Introduction To The Manual
Rationale for the Manual This manual is meant to promote transparency and accountability of the financial transactions of OLS as well as ensure value for money. A sound and well laid down financial management system is key to ensure a transparent, accountable and value for money transactions. The manual therefore has been prepared to document the internal control procedures for OLS. This document is intended to prevent to a greater extent, incidents of arbitrariness and provide a reasonable level of assurance to our partners of the prudent application of funds allocated to the organization making sure that financial statements are in conformity with Generally Accepted Accounting Policies and Principles (GAAP) The Purpose of the Manual The main aim of this manual is to document the policies and procedures for managing the assets of OLS and to provide assurance that all transactions are recorded as necessary and per laid down principles and procedures. Specifically, the Manual aims among other things to:
1. Provide a reasonable assurance to both donors and beneficiaries that the assets of OLS are safe because there
is evidence of the implementation of checks and controls in all financial transactions.
2. To set out in a written document the accounting system and internal control procedures to be followed by OLS
to always ensure proper bookkeeping and systemic recording of all financial transactions.
3. Ensure that relevant accounting regulations and standards are complied with.
4. Ensure efficient and effective use of OLS resources.
5. Provide references and guidelines in acquisition, disbursement and management of funds and assets of OLS
6. Ensure appropriate segregation of responsibilities involved in the authorization of transactions, records
keeping and control of assets.
7. Ensure completeness, accuracy, and consistency in the management of financial transactions
The Basis of the Manual The manual is derived from a variety of sources such as the GAAP, national legislation regarding issues such as tax, social security, as well as best practices adopted from other NGO's, taking into consideration donor or funders requirements. Procedure for Revision of the Manual This manual is expected to be always relevant and therefore will require revision from time to time as the need may be to conform to current trends, statutory and other international regulations. Suggestions for the revision of the manual should be directed to the Executive Director. Upon the advice of the Executive Director, the Board shall constitute a team to review and update the manual. The executive director shall be expected to recommend to the Board in writing for approval of any major changes and/or changes deemed necessary. The said recommendation shall state inter alia: The present policy and procedure The problems encountered with the present policy and procedure. The recommended policy and procedure The benefits of the recommended policy and procedure All revisions to the manual and implementation are therefore the responsibility of the Executive Director and Finance Officer. On approval of any changes or additions, the Executive Director/Finance officer shall inform all staff in writing of the change(s) and send out the relevant page(s) of the manual to all staff. In addition, the Executive Director shall maintain a separate file on which he/she shall keep all memorandum authorizing modifications in the manual.
The Arrangement of the Manual The manual is organized into eleven (11) main Sections. Section one gives the background of OLS. It also contains the purpose, basis, and revision of the manual. It also provides an overview of the accounting policies and procedures, responsibility and management of the finance function, the ledger system and financial reporting. Section two discusses the system and procedure of operation of bank including the procedure for the preparation of bank reconciliation. Section three is about cash management policies and control procedures over cash, payment procedures, receipt and cheque book and safety and storage of accounting records and documents. Section four, five, six and seven outlines Payroll management, petty cash management and expense claim. Section eight and nine are dedicated to the procedure for procurement and fixed asset management, respectively while section ten looks at budget and budgetary control. Audit process is documented in section eleven.
Section One: Accounting Policies And Procedures
Accounting Policies The following are the principal accounting policies adopted for the preparation of financial statements by OLS. Financial Year The financial year of OLS shall be January 1st to December 31st each year. Accounting Convention The accounts of OLS shall be prepared under the historical cost convention and in accordance with GAAP and other applicable Accounting Standards. Basis of Accounting OLS's accounts has the following accounting basis: o Income is recognized at the time of remittance. o Expenses are recognized at the time they are incurred. Fixed assets purchased within a period shall be expensed to the appropriate cost center (s) for the purpose of internal management reporting. However, fixed assets with values greater or equal to $1,000 equivalent in Ghana cedis shall be capitalized for statutory account purposes at the end of the year. Depreciation Depreciation of fixed assets shall be calculated on the straight-line basis to write off the cost of each fixed asset over its estimated useful life. Full year depreciation shall be charged in the year of purchase of an asset irrespective of the month it was purchased within the year. However, no depreciation shall be charged in the year of disposal of the asset.
