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Islamic relief financial guidelines ver 2
Islamic Relief Worldwide Financial Guidelines PREPARED BY THE IRW FINANCE Islamic Relief Financial Guidelines FOREWORD 1.0 General Framework I Introduction II Background to the Financial Guidelines III Rules governing finance IV Islamic Relief Worldwide Family 2.0 Financial Controls I External Audit II Reporting III Elements of Financial Control 3.0 Financial Reporting 11 I Timing of Reports 11 II Procedures 11 III Formats 12 IV Reporting Currency 12 V Responsibility 12 VI Year End Reporting 12 4.0 Budget Guidelines 14 I Proactive Planning 14 II A budget 14 III Preparing a Budget 14 VI Strategic Budgeting 17 V Approval Process 18 VI Budget Holders 18 VII Monitoring 18 VIII Post Budget Adjustments 19 5.0 Cash and Bank Guidelines 20 I Opening of Bank Accounts 20 II Closing of Bank Accounts 20 III Banking Cash and Cheques 21 IV Withdrawal of Funds 21 V Authorised Signatories 22 VI Disbursement of Funds: Segregation of Duties 22 VII Depository of Funds: Segregation of Duties 23 VIII General Ledger Controls 24 IX Disbursements of Funds: Approvals 24 X Petty Cash 25 XI Petty Cash Disbursements 25 XII Petty Cash Reimbursements 25 XIII Internal Control Procedures 26 XIV Physical Security 26 6.0 Guidance to Islamic Relief Signatories 27 I Information to be checked 28 7.0 Procurement Guidelines 29 I Purchase Orders 29 Version Updated November 2005 Prepared by IRW Finance II Purchasing Requirements 29 III Approval Levels 30 IV Placement of Orders 30 V Receipt and Acceptance 31 8.0 Tendering Guidelines 32 I Tendering Instructions 32 II Conditions for the Tender 32 III Tendering Committee 32 IV Tendering Procedures 33 9.0 Accounts Payable 34 I Payment Process: Segregation of Duties 34 II Accounts Payable Process: Segregation of Duties 34 III Accounts Payable Process: Internal Control Procedures 35 IV Documentation 35 V Accounts Payable Processes 36 VI Accounts Payable Processes: Payments 37 VII Accounts Payable Processes: Accounting 37 VIII Accrued Expenses 38 IX Prepayments 38 X Accounts Payable: Expenditure Categorisation 39 General Expenditure Categorisation 39 • Fundraising Expenditure Categorisation 40 • Project Costs Expenditure Categorisation 40 • XI Travel Allowances and Advances 40 XII Reimbursements 41 I Account reconciliations defined 42 II Responsibility 42 III Development and review processes 42 11.0 Inter-company Transactions 44 Principles of Inter-company Accounting 44 General Procedures 44 Inter-company Dispute Resolution 44 12.0 Income Management 46 I Receipts of Income Controls 46 II Donations 46 Donations by Post or in person at the Offices 46 Donations by Credit Cards 47 Donations via Collections 47 III Reconciliations 48 IV Tax Rebates 48 V Other Sources of Income 49 Sale of Donated Goods 49 Goods Purchased for Resale 50 VI Income In-Kind 50 Valuation of In Kind 50 Documentation 51 13.0 Fixed Assets Management 53 I Acquisition and Capitalisation 53 II Depreciation 53 III Transfers 54 Version Updated November 2005 Prepared by IRW Finance IV Retirements and Disposals 54 V Financial and Physical Control 55 VI Approvals/Documentation 56 Accounting Records 56 • Approvals 56 • Institutional Donor Assets 56 • VII Expensed Assets 56 14.0 Stock Guidelines 57 I Stock Valuation 57 II Annual physical Stock Count 57 III Stock not on Islamic Relief premises 58 IV Proper identification of inventory ownership 58 V Reconciliation of physical and perpetual records 58 15.0 Exceptions to Financial Guidelines in responding to a EmergencyHumanitarian Disaster 59 I Emergency Supplies are needed urgently 59 II Emergency Aid Distribution 60 III Stock Issue for Emergencies 60 IV Minimum Documentation 60 V Transportation of Cash to the Field 61 VI Handling Cash 61 VII Recording of In-Kind Donations 61 VIII Overview 62 16.0 Field Office specific 63 I Introduction 63 II Documentation 63 III Organisational structure 64 IV The Structure of Finance Department 65 V Financial Control 65 VI Financial procedures and forms 67 VIII Payments & transfers 69 IX Financial procedure with Islamic Relief partners 72 XI Reports 73 XIII Stock Control 74 XIV Employees 74 XV Project Control 75 XVI Filing System 76 XVII Year end Closing 31/12 (after Q4 report to Head Quarters) 79 17.0 Islamic Relief Policy on Grants 81 I Introduction 81 II Procedure 81 III Transparency & Fairness 82 IV Conclusion 83 Islamic Relief