Standard Operating Procedure. For. Financial Resources Management (CU/SOP/FIND/24)

Transcription

1 CHUKA UNIVERSITY Standard Operating Procedure For Financial Resources Management (CU/SOP/FIND/24) Document Review Sheet The signatures below certify that this Standard Operating Procedure has been reviewed and accepted, and demonstrates that the signatories are aware of all the requirements contained herein and are committed to ensuring their provision. Action Name & Signature Position Date Prepared by John K. Thuranira Finance Officer (Ag) Reviewed by Prof. D. K. Isutsa Deputy Vice-Chancellor (ARSA)/ISO MR Approved by Prof. E. N. Njoka Vice-Chancellor Controlled Copy: Circulation Authorized by the Management Representative. Page 1 of 21

2 CONTENTS DOCUMENT REVIEW SHEET AMENDMENT RECORD GENERAL Purpose Scope References Abbreviations Definitions Responsibility ADMINISTRATIVE STRUCTURE PROCESSES Overview Process for Accounting for Income Process for Processing of Payments Process for Budgeting Process Process for Imprest Processing and Surrender Process for Preparing Financial Accounts and Audit Reports RECORDS KEY PERFORMANCE INDICATORS/QUALITY OBJECTIVES Key Performance Indicators Quality Objectives 12 RISK AND OPPORTUNITIES REGISTER 16 APPENDIX I: PROCESS MAPS...17 Controlled Copy: Circulation Authorized by the Management Representative. Page 2 of 21

3 1.0 AMENDMENT RECORD This Standard Operating Procedure is reviewed regularly to ensure relevance to the systems and process that it defines. A record of contextual additions or omissions is given below. Amendment Record Sheet Amendment Date Issue No. Revision No. Page No. Subject of Review /Modification Revised By Approved By Controlled Copy: Circulation Authorized by the Management Representative. Page 3 of 21

4 2.0 GENERAL 2.1 Purpose The purpose of this procedure is to ensure that the activities of the Finance Department are in compliance with the International Standard and the CU s and the Government s statutory policies, procedures, International Accounting Standards and other regulations. 2.2 Scope This procedure applies to and defines the activities carried out by the Finance Department. 2.3 References CU Charter, 2013 CU Statutes, 2014 CU Strategic Plan, Government and Management Circulars International Accounting Standards ISO 9001:2015 International Standard, Clauses 4 to 10 CU ISO Quality Management System Manual, 2017 Public Audit Act, Cap 412 Public Procurement and Disposal Act, 2015 State Corporations Act, Cap Abbreviations AAC Assistant Accountant. AC Accounts Clerk ACC Accountant. FO Finance Officer IAS International Accounting Standards. SAA Senior Accounts Assistant 2.5 Definitions Ledger: A book in which the monetary transactions are posted in the form of debits and credits. Payment Voucher: A document containing summary of details for a specific payment. 2.6 Responsibility The Head of Finance Department has the primary responsibility of ensuring that this procedure is implemented and remains adequate for its intended purpose and for providing the information from which the documentation for its processes can be compiled and for initiating action to keep them up to date. All departmental staff members are responsible for implementing and ensuring that this procedure is followed. 3.0 ADMINISTRATIVE STRUCTURE Finance Department is one of the sections in the Division of Administration, Finance, Planning & Development of the University. The Department s administrative structure is as follows: Controlled Copy: Circulation Authorized by the Management Representative. Page 4 of 21