Foreign Currency Transaction
1. Each transaction denominated in foreign currency shall be translated into cedis and recorded at the
exchange rate in operation on the date on which the transaction occurred.
2. At the balance sheet date, monetary assets and liabilities denominated in a foreign currency shall be
translated by using the exchange rate ruling at the balance sheet date or where appropriate the exchange rate fixed under the terms of the transaction.
3. Any foreign exchange differences (gain/loss) shall be dealt with in the income statement for that
period. Responsibility and Management of the Finance Function The overall responsibility of ensuring that efficient and effective financial systems are established shall rest with the Board Members. The overall responsibility for the compliance and implementation of the policies and procedures stated in this manual shall be the Executive Director. However, the day- to-day management of the financial systems of OLS shall be the responsibility of the Finance Officer. It is also expected that all staff members shall be committed to the full implementation of this manual.
Section Two: Financial Structure And System
The Responsibilities of the Board of Members The BOARD MEMBERS holds OLS's assets in trust for OLS's and funders and are responsible for ensuring that they are used to achieve the aims for which OLS's was established. To this end, the responsibilities of the BOARD MEMBERS among others shall be as follows. Authorize the opening and closing of all bank accounts. Approve financial systems, procedures, and management. Approving annual audited accounts upon completion. Approve a salary structure for the organization.
Signatory to bank accounts. Appointing auditors. Approve major procurements. The Responsibilities of the Executive Director The Executive Director on behalf of the Board has the overall responsibility of ensuring that all financial systems and procedures specified in this manual are adhered to by all staff. The Executive Director's responsibilities among others shall be: Approve monthly payroll. Signatory to all OLS's bank accounts Authorize all expenditure above GHC 500.00 Ensures that all statutory deductions have been accurately done and paid to the relevant authorities on time as stipulated by the laws of the country. Make recommendations for review of manual, opening of bank account, recruitment etc. to the BOARD MEMBERS. The Finance Department The Finance department shall be headed by the Finance Officer who shall be accountable to the Executive Director but have functional reporting to the Board Members. The Finance Officer shall be supported by the Accounts assistant. The Finance Officer shall be responsible for the day-to-day administration and management of the finance function of OLS. However, in their absence, the Account Assistant shall play that role until the position is formally filled. Therefore, for the purpose of this manual, the Account Assistant is used in place of the Finance Officer. The overall functions of the Finance Department among others are; o Maintain and safeguard all books of account and other financial records, documents, and assets of OLS. o Comply with all statutory and other international accounting policies. o Provide timely and accurate accounting information to management for effective decision making and planning.
o Meet all reporting needs of donors and other statutory agencies. o Process payroll o Prepare final accounts for audit and other accounts and reports required by management. o Process all transactions in accordance with approved budget(s) o Manage petty cash. o Set up and maintain satisfactory financial controls over the resources of OLS. o Reconcile all bank accounts at the end of each month. o Prepare monthly/quarterly and yearly management reports. o Financial management training for the non-finance staff once every quarter. General Ledger System The Finance Department shall ensure that all transactions are legitimate and appropriately recorded. OLS shall use appropriate designed worksheets in Microsoft excel and other accounting software to record all transaction. The worksheet and the said software shall be designed to: o Provide a basis for providing financial accounting information on a regular basis. o Provide adequate classification and analysis of financial and management accounting information on regular basis. o To make it possible for management to control its budgets. Books of Accounts OLS shall maintain two main books of account for accounting transactions as follows; a. Cash book with a running balance into which all cash receipt and payment shall be recorded. b. Cheque payment cash book (Bank transactions) with a running balance into which all receipts and payments by cheque shall be recorded.
