Hughes implementing ipsas to improve public financial management
Implementing rigorous financial management
-
Upload
forum-for-indonesia -
Category
Government & Nonprofit
-
view
532 -
download
1
Transcript of Implementing rigorous financial management
Implementing rigorous financial
management
April 2015
Authors: David Siregar; Felicia Gunadi; Ghufron Mustaqim
Proprietary of Forum for Indonesia. All rights reserved. No part of this document may be
reproduced in any format without specific writing permission from Forum for Indonesia
Forum for Indonesia 2
Co
pyri
gh
t ©
2014 b
y F
oru
m f
or
Ind
on
esia
David Parlindungan Siregar Biography
Selected organizational experience :
• Badan Perwakilan Mahasiswa FE UI, Vice Chairman
– Badan Perwakilan Mahasiswa is the highest organization in FEUI’s hierarchy
– Successfully establish new constitution & develop integrated e-Vote format to be used in election
– Supervised 34 staffs overall & responsible for coordinating the organizations in FEUI, monitoring
the performance of BEM FEUI and developing a set of student governance regulations
Selected project experience
• Yayasan Gerakan Indonesia Mengajar, Pro Bono Financial Auditor & Consultant
– Support the foundation in assuring the objectivity of financial statement given to the donaturs and
sponsors
• PT Kereta Api Indonesia (Persero) , Business Process & Organization Consultant
– Successfully develop Safety & Security Business Process Framework and Organization
• PT Pertamina (Persero), Joint Venture PMO Consultant
– Manage a JV plant establishment between Pertamina and a Thailand Oil & Gas Company
Selected work experience:
• XL Axiata, Corporate Strategy Specialist
– Strategy & Business Plan Development, Value-Added Project Analysis
• Arghajata Consulting, Consultant
– Corporate Transformation & Organization Enhancement, Business Process Reengineering,
Project Management, Corporate Governance
– Various Industry Exposure: Property, Oil & Gas, Banking, Transportation, Autofinance
• PricewaterhouseCoopers (PwC) , Auditor
– Financial Statement Review & Audit
Education :
• Bachelor of Economics – Accounting, Universitas Indonesia (2008 – 2012)
David is a profesional
specializing in strategy,
governance and
transformation
He has worked and led several
projects, both social and
commercial to achieve their
objectives
He has an ideal of developing
an effective & efficient
entrepreneurship that is
impactful for the society
AUTHOR
Forum for Indonesia 3
Co
pyri
gh
t ©
2014 b
y F
oru
m f
or
Ind
on
esia
Felicia Gunadi Biography
Selected organizational experiences :
• Sekolah Non Formal, Editor-in-chief for yearbook & Volunteer Teacher
– Develop yearbook concept, initiate fundraising, and distribute the yearbook to 5 alumni, 38
members, and 32 students. Voluntarily teach Bahasa Indonesia and English to underprivileged
children .
• AIESEC, Non-corporate team, Organizing Committee of Finance in Environment Project
– Establish partnership with NGOs as Learning Partner and collaborate with exchange
participants from China and Tokyo to run environment project.
• Liga Fotografi, Treasurer
– Manage budget, monthly report, cash flow, and financial activities of 43 members in the
organization.
Selected project experiences :
• PT Telekomunikasi Selular, Internal Control over Financial Reporting (ICOFR) Consultant
– Optimise up to 65% of the existing key control design under Sarbanes-Oxley (SOX)
requirement.
• PT Unilever Indonesia Tbk, Integrated Audit team for 2012 and 2013
– Ensure adherence of its consolidated financial statements, including assess the sales of its
subsidiary (PT Technopia Lever), under IFRS and PSAK.
Selected working experiences :
• PricewaterhouseCoopers (PwC) , Senior Associate
– Provide assurance over the quality of financial information in various industries :
telecommunication, automotive, advertising, transportation, technology, retail and consumer.
• Citibank N.A., Summer Intern
– Ensure the compliance of BAPEPAM Aria Requirements from 17 Selling Agents and 8 Fund
Managers.
