Alfalah NGO.docfsda

8/12/2019 Alfalah NGO.docfsda

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INTERNSHIP REPORT

Doing internship is mandatory for the students of Department of Business Administration of

Jahangirnagar University. Final and 8 th semester of BBA program requires internship which

involves 3 months organiational attachment for practical e!perience and " month time for

report writing. As per norm this report is the fulfillment of the mandatory requirement for the

evaluation process of the 8 th semester and internship program. #his report titled Financial

Management of NGO: Case of ActionAid Banglades !it Com"a#ati$e %isc&ssions of

P#actices in P#ofit O#iented Fi#ms'is the outcome of 3$months internship in the Finance

and Administration Unit at the %ountry &ffice of ActionAid Bangladesh. #he topic is

assigned 'y (yed )aushad Ahmed* (un (upport Accountant of ActionAid +nternational and

former ,ead of Finance and Administration of ActionAid Bangladesh. During the internship

period + was assigned with the -o's related to the Fund anagement of the partners* and %ash

anagement (ection of Finance Department. + was under the direct supervision of s.

Jesmin Banu* ,ead of Finance and Administration of ActionAid Bangladesh. + have prepared

this internship report with the mentioned topic* which was supervised 'y my academic

supervisor ohammad Farhad ,ossain* Associate /rofessor of Jahangirnagar University.

()()( O*+ecti$e of te Re"o#t

#he o'-ective of the report is to 0now the financial management of )1&s as non$profita'le

organiation and also to present a comparative scenario of financial management of non$

profit and profit oriented firms.

()(), Sco"e of te Re"o#t

#he scope is limited within the %ountry &ffice of ActionAid Bangladesh and especially

within the Finance 2 Administration Unit of ActionAid Bangladesh. ,ere + mentioned a part

of financial wor0s of ActionAid Bangladesh giving emphasis on their finance structure*

accounting* auditing* 'udgeting* ta!ation* and performance evaluation 2 controlling of

pro-ects in financial aspect.

()()- Metodolog.

#he method is mainly discussion and sharing of information with staff mem'ers of AAB and

review of their operational documents and manuals. AABs pu'lications have used to prepare

this report. + also incorporated with ver'al suggestions of the staff mem'ers* which helped me

a lot to enhance my 0nowledge. #he secondary sources for data collection were pu'lishedannual reports* annual financial reports of AAB* electronic pu'lications of AAB and their

/age " of 43

()( CHAPTER ONE: Int#od&ction()( CHAPTER ONE: Int#od&ction


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country strategic paper.

()()/ 0imitations

/roper guidance from more professionals of similar sector could enrich this report and also

could ma0e it more informative and compara'le. But their time constraints could not allow

me to do that* which seemed to me a limitation to prepare this report. Another limitation is

that* compara'le information is not availa'le in this report as + was only permitted to

complete my internship in a single organiation* i.e Actionaid Bangladesh.

()()1 St#&cte of te Re"o#t

#he report is divided into two main parts5

Pa#t (: O#gani2ational o$e#$ie! contains snapshot of ActionAid Bangladesh*

functions of ActionAid Bangladesh* overall financial performance of AAB

6+n 74 and 79:* and AABs current state of operations and future

direction.

Pa#t ,: First portion of the "#o+ect "a#tis the introduction to the pro-ect. ActionAid

Bangladeshs Financial anagement* Accounting (ystem* Budgeting*

#a!ation* Auditing* /erformance ;valuation 2 %ontrolling of /ro-ects are thecore chapters of this part. a-or findings* recommendations and lastly

conclusion are given to end the pro-ect.

.

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Action Aid is an international development organiation wor0ing over 34 countries* with its

head quarter 'ased in the United ivelihood and (top ?iolence against @omen 2 1irls.

Actionaid Bangladesh 6AAB: is registered with )1& Affairs Bureau of Bangladesh

1overnment under the Foreign Donations 6?oluntary Activities: egulation ules* "=8 vide

registration no. FDC )o$7"* Date 7CC"=89.

(),)( 0ocation of ActionAid Banglades and ActionAid Inte#national

#he addresses of ActionAid +nternational and ActionAid Bangladesh are as follows5

(),), Histo#ical *ac3g#o&nd of AAB

(),),)( ActionAid Inte#national

ActionAid was founded in "=7 'y r. %ecil Jac0son$%ole* a 'usiness man who

'elieved that 'usiness people should actively support charities* with the name Action

in distress 6Aid: with the o'-ective to provide education* health support* and

emergency relief to the poor children as service oriented activities. +n "== it changes

its name to ActionAidand started to wor0 in 7 countries.

(),),), B#ief isto#.

@hen ActionAid was esta'lished in "=7* its primary aim was to assist some of the

worlds poorest children* firstly with primary education* and then with practical

s0ills* which would help them 'uild a more secure future. +t soon learnt that providing

primary education and training was not enough. +t was only the first step in 'uilding a

program that will reduce poverty and ena'le children to have a 'etter future. By the

/age 3 of 43

ActionAid Inte#national

/ost )et (uite E 78

/rivate Bag 3"

(a!onwold 7"37

Johanes'urg* (outh Africa

ActionAid Banglades

oad noE"39*

,ouse noE8*

1ulshan$"* Dha0a$"7"7

Bangladesh

(), CHAPTER T4O: Sna"sot of ActionAid Banglades(), CHAPTER T4O: Sna"sot of ActionAid Banglades


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end of the decade* its wor0 had e!panded to include long$term health* sanitation and

agricultural pro-ects that would improve living conditions for children and their

families. +n "=8 it started its first pro-ect underta0ing integrated community

development.

+n "= it supplied emergency relief for the first time when ,urricane Fifi struc0

,onduras $ funding food* clothing* medicines and tools for thousands of homeless

people in 74 isolated villages. +n the same year in Bangladesh it also funded

provision of 4* meals a day* glucose and medicines for the people of eight towns

devastated 'y floods.

From the mid seventies* the focus of its wor0 started shifting. From solely providing

education it moved on to helping children and their families to 'ecome self$

supporting. By the start of the"=8s* its focus had shifted again to ensure it was

tac0ling the root causes of poverty* not -ust the symptoms. #here are many comple!

and inter$related causes of poverty. ,igh child mortality and malnutrition* high 'irth

rates* low literacy rates* limited access to clean water and sanitation* health care and

education* insufficient land to grow food and lac0 of credit to 'uy seeds and tools $

these are -ust some of the factors that can contri'ute to poverty.

+t had learned that for its wor0 to 'e of lasting 'enefit* it needed to wor0 with whole

communities to 'oost agricultural production* improve water supplies* gain access to

'asic healthcare and find new sources of income. /rograms in education* agriculture*

health* water* s0ills training and helping people to organie and access savings and

credit were integrated so that each supported the other. +t also helped communities

organie themselves to challenge in-ustice and ensure they received their entitlements

and as much assistance as they could from their own governments.

(),)- Int#od&ction to ActionAid Banglades

ActionAid Bangladesh 6AAB: started as a small operator in the coastal areas of Bangladesh in

the district of Bhola in "=83 to manage disaster 'ut over the years its wor0 shifted more

towards a rights$'ased approach. #his was one of the 0ey approach changes. AABGs current

strategy is aligned with the poor and e!cluded people. +t emphasies the agency and the action

of the poor and e!cluded people as the primary engine of development to eradicate poverty

and in-ustice from society of Bangladesh.

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A rights$'ased approach to development implies* as mentioned in "%(/ +++* recognition of the

rights of people not only to fulfill their 'asic needs* 'ut also to treat them with equal dignity

and realie their creative potential and state o'ligations to create an ena'ling environment for

assertion of their fundamental rights. +n the promotion of the rights$'ased approach to end

poverty and in-ustice* the concepts of equality* citienship and -ustice are critical.

#his evolution has 'een the imperative of the empirical e!perience that the organiation

gained through its long and deep involvement in com'ating poverty and 0nowing its

structural causes. Huestions of rights of women* e!cluded groups and the livelihoods of the

poor and the marginalied now occupy a front seat.

At present AAB wor0s in 34 districts and has more than 7 local and community$'ased

partner organiations. @hile AAB sets its own strategy* it is an international organiation

with national accounta'ility. #he unity with ActionAid +nternational is in the common

vision* mission and values* this ena'les AAB to ta0e a determined action in the fight to

eradicate poverty and esta'lish equal rights.

From its inception to the present times* AAB moved from the regional to the thematic

approach in its wor0. ,owever the core values remain unchanged. #here are "7 ongoing

pro-ects with ma-or donors and child sponsorship continues to 'e a ma-or source of fund.

#he present %ountry (trategy /aper +++ of AAB focuses on I;quality* %itienship and

Justice which sums up the core concerns of AABs wor0.

A new %ountry (trategy /aper was initiated in 7* which required operational changes to

cope with new challenges. As a result* there has 'een a change from regionaliation to

thematic programs 'ased on AABs learning* e!perience and history of wor0 for 'etter

coherence. #he themes are now pursuing to achieve specific strategic o'-ectives and this has

provided greater space to engage the partners and other actors 'oth at the local and nationallevel. @ith stronger position at the policy ma0ing level* there is now increased synergy in

AABs wor0 as it 'enefits from lin0ages across themes.