Grant Application Form - Organisations 87 Grant Application Assessment – Internal Use Only 91 18.0 Appendices 92 Version Updated November 2005 Prepared by IRW Finance FOREWORD This document gives guidance to all Islamic Relief’s staff allied with financial issues which affect the organisation on a day to day basis Further, it provides appropriate procedures and controls when having to pact with them With the whole sphere of charitable work coming under increasingly stringent scrutiny, it is essential that clear guidelines are instituted and adhered to, to ensure the organisation is operating both efficiently and lawfully to meet its objectives Virtually every transaction entered by Islamic Relief has a financial dimension; from initial operations in new locations to the time they are terminated, where specific financial issues require attention Islamic Relief may deliver the best charitable work in the world, but without the production and maintenance of accurate records, especially financial, the organisation will have failed to provide the necessary verification to confirm operations have been carried out It is absolutely imperative, whether it be opening a new bank account or keeping some petty cash, rules will need to be adhered to govern all financial transactions Failure to comply with prescribed guidelines results in a high propensity to the emergence of chaotic situations, whereby managers’ may loose control of their financial responsibilities and consequently fail to produce accurate accounts and records This will not only adversely affect management decisions, but could pose a threat to the continued existence of Islamic Relief per se Finally, all Islamic Relief’s staff are strongly encouraged to provide feedback regarding any issues covered within this document; or to inform the relevant parties in any doubtful events where financial queries arise and have not been addressed Haroun Atallah General Manager Islamic Relief Worldwide Headquarters Please forward your suggestions to: IRW Finance Islamic Relief Worldwide Headquarters Email your suggestions to Javed Akhtar, javed_akhtar@islamic-relief.org.uk Version Updated November 2005 Prepared by IRW Finance 1.0 General Framework I Introduction Islamic Relief is an internationally recognised relief and development charity organisation, working to alleviate the suffering of the world’s poorest people For this reason Islamic Relief must ensure the finest practice and highest standards are adhered to, when managing and reporting the financial resources of Islamic Relief by all Islamic Relief Offices and Islamic Relief Partners The Financial Guidelines are applicable to all Islamic Relief Offices and Partners, regardless of any operations one may be engaged in, whether it be: fundraising, field work, management or coordination These financial guidelines however, were set to provide guidance to the principles and to operate in accordance with all Islamic Relief Offices and Partners local regulatory requirements, when managing and reporting financial transactions The Financial Guidelines form the general framework, which was prepared to ensure the quality and accuracy of recording as well as reporting financial information The Management of each Islamic Relief Offices and Partners must ensure the financial reporting team members are knowledgeable about the financial guidelines Further, all Islamic Relief Offices and Partners should have documented procedures (desk-top procedures) pertaining to the processes used which, must comply with the Islamic Relief Financial Guidelines provided local laws and regulations permit II Background to the Financial Guidelines The reliable system of financial management provides a sound basis for planning ahead as well as utilising resources in the best possible manner The efficient financial administration contributes significantly to the smooth running and successful outcome of relief and development programmes Therefore a good system should provide a reliable source of information, to base timely modifications to the original plans with minimum interference Conversely, inadequate financial management can seriously undermine potential achievements Auditors on the other hand, would need to be assured that satisfactory systems of control over transactions are maintained with regulatory requirements in mind Further, major donors would also want to be assured that their donations are