FINANCIAL MANAGEMENT POLICY (FINANCIAL OPERATION MANUAL)€¦ · THE PETTY CASH FUND Creation of...

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Proposed by JADE M. MONTERO

FINANCIAL MANAGEMENT POLICY

(FINANCIAL OPERATION MANUAL)

CHAPTER I

Declaration of Objectives. It is the objective of the association to adopt this Financial Policy or

Financial Operation Manual:

a. To exercise prudence in all its financial transactions;

b. To maintain a healthy financial condition;

c. To set up checks and balances in all its transactions; and

d. To protect the general membership from unscrupulous practices of the Board and Officers of

the association.

Definition of Terms. The following terms shall be defined liberally.

a. Association refers to Pag-ibig Citihomes Phase 2 Homeowners’ Association, Inc. (PICHOA-

2);

b. Audit & Inventory Committee refers to the committee created by the association to

conduct audit of the association’s businesses, practices and operation;

c. External Auditor refers to the person or agency hired by the association to conduct audit of

association’s businesses, practices and operation;

d. Financial Management Committee refers to the committee created by the association as

the coordinating body of the association involving financial matters including those involving

external institutions;

e. Membership Dues refers to the amount levied by the Association, as provided in the

Association’s By-Laws, from its members on a monthly basis to defray the operational cost of

the Association;1

f. Membership Fee refers to the amount paid, as provided in the Association’s By-Laws, by an

individual applying for membership in the Association, which is paid only once;

g. Net Surplus refers to the excess of the revenues of the association after deducting official

expenditures incurred in the conduct of business, which is subject for allocation to various

funds of the association;

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CHAPTER II

FUND MANAGEMENT

Classification of Funds. The association shall create and maintain a General Reserve Fund, a

Special Reserve Fund, and a Petty Cash Fund.

Allocation of Net Surplus. The annual Net Suplus shall be allocated in the following manner:

a. Sixty percent (60%) for General Reserve Fund, and

b. Forty percent (40%) for Special Reserve Fund.

Allocation of Membership Fee. The membership fee collection shall automatically form part of

the Special Reserve Fund

Custodian of Official Receipts/Books of Accounts. The custodian of the Official Receipts of

the association shall be the Treasurer. The Board, however, can assign, through a resolution, somebody

from the Board as custodian of the Official Receipts.

The Books of Accounts of the association shall be kept and maintained by the Treasurer.

Approving Authority/ies. The Board shall pass a Board Resolution specifying the approving

authority/ies with corresponding amount for all the association’s financial transactions, provided,

however, such authorities shall not run in contrast to the provisions in Chapter 3, Paragraph 3-C of this

manual.

Reimbursement Expense Receipt (RER). The Reimbursement Expense Receipt (RER) shall

be used in instances that seller or service provider does not have an Official Receipt or Temporary

Receipt, provided, however, it shall be used for expenses of not more than P500.00.

CHAPTER III

THE GENERAL RESERVE FUND

Creation General Reserve Fund. The association shall create a General Reserve Fund to

finance the regular or routine activities of the association.

Purpose/Use of General Reserve Fund. The General Reserve Fund shall be used for the

following purposes:

a. To finance Administrative Cost of the association;

b. To finance Maintenance Cost of the association;

c. To finance Project/Program Cost of the association; and

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d. To finance Miscellaneous Expenses of the association.

Disbursement Procedure of General Reserve Fund. The General Reserve Fund shall be

disbursed through the issuance of a cheque.

The following process shall be observed in the disbursement of General Reserve Fund:

a. Filing of Requisition and Issuance Slip (RIS);

b. Conduct of Bidding or canvass;

c. Filing of Board Resolution, if requested amount is more than P1,500.00;

d. Approval of the RIS;

e. Preparation of Check Voucher; and

f. Issuance and acceptance of Cheque.

Liquidation of General Reserve Fund. The money disbursed from the General Reserve Fund

shall be liquidated within 15 calendar days from the date of fund disbursement.

The following documents shall be submitted during the liquidation:

a. Official Receipt;

b. Report of Inspection; and

c. Certificate of Acceptance

CHAPTER IV

THE SPECIAL RESERVE FUND

Creation Special Reserve Fund. The association shall create a Special Reserve Fund to

finance its special projects and programs.