"%ountry (trategy /aper +++

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(),)/ O#gani2ational O*+ecti$es5 Goals 6St#ategic O*+ecti$es *. Temes5 Mission5

7ision5 and Co#e 7al&es of AAB

(),)/)( O#gani2ational O*+ecti$es

#he organiational o'-ectives for AAB according to %ountry (trategy /aper +++ which

is applica'le for the time period 74$7= are presented 'elow.

O#gani2ational o*+ecti$es acco#ding to CSP III

#o promote effective organiational culture

#o promote ,uman esource Development system that continuously

addresses the needs and updates the capacities of staff

#o promote gender equity and equality

#o nurture shared learning and esta'lish a system of 0nowledge

management to promote institutional memory and greater synergy of

wor0

%ommitment towards monitoring and evaluation for 'etter understanding

for the changes in the lives of poor and marginalied

#o esta'lish national accounta'ility in light of internationaliation

#o allocate resources at the optimum level for cost effectiveness and

ensuring financial transparency

#o raise sufficient resources and effectively manage the resources to 'e

efficient* effective and transparent

(),)/), Goals 6St#ategic O*+ecti$es of AAB *. Temes

Goal (: /oor and marginalied peoples rights over their livelihoods are more secure

St#ategic o*+ecti$esfo# acie$ing goal (

#o facilitate an ena'ling environment where poor and marginalied

people are a'le to e!ercise their right to sustaina'le livelihood through

access to employment opportunities* and also a'le to claim their fair

share from the institutions* capital and mar0et

#o reduce vulnera'ility and ris0 to the livelihood of the poor and

marginalied from disasters

#o increase access and control over natural resources and pu'lic

services 'y the poor and marginalied

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Goal ,: @omens rights are advanced for gender equality

St#ategic o*+ecti$esfo# acie$ing goal ,

#o promote womens right to self determination and create an ena'ling

environment for their effective participation in social* political* economic

and environmental dimensions

#o create an ena'ling environment for practice of egalitarian gender

relations and active citienship 'y adolescent

#o promote a culture of ero tolerance of violence against women

Goal -:Development of a society inclusive culture where diversity is cele'rated*

equal citienship e!ercised* and non$ discrimination is actively practiced

St#ategic o*+ecti$esfo# acie$ing goal -

#o assert equal citienship 'y those of diverse origins 'ased on ethnicity*

language and religion

#o promote an inclusive and 'arrier free society where ena'ling

environment and conditions prevail for the people of disa'ilities

#o promote active processes for inclusion of the socially e!cluded

Goal /: /eoples movements for social and economic -ustice are strengthened

St#ategic o*+ecti$esfo# acie$ing goal /

#o promote the right to Iquality education for the poor and marginalied

children

#o promote pu'lic accounta'ility of the government* private sector and

international development agencies that secures economic -ustice for all

#o promote the right to quality health care for the poor and marginalied

(),)/)- AAB8s Mission

A confident and responsi'le nation* free from poverty and indignity* in which its

citiens can lead an active life of freedom and livelihood security.

(),)/)/ AAB8s 7ision

#o wor0 with poor and marginalied women* men* girls and 'oys to eradicate poverty

'y overcoming the in-ustice and inequity that causes it.

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(),)/)1 AAB8s Co#e 7al&es

#hroughout ActionAid the following values are maintained form the common 'asis to

help in designing all organiational policy and practice.

;ach person in ActionAid has the right to e!pect to 'e treated and the o'ligation to

treat others according to these principles implicit in organiational values. AAB will

actively* e!plicitly and continuously invest in 0eeping its values alive.

Mutual Respect:ActionAid recognies the innate dignity and worth of all people and

the value of diversity.

Equity and justice:ActionAid will ensure that every person* irrespective of se!* age*

race* colour* class and religion has an equal opportunity to e!press and utilie her or

his potential.

Honesty and transparency:ActionAid will 'e accounta'le for the effectiveness of

their actions and open in their -udgments and communications with others.

Solidarity:ActionAids only 'ias will 'e a commitment to the interest of the poor and

powerless.

Courage and conviction:ActionAid will have the courage of our convictions to 'e

creative and radical* without fear of failure* in pursuit of ma0ing the greatest possi'le

impact on the causes of poverty.

Independence:ActionAid will 'e independent of any religious or party political

affiliation.

Humility:ActionAid recognie that they are part of an alliance against poverty and

so* in their presentation and 'ehavior* they will demonstrate humility.

Efficiency:ActionAid will manage their organiation in the most cost effective and

efficient manner possi'le in order to ma!imie the impact of the resources that are

dedicated to their ultimate o'-ective of eradicating poverty.

Excellence:ActionAid will try and attain the highest standards in their wor0 with a

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view to esta'lishing ActionAid as a world leader in terms of the quality of the their

development wor0.

Proximity:ActionAid will ta0e decisions as close to their consequences as possi'le.

(),)1 Inte#national o#gani2ational st#&cte of ActionAid

@ith its head office in U


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%ommon wor0 approaches followed in AAB form a strong 'asis for their unity. AAB is

committed to creating a diverse wor0force that positively ac0nowledges the differences

e!isting 'etween people$ such as se!* gender* race* age* ethnic origin* caste* class* color*

'elief* nationality* ,+? status* se!ual orientation* disa'ility* education* social 'ac0ground etc.

#hese differences may lead to differences in attitudes* e!periences* and ways of thin0ing*

'ehaving* communicating and wor0ing. AAB reserves the right to add other categories to this

list and will apply this principle in all aspects of organiational practice. AAB recognies that

a diverse wor0force leads to 'etter organiational performance* improved productivity.

#his chapter gives the detailed description of various functional units of AAB* its logo 2

slogan* and organogram.

()-)( Identit. 6 Resoces Mo*ili2ation

+ Dept. through its three unique functions of (ponsorship* /artnership Development and

+dentity hope to create a cohesive and winning team environment to achieve a cost$effective

funding 'ase for AAB through horiontal team wor0 as well as interlin0 AABs local and

national issues and identity with other development sta0eholders. +t also hopes to create wider

space for shared learning and 'est practices through regular flow of information 'oth from its

local partnerships as well as AA+ %ountry /rograms.

()-)()( S"onso#si"

". ights Based Approach and its outcomesCimpacts more tangi'le to the supporters

in its telling of the reports

7. %reating opportunities for supporters to move on from 'eing donors to 'ecoming

active supporters of the social movements.

3. %apacity 'uilding of the staff of partner organiations to ensure the real andorganied program information from the field

. Arranged communication training for Development Area 6DA: staff

()-)(), Te Identit. 9nit

". #he identity of AAB is rolled out through information and case stories of their

wor0 pu'lished in newsletters* 'rochures* information pac0s* identity materials

6 such as posters* leaflets* greeting cards* year planners etc:* photographs* media

and news articles 6 'oth national and international:* participation in national and

international programs and e!hi'itions* the we'site and the intranet.

/age " of 43


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7. +dentity produces social messages in the print media and regularly follow up with

the media on programmatic involvements as well as continue dialogues on a

regular 'asis.

3. Develops partnerships with educational institutions to promote future leadership

in the development sector and to familiarie the young leaders of tomorrow a'out

wor0 in development.

. (hares localCnational issues in the international forums through electronic media*

we'site and e!ternal pu'lications and regular communications update I#he Asia

Update

4. /roduce television and radio spots on priority sectored issues

9. /roduces items for enhancing AABs +dentity through video documentation

. Developing media strategy for 'etter professional lin0ages and capacity 'uilding

of grass roots level -ournalists

8. 1ives active support to local and international campaigns

()-)()- Pa#tne#si" %e$elo"ment

". /artnership Development Unit started with the inception of +dentity 2 esource

o'iliation Department 6+: of AAB 6&ct.7":. (ince then /artnership

Development initiated a process of developing a structured fundraising system

with strategies* policies* donor relationship* systems of archiving* contract

management and overall capacity of official and non official fundraising* etc

7. /artnership development deals with official funding and relationships with

'ilateral and multilateral donors* trusts* foundations 2 corporations.

3. /artnership Development unit also closely wor0s with the DA and pro-ect

partners to 'uild their fundraising capacity

. /artnership Development unit critically engages itself with donors to influence

4. /artnership Development unit wor0s 'oth with internal and e!ternal entities

Fige (: O#ganog#am of IRM %e"a#tment

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()-), Finance and Administ#ation

AAB finance and administration unit wor0 together. #he main responsi'ilities of finance

department are5

". Financial management 6/lanning* Fund management* onitoring 2 %ontrolling:

7. Financial accounta'ility

3. +nternal controls

. ecording financial events

4. Audits

9. Budgeting and planning

. #reasury management

8. eporting financial information

=. Financial efficiency measurement

". %apacity 'uilding of Finance (taff mem'ers of AAB and at partners end

@or0 done 'y a ten 6": mem'er team of dedicated and e!pert staff mem'ers under the

leadership and management responsi'ilities of ,ead of Finance and Administration.

#eam contains different level of staff mem'ers* i.e anager* Deputy anager* &fficer*

Associate &fficer.

(etting (trategic Direction done 'y Board of #rustees and +nternational Directors.

#he core responsi'ilities of Administration department are5

/age "7 of 43

Head

S"onso#si" Pa#tne#si" %e$elo"ment Identit.