Routine Monthly Procedures The Finance Officer shall undertake the following month end procedures among others. a. Obtain bank statements from the bank for all bank accounts. b. Preparation of bank reconciliation statement for all bank accounts
c. Close all cash book for the month.
d. Process payroll
e. Prepare all statutory deduction schedules and process payment to the relevant agencies. Year End Procedures The following procedures shall be carried out at the end of each year-end to ensure that the financial statements which are produced are materially complete and accurate. The Finance Officer shall be responsible and coordinate the year end procedures. a. There shall be physical cash count of all cash amounts in the safe at the end of the year to support the year-end book figures. b. All cash book balance at the end of the yearshall be lodged into the bank account and the cash book closed for the year.
c. All cash and bank accounts shall be reconciled, and any adjustments incorporated in the
general ledger.
d. Ensure that all field advances to staff have been liquidated at the end of the year.
e. The fixed assets register shall also be updated with depreciation charge. f. Physical inventory shall be taken of all fixed assets and agreed to the fixed assets register. Financial Reporting The following reports shall be generated as per the periods indicated and these reports shall be the responsibility of the Finance officer.
Monthly reports: Such as bank reconciliation statement, payroll shall be ready by the 10th of the month immediately following the month to which the report relates except for the payroll which shall be ready by the 25th of the month in question. Quarterly Management reports: This should be ready by the end of month immediately following the quarter. This is a summary report that shows actual expenditure against budgeted expenditure for the period. It gives a summary of the financial performance of OLS every quarter. This shall be made up of both narrative and accounts. Annual Report: This should be ready by mid-February. This shall be in the form of both narrative and accounts explaining in detail the financial performance of OLS in totality for the year. Donor Specific Report: Project specific reports showing pertinent financial performance on projects shall be generated. This should be in accordance with the date and format agreed with the donor as highlighted in project contract/MOU. Exceptional report: These are reports that management, the Board or Donors may require for planning or decision making. This will be requested as and when necessary.
Section Three: Operation Of Bank Account
Bank Account
1. OLS shall operate bank accounts with specific project names as per donor requirements in Ghana cedis
apart from smaller grants for training or short-term projects which shall be kept in OLS's general account. The said accounts shall be used for the purposes of receiving of funds transfer from donors and project specific payments.
2. Where there is the need to open a new account, management shall conduct due diligence taking into
account the integrity, reliability, reputation, proximity and whether the services offered by the bank gives value for money. The Executive Director shall recommend to the Board for the opening of a new bank account after undertaking the due diligence. The Board shall be responsible for approving the opening of a new bank account. The account name of all bank accounts shall be preceded by "OLS". Signatories and Authorization
1. There shall be one authorization level as follows.
a. This shall consist of the Executive Director and Board chair. They shall have unlimited authority and shall be the mandated signatory to all bank accounts.
2. All cheques shall bear the signatories of two authorized staff to make it legitimate (The ED and the
Board chair). At least one person shall have authority to approve the face value of the cheque.
3. In the event of change in the signatories to the account or a signatory left, the bank shall be advised
immediately in writing of new signatories to the account.
4. Separate cash books shall be kept for each bank account for the recording of payment and receipts
either by cash, transfer, or cheque.
5. The cash book shall be updated daily and checked regularly to ensure that there is enough funds to
meet all payment obligations at every point in time. Deposits and Remittances
Remittances The major sources of funds for OLS: Grants, Funds from Donors, Donations, sale of assets etc. All remittances shall be recorded in the appropriate cash book immediately they are received. Where remittances are received directly through the bank, a credit advice from the bank indicating the amount and the related charges if any or email or letter from the remitter shall be evidence of funds received. Based on the credit advice, email or letter, an official receipt shall be issued in duplicate, and the original shall be attached to a cover letter of acknowledgement of receipt of funds and shall be sent to the donor/remitter within five (5) working days of bank confirmation of receipt of remittance. Official receipts shall be prepared to cover other receipts such as proceeds from the sale of asset, staff field advance returned immediately it is received. All projects under the ambit of OLS shall be expected to contribute to the running cost (overhead/indirect cost) of the Organization. The percentage of contribution if applicable shall be as stated in the project proposal and the MOU. The Finance Officer shall open an account in the General Ledger for each bank account. In addition, a Cash Book will be kept for each bank account by the Finance Officer. Deposits
1. All receipts (cash/cheque) shall be lodged into bank within a reasonable time from the time the amount
is received.
2. Copies of the bank pay-in-slip should be maintained as part of the documents in the bank statement
file for easy audit trail.