Education :
• Bachelor of Economics – Accounting, Universitas Indonesia (2007– 2012)
• Bridging Programme 2008, Singapore Management University
Felicia is organized
professional responsible for
evaluating business process,
control activities, and financial
reporting for public and private
corporations.
She aspires to drive business
process improvement and
enhance performance of small
and medium business sector in
Indonesia.
AUTHOR
Forum for Indonesia 4
Co
pyri
gh
t ©
2014 b
y F
oru
m f
or
Ind
on
esia
Muhammad Ghufron Mustaqim Biography
Selected organizational experience :
• Forum for Indonesia, Co-Founder, Co-Chair, and Executive Director
‒ Develop five year transformation blueprint, design operating model and delivery strategy,
and lead the development of intersector collaboration and social innovation knowledge
‒ Oversee program development and implementation in organzation’s regional chapters
• Rotaract Club in Yogyakarta, Charter Member and President
– Led the implementation of community service, mentored volunteers, and maintaned
professional network with other clubs from inside or outside Indonesia
Selected project experience
• FFI’s Obrolan Sabtu, Founder and Advisor
– Initiated sharing platform that connects students with inspiring professionals or young
leaders to discuss about social innovation. After two years, Obrolan Sabtu has been
delivered 25+ times in 6 different cities—inviting 35+ speakers and attended by 800+
audiences
• Rotaract’s community service in Elementary School in Yogyakarta, Project Manager
– Supported school’s facility and conducted trauma healing for students in local elementary
school impacted by Mount Merapi eruption. This project was delivered in cooperation with
United World College of Italy & Netherland
Selected work experience:
• McKinsey & Company, Consulting Analyst
– Driven mega infrastructure project worth USD 100 million in capex to be completed on
schedule. Analaysed the hydrocarbon maturation of client’s oil and gas field in South
China Sea and forecasted its 10 year production profile
Education :
• Bachelor of Arts – International relations, Universitas Gadjah Mada (2009-2013)
Ghufron is a young leader
committed to improving the
state of Indonesia
His core interests are on
issues related to social
innovation, intersector
collaboration, and political
affairs
AUTHOR
Forum for Indonesia 5
Co
pyri
gh
t ©
2014 b
y F
oru
m f
or
Ind
on
esia
Executive Summary (1/2)
A rigorous implementation of financial management in social projects are very important for
the project’s financial accountability & life-long sustainability
Accountable system and its execution assures the usage of funds coming from the sponsors and
donors
Trustworthy reports coming from accountable system is more likely to enable us gaining funds
from public
Strong financial system prevents any fraudulent actions in all operational level and minimize
operational risk
For one social project to execute a rigorous accountable system, budgeting and accounting
process needs to be done with high discipline
Budgeting process is very crucial in the organization as it will determine resources needed in the
entire year
The budgeting process overall starts with defining the objective and timeline for the budget and
ends with budget controlling
After budgeted, the organization needs to record every financial transaction to ensure
accountability
At the end of accounting cycle, financial statements needs to be released to provide information of
financial position and performance
Financial department needs to analyze the released statements to check the organization’s
healthiness and sustainability going forward
Forum for Indonesia 6
Co
pyri
gh
t ©
2014 b
y F
oru
m f
or
Ind
on
esia
Executive Summary (2/2)
A robust finance organization structure needs to be in place for control and monitoring
purposes
A financial organization structure needs to be in place to support the right governance of the
social project
A simple financial organization structure at least needs to do minimal segregation of duties to
keep the reliability of governance
If multiple location social projects exist, the interaction between each internal finance organization
need to be regulated
After designing simple organization structure, manpower planning needs to be done in order to
execute effectively and efficiently
Monitoring process is one crucial thing to implement an accountable system
Financial processes needs to be controlled & monitored to ensure reliability, efficiency and
effectiveness
To gain a strong financial control, 5 elements need to be implemented following general control
principles
By designing and implementing the financial system described in this document, it is
expected that the organization will become a responsible and professional organization so
that it can focus mainly to deliver its goals efficiently.