Assoc. %oordinator

&fficer

Assoc. &fficer

Assoc. %oordinator

Assoc. %oordinator

Assoc. %oordinator

Assoc. &fficer


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". Assisting in organiing +nternational 2 national meetings* seminars* wor0shops*

training courses and pro-ects related events including administrative and logistics

support

7. /rocessing visa 2 tic0eting* maintaining petty cash *coordinating and monitoring wor0

of support staff* 0eeping an inventory record of all properties* supervising office

equipments and maintenance

3. /rocuring and purchasing equipments* reviewing vouchers and requesting for

payments related administrative functions* ensuring office safety* security and

cleanliness* ma0ing arrangements for travel and accommodation

. ;nsuring and 0eep functioning the communication systems of the office 6internal 2

e!ternal:

4. ?ehicle management and provide vehicle support to field visit and different events

Fige ,: O#ganog#am of Finance 6 Administ#ation 9nit

()-)- H&man Resoces 6 IT

". (taff recruitment as per need

7. /lacement of staff

3. %onfirmation of regular staff* e!tension of pro'ation period

. /reparing ;mployment /olicy* %onsultant 2 &utsourcing /olicy* ?olunteer /olicy*

+nternational (econdment /olicy

4. /reparing -o' description of each personnel

9. /erformance appraisal of the staffs

. Arrangement of staff capacity 'uilding* staff retrenchment* staff leave* staff leaving a

/age "3 of 43

Head of Finance and Administ#ation

anager Administration

Deputy anager

&fficer

Assoc. &fficer

&fficer

Administration

(upport (taff

anager Finance


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-o'* staff medical 'enefits.

8. anagement of smooth and uninterrupted +(/ service

=. /lan* organie and procure +# items as per need

Fige -: O#ganog#am of HR 6 IT 9nit

()-)/ Co&nt#. %i#ecto#8s 9nit

%ountry Directors 6%D: unit consists of %Ds unit* internal audit* monitoring 2 evaluation*

reflects development and shared learning. #he responsi'ility of %D is

". #o re'uild and re$invigorate the organiation and 'ring a'out sta'ility within

the organiation7. #o deal with the negative pu'licity and other trou'lesome issues

3. #o spend time on mission level issues and to do field visits to understand the

perspectives of the poor and marginalied people that AAB wor0s for

. #o finalie various policies and pu'lish the %(/.

4. #o 'uild up the relationship with the partners as well as AABs donors.

Fige /: O#ganog#am of Co&nt#. %i#ecto#s 9nit

()-)1 0i$eliood Secit. 6 Ris3 Red&ction

#he goal of this sector is to ensure a more secure livelihood for the poor and marginalied

/age " of 43

Co&nt#. %i#ecto#

onitoring 2

;valuation

+nternal Audit eflect

Development

(hared >earning

Assistance to %D

Head of HR 6 IT

%oordinator$+# %oordinator$,

&fficer&fficer

Assoc. &fficer


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people. /romotion and strengthening of livelihoods* protection from disasters* access to and

control over natural resources are the three themes in this sector.

()-); 4omen8s Rigts 6 Gende# E&stice 9nits

()-)@ Te logo and slogan of ActionAid Banglades

/age "4 of 43

Secto# Head

0S 6 RR 4R 6 GE R 6 S> S% 6 E>

Teme 0eade#

P#og#am Office#

Assoc) P#og#am Office#

Secto# Head Secto# Head Secto# Head


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()-)@)( #he logo of ActionAid Bangladesh is5

()-)@), #he slogan of ActionAid Bangladesh is5

()-)( O#ganog#am of ActionAid Banglades

An organogram of ActionAid Bangladesh is attached in the following page.

/age "9 of 43


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/age " of 43

,ead$

+

+dentity2

%ommunication

s

(ponsor

ship

anage

ment

Fundrais

ing and

%ontract

gt

ActionAid

Banglades

,ead$

, 2

+#

%Ds

Unit

,ead$>iveliho

od(ecurity

2 is0

eduction

,ead$@omen

s ights2

1ender

;quality

,ead$

ights2 (ocial

Justice

Finance/artners

2capacity

'uilding

,

anage

ment

onitori

ng 2

;valuati

on

>ivelihood

/romotion

@omen

s ight

Diversit

y 2

%itiens

hip

;ducatio

n

,ead$Finance

and

Adminis

tration

Finance

/ro-ects

Adminis

tration

+nformat

ion

#echnol

ogy

eflect

Develop

ment

Unit

)atural

esources 2

/u'lic(ervices

?iolence against

@omen

(ocial

+nclusio

n

,ealth

&rgani

ational

Develop

ment

+nternal

Audit

;merge

ncy andis0

eduction

Adolesc

ent 2

Kouth

Disa'ilit

y

;conom

ic

Justice

,ead$

(ocialDevelop

ment 2

;.Justice

(hared

>earnin

g

Fige ;: O#ganog#am of ActionAid Banglades


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#he overall financial performance of AAB is measured 'y the total income it received*

percentage of costs according to international themes* and trends of income 2 e!penditure.#he analysis of these data for the year 74 and 79 is presented in the following section.

()/)( Income mi

#he total income for 74 and 79 was L 3.4= and L 3.= million respectively. From this

AAB has spent L 7.88 and L 7.=9 million as pro-ect cost for the year 74 and 79. #he

percentage of income mi! was5

Ta*le ,: Income mi in ,1 and ,; Fige =: Income mi ,1

Income mix 2005

61%

0.97%

35%

2.36% 1.13%0.31%

Regular giving Other regular giving

Partnership (off icial Partnership (others

Others !ransfer in

#he income from egular 1iving is high for 'oth the year 74 and 79. #he income from

/artnership 6official: is high in 74 'ut in 79 the second highest position held 'y other

regular giving. #he least income came from other source for 'oth the year as shown in the

graphs.

/age "8 of 43

ea# ,1 ,;

Reg&la# gi$ing 9"M 8.4"M

Ote# #eg&la# gi$ing .=M "9.73M

Pa#tne#si" Dofficial 34M =.8"M

Pa#tne#si" Dote#s 7.39M "7.M

Ote#s .3"M .33M

T#ansfe# in "."3M "3.4M

Total "M "M

()/ CHAPTER FO9R: O$e#all Financial Pe#fo#mance of AAB DIn ,1 and ,;()/ CHAPTER FO9R: O$e#all Financial Pe#fo#mance of AAB DIn ,1 and ,;


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INTERNSHIP REPORT

Fige ?: Income mi ,;

Income mix 2006

"#.51%

16.23%

9.#1%

12.07%

13.05%

0.33%

Regular giving Other regular giving

Partnership (off icial Partnership (others

Others !ransfer in

+n 74 the income from egular giving and /artnership 6official: are higher from 79 as

shown in the a'ove graphs. #he income form &ther egular 1iving* /artnership 6others: and

#ransfer in are higher in 79 than 74.

()/), Pe#centage of costs acco#ding to Inte#national Temes

#he analysis according to the various international themes is the following.

Ta*le -: Pe#centage of costs acco#ding to Fige @: of costs acco#ding to Inte#national

Temes ,1

Inte#national Temes in ,1 and ,;

/age "= of 43

ea# ,1 ,;

Food and &nge# 74M 3"M

4omen8s #igts "7M 7M

H&man secit. 77M "8M

Rigt to ed&cation 78M "4M

Go$e#nance M M

HI7AI%S 4M 4M

Ote#s 7M MTotal "M "M


20/53

INTERNSHIP REPORT

% of costs according to international themes 2005

25%

12%

22%

2%

2#%

5%

7%

$oo an hunger &o'ens rights )u'an securit*

Right to eucation +overnance ),-/,

Others

+n the year 74 AAB had spent most in ight to ;ducation #heme* 'ut in the following year

it turned its policy and spent most in Food and ,unger #heme. #he second highest

contri'ution of AAB was Food and ,unger and @omens ights for 74 and 79

respectively.

Fige (: of costs acco#ding to Inte#national Temes ,;

% of costs according to international themes

2005

25%

12%

22%

2%

2#%

5%

7%

$oo an hunger &o'en(s rights )u'an securit*

Right to eucation +overnance ),-./,

Others

#he development wor0s of AAB for its international themes are higher in 79 than 74 in

the themes li0e5 Food and ,unger* @omens ights and &thers. +n ,uman (ecurity and ight

to ;ducation the costs are more in 74 where in 1overnance and ,+?CA+D( themes it

remained almost same for the 'oth year.

()/)- T#ends of income and e"endite in AAB

#he following graph shows AABs last four years income and e!penditure pattern from year

/age 7 of 43


21/53

INTERNSHIP REPORT

7 to 79 are given 'elow. ,ere we can see the e!penditures increased with incomes and

in the year 74 and 79 the e!penditures were almost equal to incomes.

Ta*le /: Income and e"endite t#end D,/,;

+n 1B/ Nea#

,/ ,1 ,;

Income *3= 3*3=9 3*8

E"endite 3*=7 3*7=9 3*94

Fige ((: T#ends of income and e"endite in AAB

Trends of income & expenditure

0

500

1000

1500

2000

2500

30003500

"000

"500

5000

200" 2005 2006

Year

InGBP

'000

,nco'e 4peni ture

()/)/ S4OT Anal.sis of AAB

#he (@ analysis comprises of the organiations internal strength and wea0ness and

e!ternal opportunities and threats. (@ analysis helps the company an insight of what they

can do very important to identify the current position of the strategic analysis of the

organiation.