3. All cheque/cash received must be secured in cash safe under lock and key until they are deposited.
Bank Reconciliation The purpose of the Bank Reconciliation is to find errors or irregularities/differences in items between the bank statement and OLS's cash book. The following procedures shall apply:
1. All bank accounts shall be reconciled at the end of every month.
2. Bank Reconciliation Statement (BRS) shall be prepared not later than the 10th of the month following
the month to which the reconciliation relates.
3. The Finance Officer shall prepare the BRS, and the Executive Director shall approve it.
4. The approved BRS shall be filed appropriately.
Section Four: Cash Management Policies And
Control Procedures
Cash Procedures and Controls Since cash is the most liquid and for that matter the most vulnerable of all assets and can easily be misappropriated or misused, its management must be properly controlled. To ensure adequate control over cash, the following procedures shall be followed; All Cash shall be kept in a safe under lock and key, and only authorized persons shall have access to the key. There shall be separate responsibility for handling cash and recording of cash related items. All disbursement shall be by cheque except small amounts that will be disbursed through the cash or imprest system. All cash disbursement must be supported by a complete set of prescribed documents that have been duly authorized and approved according to the authorization levels. All cash disbursement and/or receipt shall be recorded immediately in the appropriate cash book. As much as possible, care should be taken to avoid robbery and theft. however, in the event of robbery or theft of money, staff concerned must immediately report to the police and immediately thereafter notify the executive director. Cheque Procedures and Controls All cheque received shall be receipted and lodged intact into the bank account within a reasonable period. Immediately after lodgment of these cheques, the Finance Officer shall record the lodgment in the appropriate cashbook. The Finance Officer shall issue an official receipt to the donor/remitter as soon as these cheques are received as evidence of receipt. The duties of cheque book custody, writing of cheques and signing the same should be separated for control purposes. All cheque payment shall be appropriately documented on a payment voucher (PV) before issued to the payee.
The details of the cheque should be written on the cheque stub (the counterfoil). The reason/transaction for which cheque is written for audit trail. Under no circumstance shall a cheque be signed before full details of the payee and sum payable have been entered. All unused cheque books shall be kept in safe custody by the finance department. These will be issued out for use in numerical sequence. Only one cheque book per account shall be in use at a time. Issues of a new cheque book shall be made only when stubs of fully utilized ones have been produced. Un-cashed cheque: If for any reason a cheque is retuned un-cashed by the payee, such cheques must be considered as void. The original entry should be reversed, and the cheque canceled. In case of lost cheques, the Finance Officer shall immediately effect a call to the Relationship officer of the bank stopping the honoring of the cheque and followed up with an email or letter to the bank stopping payment of the lost cheque. All requests to stop payment should include the date the cheque was issued, the payee and the amount involved. Upon receipt of the bank's confirmation that it has halted payment of the cheque and of a signed letter of indemnity from the payee, the following actions must be taken. o The disbursement voucher against which the lost cheque was originally issued, should be cancelled. o A replacement cheque for the same amount should be issued by preparing a new disbursement voucher. In case of a mutilated cheque, it will be returned and the same procedures for a lost cheque as described above should be applied. Please note that in this case, neither a stop payment order nor a letter of indemnity need be issued. The mutilated cheque must be attached to "Canceled Disbursement Voucher" and filed. Any outstanding cheques for the period of two (2) months or more must be followed up by the drawer. If upon investigations, it transpires that the cheque is missing, then the cheque must be stopped. However, if the cheque is found, but cannot be honored by the bank because of the expired date or some imperfection, it must be returned by the payee, cancelled, and replaced with a new cheque. The cancelled cheque must be attached to the disbursement voucher. There should be no alteration on cheques. If a cheque leaf has to be cancelled, the word "cancelled" must be written across the face of the cheque leaf and cheque stub in ink. After the cancellation, the portion containing the cheque number should be cut off and stapled to the counterfoil. The PV must be similarly marked and noted in the cashbook.
All cheques must be accounted for, and any mutilated must be attached to the Disbursement Voucher and noted separately on the list of cheques, at month end. Controls over Value Books (Receipts, PVs. Cheques.)