5 CU/SOP/FIND/24 30 th August, STANDARD OPERATING PROCEDURE FOR FINANCIAL MANAGEMENT VICE-CHANCELLOR/VC/CEO DEPUTY VICE-CHANCELLOR (ADMINISTRATION, FINANCE, PLANNING & DEVELOPMENT) FINANCE OFFICER DEPUTY FINANCE OFFICER SENIOR ACCOUNTANT OPERATIONS, EXPENDITURE AND BUDGETARY CONTROL DEPARTMENT ACCOUNTANT INCOME AND FINANCIAL ANALYSIS DEPARTMENT ACCOUNTANT Cash Office & Bank Reconciliation 1 AAC, 2 SAA 2 AA, 1 AC Creditors, Imprest and Vote Control 1 AA, 1 AC Examination of documents 2 SAA Payroll 1 SAA 1 AA Final Accts and Mgt Reports (1 ACC) Assets Mgt 1 AA 1 AC IGU 1 SAA 1 AA LEGEND: AAC = ASSISTANT ACCOUNTANT SAA = SENIOR ACCOUNTS ASSISTANT ACC = ACCOUNTANT AA = ACCOUNTS ASSISTANT AC = ACCOUNTS CLERK Student Finance 1 AAC, 1 SAA 1 AA Controlled Copy: Circulation Authorized by the Management Representative. Page 5 of 21

6 4.0 PROCESSES 4.1 Overview The Finance Department is responsible for the University s activities related to finances. The core activities of the office include: (i) Accounting for Income (ii) Processing of Payments (iii) Budgeting Process (iv) Imprest Processing and Surrender (v) Preparing Financial Accounts and Audit Reports 4.2 Process for Accounting for Income Source ISO Departments; Government; CU/SOP/VCIM/01; CU/SOP/DVCF/ Required inputs Income source Standards and guidelines Resource persons (Experts) Expected outputs Receipt Income reports Receivers ISO Departments; Other payees Procedure details No. Description Output Responsibility 1. The customer deposits income in the Bank in slip Finance Officer appropriate University bank accounts and is verified. Customers include students, bidders and the Government 2. Preparation and issuance of receipts for the receipt Accounts Assistant income paid by RTGS, cash, bankers and CDF cheques upon presentation of the banking slip 3. Recording of the collections in the relevant Cash summary Cashier Cash and Deposits registers /cashbook 4. Balancing and verification of the receipts written and coded using Daily Cash Summary Report from the Computerised System. Cash summary Accountant 5. Verification of the receipts in the System and processing cashbook statements. Cashbook statement Accountant Controlled Copy: Circulation Authorized by the Management Representative. Page 6 of 21

7 6. Preparation of bank reconciliation on a monthly basis to confirm that all receipts have been accounted for and ascertain status of banking 7. Post the income into the respective ledgers and General Ledger 4.3 Process for Processing of Payments Source ISO Departments; CU/SOP/PROD/25; other payees Required inputs Invoices Supporting documents Standards and guidelines Resource persons (Experts) Financial budget Expected outputs Signed cheques Payment vouchers Receivers ISO Departments; Other payees Bank reconciliation report General ledger report in the system Accountant Accountant Procedure details No. Description Output Responsibility 1. Receipt of paying documents i.e. invoices, GRNs, LPOs, delivery notes and duly approved claims by creditors as follows: Completeness of paying documents Procurement Officer (a) Suppliers: GRNs, Delivery Note, Requisitions, LPOs and Invoices. (b) Teaching claims: duly approved claims, appointment letters, and attendance sheets. (c) Other Claims: duly signed/ approved and detailing expenditure incurred. (d) Imprest: duly signed and approved imprest warrants and supporting documents. 2. Confirmation of the required documents and Completeness of Creditor Section appropriate approvals 3. Preparation of the payment voucher and cheque printing in computerised system (a) Withheld tax & PAYE are retained paying documents Printed cheque, payment voucher Creditors section Controlled Copy: Circulation Authorized by the Management Representative. Page 7 of 21

