit the cash in hand account (1050) and credit the bank account (1000) from which the funds were transferred.
Disbursements from Petty Cash
The cash in the petty cash box plus the total of all petty cash vouchers in the box should always equal the total authorized petty cash level. Any reimbursement of petty cash should be equal to the value of all the petty cash vouchers expensed. If this is not the case then any difference should be investigated.
All payments should be supported by a receipt or a document detailing why it was not possible to obtain a receipt. This document should be approved by the person authorising the payment.
The overall financial management of country offices is governed by the accounting policies and standard operating procedures of SCI. As SCI is a donor based Organization to keep the record properly, every transaction must be accurately coded before they are entered into the finance system. Expenditure should be incurred and coded in line with program requirements and donor regulations.
For every expense two parties become responsible. One is Budget holders another one is the Finance staff. The responsibilities are described below:
Budget holders should:
- code their budgets both by SCI chart of account code and donor expense analysis code
- Identify the complete budget code when authorizing a purchase request, an expenditure commitment (e.g. a purchase order), a program advance or a payment.
Finance staff should:
- set up and ensure the integrity of the overall program coding structure, in consultation with the program staff and in line with SCI chart of account rules
- ensure consistency of coding across the program
- provide training, support & guidance to the budget holders on coding issues
- Seek guidance from regional finance staff if required.
Recording Attributes (codes)
Whenever enter data in the finance system, for example when making a payment, there are certain fields in which one must enter a coded value. These fields are known as attributes, and they are used to provide particular information about the transaction.
There are three types of attribute:
- account code
- posting attributes (direct dimensions)
- reporting attributes (indirect dimensions)
Account codes and rules
The first attribute is the account code. The list of account codes from which one can select a value at the time of posting is known as the chart of accounts and is standardized across SCI.
The most up-to date version of the chart of accounts is available as a report in Agresso.
Within the chart of accounts, the codes fall into three main groups:
- balance sheet codes: these are four-digit codes that have a value between 1000 and 2999
- income codes: these are four-digit codes that have a value between 3000 and 3999
- expenditure codes: these are four-digit codes that have a value between 4000 and 9999
Each account code is linked to an account rule. The account rule determines what other codes must be completed when entering a transaction.
For example, when recording a payment from the bank using account code 1000 (cash at bank), it is not possible to complete the entry without entering a code to identify the specific bank account being used.
A cost centre is a section of SCI to which costs are allocated. Where possible, cost centers represent a physical location, such as a country office’s main office or sub-office. Outside of the individual country structure, there are cost centre codes for regional office teams and for SCI central teams.
The cost centre is a five digit code and a cost centre code is required for all transactions. The first three digits are the country code (ISO code) and the last two digits represent the office, e.g.
03100 Azerbaijan main office
03101 Ganja sub-office (Azerbaijan)
Note that the main office in each country will be coded CCC00 (where CCC is the country’s ISO code)
This is a seven digit code which links the transaction to a particular activity. This means it is possible to identify all the costs associated with a particular activity for monitoring purposes.
Project codes identify use of funding. A project code is required for all income & expenditure transactions. Examples are:
0047112 Kandahar working children
0500770 Flood emergency relief (Bangladesh)
Source of funds (SOF)
A source of funds is a specific source of income requiring tracking and reporting. This is an eight digit code and the first three digits identify the member country providing the funds, with the other five uniquely identifying the grant. A SOF code is required for all income & expenditure transactions and some balance sheet transactions.
Donor expenditure analysis (DEA)
This is a unique 5-digit code that can be used for identifying costs by donor budget categories.
This will enable reporting against donor budgets at the level of detail specified in the grant agreement. A donor expenditure analysis is required for all expenditure transactions.
Unlike the other posting attributes this field varies, depending on the account code one select for a transaction.
For example, if you select the account code 5030 – Vehicles – the analysis field will be named vehicle and must then enter a vehicle code.
Alternatively, if one selects the account code 4920 – Relocation expenses – the analysis field will be named staff, and must then enter a staff ID number.
Reporting attributes (indirect dimensions)
In Agresso there are various fields that are only used for reporting purposes. They are not completed when recording a transaction, but have been linked to the posting attributes. An example of a reporting attribute is ‘donor’ – this is linked to the source of funds code.