()/)/)( Te st#engts of AAB a#e:

1ood organiational culture of AAB.

+ts young* energetic* sincere and s0illed wor0ers.

#o attract donor ActionAidhas priority over other companies 'ecause it spreads in

countries.

ActionAidis centralied. (o each %ountry Director has responsi'ility to the head of

ActionAid for reporting.

ActionAidacts as pressure group for the 1overnment.

1ood organiational culture of AAB.

/age 7" of 43


22/53

INTERNSHIP REPORT

/articipatory program development on need 'asis* which promotes harmony and

goodwill with in the organiation* in the communities where it wor0s and amongst

the donors.

()/)/), Te !ea3nesses of AAB a#e:

?iolation of policy as per senior management instruction sometimes happened.

)one is directly lia'le to anyone for hisCher duties. #he leader is all in one. (o

negligence in service may occur.

(ometimes* ActionAidis criticied for not maintaining good relationship with )1&

affairs 'ureau.

@ea0ness in management system including un'alanced distri'ution of

responsi'ilities* inadequate and inappropriate assessment and evaluation of pro-ects*

lac0 of unity in management.

()/)/)- Te o""o#t&nities of AAB a#e:

ore scope of colla'oration with various government programs.

1reater colla'orative programs with other )1&s.

Diversification of donor source.

;!panding activities in new areas and new fields of activities.

#he policies are reviewed time to time* so there is lot of opportunity to adapt the

policies with the changing demand of the world.

()/)/)/ Te t#eats of AAB a#e:

ActionAid may lose donor fund if they dont maintain good liaison relationship with

donor organiation.

ultiplicity of )1&s in Bangladesh.

1overnment policy change and 'ureaucratic nature of decision ma0ing lead to

unequal e!change.

/age 77 of 43

()1 CHAPTER FI7E: AAB8s C#ent State of O"e#ations and its E"ected F&te()1 CHAPTER FI7E: AAB8s C#ent State of O"e#ations and its E"ected F&te

%i#ection%i#ection


23/53

INTERNSHIP REPORT

%urrently AAB is operating in Bangladesh with a hope to eradicate poverty. AA has si!

international themes. #hey are Food and hunger* @omens rights* ,uman security* ight to

education* 1overnance and ,+?CA+D(. &f that* in Bangladesh it gives most emphasie on

food and hunger theme. #he rationale of this* they are trying to enhance the livelihood of the

marginalied people of Bangladesh.

ActionAid +nternational* which has 'een wor0ing in Bangladesh since "=83* is uniquely

placed to address the development challenges that the people of Bangladesh will face in the

coming years. &ver the past 7 years* AAB has esta'lished a trac0 record for wor0ing

effectively with communities for their advancement and empowerment. (ince "==8* AAB has

e!panded its partnership to include organiations from vulnera'le locations throughout the

country. +t has developed e!pertise in wor0ing with disa'led* development of adolescent

programs.

#he special characteristics of AAB to promote and strengthen national leadership within an

international organiation* and its funding structure provide AAB with a unique opportunity

to pursue the challenges faced 'y Bangladesh in the coming years through development ofinnovative grassroots programs and provide policy insights and directions. #his will provide

AAB the strategic advantage. #hough* AAB faces some pro'lems in strategic and operational

level.

()1)( St#ategic and o"e#ational iss&es facing AAB

()1)()( St#ategic iss&es

Although AAB emerged as pu'lic 'enefit organiations in advancing the interests of

a 'roader community where a large num'er of men and women are marginalied*

vulnera'le to structural social in-ustice and victim of violation of human rights* their

management practice does not show any line of accounta'ility to the community. #he

lac0 of defined accounta'ility to the community 'lurs the downward accounta'ility of

AAB 2 other )1&s and therefore creates accounta'ility gap.

)1&s should have accounta'ility relationship 'etween their peer organiations from

the perspective of upholding the standard* value tradition and reputation from the

sector. ,owever* the reality is that the norms around the sharing of good

/age 73 of 43


24/53

INTERNSHIP REPORT

accounta'ility practice are often a'sent and as a result )1&s frequently lac0 a

common standard or accepted 'ehavior to hold each other to account.

()1)(), O"e#ational iss&es

For an effective organiation leadership* accounta'ility and transparency are needed.

(o* AAB has to 'uild up leadership and develop inner strategies. AAB has to elect

people in the 'oard view of changing the nation in a positive direction.

#he strategic and operational issues that AAB is facing can 'e minimied 'y the following

strategies and tactics5

()1), Te st#ategies and tactics &sed to co"e !it tem

Building responsive governance within the organiation.

Developing policy guidelines and manuals as open document.

%oordination and creation of space for shared learning in terms of accounta'ility.

egular revisit of the policies* values and norms in line with e!isting policies.

inimum standard setting for organiational accounta'ility.

/romoting self assessment with organiational domain.

Developing relationship with government officials.

Dissemination of information at all levels.

/ractice of participatory decision ma0ing process.

+n case of preparation and implementation of policy the method should 'e

sharing* involvement* and dissemination.

/eer accounta'ility should 'e trust 'uilding* development of mindset a'out

shared learning.

Downward accounta'ility should 'e mind setting of su'ordinates* trust 'uilding

and reducing dependency.

eal partnership has to 'uild up with donor through local fund mo'iliation.

/age 7 of 43


25/53

INTERNSHIP REPORT

ActionAid Bangladesh is a leading +nternational )on 1overnment &rganiation in

Bangladesh. +n preparing this report financial management practice of AAB has ta0en among

non government sector. #he study is 'ased on the three months internship program at the

AAB. #he study is a'out the overview of the financial management practice of AAB.

,)()( O*+ecti$e of te St&d.

#hrough this study* + tried to attain the following o'-ectives5

/rime o'-ective of my study was to find out financial management of )1&

#o reach in a comparative analysis of financial management of profita'le and non$

profita'le organiation.

,)(), Significance of te St&d.

#his pro-ect titled IFinancial Management of NGO: Case of ActionAid Banglades !it

Com"a#ati$e %isc&ssions of P#actices in P#ofit O#iented Fi#ms' was designed to present

the financial management of )1&s in an easy and understanda'le way. + have selected this

topic to present the financial management of non profita'le organiation. As non profita'leorganiation has no profit motive* so how they organie their income and e!penditure in their

financial statements according to their organiational o'-ective was my attempt to prepare this

report. #he report is totally descriptive in nature.

,)()- Sco"e of te St&d.

#he scope of the pro-ect part is limited to the financial manuals of ActionAid and their

financial reports only. eviews of their operational manuals are also used to prepare the

report. Besides* te!t 'oo0s were used as supplementary when needed. A detailed list of them

has mentioned in the 'i'liography.

,)()/ Metodolog.

/reparing a report a'out the financial management of an organiation is a difficult and

complicated tas0 and no single method is appropriate for preparing the report. ;ffective

research involves si! 'asic steps* shown in the following figure5

/age 74 of 43

,)( CHAPTER ONE: Int#od&ction to te P#o+ect,)( CHAPTER ONE: Int#od&ction to te P#o+ect


26/53

INTERNSHIP REPORT

Fige (,: Metodolog. of te #esea#c

#he pro-ect title is Financial S.stems of NGO: Case of ActionAid Banglades DAAB

!it Com"a#ati$e %isc&ssions of P#actices in P#ofit O#iented Fi#ms') #his is a

descriptive research. #he ma-or purpose of this descriptive research is to descri'e the

financial management of non profit oriented organiations.

,)()/)( T."es of %ata

#he report is mainly 'ased on 7 types of data$

() /rimary data

,) (econdary data

,)()/), Collection of %ata

,)()/),)( P#ima#. soce of data

/ersonal o'servation of the financial activities.

+nterview with the officials of the ActionAid Bangladesh.

,)()/),), Seconda#. Soce of data

Annual financial reports of ActionAid Bangladesh.

/u'lished documents and reports.

elevant @e'sites

,)()1 0imitations of te St&d.

(ome of the limitations faced while preparing this report are mentioned here5

#ime was the most important limitation in preparation of the internship report.

#he program allotted only 3 6three: months for entire study* which disa'le many

opportunities for a comprehensive study.

elevant papers and documents were not availa'le sufficiently.

+n many causes updated information were not availa'le.

#he time schedule of AAB senior staffs did not allow me to discuss with them.

But their opinion could ma0e this report so informative. +t seems a great

limitation to me.

/age 79 of 43

%efine te P#o*lem Resea#c O*+ecti$e

Findings 6 Recommendations %ata Anal.sis

%e$elo" Resea#c Plan

%ata Collection


27/53

INTERNSHIP REPORT

#he lac0 of e!perience of the researcher in this field may have 'ecome another

limiting factor.

#he core requirements of the financial management aspects of AAB include structure of

finance unit* accounting procedures* recording of accounting information* 'udgeting*

ta!ation* auditing* and performance measurement 2 controlling of pro-ects 'y finance

section.