8 4. Examination and endorsement of the payment vouchers for amounts and coding 5. Recording the documents and forwarding to internal auditor for verification 6. Receiving from internal auditor, recording the documents and forwarding to at least two authorised signatories 7. Issuance of the cheques to the payees upon identification Validity of payment Cheque movement register Cheques register Cheque issuance register Examination section/fo Clerk Clerk Clerk 4.4. Process for Budgeting Process Source Government; MoE; CU/SOP/VCIM/01; CU/SOP/DVCF/ Required inputs Departmental budget proposals Standards and guidelines Resource persons (Experts) Expected outputs Approved budget estimates Receivers Government; MoE; CU/SOP/VCIM/01; CU/SOP/DVCF/02; ISO Departments Procedure details No. Description Output Responsibility 1 Proposed departmental budgets for the Forwarding memos HODs following financial year are prepared in accordance with management and government guidelines and submitted 2 Consolidation of all anticipated income and Proposed university FO expenditures into the various expenditure and income votes to prepare a proposed University budget. budget 3 The proposed budget is presented to the Management FO Management for discussion and approval. 4 Presentation of the proposed budget to the Finance, Farms, General Purpose and Enterprise Company Committee and the University Council for discussion and consideration of approval. minutes Approved budget estimates VC/CEO Controlled Copy: Circulation Authorized by the Management Representative. Page 8 of 21

9 5 Submission of the University budget to the Ministry of Education and the National Treasury by the due dates 6 The Government releases the approved budgetary estimates before end of June of every year to the University 7 Submission of the rationalised budget to the University Council for final discussion and approval. 8. The Management allocates the budget to various vote holders and Departments for implementation and control. 9. The allocated budget is issued to the Departments for use in making requisitions 4.5. Process for Imprest Processing and Surrender Source ISO Departments; employees; CU/SOP/RADP/ Required inputs Need identification Imprest request form Standards and guidelines Resource persons (Experts) Financial budget Expected outputs Approved imprest Fully surrendered imprest Forwarding letter/memo Budget estimates Approved budget estimates Council minutes Allocation schedule Notification of allocated budget VC/CEO National Treasury/Ministry of Education VC/CEO/FO FO FO Receivers Top Management; CU/SOP/CVIM/01; CU/SOP/DVCF/02; CU/SOP/IAUD/ Procedure details No. Description Output Responsibility 1 The user submits and application letter by explaining the purpose for an imprest, which if valid is approved Approval letter Vice- Chancellor/Deputy Vice-Chancellors 2 An applicant raises an imprest warrant Imprest warrant User supported by the approved letter 3 Forwarding of imprest warrant to vote book section to confirm availability of funds Expenditure approval Vote book section Controlled Copy: Circulation Authorized by the Management Representative. Page 9 of 21

10 4 Debtors section confirms that the applicant has no outstanding imprest and that the warrant is properly authorised 5 Accountants process the payment once approval is granted from debtors section 6 After accomplishing the task for which the imprest was requested, the applicant prepares an imprest surrender form and attaches a copy of the approved memo and receipts to account for expenditure within one month. a) Applicant requests reimbursement via a letter in case over-expenditure is incurred b) If there is under-expenditure, the applicant banks the balance in the relevant CU bank account before processing the imprest surrender. 7 The surrender form is authorized by the HOD, approved by the Registrar (A&P) and finally checked by the Internal Auditor. 8 Debtor staff assigns a surrender number generated by the computerized accounting system to the surrender form and the relevant journal entries are captured. (a) The applicant is no longer held as a debtor to the University 9 A list is compiled of imprest defaulters, within stipulated period, and send to salaries section to recover from the payroll. Payment processing Cheque Surrender form Approved surrender form Surrender statement Debtor list Debtors section Accountant Imprest holder HOD/Registrar (AP) and Internal Auditor Accountant Debtors section 4.6 Process for Preparing Financial Accounts and Audit Reports Source Government; MoE; CU/SOP/VCIM/01; CU/SOP/DVCF/ Required inputs Standards and guidelines Resource persons (Experts Stock sheets Fixed asset register Expected outputs Financial statements Controlled Copy: Circulation Authorized by the Management Representative. Page 10 of 21