1. All value books shall be printed in duplicate and be serially numbered.
2. There shall be only one value book/cheque book in use at every point in time.
3. Before a new value book is issued, the used one must be returned to archives.
4. All staff who are not signatories to the bank account and have nothing to do with the writing of
financial records should not have unsupervised access to cheque books and value books.
5. All cancelled, stale, and mutilated value and cheque books should be retained in the books and filed at
a secure place for audit verification. Safety and Storage of Accounting Records and Documents All finance documents and records shall be kept for seven (7) years as stipulated in the current tax laws of Ghana. However, if there is any revision of this law in future, the new regulation shall apply. Where a donor's requirement for the retention of financial documents is a longer period from the statutory requirement stated above, the donors' requirement shall prevail for that donor. All finance documents (Cheque books, value books, reports etc.) shall be kept in a safe and secure custody and in a manner that shall facilitate easily authorized access to the appropriate officials. Only authorized staff shall have access to OLS's value books and other financial documents. All documents including grant transfer documents, bank transfers and other financial correspondence shall be filed in appropriate file folders with a schedule for tracking and reference to documents. All Electronic Accounting records shall be stored on external hard drives as back-up and any other storage media such as cloud storage facilities. Back up of all electronic accounting records shall be done daily. Payment Procedure
1. All payment shall be made based on generated documents. This may be in the form of memorandum
explaining the activity to be carried out and the associated cost, request for payment from third parties, invoices etc.
2. The request for payment shall be first be checked/seen by the Programs Officer making sure the said
request is connected to the work plan for the period and reviewed by the Finance Officer. The review process shall include some or all the following as the case may be: Checking of the arithmetic accuracy of the figures Compliance with laid down financial policies and procedures. Verify the authenticity of the document/expenditure. Verify the payee. Check for value for money (Cost must be allocable, reasonable, and allowable) Checking the quote value against budget The Finance Officer then reviews on the payment request after all these checks, signs and dates it.
3. The Executive Director or whoever has the authority in accordance with the authorization limit shall
approve the reviewed document.
4. A payment voucher shall be processed by the Account Assistant by completing a payment voucher
(PV), either cash or cheque transaction.
5. The Executive Director shall approve the PV and sign the accompanying Cheque according to the
authorization limit after which the other signatories would sign.
6. OLS shall request for official receipt for all Cheque payments. In cases where it is impossible to obtain
a receipt, the payee must acknowledge receipt in writing for such payment by way of using a certificate of honor.
7. The Finance Officer shall file the payment voucher from a bottom to top order with respect to the
dates, and code each PV in accordance with the budget lines before entries are made in the appropriate books.
8. Entries in appropriate reporting systems shall be done daily.
Section Five: Payroll Management
Introduction
The Human Resource Manual shall specify policies and procedures regarding staff engagement, termination, queries, and dismissals. The relevant sections regarding staff salaries and entitlements must be referred to in the preparation of payroll and other staff claims. Preparation of Payroll The Finance officer shall maintain employee payroll information and record all disbursements. All deductions and allowances relating to payroll shall be processed by the officer. The document of evidence for inclusion of staff on the payroll shall be the accepted letter of appointment forwarded to the Finance Department by the employee concerned. The individual staff shall remain on payroll until otherwise advised. Deletion of names from the payroll as well as salary changes and reclassifications of employees should always be evidenced by a written approval of the Executive Director. All personnel cost from projects shall be paid from the specific project account accordingly. Payroll for all staff in OLS shall be prepared by the Finance officer. This shall be ready for approval by the 25th of every month upon receipt of reports and time sheets from staff and availability of funds from donors. Payroll shall be prepared strictly in accordance with contractual conditions of service agreed in staff appointment letters. All staff are required to provide their accounts details and social security numbers to the finance department on assumption of office. The FAM shall prepare the payroll for the month using the appropriate worksheet designed purposely for Payroll. A copy of each set of the payroll shall be filed appropriately. The Finance officer shall distribute the pay slips to all staff. Payroll deductions to 3rd parties e.g., SSF. shall be paid. Statutory deductions must be paid to the appropriate authorities by the 15th of the following month as stipulated by law to avoid penalty.
Section Six: Petty Cash Management
Petty Cash Book and Payment Procedure All petty cash payment shall be in respect of properly authorized expense made for the purpose of work of OLS.