,),)( St#&cte of Finance 9nit of AAB

#he structure of finance department of AAB is as follows5

Fige (-: St#&cte of Finance %e"a#tment of AAB

Ta*le 1: N&m*e# of Em"lo.ees in Finance and Administ#ation 9nit

,),), Com"osition of te finance team

/age 7 of 43

(et (trategic

Direction

>eadership and

management

Boa#d of T#&steesInte#national

%i#ecto#s

HeadFinance

and

Administ#ation

Pa.ment and Cas

Management

Re"o#ting and

Stat&to#.

Com"liance

Ca"acit. B&ilding

Co&nt#.

%i#ecto#

/lanning* controlling

and reporting

financial activities

Head of

Finance and

Administ#ation

DHOF

Finance section Administ#ation section

/ayment and

%ash

anagement

eporting and

(tatutory

%ompliance

%apacity

Building

Administrati

ve

&fficer &fficer

Admin

(upport

(taff

" 3 7 " " "

,), CHAPTER T4O: Financial Management of A,), CHAPTER T4O: Financial Management of ActionAid Banglades


28/53

INTERNSHIP REPORT

#he ,&F of the %ountry /rogram has the responsi'ility to manage the overall financial

management of the country program. #he ,&F reports to the %ountry Director of the %/*

who is appointed 'y the +nternational office of ActionAid +nternational. +n a'sence of the

,&F the %D is responsi'le of overall financial management and financial integrity of the

organiation.

,),),)( Pe#fo#mance5 standa#ds and ca"acit. *&ilding:#he team is responsi'le in capacity

'uilding of the partners as well as AAB in house staff. #he team engaged in appraisal and

review of pro-ectsCpartners performance* review of performance +n addition to that they

prepare different financial reports for AA+* egional &ffice and AAB anagement 6as per

requirement:* provide support during planning 2 'udgeting* developing policies 2 procedure

and reserve management to ,&F.

,),),), Re"o#ting 6 stat&to#. com"liance:#his team is responsi'le for the overall reporting

to internal as well e!ternal entities that is a part of the overall financial information system of

the organiation. #his includes providing e!penditureCincomeCcommitted e!penditure

information to the 'udget holders of AAB* pro-ect reporting to the donors* pro-ect reporting to

the )1& 'ureau* and reporting to the international offices. Finance uses financial software

(U) for recording of all financial information* transaction* 'udget etc. #hey use another

software named ?+(+&) 6?ersion 4: for reporting purpose. +n doing so* #eam mem'ers are

involved with partner e!penditure chec0ing as well as providing feed'ac0 to them*

monitoring the utiliation* reconciling partner e!penditure with (U)* finaliing contracts of

partnersCthird parties and providing support in preparation of pro-ect proposal. #eam prepares

final accounts of pro-ects of AAB and help e!ternal auditors to conduct e!ternal audit and

meet audit queries. #eam also involved with providing support to internal audit and different

donor audit.

,),),)- %is*sement and cas management: #his team is responsi'le to ensure timely

payment to all third parties* including proper coding of the e!penditure and verification of the

documents provided to them for payment preparation. #eam mem'ers are responsi'le torecord transactions and reconciliation of the control account codes. #he team leader of this

team will 'e responsi'le for treasury management of the %ountry /rogram.

In "#ofit o#iented o#gani2ation5generally the finance team is divided in three sections* such

as Finance* /ersonal Accounts and %osting. Finance section handles all activities related to

de'tors. +t is responsi'le for the payment of 'ills. /ersonal account section deals with salary

payment* group insurance* foreign affairs and issues related with corporate heads. %osting

section deals with the production cost and profit related issues. (o profit oriented

organiations finance team is 'road than non profit oriented organiations finance team.

/age 78 of 43


29/53

INTERNSHIP REPORT

)on profit organiations such as )1&s need accounting to record and account for fund

received and dis'ursed. #hough they do not have a profit motive* yet they should operate

efficiently and use resources effectively. #his chapter will give idea a'out the accounting

principles of AAB* their accounting cycle* financial reports 2 statements* accounting

equation of AAB* accounting policy and procedure* recording of accounting information* and

software used in AAB 'y finance unit..

,)-)( Acco&nting P#inci"les

,)-)()( %&al as"ect "#inci"le: Dou'le entry should 'e recorded in all ledgers.

,)-)(), Moneta#. "#inci"le: AAB uses Bangladeshi #a0a 6BD#: as its 'ased

currency in all local financial reports. ,owever* the transactions incurring in other

currencies such as U( Dollar 6U(D:* 1reat Britain /ound 61B/: should 'e recorded

in the original currencies and translated into BD# 'ased on the accounting e!change

rates for reporting purposes.

,)-)()- Consistent "#inci"le: #his principle regulates that all the accounting

methods* 'oo0s and reports should remain unchanged until their financial manual is

revised or communicated through memo and notice.

,)-)()/ Mate#ialit. "#inci"le:A transaction will 'e considered as material when its

value equals to or is over 1B/ "* or U(D "*9 or BD# ""*.

,)-)()1 F&ll. disclose "#inci"le:All transactions must 'e recorded in the 'oo0s and

'e disclosed in all financial reports.

,)-), Te Acco&nting C.cle in AAB

#he accounting cycle practiced in )1&s is almost same with accounting cycle of profita'le

organiation. #hey also contain 'oo00eeping and accounting steps.

/age 7= of 43

,)- CHAPTER THREE: Acco&nting S.stem of Actionaid Banglades


30/53

INTERNSHIP REPORT

,)-),)( Boo33ee"ing ste"s

". ecord transaction in a -ournal. #ransaction means cash receipt and payment.

7. #ransfer amounts from various -ournals to general ledger.

3. %alculate whether sum of all de'it 'alances equals sum of all credit 'alances.

,)-),), Acco&nting ste"s

. /osting the cash ledger to the accounting software (U).

9. Analysis of data for reporting and preparing financial statements.

,)-)- Financial Re"o#ts AAB P#od&ce DFo#mal 6 Info#mal

#o measure the overall financial performance of a country program each country program has

to send their Annual Financial eport to AA+. #his report contains the following financial

statements5

,)-)-)( Statement of income and e"endite #his include income from regular

giving donation* income from partnership* net transfers in* transfers out* e!penditure

'y pro-ect* support* fundraising 2 government. #his statement shows the amount of

money coming into AAB* how this money was paid out and any leftover money for a

given period of time 6ie5 three months* one year* etc:.#his statement is equivalent of a

/rofit and >oss (tatement for profit oriented organiations. +n some )1&s this

statement is called (tatement of eceipts and Dis'ursements. A sample of income

and e!penditure statement is included in appendi! part 6#a'le ":

,)-)-), Balance seet#he 'alance sheet provides a picture of the assets* lia'ilities

and capital reserves of AAB at a given point in time. A sample of 'alance sheet is

included in the appendi! part 6#a'le 7:.

#hese two statements in com'ination with more frequently generated performance reports can

form the 'asis of financial reporting for AAB. Besides* the statements needed to support this

two 'ase statement are as follows5

,)-)-)- S&mma#. of mo$ements in #ese#$es#his ta'le gives the summary of fund

flow from different country programs and chec0 the reserve held at the end of the

year.

,)-)-)/ E"endite5 income and #ese#$es *. %A &pening reserve* e!penditure

and closing reserve 'y each Development Area is shown here.

,)-)-)1 Financial "e#fo#mance meases DFPM ta*le$ +t shows the progress of the

development wor0 in a year. +t is the 0ey ta'le to show accounta'ility to the trustees

and donors.

/age 3 of 43


31/53

INTERNSHIP REPORT

#he reports AAB has to su'mit to AA+* regional office* %D* donors are mentioned 'elow5

Ta*le ;: Financial #e"o#ts of AAB

Re"o#t t."e To *e s&*mitted

Kearly financial report AA+Annual report 2 ,alf yearly report #o egional &ffice

%onsolidated Huarterly management

report

#o %D and egional &ffice

onthly management report #o the %D and every 'udget

holder of the %/

/ro-ect financial report for the donor #o the donor

,)-)/ Acco&nting Eia'ility P &wners ;quity is also

maintained in AAB. AAB uses accrual 'asis of accounting.

#otal assets O De't to staffs* other country programs* income due from local contracts P cash

at 'an0 and (# 'an0 deposit.

#otal lia'ilities O Due to staffs* other country programs* deferred income on local contracts

#otal assets$#otal lia'ilities O #otal equity.

,)-)1 Acco&nting Polic. and P#ocede

ActionAid has Financial anagement Framewor0 where accounting policy and procedures

are esta'lished. #his involves the policies and procedures AAB should use to record and

monitor financial transactions. +ts purpose is to help ActionAid5

. ecord all financial transactions

. onitor and control e!penditures

. (atisfy statutory reporting requirements

. ;nsure timely and accurate financial and management reporting to donors and grant$

ma0ers

#he core aspects of their accounting policy are a'out5 income* e!penditure* reserve* currency

and e!change rate movement* fi!ed asset* depreciation method* lia'ilities* accrued income

and e!penditure* and advance and pre payments.