11 4.6.4 Receivers Government; MoE; Council; CU/SOP/VCIM/01; CU/SOP/DVCF/ Procedure details No. Description Output Responsibility 1 Capturing and recording data on income and General ledger Accountants expenditure into various books of account 2 End of the year stock taking to ascertain the Stock take sheets Accountants value of inventory is done at the end of every financial year 3 Checking various IGUs accounts to ascertain IGUs income Accountants profits as at the closure of financial year statements 4 Submission and presentation of a complete Management Finance Officer set of accounts to the University minutes Management for discussion 5 Submission and presentation of the Annual Report and Financial Statements to the Council for discussion and approval 6 Submission of approved accounts to Auditor General to prepare for audit as required by the Exchequer and Audit Act (2003). 7 After Audit accounts are submitted to the Ministry of Education & National Treasury. Approved financial statements Audited accounts 5.0 RECORDS (i) Memos (ii) CDF/Sponsors notifications (iii) HELB notifications (iv) Online bank statements (v) Cheques (vi) Bank statements and bank reconciliation statements (vii) Project payment certificates (viii) Payment vouchers (ix) Fixed asset register and stock-take schedules (x) Creditor s ledger and debtors ledger 6.0 KEY PERFORMANCE INDICATORS/OBJECTIVES 6.1. Indicators Annual and Quarterly Minutes, Statements, Reports Budgetary allocation Project completion and payments VC/CEO VC/CEO/Auditor General Finance Officer Controlled Copy: Circulation Authorized by the Management Representative. Page 11 of 21

12 6.2. Quality Objectives Linked Strategic Objective(s) SO 15: Institution of Prudent Management of Financial Resources SO 27: Compliance with Statutory Requirements Quality Objective 1. To prepare and submit annual financial statements by 30 th September after the closure of every Financial Year to the Auditor General s Office, and quarterly financial reports by 15 th day after the end of every quarter to the National Treasury Strategies Improve financial management systems Reconcile and compile financial records regularly RESPONSIBILITY RESOURCES TIMELINE MEASURE OF REQUIRED SUCCESS (KPIs) Finance Officer Expenditure documents Annually Submitted annual Income documents financial statements Review dates: Quarterly Linked Strategic Objective(s) SO 14: Expansion of the University s Financial Resource Base SO 15: Institution of Prudent Management of Financial Resources SO 27: Compliance with Statutory Requirements Quality Objective 2. To prepare and submit the University budget to the National Treasury by 31 st January of every Financial Year. Strategies Rationalization of budgets for all the budgeted activities Request for submission of proposed departmental budgets Consolidate the departmental budgets into the corporate budget RESPONSIBILITY RESOURCES TIMELINE MEASURE OF REQUIRED SUCCESS (KPIs) Finance Officer Accountants 31 st January Submit the University Head of Departments annually budget Review dates: Quarterly Linked Strategic Objective(s) SO 24: Development and Projection of a Positive Image of the University SO 27: Compliance with Statutory Requirements Quality Objective 3. To ensure that all approved payment requests from Procurement Department are processed within two days from the date of receipt and the customers get their payments within seven days from the date of signing. Strategies Monitor payment logs on a daily basis Scrutinize supportive documents and process as appropriate Controlled Copy: Circulation Authorized by the Management Representative. Page 12 of 21

13 RESPONSIBILITY Finance Officer Auditors Procurement Officers RESOURCES REQUIRED Payment requests Testimonials for payments TIMELINE MEASURE OF SUCCESS (KPIs) 7 days from Processed payment the date of requests signing Review dates: Weekly Linked Strategic Objective(s) SO 24: Development and Projection of a Positive Image of the University SO 27: Compliance with Statutory Requirements SO 30: Development of Motivated Staff Quality Objective 4. To process all approved Pay Change Advices from the Registrar (Administration & Planning) and pay staff salaries by 2 nd day of the following month. Strategies Monitor submitted PCAs each day, verify validity and approvals and process RESPONSIBILITY Finance Officer Registrar (A & P) RESOURCES REQUIRED PCAs Testimonials TIMELINE MEASURE OF SUCCESS (KPIs) 2 nd day of Paid PCAs the next month Review dates: Daily Linked Strategic Objective(s) SO 24: Development and Projection of a Positive Image of the University SO 27: Compliance with Statutory Requirements Quality Objective 5. To attend to all audit queries within 3 days after receipt of queries from the external auditor. Strategies Monitor income and expenditure (cash flow) regularly Implement prioritised projects Settle approved invoices as stipulated Perform follow-up activities and ascertain closure RESPONSIBILITY RESOURCES REQUIRED TIMELINE MEASURE OF SUCCESS (KPIs) Finance Officer Audit queries Weekly Resolved audit queries PFMA/Finance Manual Review dates: Daily Linked Strategic Objective(s) SO 15: Institution of Prudent Management of Financial Resources SO 27: Compliance with Statutory Requirements Quality Objective 6. To ensure that the University approved budget is adhered to and absorbed 100% every Financial Year to satisfy customer requirements. Controlled Copy: Circulation Authorized by the Management Representative. Page 13 of 21