1. Petty cash payment shall be limited to staff claims for amount not exceeding the amount stated in
GHC250 above. However, where it becomes necessary to pay third parties in cash, the amount shall not exceed the amount stated in GHC500 above.
2. All petty cash payment shall be approved by the Finance officer.
3. All transaction processed for payment shall be properly approved and supported with proper
documents to show evidence of transaction.
4. A petty cash book shall be maintained to record all receipt and payment. This book shall have the
following columns: Date of transaction Particulars of transaction / Narration Project/Account Code PV Number Receipts Payments Balance
5. All receipts shall be recorded at the receipt column and all payments at the payment column. A
running balance shall be extracted and recorded at the balance column after every entry.
6. At the end of every month, the Finance officer shall write a memo to request for refund of all expenses
incurred through petty cash payment from the account of each of the projects that petty cash expenses have been incurred for.
Section Seven: Expense Claim
Policy and Procedure
1. All claims must be for expenses incurred by staff on behalf of OLS and must be in accordance with
stated policy.
2. Examples of such expenses include, but not limited to, transport cost of official rounds/trips, hotel
expenses on official trips and other such expenses incurred by the employee of which OLS is not paying directly to the supplier of service.
3. A Memo must be prepared indicating the details of the claim. All receipts and other supporting
documents shall be attached to the memo. In circumstances where genuine receipts are not obtainable, a Certificate of Honor may be accepted.
4. The memo shall be authorized by the Finance officer where the amount can be paid out of petty cash.
However, where the amount exceeds the petty cash limit, the normal authorization procedure shall apply.
5. The completed memo shall be reviewed by the Program officer, Finance officer and approved by the
Executive Director before being processed for payment. Per Diems
1. All per diems shall be paid based on a Travel Authorization approved by the Executive Director.
2. As much as possible per diem will be paid before staff travels (As much as possible OLS should not
encourage payment of per diem to staff from advance)
3. The relevant memo for per diem claim s detailing the purpose shall be completed at all times and be
duly authorized. The said memo shall have a work plan in connection with the periods planned activity.
4. Upon review of the memo, the Finance officer shall process for payment in accordance with the
prescribed procedure.
5. Per Diem shall be paid based on approved rate of the organization.
6. Where it become necessary that a staff exceeds the approved number of days for which per diem was
paid, approval should be sought from the Executive Director/or the supervisor. In such a case the staff shall be paid per diem for the extra days.
7. No per diem shall be paid for the extra days when approval is not sought.
Section Eight: Procurement Procedure
Introduction
For the purpose of this manual, procurement in OLS is classified into three (3) major categories namely procurement of goods, services, and consultancies. OLS believes that the Procurement of Goods and Services must be done in a competitive, transparent, and cost effect manner. In furtherance of the above, the following procurement procedures shall be followed; Procurement of Goods
1. Procurement of goods shall be made in accordance with the Procurement Act, Act 663 of 2003 of
Ghana
2. The request for procurement of goods and services shall be made in writing by filling a purchase
requisition (PR) form by way of raising a well detailed memo.
3. The purchase requisition shall be reviewed by the FAM and approved by the Executive Director.
4. Approved requisition shall be submitted to the finance department in charge of procurement to source
for invoices from at least 3 sources to ensure that procurement is done on competitive basis especially where the procurement is above GH1,000.00.
5. Where the goods are less than and equal to GH1,000.00, OLS shall request at least three invoices.
6. The selected quotation/invoice shall be reviewed by the Finance Officer and approved in accordance
with existing authorization limits.
7. In case of major procurement, a team shall be set to handle the procurement process by following all
the procurement procedures stated in this manual.
8. The Executive Director on behalf of the Board shall approve all major procurements.
9. All procurement must not exceed the budget provision and so must be checked against the budget
before approval and authorization.
10. In case of extreme emergency, prior permission with justification must be sought from the Executive
Director. Administrative negligence or delays caused by poor planning and management cannot be invoked to skip the normal procedure.
11. All statutory deductions like withholding Tax should be deducted at source during the processing of
payment for any good, service and consultancy.