This means that once the transaction has been entered as normal, using the various posting attribute codes, it is possible to run reports for these other pieces of information (e.g. donor).
Discussion & recommendation
Findings and Observation –
Save the Children is an international organization which works for the underprivileged children around the world. SCI’s aim is to provide the children as much as benefit and to make it possible the finance department of SCI constantly tries to use a minimized the cost of SCI by doing all the financial activities in a proper and cost effective way. To minimize the cost of SCI it is very important to maintain a sound process in the finance department for transaction and recording. After observing the bank & cash management and general accounting procedure of SCI I can say that they are successful to achieve their goal to some extant but there also some factors which can be create problem in the way of proper finance management.
Those factors are describing below:
- Dependency on manual activities: SCI is an international organization it has to operate lots of transaction every day. But from the process of receiving the bill or fund request to the payment all happens in a manual way. It increases the chance of mistakes.
- Improper use of human recourse: As the process depends on the manual activities in a large extant so it is found that it’s creating the improper use of work force. For example, responsible officer in payables and FMS section has to work with same bills again and again for checking, entry and various purposes. If the system is like, at a time the authorized person has to check and entry the voucher in the system I think it would ensure more efficient use of work force.
- Slower Software Operation: At present “Agrosso” is used as online spreadsheet, but it operation is very slow. Its slowdown the recording system and reporting to the other department as a result it affects the whole financial activities of SCI.
- Incomplete Supporting Documents: Sometimes the bills deposited by the vendors and staffs are not accurate. The supporting documents of the bills are missing, so it creates problem for the officer who makes the vouchers.
- Paper Vouchers: The payment vouchers can be required for various use including audit, prepare different report of different department and program, for justification etc. but all the vouchers made for the payment of bills are paper vouchers which can be easily damaged, so keeping bill vouchers for 5 years according to the policy of SCI is very tough.
- Documentation: For documentation vouchers are filed in a monthly basis. Voucher is required for the future reference, audit and different propose of different department. People of different departments and programs use vouchers but it is found that most of those are not put back in the same place. There is no authorized person or system to maintain the documentation, so these missing vouchers can create problems in the future.
- Irregular cross checking: Through there are several cross checking point from topping up bank/cash balance to payment process, but it is not practicing in the way it should be. So it increases the chance of mistakes and corruption.
After all the discussion and observation of the process of “Bank & Cash Management” and “General Accounting” of I want to recommend some points.
Those are describing below:
- Revised system: In order to maintain a sound finance management process they should make the system more revised and computerized rather than the manual process. For example, if there is a system of submitting the entire bill and fund request on online software than it will easy check, decrease mistakes and ensure the proper use of workforce.
- Upgraded Software: To make sure the faster recording system the software used for recording should be upgraded or should be changed.
- Internal Audit: To ensure the proper execution of the policy, appropriate financial activities and decrease the possibility of unfair means internal audit should be appointed.
- Increase emphasis of cross checking: To increase the accuracy and decrease unfair means it is very important to give more emphasis on cross checking of bill vouchers, cheques and other financial data. So it should be ensured.
- Improved procedure of documentation: One of the policies of SCI finance is to keep the financial document up to 5 years. But by the current documentation procedure is not possible. So I think more improved procedure of documentation should be introduced.
- Decentralization of responsibility: SCI is an international organization, in Bangladesh currently it is operating different activities program for the under privileged children and finance department aim is to help to achieve the goal of this program. According to my observation to operate the financial activities more efficiently by more decentralization of the responsibility of top and middle management of finance.
Save the Children International is globally recognized welfare organization for deprived children. They collect fund from different governmental, individual and corporate organizations and committed to managing the funds in a fully accountable way. SCI mission is to provide maximum benefits to the poor and deprived children; as a result it spends as much money as possible on programs which benefit children directly. Most of these programs are based in the world’s poorest countries, where millions of children struggle to survive and thrive. In order to accomplish the mission, its finance department always tryst to minimize the expense of SCI by properly manage the financial activities of the organization.
They operate their financial management process in a cost effective way which ensures the organizations goal to provide maximum benefit the children. SCI is successful to achieve their goal to a large extant but still they have some problems regarding the financial management process as well as in human resource management, if they can overcome those problems they can manage their activities more efficiently as a result it will be more easier to achieve their mission.