accurately administered and allocated, with purposes consistent with their reasons for giving The Accounting/Finance function should maintain a good record keeping; as this is critical for reasons such as verification as well as reporting back to management and major donors It is important for managers to be familiar with what to expect when examining the budgets and accounts; as well as simultaneously understand the underlying principles of good accounting practices Version Updated November 2005 Prepared by IRW Finance III Rules governing finance The basic governing rules for Islamic Relief Worldwide are enclosed in Articles and Memorandum of Association These set out the objectives of the organisation as: “The relief of poverty in any part of the world” [Memorandum of Association (3)] Islamic Relief is committed to strict compliance, with all legally prescribed regulations governing charitable work and charitable organisations, wherever it operates It is the responsibility of management in each country to ensure that local laws and regulations are complied with In general these rules when related to financial matters will be devised to ensure: • the ability to disclose (with reasonable accuracy) the financial position of Islamic Relief at any time • accurate accounts can be prepared from appropriately maintained records • records show all monies received and expended • the records provide a register of all assets and liabilities The highest professional accounting practice is recommended throughout the organisation In order to ensure compliance and suitably qualified auditors, one must externally audit all operations However, the responsibility of implementing the guidelines rests with management in each location The management at headquarters on the other hand, will inspect and examine the level of compliance with the guidelines at every practice, which carries the name and logo of the organisation Compliance with the financial policies set out in this manual would help enable the organisation to achieve standardisation of reports and operations This will have a direct and positive impact on the credibility of Islamic Relief and will therefore play a pivotal role in protecting the organisation Version Updated November 2005 Prepared by IRW Finance IV Islamic Relief Worldwide Family Islamic Relief Worldwide Family includes members of the family that undertake fundraising operations within their respective countries These family members are registered operations with their own national borders which, must comply with various legal requirements pertaining to the country Islamic Relief family members engaged in Fundraising activities at the point of time where publication of the Financial Guidelines went to print are stated below However, it should be noted that all references throughout the Financial Guidelines to Islamic Relief family members apply to current and future Islamic Relief family members Islamic Relief Family members engaged in Fundraising Belgium France Germany Holland Italy Mauritius Malaysia South Africa Sweden Switzerland UK USA It is also acknowledged that Fundraising Operations are undertaken in countries where no Islamic Relief Partner exists; these activities are mainly conducted by the Fundraising Division of IRW, Birmingham, UK Most of the organisation’s relief and development work is carried out in developing countries, although some projects are implemented in developed countries However, it is important to note that fundraising is carried out wherever it is permissible to so Islamic Relief’s Offices’ (family members) across the world are responsible for managing the emergency and development projects within each respective country Islamic Relief Offices (family members) are within in the following regions/countries as when went into print: Afghanistan Albania Bangladesh Bosnia Egypt Ethiopia Kenya Kosovo Indonesia Version Updated November 2005 Prepared by IRW Finance Sri Lanka Mali Niger Pakistan Palestinian Administered Areas Russian Federation (Chechnya/Ingushetia) Sudan Yemen Islamic Relief takes on development projects where no offices exist in conjunction with partner organisations During the publication of the Financial Guidelines Islamic Relief was operating in the following countries in conjunction with Partner organisations: China India Kenya Jordan Morocco It should be noted that all references throughout the Financial Guidelines to