Forum for Indonesia 7
Co
pyri
gh
t ©
2014 b
y F
oru
m f
or
Ind
on
esia
Table of contents
Background
Financial Management Processes
Finance Organization Structure & Interaction
Finance Control Mechanism
Conclusion
Forum for Indonesia 8
Co
pyri
gh
t ©
2014 b
y F
oru
m f
or
Ind
on
esia
Table of contents
Background
Financial Management Processes
Finance Organization Structure & Interaction
Finance Control Mechanism
Conclusion
Forum for Indonesia 9
Co
pyri
gh
t ©
2014 b
y F
oru
m f
or
Ind
on
esia
Accountable system and its execution assures the usage of funds
coming from the sponsors and donors
Wit
ho
ut
Pro
pe
r
Fin
an
cia
l S
ys
tem
Wit
h P
rop
er
Fin
an
cia
l S
ys
tem
Improper Acct. Record
Proper Acct. Record
Total
Spending
Spending 1
Spending 2
Spending 3
Total
Spending
Spending 1
Spending 2
Spending 3
Inaccurate Consolidation
Accurate Consolidation
Statement
of Financial
Position
Statement
of Activities
Inappropriate Reporting
Appropriate Reporting
Statement
of Financial
Position
Statement
of Activities X X Unreliable Cash Flow
Reliable Cash Flow
Non-auditable High Probability of Fraud
Auditable High Protection against Fraud Fit for Purpose Spending
Impact
Impact
Forum for Indonesia 10
Co
pyri
gh
t ©
2014 b
y F
oru
m f
or
Ind
on
esia
Trustworthy reports coming from accountable system is more likely to
enable us gaining funds from public
Clear
Mission
& Goals
Share
Similar
Goals
Trust-
worthy
Visible
Impacts
Well
Exposed
Drivers for Public Donation / Sponsorship
Financial System
& Reports
• Vision & Mission Statement
• Short Term & Long Term Plans
Operational & Activity
Reports Activity Reports by Media
• Vision & Mission Statement
• Short Term & Long Term Plans
Rigorous system and frequent reports
shows positive connection with total
numbers of funds sponsored
Forum for Indonesia 11
Co
pyri
gh
t ©
2014 b
y F
oru
m f
or
Ind
on
esia
Strong financial system prevents any fraudulent actions in all
operational level and minimize operational risk
Unguarded by system
Guarded by system
VS
Fraudulent Actions Illustration Risk Exposure Illustration
Protected by system
Financial system creates hurdles for anyone who is willing to
do fraudulent actions.
Rigorous system will also enable us to track investigate any
inappropriate cash disbursement and mismanagement
Management can also mitigate risk
effectively by using strong financial
system, e.g. any liquidity risk will be
identified if right system is applied
Forum for Indonesia 12
Co
pyri
gh
t ©
2014 b
y F
oru
m f
or
Ind
on
esia
Table of contents
Background
Financial Management Processes
Finance Organization Structure & Interaction
Finance Control Mechanism
Conclusion
Forum for Indonesia 13
Co
pyri
gh
t ©
2014 b
y F
oru
m f
or
Ind
on
esia
Budgeting
Process
Financial
Management
Process
Accounting
Process
Financial
Control Mechanism
(refer to last section)
Financial management consists of 3 major processes: budgeting,
accounting and controlling
1
2 3
Forum for Indonesia 14
Co
pyri
gh
t ©
2014 b
y F
oru
m f
or
Ind
on
esia
Budgeting process is very crucial in the organization as it will
determine resources needed in the entire year
1
BUDGET
Operating
budget
Capital
budget
Planning &
Decision Making
Monitoring
& Control
A budget is a quantitative expression of an
entire organization plan for a defined period
of time
Category
Purpose
Definition
Forum for Indonesia 15
Co
pyri
gh
t ©
2014 b
y F
oru
m f
or
Ind
on
esia
The budgeting process overall starts with defining the objective and
timeline for the budget and ends with budget controlling
6.