14 Strategies Train staff in financial management practices and requirements Sensitized staff on allocated budget and procedures for absorption RESPONSIBILITY RESOURCES TIMELINE MEASURE OF Finance Officer DVC (AFPD) REQUIRED Training facilitation budget Training experts Training programme Stationery Annually SUCCESS (KPIs) Trained staff Absorbed budget Training report Review dates: Quarterly Linked Strategic Objective(s) SO 15: Institution of Prudent Management of Financial Resources SO 24: Development and Projection of a Positive Image of the University SO 27: Compliance with Statutory Requirements Quality Objective 7. To continuously adopt and implement Financial Accounting Standards and Practices (FASP) in the preparation of financial statements annually. Strategies Train Finance staff in FASP Develop and regularly update the Finance manual RESPONSIBILITY Finance Officer DVC (AFPD) RESOURCES REQUIRED Training facilitation budget, experts, programme Stationery TIMELINE MEASURE OF SUCCESS (KPIs) Annually Statements prepared following FASP and with no errors Review dates: Semi-annually Linked Strategic Objective(s) SO 15: Institution of Prudent Management of Financial Resources SO 24: Development and Projection of a Positive Image of the University SO 27: Compliance with Statutory Requirements Quality Objective 8. To respond to all customer complaints within one (1) week from time of receipt. Strategies Monitor customer complaints daily Assign complaints to Departmental investigators Review reports, statements and finings and prepare response Dispatch responses promptly RESPONSIBILITY Finance Officer Review dates: RESOURCES REQUIRED Complaint document or info Public Complaints Policy Weekly TIMELINE MEASURE OF SUCCESS (KPIs) Annually Number of resolved complaints Controlled Copy: Circulation Authorized by the Management Representative. Page 14 of 21

15 Linked Strategic Objective(s) SO 24: Development and Projection of a Positive Image of the University SO 25: Maintenance and Improvement of Quality Assurance SO 26: Improvement of Productivity, Efficiency and Effectiveness SO 27: Compliance with Statutory Requirements Quality Objective 9. To continuously update the University s asset register to safeguard against loss Strategies Generate codes/signage for new assets Value assets annually Affix tags with tagging codes on the assets regularly RESPONSIBILITY RESOURCES TIMELINE MEASURE OF Finance Officer Procurement Officer Review dates: REQUIRED Tags for assets Serial numbers/codes register Monthly Annually SUCCESS (KPIs) Number of tagged and inventoried assets Department: Finance Project Name: Financial Management. Code Name: CU/SOP/FIND/24 SN Risk Source (How can the risk occur) Impact (What is the impact of the risk occurring) 1 Payment of Failure to vet documents Loss of funds fictitious claims Collusion to defraud 2 Loss of cash in transit Theft Failure to fulfil projects/ financial obligations 3 Theft of cash in Fraud/Collusion Loss of funds office Weak security measures 4 Inflation General increase of prices of Loss of value of money 5 Failure to meet statutory deadlines goods and services Delays in availing of data Heavy penalties Litigations Controlled Copy: Circulation Authorized by the Management Representative. Page 15 of 21