,)-)1)( Income

AAB receives its income as donation and contri'ution from individual donor or

/age 3" of 43


32/53

INTERNSHIP REPORT

institutional donor from Bangladesh or outside of Bangladesh in support of its

activities ta0en under the %ountry (trategic /aper 6%(/:. &nly when the income has

practical certainty of 'eing approved then it is realied in the accounts. ain child

sponsors are from U


33/53

INTERNSHIP REPORT

;!penditure should 'e appropriately authoried as guided 'y the e!isting Authority

/rotocol and changes there in time to time.

All e!penditures must 'e supported with appropriate supporting 6i.e. cash memo*

challan Cinvoice* 'ills* claims* @or0 order etc.:

;!penditure only which are incurred for the organiation will 'e included in the

'oo0s of accounts.

,)-)1)- Rese#$e

eserves represent the capital of the organiation* fi!ed and wor0ing* including short$

term resources. #he statutory reserve level will remain over the %ountry /rogram

according to the 7AFF guideline which will 'e not less than 7 months and not more

than months of planned e!penditure of the following year. ;very year the reserve

level will 'e analyed and reviewed 'efore annual 'udgeting and it would 'e ad-usted

in the plans 2 'udget for the ne!t year.

,)-)1)/ C#enc. and ecange #ate mo$ement

Dealing with international institutions* and having an international presence AAB is

e!posed to varieties of e!change rate and as a result is open to e!change rate gain or

loss. #he policy of the %/ is to minimie e!change rate loss through maintaining a

1reat Britain /ound sterling 61B/:. Foreign currency account and utiliing the

e!change rate information received from #he ,ong


34/53

INTERNSHIP REPORT

Depreciation is charged to the income and e!penditure account in order to write up

the cost of a fi!ed asset over its e!pected life. #his means that the cost of asset will 'e

divided 'y the num'er of years of asset life to get the annual depreciation charge.

%apital items are su'-ect to properly authorie* purchase* recorded* and accounted for*

valuation and disposal. +t is also su'-ect to depreciation according to the following

principle and depreciation of assets to 'e charged in straight$line method.

Ta*le @: %e"#eciation "e#iod of ca"ital items

)ote to mention in case of depreciation5 Freehold land will not 'e part of depreciation. Full year

depreciation charged in the year of purchase of an asset and nil in the year of disposal.

,)-)1)= 0ia*ilities

As AAB is following the accrual 'asis of accounting* it is important that financial

o'ligation to the third parties who have provided resources or to whom AAB is lia'le

to pay 6e.g. ActionAid Bangladesh employee provident fund* ActionAid Bangladesh

;mployee 1ratuity Fund: is accounted in the local 'alance sheet in the accounting

period in which the resources have 'een received and against whom e!penditure has

'een charged. +t should 'e paid in the following accounting period and 'e removed

from the 'alance sheet simultaneously. #ransaction recorded as lia'ilities must 'e

supported 'y sufficient documentation that esta'lishes the 'asis for their inclusion in

the accounts.

,owever* any goods and services purchased 'y the %/ will 'e on payment on delivery

'asis. #he %/ must not have any agreement with any suppliers that require an interest

paya'le in case of failure of terms and conditions for payment without written approval

from the ,&F and %D.

,)-)1)? Acc#&ed income and e"endite

Accrued income represents income due from localCinternational contractors with

sufficient documents supporting the realiation of the income with certainty for the

/age 3 of 43

ASSET %ESCRIPTION O9TSI%E E9ROPE

F;;,&>D

/&/;#K

Buildings owned 'y ActionAid

+nternational* AAB has no such

property in Bangladesh

" years

&FF+%; ;HU+/;)# %omputer ;quipment&ther ;quipment e.g. photocopiers*

generators and any other equipment

used in the %/

3 years3 years

& ?;,+%>;( All otoried transport e.g. cars* truc0s 3 years


35/53

INTERNSHIP REPORT

pro-ect activities already completed in an accounting year. #his income is categoried

to 'e received in the local 'an0 account of the %/. +ncome due from international

donor for which the money is to 'e received in ActionAid +nternational office is not

accounted for in the local account. During the year$end process* this needs to 'e

informed to those offices in order to 'e incorporated in there accounts. +ncome due

must properly recorded in the de'tor account.

+n order to accrue e!penditure* the goods or services to 'e received against the

e!penditure must 'e received in the accounting period with the purpose of matching the

e!penditure with the 'udget and for which payment has not 'een made. @hile

considering the accrued e!penditure the followings are to 'e considered 'y ,&F5

@hat are the legal arrangement of the contract and how any disputes arising are to

'e settled

@hether any entitlement to the funding requires a specific performance to 'e

achieved 6a contract or performance related grant:

@hether funds can 'e used for any of the purposes of the organiation* or whether

they can only 'e used for a specific purpose

Accruals e!penditure should not 'e 'oo0ed in the accounts merely to show e!penditureutiliation against the 'udget for that specific period* unless the goods or services have

'een received in that specific period.

@here the incoming resources are received in advance then ActionAid may not have

entitlement to these resources until the goods or services have 'een provided. +n this

situation* incoming resources received in advance should 'e deferred until ActionAid

'ecomes entitled to the resources.

,)-)1)@ Ad$ance and "#e"a.mentAll payments in advance of the current period should 'e recorded as assets until receipt

of the goods or services involved or until contract terms are met. #his e!cludes 1rants

to /artners which should 'e e!pensed in the +ncome and ;!penditure Account.

,owever a separate ledger to 'e maintained to trac0 e!penditure against the advance

made to the partners.

Finance staff ensures that invoices are verified to identify areas where prepayments

may occur. /repayments are considered a standard 'usiness practice for the following

types of transactionsQ em'erships and (u'scriptions* ent* +nsurance /remiums*

/age 34 of 43


36/53

INTERNSHIP REPORT

/ayment to 1overnment Units and equired Deposits. &ther prepayments may 'e

accepta'le only if it is cost 'eneficial. #he location* reputation and other characteristics

of the vendor should 'e ta0en into consideration when ma0ing prepayments as it could

have a 'earing on the a'ility to recover the payment if the vendor defaults in the

delivery of the supply or service.

,)-); Reco#ding of Acco&nting Info#mation in AAB

+n the cash payment section* when any advance is ta0en 'y an individual it is recorded as

de'it. At the time of returning the remaining amount it is recorded as credit. All the

e!penditure is recorded as de'it in the -ournal. #he transaction part of a sample %ash /ayment

and eceipt -ournal in included the appendi! part 6#a'le 3 and :.

AAB maintains two types of vouchers. &ne is for payment and another one is for receipt. At

the time of receipt the all the e!penditure is de'ited along with received amount. #he original

amount that had ta0en as advance is recorded as credit as follows5

&nly payment up to "* ta0a is paid in cash. /ayment a'ove "* ta0a is paid 'y chec0.

For preparing chec0 AAB use a software ,;A1&) which is supplied 'y ,(B%. After

preparing voucher the transactions again recorded in ;!cel which later converted into 3(U)

software for further analysis.

,)-)= Soft!a#e 9sed in Finance 9nit of AAB

,)-)=)( S9N: (U) 6?ersion : is accounting software used 'y most of %ountry

/rograms of ActionAid. (oftware is fully equipped with lot of data recording and

analying tools.

#hrough (U) they can capture5$

(taff wise transactions 6training * advance etc:*

/artner )1& wise transactions 6advance* e!penditure:*

#hemeC (ector wise e!penditure

DonorC funding country wise e!penditure

;!pense incurred on 'ehalf of other county program 2 vice versa

Budget

3(U) is specially designed accounting software for ActionAid which is fully equipped with lot of data

recording and analying tools.

/age 39 of 43


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,)-)=), 7ision: ?ision is reporting software. #hrough this AAB can further analysis

the financial data recordedC processed through (U). +t also gives them the space to

prepare report in time donors requirement. #hey also produce the internal

management reports 6'udget and actual e!penditure: through vision.

In "#ofit o#iented o#gani2ation and also in non "#ofit o#iented o#gani2ation5 accounting

policies are esta'lished 'ased on the organiation need. #he o'-ectives of accounting i.e.

analying and interpreting financial information* preparing financial statements* conducting

audits* designing accounting system* preparing forecasting and 'udgets* and providing ta!

services are same. But it varies in its operational nature with the need of the organiation

whether it is profit oriented or not. For e!ample* most organiations use a standard accounting

software for accounting purpose. But it is not same in all organiationsQ accountants choose

the software according to their organiations need. All )1&s require a financial

management system* however* many small )1&s may only have an accounting or

'oo00eeping system. Accounting or 'oo00eeping are a su'set of financial management. +n

)1&s* financial management systems can 'e 'ro0en down simply into administrative

systems and accounting systems. Administrative systems assist all )1& managers in

decision$ma0ing* planning* communicating* controlling and evaluating. Accounting system is

concerned with identifying financial information* e!pressing the information in numeric terms

and communicating this information to interested parties. An accounting system provides the

framewor0 for wor0ing with financial information.

/age 3 of 43

,)/ CHAPTER FO9R: B&dgeting of Actionaid Banglades


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Budgets have a crucial role to play in strong financial management. For 'udgets to 'e useful*

they must 'e accurate and complete. #hat means that they have to 'e 'ased on a realistic

assessment of the activities that )1&s e!pect to carry out and of how they e!pect to pay for

them.

An important internal control of financial management is the operating and activity 'udget.