Final
Budget
7.
Budget
Approval
8.
Budget
Implementation
9.
Budget
Deviation
Analysis
10.
Monitoring
&
Controlling
1.
Budget
Objective
& Timeline
3. Anticipated
Income
4.
Incomes
&
Expenses
Alignment
5.
Cash
Flow
Planning
2.
Expense
Budget
Budgeting
Process
1
Start
To see the detail of budgeting
deliverables, kindly refer to
Appendix 1
Forum for Indonesia 16
Co
pyri
gh
t ©
2014 b
y F
oru
m f
or
Ind
on
esia
After budgeted, the organization needs to record every financial
transaction to ensure accountability…
Definition: Record of financial transactions and information to organization
Purpose of
Accounting
Ensure compliance with laws &
regulations
Anticipate financial issues
Accountability to donors and
sponsors
Manage the use of financial
resources
2
After transactions are accounted for, finance department need to reconcile and
close all the accounting records. Finally these 2 things needs to be done, i.e.
• Produce financial statement
• Conduct financial analysis
Forum for Indonesia 17
Co
pyri
gh
t ©
2014 b
y F
oru
m f
or
Ind
on
esia
…which can be done via 2 methods: direct and indirect
Cash basis
Accrual basis
Method
of accounting
Income is recorded when cash
is actually received
Expenses are recorded when
they are actually paid
Income is recorded when
earned
Expenses are recorded when
incurred
2
Forum for Indonesia 18
Co
pyri
gh
t ©
2014 b
y F
oru
m f
or
Ind
on
esia
At the end of accounting cycle, financial statements needs to be
released to provide information of financial position and performance
2
Financial
Statements
Statement of Financial Position
(“Laporan Posisi Keuangan”)
Statement of Activities
(“Laporan Aktivitas”)
Statement of Cash Flows
(“Laporan Arus Kas”)
Notes to Financial Statements
(“Catatan Atas Laporan Keuangan”)
This statement consists of:
Assets
Liabilities
Net assets
– Independent (Tidak Terikat)
– Dependent (Terikat)
– Temporary (Temporer)
This statement consists of:
Change in Independent Net Assets
– Revenues (Pendapatan)
– Expenses (Beban)
Change in Temporary Dependent Net
Assets
Change in Permanent Dependent Net
Assets
This statement can be produced using:
Direct Method
Indirect Method
The main difference of the 2 methods is on
the cash flow from activities
This statement consists of:
Mandatory disclosure (Notes A – C)
Recommended disclosure (Notes D – F)
To see the detail of financial
statements, kindly refer to
Appendix 2
Forum for Indonesia 19
Co
pyri
gh
t ©
2014 b
y F
oru
m f
or
Ind
on
esia
Financial department needs to analyze the released statements to
check the organization’s healthiness and sustainability going forward
2
Liquidity Ratios
Measure the organization’s
ability to pay for current
obligations or liabilities
Leverage Ratios
Measure the relative mix of
external and internal
provided capital
Coverage Ratios
Measure the ability of the organization’s cash flow to meet its fixed
payment and interest expense commitments
3 Important Financial Ratios to Support Analysis
To see the detail of financial
ratios, kindly refer to
Appendix 2E
Forum for Indonesia 20
Co
pyri
gh
t ©
2014 b
y F
oru
m f
or
Ind
on
esia
Table of contents
Background
Financial Management Processes
Finance Organization Structure & Interaction
Finance Control Mechanism
Conclusion
Forum for Indonesia 21
Co
pyri
gh
t ©
2014 b
y F
oru
m f
or
Ind
on
esia
Tertarik mempelajari lebih lanjut
atau ingin agar Forum for
Indonesia memberikan workshop
tentang financial management
untuk organisasi Anda?
Silahkan hubungi kami di
ceritakan bagaimana kami dapat
membantu Anda!