16 Risk name/ description Payment of fictitious expenses Document Ref.: Issue Date: CU/SOP/FIND/24 30 th August, STANDARD OPERATING PROCEDURE FOR FINANCIAL MANAGEMENT RISK AND OPPORTUNITIES REGISTER Note for monitoring, the responses are: What = risk described. Why = prevent/correct consequence. How = mitigations/controls. Who = risk owner. Risk Consequences Raw Risk Mitigations/ Controls Likelihood Consequence Raw Risk (Opportunities source) (L) (C) (L x C) Risk Owner Monitoring Loss of income Thorough examination of FO all documents before payment Loss of cash in transit Theft of cash in the office Inflation Failure to meet statutory deadlines Low/poor capitation Legal suits Failure to meet financial obligations Escort of cash in transit Impromptu checks on cashiers and guards Cashless transactions Provision of insurance Loss of income Impromptu check on safe keeping practices Depreciation, high prices Penalties Litigation Failure/inability to deliver business Opening a foreign currency account Strict adherence to statutory deadlines Develop alternative sources of income FO FO FO FO Resource Mobilization Office What: Fictitious payment When: Continuously Who: FO How: Strengthening exam section What: Number of cases reported When: Continuously Who: FO How: Strengthen exam section What: Number of cases reported When: Check continuously Who: FO How: Strengthen internal controls What: Foreign currency use When: Continuously Who: FO How: Making payment as per the invoice currency What: Statutory payments When: Continuously Who: FO How: Sensitization What: Income When: Quarterly Who: RMO How: Fundraising Controlled Copy: Circulation Authorized by the Management Representative. Page 16 of 21

17 CU/SOP/FIND/24 30 th August, STANDARD OPERATING PROCEDURE FOR FINANCIAL MANAGEMENT APPENDIX I: PROCESS MAPS i. Accounting for Income RESPONSIBILITY ACTION Start CASHIER Receive of Income Prepare and Issue receipts Balance and verify daily collections ACCOUNTANT IN-CHARGE, CASH OFFICE Correct? NO YES Update Cashbooks /students statements FINANCE OFFICER, ACCOUNTANTS Prepare Bank Reconciliation Post to General Ledger Stop Controlled Copy: Circulation Authorized by the Management Representative. Page 17 of 21

18 ii. Procedure for processing of Payments RESPONSIBILITY ACTION Start SECRETARY, ACCOUNTANTS Receive and Record Documents Verify Documents and approvals ACCOUNTANT IN CHARGE, CREDITORS SECTION Valid? Prepare Payment voucher and Cheque NO YES Return to source Examine the payment FINANCE OFFICER, ACCOUNTANTS Forward to Internal Audit and Signatories Stop Controlled Copy: Circulation Authorized by the Management Representative. Page 18 of 21

19 iii. Budgeting Process RESPONSIBILITY FINANCE OFFICER ACTION Start ACCOUNTANT IN CHARGE, VOTE BOOK SECTION Receive Departmental Budget proposals Consolidate dept. Budget Proposals FINANCE OFFICER Management Board NO Approved? YES University Council NO Approved? YES Ministries Rationalise Budget Allocation to dept. for implementation Stop Controlled Copy: Circulation Authorized by the Management Representative. Page 19 of 21

20 iv. Imprest Processing and Surrender RESPONSIBILITY ACTION Start IMPREST APPLICANT Raise Imprest Warrant VICE-CHANCELLOR/ DEPUTY VICE- CHANCELLORS ACCOUNTANT IN CHARGE, DEBTORS SECTION Approved & Funds Available? NO YES YES Outstanding imprest? FINANCE OFFICER, ACCOUNTANTS NO Process payment Prepare Imprest Surrender Claim Approved? NO YES Clear debtor Stop Controlled Copy: Circulation Authorized by the Management Representative. Page 20 of 21

21 v. Preparation of Financial Accounts and Audit Reports RESPONSIBILITY ACTION Start Post Income and Expenditure data to General Ledger ACCOUNTANTS IN CHARGE: FINANCIAL REPORTS, ASSETS AND CASH OFFICE SECTIONS Conduct Asset Count Prepare Accounts University Management Board University Council Approved? NO YES FINANCE OFFICER Forward to Auditor General NO Audited? YES Relevant Ministries Stop Controlled Copy: Circulation Authorized by the Management Representative. Page 21 of 21