#his 'udget includes all monies approved in donor proposals and all activities planned for a

given period of time 6prefera'ly the fiscal year of an organiation:. #he line items in the

'udget should coincide with chart of account line items so that e!penses can easily 'e tagged

to 'udget. +n AAB* 'udget done in accordance with its income. #hey follow ero 'ased

'udgeting. Using a ero$'ased 'udgeting and properly dealing with the difference from month

to month allows AAB to gain total control over every money they spend. +f they spend less

than planned during the year* they can easily redirect that money where they really want it

instead of letting it misused through unfocused spending.

#he parties involved in preparation of 'udget are sector head* finance department* and partner

organiation for partner 'udget. +mportant aspect of 'udgeting of AAB are their three year

rolling 'udgeting process* 'udget responsi'ility and implementation* and yearly 'udgeting

process.

,)/)( T#ee .ea#s #olling *&dgeting "#ocess

AA introduced 3 year rolling plan in 7 which ena'les each AA offices to have medium

view on its program* organiational and funding aspects.

,)/)()( Res"onsi*ilit.

#he regional finance coordinator 6F%: provides guidelines and ta'le formats

annually. +n AAB* Asia finance coordinator provides these formats.

#he ,&F is responsi'le to coordinate the process from providing guidelines to

consolidating AAB 'udget ta'les and su'mit to the region.

Budget holder is responsi'le to formulate the plan and 'udget for the area of

herChis responsi'ility.

Funding 2 fundraising head in colla'oration with the ,&F is responsi'le to

prepare the funding plan for the whole organiation.

#he senior management team is responsi'le to review and approve the

planC'udget as well as plan e!ecution.

/age 38 of 43


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INTERNSHIP REPORT

#he %D in consultation with the ,&F and other concerned line managers

authories supplement planC'udget and or ma0es any ad-ustment when and

where necessary.

#he team leader of reporting and statutory compliance team is responsi'le toreview the coding and import the 'udget into accounting software 6(U):.

,)/)(), Im"lementation

#ime for planning5 (eptem'er every year for 3 year planQ )ovem'er every year

for annual 'udget.

#ime for approval within the country5 &cto'er every year.

/rocess5 the ,&F in consultation with the %D and management team will issue

guidelines for the process every year.

A ma-or review 2 planning process involving larger sta0eholders will 'e

underta0en once every 3 years. +n the years 'etween a minor review and

read-ustment of the plan will 'e done.

,)/), ea#l. *&dgeting "#ocess

For the 'udgeting purpose each sector has given a 'udget range. #hen the finance section

revises the 'udget and finally prepares it.

After completion of the "P7 'udgeting process the reporting and compliance team will

provide formatted 'udgeted e!penditure with codes 6for trac0ing e!penditure: to every units

in the %/ in order to provide their plan of e!penditure across twelve months. #he final

individual 'udget is approved 'y the %D of the %/ and a signed copy is circulated from the

finance. After completion of the monthly 'udget* the 'udget is uploaded 'efore

commencement of the 'udget year.

P#ofito#iented o#gani2ations sell goods or service* so they have revenues and operating cost

that must have to 'e 'udgeted. #hey prepare pro-ected income statements and 'alance sheets.

)on profit oriented organiations prepare cashflow forecast that tells them when receipts and

payments will happen* 'ecause they cannot start spending money on the pro-ect 'efore they

have actually received the cash. #hey also prepare partner 'udget for various pro-ects. (o the

classifications of 'udgets for )1&s are5 Unit 'udget* %ashflow forecast* (alary 'udget*

/ro-ect 'udget. Unit wise 'udget is their master 'udget 'ecause it includes costs* income*

salary* and DAC non DA 'udget.

/age 3= of 43

,)1 CHAPTER FI7E: Taation of Actionaid Banglades


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#a!ation is the system of raising money to finance government. All governments require

payments of money i.e. ta!es from people. But non profit organiations do not have to pay

any ta! for their income from grants. But the employees* who are wor0ing in there* have to

pay ta!es for the incomes they received. ost of the organiations follow ta! deduction at

source. #he suppliers ?A# are also deducted at the time of payment 'y accounts unit of

)1&s.

For the ta!ation purpose in terms of salary of employees of AAB it follows ta! deduction at

income source. #he withholding of #a! and suppliers ?A# are descri'ed in the following

section5

,)1)( 4itolding Ta

#he team leader of payment and cash dis'ursement shall ensure that withholding ta! is

deducted as envisaged in the Bangladesh statutory laws. #he ta! deducted shall 'e deposited

to government treasury every quarter. (Che shall prepare statutoryCta! returns and get it

approved from ,&F to 'e su'mitted to authorities. #he ta! heads are li0e salary ta!* ?A# on

suppliers goods.

#here is no any ta! imposed on )1& income as it is grant. +t is totally ta! e!empted. But

recently Bangladesh government is thin0ing to impose ta! on the income from micro credit

and other small income generated activities of )1&s. But AAB has no any micro credit

scheme.

,)1), S&""lie#s8 7AT

(uppliers ?A# is also deducted at source 'y payment and cash dis'ursement section of AAB

at the time of payment.

#a! is the largest income source for government. For this ta!ation has a crucial role in

"#ofit o#iented o#gani2ation) #hey try to give minimum ta! and sometimes evade ta! so

that they can en-oy most profit. #hey have to give ta! for 'oth the personal and corporate

income. 1overnments impose many types of ta!es for which only profit oriented

organiations are entitled. @hen high ta! rates affect the 'ehavior of profit oriented firms to

pay their corporate ta! 'y evasion* non profit oriented organiations do not have any such

impact.

/age of 43

,); CHAPTER SI: A&diting of Actionaid Banglades


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Auditing is the process inspection and verification of the accuracy of financial

records and statements. /rivate 'usinesses and all levels of government conduct

internal audits of accounting records and procedures. +nternal audits are conducted

'y a firms own personnel to uncover 'oo00eeping errors and also to chec0 the

honesty of employees. An e!ternal audit is used to give the pu'lic a true statement of

a companys financial position. +t is made at least once a year 'y pu'lic accountants

who are not regular employees of the organiation. #he auditors ma0e sure that the

organiation has followed proper accounting procedures in its financial records and

statements. #hey compare the current financial statements with those of the previous

year to determine whether the statements are calculated consistently. +f they are not*

they present a distorted picture of the organiations financial position. #he auditors

also inspect real estate* 'uildings* and other assets to see if their value is overstated.

De'ts and other lia'ilities are chec0ed to see if they have 'een understated.

@hen the auditors are satisfied that the organiations accounts are in order* they

issue a statement certifying that they 'elieve the organiations 'alance sheet*

income statement* and records fairly reflect the organiations financial condition.

#he audit statement is then made pu'lic in the organiations annual report.

>i0e profit and non profit oriented organiation* in AAB 'oth e!ternal and internal

audit is followed. #his chapter discusses the internal and e!ternal audit of AAB*

audit terms of reference* ma-or areas covered 'y each audit* and the process of

recruitment of an e!ternal auditor.

,);)( Inte#nal a&dit

AAB internal audit function is completely independent of the finance function and is

administratively reporta'le to the %D 2 functionally reporta'le to the (# of the %/. #here

core role include5

(trengthening the financial integrity of the organiation.

;nsure compliance with internationalClocal policies and procedures.

/age " of 43


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INTERNSHIP REPORT

%oordinates the outsourced audit to the third parties of %/.

%oordinates the ris0 management of the organiation.

Update the (# and local of the audit issues and follow up the recommendation with

focal person of the %/.

Inte#nal A&dits a#e #e


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INTERNSHIP REPORT

Asset control and payments

Financial reporting* including management accounts* reporting to institutional

donorsCsponsors etc* cost classification* performance measures 6including partners:*

donor relationship management* revolving funds and savings and credit schemes 6if

applica'le:

&ther support functions* including local internal audit function 6if applica'le:* wor0

with partners and partner relations* information technology* compliance with local

laws 6ta! etc:.

A>/( core requirements* including how A>/( core requirements* processes and

standards have 'een implemented and includes appraisals* strategiesC strategic plans*

e!ternal reviews* annual review and reflection processes* annual review and learning

reports

,ow countriesCregions and themes have applied the principles of accounta'ility to

sta0eholders especially to poor and e!cluded groups and their organisations. #his will

include 'udget transparency processes* implementation of open information policy

etc.

Audit report depends on the #& of the organiation. +f e!ternal auditor is appointed to audit

the financial statements of the organiation then they report a'out that. )o ma-or difference

'etween the audit of profita'le and non$profita'le organiation. &nly scope of wor0 may 'e

different. Because in profit oriented organiation auditors have to audit the inventory of the

organiation.

In *ot "#ofit and non "#ofit o#iented o#gani2ations* internal auditing is an

ongoing procedure. #here is no any difference in the appointment procedure of an

e!ternal auditor in profit and non profit oriented organiations* only the regulating

'ody of that particular industry can affect in the recruitment of an auditor. +n case of

)1&s e!ternal auditors should 'e from the approved list of )1& Affairs 'ureau and

internationally reputed firm.

