Guidelines and controls are thought to protect the institution and all individuals acting on behalf of it from misunderstandings, illegal actions and its negative consequences. Small organisations may only be partly able to implement financial controls, but they should inform all their staff about what is expected from them and implement at least some key guidelines and controls.
As a principle, ensure that in your institution it is not possible for one single person to send or pay a certain amount of money to someone without having a second person confirming or authorising it. The second person should not be a direct subordinate or dependent person to the one asking for confirmation.
The below mentioned controls should be considered and communicated to all staff members. It is necessary to issue these guidelines in writing to the management and all staff. The management should also explain the rules and clarify any staff questions. In some cases you might even ask employees dealing with financial releases or sensitive information to accept the rules by signing them.
The executive manager will need to understand the bookkeeping system and processes of the support institution in order to be able to monitor and control the administration. The following tips are summarised from:
The below recommended measures incorporate tips from “Business Against Crime” www.bac.co.za and American Express Small Business Network http://home3.americanexpress.com/smallbusiness/tools/security/financialcontrols.asp
a) Segregation of duties
As a rule try to divide responsibilities in work processes, especially those related to purchasing, selling, salary administration and bank relations. As a consequence, the person who orders something with a supplier should not be the one releasing the money or writing out the cheque. The person calculating the salary/contribution should not the one releasing payment to staff. The right to sign for bank transfers or sign cheques, credit cards, etc. should be limited to management.
b) Control bank and credit card statements and cheque lists
The first opening of envelopes and control of bank and credit card statements as well as cheque lists should be done by the executive manger or an outside accountant. Check that all the payees are known by the institution (suppliers, staff, consultants, landlord, etc.) and that the amounts paid correspond to the invoices or receipts.
Cash withdrawals should be looked at specifically. At least two people should verify the monthly incoming cash receipts and if they are correctly related to invoiced sums and sales.
c) Lock credit cards, bank account pass words, saving books, checks, etc.
It is in the interest of all employees and the management that sensitive documents are locked safely. The key should be in the hands of the management only.
d) Organise for reviews, audits or external book keeping
Regular third party controls will help checking the correctness of your bookkeeping and should give you further hints on any missing financial controls.
e) Use authorisation procedures for purchasing, selling, travelling, etc.
The institution management can define special instructions for the most important business cases. In this guide we propose purchasing, selling and travelling – others might apply in your case.
· Purchasing
The purchasing act implies the following basic steps:
· defining the requirement for the goods or services to be purchased
· defining a list of suitable suppliers (quality, cost, service, ….)
· request for offers (orally or in written depending on complexity of need)
· comparison of offers
· selection of suppliers and contract negotiation
Define in your procedures who is responsible for which steps and how they should be done. Normally, value limits are used to specify the degree of authorisation needed.
Example:
Staff and independent contractors of institution x respect the international agreement on anti-corruption. Our staff and independent contractors commit to apply business behaviour widely considered as ethical and reasonable. Every purchasing act follows the objective of procuring the right good or service at the most effective cost and at the right quality and time.
Office materials up to a value of US 20 can be purchased by the secretary without further authorisation.
20 – 500 US Responsible employee defines requirement, requests an offer from at least 3 suitable suppliers and presents his choice to the executive director. The executive director authorises the purchase.
500 – 5000 US Responsible employee defines requirement, sends out a formal request for offer to at least 5 suitable suppliers and compares the offers together with the executive director. The board of directors will authorise the purchase.
> 5000 US Executive director defines requirement, sends out formal tender request, manages the tender process, compares the offers and presents the result to the board of directors. The board of directors authorises the purchase
· Selling
The sales act implies the following basic steps:
· Maintaining and enlarging a (potential) client database
· Contacting potential and existing clients, being contacted
· Putting together an offer that fits the potential client’s needs
· Relationship building and sales development
· Negotiation and contract conclusion
Define in your procedures who is responsible for which customer group(s). Define the steps and how they should be done. Normally, value limits are used to indicate the level of authority needed.
Example:
Existing and potential customers in region x are the responsibility of team A. Existing and potential customers in region Y and in the capital are the responsibility of team B.
Sales of Training Programmes
Short-term training - The sales team informs the training team about the potential client and identified needs, together they develop a unique and sustainable offer, a person from the sales team and one from the training team present the offer to the potential client, the sales team is responsible to build further relationships and negotiate with the client. The negotiation results and any contract needs to be authorised by the executive director (up to US 5000) or by the board of directors (more than US 5000).
· Travelling
Travelling or business trips imply the following basic steps:
· Authorisation of need for business trip
· Planning and travel arrangements (transport, accommodation, insurance)
· Business trip
· Expense policy and travel claims
· Travel claims authorisation
Define in your procedures the steps and how they should be done and by whom. Normally, value limits are used to indicate the level of authority needed.
Example:
Local and national business trips not exceeding a stay of 2 nights are authorised by the executive manager. All local or national trips implying a stay of 3 nights or more and all international business travel need to be authorised by the board of directors.
Local or national travel arrangements are done by the secretary. The max. spend for hotels is US 30 per night. The traveller has to chose the most efficient transport for the trip. Air travel should be limited to exceptions. The secretary will take out suitable travel insurance for the traveller. The insurance police has to be taken on the trip, a copy has to be held by the secretary.
International travel arrangements are done by the secretary through our travel agency. The travel arrangement (price) has to be authorised by the executive manager.
Within two weeks after returning from the business trip, the traveller has to fill out the standard report on business travel and claim his/her travel expenses. The executive manager will authorise the payment of reasonable accommodation, transportation and eating expenses.