Islamic Relief Offices (family members), apply to current and future Islamic Relief Offices as stated above and to the Islamic Relief Headquarters 2.0 Financial Controls Islamic Relief adheres to the responsibility of having to exercise strict financial controls This is to ensure all funds received are utilised, only for the purpose that Islamic Relief has stated in its objectives It is standard practice that all financial reports sent to IRW are subject to a thorough examination Every Islamic Relief Office and every Islamic Relief Partner is responsible for preparing financial reports, and ensuring adequate accounting controls are in place which safeguard the assets, at the same time ensures the reliability of financial records I External Audit All Islamic Relief Offices and Partners are required to conduct an external audit, whether it is predetermined by local law or not In extreme extraneous circumstances, where an external auditor cannot be appointed due to any reason, the IRW Internal Audit Unit would conduct the audit II Reporting Islamic Relief Partners that are engaged in fundraising operations must comply with the laws of their respective countries operations; and submit the required reports to the designated agencies authorised by the state to receive their reports Partner organisations implementing projects on behalf of Islamic Relief must sign agreements with Islamic Relief They are then required to submit reports to Islamic Relief as well as to enable Islamic Relief to monitor their operations All Islamic Relief Offices and Partners must therefore submit quarterly reports to Islamic Relief Head Office, namely to the IRW Finance department Version Updated November 2005 Prepared by IRW Finance III Elements of Financial Control All Islamic Relief Offices and Partners should have the following financial controls in place: • Authorisation and Approval Written documentation on the authority levels should be maintained Whereby Islamic Relief Offices and Partners must ensure all transactions undertaken conform to Islamic Relief’s objectives Authorisation and Approval procedures should be followed in the opening of bank accounts - refer to Cash & Bank section • Documentation and Accurate Recording All Islamic Relief Offices and Partners should have specific and detailed procedures (desk-top procedures) to ensure all transactions are recorded in the appropriate account as well as the accurate amount These controls will assist with guarding against the recording of fictitious transactions • Computer Security Islamic Relief Offices and Islamic Relief Partners should have sufficient passwords and security controls in place This would secure paperless transactions and other sensitive areas of information • Reporting To mitigate organisational damage in the event that one or more of the accounting controls breach security (i.e fraud); all Islamic Relief Offices and Partners should implement a system that allows for early and effective breach detection This would encompass periodically reviewing expenditure and constantly reviewing actual results compared with the budget All Islamic Relief Offices and Partners should ensure timely monthly financial reporting (within 15 days of month end), for this acts as a fraud deterrent • Segregation of Duties All Islamic Relief Offices and Islamic Relief Partners should segregate duties of personnel Different personnel should be assigned to the responsibilities of authorising transactions, recording transactions and maintaining custody of assets • Conflict of Interest and Ethics Statements All Islamic Relief Offices and Islamic Relief Partners should ensure that procurement of goods and services are on an arm’s-length basis • Cash Receipts If Islamic Relief Offices or Islamic Relief Partners receive numerous cash receipts; several individuals would need to be readily available to handle and count the cash receipts to certify the total • Bank Statement Review and Reconciliation Version Updated November 2005 Prepared by IRW Finance PETTY CASH PAYMENT VOUCHER Appendix B17 ISLAMIC RELIEF Date: Currency: Voucher No.: PCV PAYMENT MADE TO: DETAILS OF PAYMENT Description No Prepared by Position (Date: Reference Amount Project Code Account Code Checked / Controlled by ) Quickbooks transaction No Approved by Position (Date: Position (Date: ) ) PETTY CASH FLOAT REPLENISHMENT FORM ISLAMIC RELIEF Appendix B18 Date Week No Currency No Denominator