,);)1 Te "#ocess of #ec#&itment of an ete#nal a&dito#:

Accounta'ility* >earning and /lanning (ystem

/age 3 of 43


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INTERNSHIP REPORT

/age of 43

PROCESS A9%IT ACTI7ITIES S&""o#ting %OC9MENTS

"./re$audit

preparations

%hec0 audit #& 6o'-ectives*

scope 2 criteria:

TOR, HR policy, Project Objectives,

Project Logical Framework

/lan audit Audit Plan

Appoint audit team

%ontact audit Audit uestionnaire

/repare wor0 documents

+nitial document review

7.&nsite auditing

activities

&pening meeting

%ollect evidence5

Documents* interviews*

o'servations

Audit team meetings

!"ecklist,

Register o# interviews, Register o#

documents, Register o# observations

Audit findings5

)on$complianceC issue of

concern

Findings

%onclusions

ecommendations

%losing meeting

3.Audit reporting eport Fianl Audit Report and $annagement

Report

,)= CHAPTER SE7EN: Pe#fo#mance E$al&ation 6 Cont#olling of P#o+ects in AAB


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INTERNSHIP REPORT

/erformance evaluation is very important for the organiational goal achievement. #his is true

for 'oth profit and non profit oriented organiations. Because it shows the gap 'etween the

present and future position of an organiation. /erformance evaluation is not directly involved

with the financial management 'ut it has a close lin0 to financial activities. Donors are

financing for the development pro-ects and actually whether their o'-ective is fulfilled or not

can 'e measured 'y performance evaluation.

,)=)( Pe#fo#mance E$al&ation of P#o+ects in AAB

For the evaluation of performances of any proposed pro-ect 'y the partner AAB organies

some field visits to evaluate the performance. After the field visit the visitor have to su'mit a

report to the immediate supervisor. #he partner organiation has to su'mit their financial

report to AAB. All the e!penditures have to shown with appropriate supporting documents

which ensure the e!penditure are properly utilied. #he financial statements of partner

organiation are also monitored to evaluate their performance. AAB also evaluate the

performance of the pro-ect 'ased on the #erms of eference 6#&: of agreement.

Fige (/: Ste"s of Pe#fo#mance E$al&ation of P#o+ects

+n the a'ove figure* only the steps under the 'loc0ed area are maintained to evaluate

performance of pro-ects in AAB.

/age 4 of 43

Feasi*ilit. st&d. fo# monito#ing *. dono#

Ag#eement *et!een dono# and NGO

0ette# of Intent *. dono#

F&nd a""#o$al lette# *. NGO affai#s *ea&

J&a#te#l. financial and "#og#ess #e"o#t to dono# and NGO affai#s *ea&

7isit *. dono# and NGO affai#s *ea& and a&dit

/erformance

;valuation


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,)=), Res"onsi*ilit. fo# te Cont#olling of P#o+ects

#he controlling of various pro-ects is done 'y sector heads. #here are various themes under

each sector. #he theme leader is lia'le to the sector head for the controlling of hisCher theme.

For controlling of pro-ects the terms and conditions of agreement is maintained. egular field

visit is done to see the activities of partners. #he theme leader is lia'le to the sector head

a'out control of the pro-ect. For the controlling of pro-ects the authority matri! is as follows5

Fige (1: Res"onsi*ilit. Mat#i fo# te cont#olling of P#o+ects

,)=)- P#o"osed Pe#fo#mance Measement Reco#d Seet fo# Balanced Sco#eca#d

AAB can improve its performance evaluation and control 'y using a standard evaluation

technique. #he following is a proposed Balanced (corecard for measuring AABs pro-ects

performance evaluation. #his 'alanced scorecard will measure the performance of any pro-ect

from four perspectives. #hey are5 Financial perspective* /artner perspective* +nternal process

perspective* and +nnovation 2 learning perspective.

#he o'-ective of this Balanced (corecard is to ma!imie the service provided to marginalied

people within the constraints of the availa'le finances. AAB will perform 'etter 'y using this

Balanced (corecard in three aspects such as5 it will 'e a'le to provide 'etter service with

limited funds* provide higher output and ma0e the pro-ect very adapting in nature with any

change.

Ta*le (: Pe#fo#mance Measement Reco#d Seet fo# Balanced Sco#eca#d

Ta*le ()(: Financial Pe#s"ecti$e

/age 9 of 43

Co&nt#. %i#ecto#

Secto# Head

Teme 0eade#

P#og#am Office#

Associate P#og#am Office#

Associate /rogram &fficer


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INTERNSHIP REPORT

Mease 4o#3 "#og#ess

/urpose #o measure the percentage of wor0 progress within the

allocated fund for this period.

elates to #he need to fulfill the pro-ect o'-ective

#arget #o provide ma!imum service with minimum fund

Formula )um'er of people participating in the pro-ect #otal fund spent "

Frequency #o 'e measured monthly* to 'e reviewed quarterly

@ho measuresR /ro-ect &fficer

(ource of data onthly financial and field report of the pro-ect

@ho acts on the data /rogram officer* Associate program officer

@hat do they doR ?isit field for monitoring* direct partners to use the resources

efficiently* ensure financial transparency

)otes and comments

Ta*le (),: Pa#tne# Pe#s"ecti$e

Mease Pa#tne# "e#fo#mance

/urpose #o measure the performance of the partner )1&

elates to #he need to trac0 the contri'ution of partner in the pro-ect

o'-ective

#arget +ncrease the partners efficiency

Formula /artners output in the pro-ect

#otal output of the pro-ect "

Frequency #o 'e measured monthly* to 'e reviewed quarterly

@ho measuresR /ro-ect &fficer

(ource of data onthly financial report of the partner* Hualitative report of the

pro-ect

@ho acts on the data /rogram officer* Associate program officer

@hat do they doR ?isit field for monitoring* direct partners to use the resources

efficiently* ensure financial transparency

)otes and comments

Ta*le ()-: Inte#nal P#ocess Pe#s"ecti$e

Mease Se#$ice


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INTERNSHIP REPORT

administrative support

)otes and comments

Ta*le ()/: Inno$ation 6 0ea#ning Pe#s"ecti$e

Mease Em"lo.ee de$elo"ment/urpose #o measure the improvement of the employee

elates to #he need to increase the employee effectiveness

#arget Achieve the pro-ect o'-ective "M on time and if possi'le

perform e!tra ordinary performance

Formula )um'er of employee participating in the training* and cutting

'etter in appraisal

Frequency &nce in a year

@ho measuresR #rainer

(ource of data Appraisal su'mitted 'y the employee

@ho acts on the data (ector head* , head

@hat do they doR %onduct the appraisal of the employee* ta0e necessary action forimprovement

)otes and comments

)ote5 From this four perspective* performance can 'e measured for other criterion* 'ased on the need of the

pro-ect. #his BA>A)%;D (%&;%AD has prepared as a sample 'y which AAB can measure performance of

its pro-ects.

In "#ofit o#iented o#gani2ation5 generally performance is measured 'y ratio analysis. +n case

of )1&s they measure their performance 'y the actual utiliation of pro-ect cost of total cost.#heir attempt is to minimie the support and fundraising cost as well as ma!imiing pro-ect

cost with quality output.

A profit oriented organiation e!ists primarily to generate a profit* that is* to ta0e in more

money than it spends. #he owners can decide to 0eep all the profit themselves* or they can

spend some or all of it on the 'usiness itself. A non profit oriented organiation is organied

under rules that for'id the distri'ution of profits to owners. S/rofitS in this conte!t is a

relatively technical accounting term* related to 'ut not identical with the notion of a surplus of

revenues over e!penditures. (o* there e!ist lots of differences in the activities of these two

types of organiations. +n this chapter* how non profit differ from profit oriented organiation

and how their financial management differ is descri'ed.

,)?)( Ho! does a non"#ofit o#gani2ation diffe# f#om a "#ofit o#iented o#gani2ation

,ere are some of the differences 'etween a nonprofit and a profit oriented organiation5

/age 8 of 43

,)? CHAPTER EIGHT: Ma+o# Findings


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@hen a profit oriented firm starts a 'usiness* it is for the financial 'enefit of its

owners andCor shareholders. /rofit is the goal and the 'usiness pays ta!es on that

profit.

A nonprofit entity has a mission that 'enefits the Sgreater goodS of the community*

society* or the world. +t does not pay ta!es* 'ut it also cannot use its funds for

anything other than the mission for which it was formed.

)onprofit organiations can and do ma0e a profit* 'ut it must 'e used solely for the

operation of the organiation or* in the case of a foundation* granted to other

nonprofit organiations.

@hen a profit oriented organiation goes out of 'usiness* its assets can 'e liquidated

and the proceeds distri'uted to the owners or the shareholders.

@hen a nonprofit goes out of 'usiness* its remaining assets must 'e given to another

nonprofit.

%omparing with profita'le organiation AAB differs in the following areas as a non$

profita'le organiation.

,)?), %iffe#ences *et!een te financial management of non "#ofit o#iented and "#ofit

o#iented o#gani2ation

C#ite#ia P#ofit O#iented

O#gani2ation

Non"#ofit O#iented

O#gani2ation

Po#tfolio of In$estment Different lines of product or

service* with the growth of

the organiation new product

lines add.

Different development

pro-ects* with the growth of

the organiation idea of new

pro-ect initiates* and

possi'ility of getting funds

from donors increases.

Soce of Income %omes from sales or service. All the income is grants from

/age = of 43

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