Procurement of Services
1. Services to be procured may include but not limited to the following;
Printing Painting/plumbing Servicing Repairs/Maintenance Masonry Security Services Cleaning Services Hotel Packages for Trainings and workshops Auditing Rental of Office space
2. There shall be a supplier list of service providers who shall be called upon as and when required to
submit invoices for consideration.
3. The documents (memo requesting for procurement, quotations, request for payment for services
etc.) shall then be passed on for payment following the payment procedure described in Section 4.5 above. Procurement of Consultancy Services
1. Consultancy services shall be procured for the purposes of evaluations, Capacity building, technical
support, Organizational Development and Auditing.
2. OLS shall keep a register of potential individual consultants and consultancy/auditing firms with their
expertise and CVs to facilitate the award of contract if appropriate. The following principles will determine the process to be used in the award of contracts. Engagement Thresholds If the contract value is GHC3,000-GHC10,000 then it may be direct invitation and contract negotiations with one consultant from the OLS Register of potential consultants. If the contract value is between GHC10,000-GHC15,000 then pre-qualification through a short-list of 3-5 consultants from the register. The consultants shall submit a technical and financial proposal.
Where the contract value is above GHC15,000 then open bidding by advertisement in the newspapers shall apply. Under exceptional circumstances where it is advantageous to engage or continue with a specific consultant, OLS may approach the firm or individual, which has a close association with a similar project, has expertise not widely available or has undertaken similar assignments and has a good working relationship with OLS. In such a case a detailed justification shall be documented in writing prior to entering a contract with the consultant. The Selection process
1. OLS shall set up a three-member Evaluation Committee to evaluate the bids/proposals and make
recommendations for the award of contract. Persons with technical expertise in relation to the contract may be co-opted as and when required.
2. All engagement shall be based on a clearly stated terms of reference (TOR). The TOR must be clear
and precise and include but not limited to the following: Objectives of the assignment. Output required of the assignment. scope of work and activities related to the achievement of the output. Inputs to be provided by client (staff involved, documents). Duration and timing of the assignment Consultants input (profile and minimum qualification); etc. The Evaluation criteria must be agreed upon before the deadline for the submission of proposal.
3. Each member of the selection team shall fill a conflict of interest register to declare any relationship
with any of the potential consultants short listed for selection. If any of the committee members has any relations that may compromise the judgment of the selection, that member would have to opt out of the selection committee for such a contract.
4. A contract document shall be prepared for all contract engagements which shall be duly signed by
both parties before the commencement of any assignment.
5. Where the terms of payment require an advance payment, this shall not exceed 30% of the contract
sum. However, this is negotiable.
6. The consultant shall invoice based on the terms of the contract for every payment.
7. OLS shall maintain a Contract Register for each contract with the following details:
Date of contract Contract Number Description of assignment Name of consultant Contract Sum Implementation period Amount paid. Remarks (Satisfaction or not with assignment)
8. As much as possible there should be well documented records of all correspondence with the
consultant before, during and after the award of contract for clear audit trial.
9. The policy with regards to procurement shall apply.
Section Nine: Fixed Asset Management
Control Objective of Fixed Asset Management The Finance officer shall be responsible for the management of all assets of OLS. The objectives of the asset management units include, but not limited to the following; To define and maintain the fixed assets register. To ensure that fixed assets are acquired with proper authorization. To keep records of all fixed asset transaction against each individual asset at the time when such transaction occurs. The transaction shall include, depreciation, asset transfer, addition, disposal and deletion and removal of the asset. To carry out physical inventory of fixed asset at least twice a year and advice management of any discrepancy in the book value To ensure that fixed assets are properly maintained and used only for the purpose of the business of OLS. To ensure that disposals are properly authorized and that proceeds of disposals are recorded and accounted for. To create identification numbers for all fixed assets based on the format agreed by the OLS and ensure that all assets are duly labeled. The Policies The following policies shall be applied for the acquisition, disposal, safeguarding and use of fixed assets. All acquisition and disposal of fixed assets should be properly authorized. All fixed assets purchase whose value is not less than the equivalent of $1,000 shall be capitalize for statutory account purposes. All fixed assets shall be labeled with the appropriate code in alphanumeric sequence and traceable to the fixed asset register. The labeling shall be made up of the corporate identity, the class of asset and the sequential number. Where Donors require that assets donated or purchased with their funds should be labeled or treated in a way different from OLS's policy, the Donor's policy shall apply.