Quantity x x x x x x Total x TOTAL PETTY CASH BALANCE FLOAT LEVEL AMOUNT OF TOP UP REQUESTED Note: The petty cash must be counted on the same date as the date of this document Prepared by Checked / Controlled by Position (Date: Position (Date: ) Approved by Position (Date: ) ) SAFE CASH COUNT & RECONCILIATION ISLAMIC RELIEF No Denominator Quantity x x x x x x Date x Total Appendix B19 Week N Currency *Note: The Balance of Cash in Safe Counted and the Balance in Cashbook must be based on the same date as the date of this TOTAL CASH IN SAFE* document CASH BOOK BALANCE* DIFFERENCE RECONCILIATION: REMARKS _ _ _ _ _ _ _ DIFFERENCE AFTER RECONCILIATION Prepared by Checked / Controlled by Approved by Position (Date: Position (Date: Position (Date: ) ) ) CASH ADVANCE REQUEST Appendix B20 ISLAMIC RELIEF Date: Applied by: Advance No.: CAV Advance requested by Department Position Project Approved by Currency: Position Amount Requested: Purpose of Advance DETAILS OF ADVANCE Description No Amount Project Account Code TOTAL REQUESTED ADVANCE SETTLEMENT: Quickbooks transaction No DETAILS OF EXPENSES Description No Amount Project Account Code TOTAL EXPENSED AMOUNT RETURNED BALANCE OWED TO IR/STAFF Prepared by Checked / Controlled by Approved by Position Position Position (Date: ) (Date: ) (Date: ) Note: Please ensure that you have the relevant supporting documents before such as applying for the advance such as Travel Request Form for travel advances and Purchase Requisition/Order for purchases STAFF EXPENSES CLAIM FORM Appendix B21 ISLAMIC RELIEF Date: Currency: Claim No Applied by: SE Applicant Signature DATED : Department Budget Managers Certification Payment Method: Cash (please tick) Cheque BACS Description No DATED : DETAILS OF PAYMENT Reference Amount Project Account Code Quickbooks transaction No Checked / Controlled by Prepared by Position (Date: ) Approved by Position (Date: Position (Date: ) ) IOU' FORM Appendix B22 ISLAMIC RELIEF Date: Applied by: IOU No.: IOU IOU Requested / prepared by Department AMOUNT REQUESTED Purpose of IOU AMOUNT TAKEN Cash Received by; Paid by Approved by; Position Position Position IOU SETTLEMENT: Quickbooks transaction No AMOUNT RETURNED TO IR/(REFUNDED TO STAFF) AMOUNT SPENT Receipt & cash Received by; Control / checked by Position (Date: Position (Date: ) ) CASH HANDOVER FORM Appendix B23 ISLAMIC RELIEF Date: Ref.: The following cash has been handed over to: Staff Name: Department: Position: No Denominator Cash Received by; Position (Date: Total Paid by ) Approved by; Position (Date: Quantity x x x x x x x TOTAL HANDED OVER ) Position (Date: ) ASSET HANDOVER FORM Appendix B24 ISLAMIC RELIEF Name _ Designation Project Location _ I am handing over the following assets of Islamic Relief on the approval of the competent authority to the following persons Date Asset Code ) Approved by Position (Date: Handed over To: Signature of Receiver Checked / Controlled by Prepared by Position (Date: Asset Name ) Position (Date: ) STOCK REQUEST FORM Appendix B25 ISLAMIC RELIEF Date: Reference: SR Project Coordinator Certification Applied by: DATE : Department Project Budget Code Store ID Purpose: No Code Authorised by; Description COMMENTS Qty Requested Qty Despatched AID HANDOVER Received by; Handed over by: (Storekeeper) Date Received by: (Recipient) Date (Name: ) (Name: (ID: (Date: ) ) ) (ID: ) (Date: ) ISLAMIC RELIEF BIN CARD Store Location Item name Item Code Unit Max Min Item Description: No Date Note # Quantity Received Quantity issued Balance Checked by; TRAVEL REQUEST FORM Appendix B27 ISLAMIC RELIEF Date of Start:…………………………………….Date of arrival :………………………………… Date return:……………………… Mode of travel :………………………………………………………… SL Staff Name Designation Current station Destination Duration Purpose Prepared by Checked / Controlled by Approved by Position (Date: Position (Date: Position (Date: ) ) ) TRAVEL LOG FOR JANUARY 2005 Appendix B28 ISLAMIC RELIEF Travel Ref Prepared by Request ed by Participants Project Purpose of Travel Mode of Transport Verified by Stock Req Ref Cash Adv Ref Date& Time Depart Date & Time Return Approval Comments REGISTRATION SHEET Appendix B29 CAMP: LOCATION: Camp Supervisor: Date : Reg# Name of House Hold Registering Clerk: HH Size Plot No M 0001 T 0002 0 0027 0028 0 0026 0 0024 0025 0 0 0023 ≥60 0020 0021 0022 19-59 0 0 0 0 0 0 0 0019 5-18 Vulnerability & Remarks 0 0005 0006 0007 0008 0009 0010 0011 0012 0013 0014 0015 0016 0017 0018