Purpose/Use of Special Reserve Fund. The association shall only use the Special Reserve

Fund for the following purposes:

a. To fund rescue and emergency programs or activities;

b. To fund purchase of rescue and emergency tools and equipments; and

c. To provide seed capital for income-generating projects;

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Disbursement Procedure of Special Reserve Fund. The Special Reserve Fund shall be

disbursed through the issuance of a cheque.

The following process shall be observed in the disbursement of Special Reserve Fund:


b. Conduct of Bidding or canvass;

c. Filing of Board Resolution approving the amount to be released and specifying its intended

purpose;

d. Filing of General Assembly Resolution approving the amount to be released and specifying its

intended purpose;

e. Preparation of Check Voucher; and

f. Issuance and acceptance of Cheque.

Liquidation of Special Reserve Fund. The money disbursed from the Special Reserve Fund

shall be liquidated within 45 calendar days from the date of issuance of cheque.

The following documents shall be submitted during the liquidation:


b. Report of Inspection; and

c. Certificate of Acceptance.

CHAPTER V

THE PETTY CASH FUND

Creation of Petty Cash Fund. The association shall set up a P1,000.00 Petty Cash Fund to

finance its day-to-day operation/administrative expenses. The fund shall come from the General Reserve

Fund.

Purpose/Use of Petty Cash Fund. The Petty Cash Fund shall be used to pay for expenses of

not more than P500.00 per transaction. The fund shall be used for the following purposes, among others:

a. To pay for the purchase of office supplies;

b. To pay for reproduction/photocopy costs;

c. To pay for transportation expenses;

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d. To pay for communication expenses; and

e. To pay for meals/snacks.

Disbursement Procedure of Petty Cash Fund. The Petty Cash Fund shall be disbursed in the

form of cash.

The following process shall be observed in the disbursement of Petty Cash Fund:


b. Conduct of Canvass;

c. Preparation and approval of Petty Cash Voucher; and

d. Disbursement of cash.

Liquidation of Petty Cash Fund. The Petty Cash Fund shall be liquidated within 7 days from

the date of disbursement of cash.

The following documents shall be submitted during the liquidation;


b. Certificate of Acceptance;

c. Report of Inspection;

d. Travel Expense Statement or Fare Tickets; and

e. Reimbursement Expense Receipt.

Replenishment of Petty Cash Fund. The Petty Cash Fund shall be replenished, provided that

its disbursement has reached 70%, through the issuance of a cheque.

Petty Cash Fund Custodian. The petty cash custodian shall be the treasurer of the association

or any person duly authorized by the Board though the passage of Board Resolution.

CHAPTER VI

BANK ACCOUNT

Opening of Bank Account. The association shall open a Current/Checking Account in the name

of the association.

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Authorized Signatories for the Bank Account. The association shall designate authorized

signatories for the association’s bank account.

Deposit Withdrawal. Withdrawal of deposit shall be in the form of cheque. A cheque voucher

shall accompany issuance of cheque.

CHAPTER VII

THE ASSOCIATION BUDGET

Preparation and Adoption of Annual Budget. The Financial Management Committee shall

prepare an Annual Budget to be presented during the Annual General Assembly. The General Assembly

shall approved and adopt the Annual Budget during the General Assembly.

Use of Annual Budget. The association’s financial transactions shall be based on the budget as

approved and adopted by the General Assembly through a General Assembly Resolution.

Budget Reallocation/Diversion. Any reallocation or diversion of financial resources from the

approved budget shall be approved by the Board through a Board Resolution; provided, however, that

such reallocation or diversion shall not exceed P3,000.00.

Reallocation or diversion of financial resources from the approved budget of more than P3,000.00

shall be approved by the General Assembly through General Assembly Resolution.

CHAPTER VIII

THE FINANCIAL REPORT

Preparation of Financial Report. The Association’s treasurer shall prepare interim financial

report, cash report and bank reconciliation report.

Frequency of Preparation of Financial Report. The following financial reports shall be

prepared and presented to the Board as stated below:

a. Statement of Operation shall be prepared and presented every month during the Regular

Board Meeting;

b. Statement of Condition shall be prepared and presented every quarter during the Regular

Board Meeting;

c. Cash Report shall be prepared and presented every month during the Regular Board

Meeting;

d. Bank reconciliation report shall be prepared and presented every month during the Regular

Board Meeting;

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e. Internally Audited Quarterly Financial Statement shall be prepared and reported to the Board

a month after the end of each quarter;

f. Internally Audited Financial Statements shall be prepared and reported a month after the end

of the 1st semester to the General Assembly; and

g. Audited Financial Statement shall be presented during the Annual General Assembly.