In addition to the physical inventory of fixed asset, the Executive Director or any other person designated by him/her shall carry out surprise physical verification of asset at least once in a year. All fixed assets shall be classified under the following class. o Motor Vehicles o Furniture & Fittings o Office equipment The Executive Director shall authorize the disposal of all assets and property of OLS when the need arises. Disposal shall be by public auction after valuation by an independent recognized institution and a committee constituted by the Board. In the case of other assets, a Committee shall be constituted by the Board to undertake an assessment of the assets to be disposed of and make recommendations for disposal to be approved by the Board. The sale proceeds of the disposal of assets shall be lodged in the appropriate bank account. The finance department will pass appropriate journals to remove the assets sold from the asset register. Assets that have been assessed to have no market value shall be declared as obsolete or scrap. This means of disposal of such assets shall be approved by the Board. In all cases, assets donated by donors or acquired from donor funds shall not be disposed of or transferred without the written approval of the donor. Fixed Asset Register The main file required for the maintenance of the fixed asset records shall be the Fixed Asset Register (FAR). A Fixed Asset Register shall be maintained for all class of assets. A folio shall be open for individual items in each class of asset. The FAR shall contain the following information among others for the individual asset. o Date of purchase o Description
o Cost price/original cost o Estimated useful life. o Depreciation method o Depreciation rate o Condition of asset o Location o User o Serial number o Asset identification number o Etc Every purchase of asset shall be received by the unit in the finance department responsible for the fixed asset management. All purchase of new asset shall follow the procurement and payment procedures prescribed in Section 4.5 and Section 9 above respectively. The FAR shall be updated as and when new assets are purchased and when assets are disposed off.
Section Ten: Budget And Budgeting Control
Introduction
Budgeting is one of the most important activities of all organizations and therefore, requires detailed attention. Therefore, OLS needs to put in place systems to ensure effective management of its budgeting process and control. The Objective of the Budgeting Process
1. To provide a detailed plan of action in both narrative and financial terms for the operation of OLS
2. To provide guidelines to staff of OLS especially project staff and the finance team on results they are
expected to achieve over a period.
3. To serve as planning and control tool.
4. To provide a basis for performance monitoring
5. To aid in the co-ordination of the activities of OLS
The Budgeting Process
1. The budgeting process shall be led by the Finance Officer in consultation with the project team.
2. The annual plans and budget shall show income projections of all expected sources as well as
projected expenditure for all projects.
3. The Finance officer shall issue guidelines and budget worksheet for the budget exercise.
4. The budgeting process shall aim at bottom-up flow of information/data. i.e., the process shall be
participatory.
5. The Executive Director shall lead in the preparation of project narrative write ups for the projects
which shall be reviewed, budgeted for, and consolidated into the annual plans.
6. There shall be a 10% charge to all projects to support administration and management of the
organization.
7. The ultimate budget holder under this policy shall be the Executive Director. However, the day-to-day
implementation of the content of the budget shall be the responsibility of the Finance officer.
Budgetary Control
1. Budgetary control is a control technique whereby actual results are compared with budgets either to
secure prompt action by management to conform to the original budget or to provide justification for its revision.
2. The Finance Officer shall be responsible for monitoring the budgets.
3. The Finance officer shall prepare quarterly budget variance reports for management decision making.
Section Eleven: Audit
External Audit The accounts of OLS shall be audited annually by an independent professional auditing firm. The selection of the auditing firm shall follow the procurement procedure prescribed in Section 9.3 above. The statement required for the audit is the trial balance, statement of income and expenditure, balance sheet and the statement of cash flow. In addition to these reports, the auditor may request other analysis and documents. There shall be a consolidated audit for all projects being run by OLS. The Finance officer must explain all reporting templates or systems to the audit team to enable them to appreciate and have a clear understanding of same to effectively carry out the said audit. There shall be a clear Terms of Reference for the audit, forwarded to the Finance officer to enable him/her to prepare and put together all the needed documents taking into consideration all requirements of funders/donors.