Publication of Financial Report. Financial Reports shall be posted in Bulletin Boards and on-

line publications.

CHAPTER IX

SECURITY BOND OF ACCOUNTABLE OFFICERS

Posting of Security Bond. Accountable offices shall post fidelity bond as may be determined

by the Board.

CHAPTER X

AUDIT

Frequency of Audit. The Audit and Inventory Committee shall audit the association every

quarter and shall report an audited Financial Statement and/or audit report to the Board which shall

report such to the association members.

Scope of Audit. The audit shall determine the financial health of the association. It shall cover

the following areas, among others:

a. Cash Position of the association;

b. Adherences to and/or deviations from the association’s rules and procedures;

c. Physical audit of properties, accountable forms/documents of the association; and

d. Effectiveness of the association’s financial control systems.

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CHAPTER XI

FINAL PROVISIONS

Effectivity. This Policy shall take effect upon the approval of the Board and ratification of the

majority of members in good standing.

Amendment. The Board and/or ten percent (10%) of members in good standing can introduce

amendment/s, in whole or in part, to this Policy, provided, however, such amendment/s shall be ratified

by the majority of members in good standing of the General Assembly.

ADOPTED by THE BOARD, this _______ day of _________ 2012, Malanang, Opol, Misamis

Oriental.

RATIFIED by PHASE 2 HOA’s GENERAL ASSEMBLY, this _______ day of _________ 2012,

Malanang, Opol, Misamis Oriental.

Certified true and correct:

Board Secretary

Attested by:

President/Presiding Officer

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ANNEX A

THE REQUISITION AND ISSUE SLIP

Request for supplies, etc. will be filed in the REQUISITION AND ISSUE SLIP (RIS). The RIS can

be purchased from Office Supplies Stores.

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ANNEX B

THE PRICE QUOTATION FORM

The Price Quotation Form will be used to canvass services/items needed by the association that

are priced more than the amount allowed in the Petty Cash Fund.

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ANNEX C

THE CANVASS SHEET FOR PETTY CASH FUND

For expenses that are to be paid by the Petty Cash Fund, the CANVASS SHEET FOR PETTY CASH

FUND will be used. This doesn’t require the Price Quotation Form, and telephone canvass is allowed.

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ANNEX D

THE CERTIFICATE OF ACCEPTANCE

The CERTIFICATE OF ACCEPTANCE will be used to certify the acceptance of the services

rendered or the delivery of the items purchased by the association. The Certificate will be issued by the

association officer who is in-charged in the acceptance of such items/services.

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ANNEX E

THE CERTIFICATE OF INSPECTION

The Certificate of Inspection will be issued by the association officer who inspected the delivery

of items purchased or who inspected the services rendered by the service provider. This is to ascertain

that the association is not short-changed in the transaction.

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ANNEX F

THE TRAVEL EXPENSE STATEMENT

The Travel Expense Statement will be used for documenting travel expenses of officers, staff, or

members of the association which are paid by Petty Cash Fund. This will be used for travel expenses

where trip tickets are impossible to secure. But this can’t be used for liquidation of taxi, airplane, ferry,

bus fare and the like.

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ANNEX G

THE REIMBURSEMENT EXPENSE RECEIPT (RER)

The Reimbursement Expense Receipt (RER) will be used for expenses of not more than P500.00

which the buyer has difficulty of securing an Official Receipt i.e. purchases of fish from wet market, taxi

fare (if taxi has no O.R. but this is totally discouraged), photocopy, etc.

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ANNEX H

THE PETTY CASH VOUCHER

The Petty Cash Voucher will be used for request funds to purchase items or to contract services

of service providers that are within the limit of Petty Cash Fund. This will be filled out during the time of

Cash Advance and will be completely filled out once the liquidation of such expenses is already

submitted.

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ANNEX I

THE CHECK VOUCHER

The Check Voucher will be used for the issuance of check. It would also be good if a photocopy

of the check will be attached to the voucher pending the return of the used check by the association’s

depository bank.

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