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FINANCIAL PROCEDURES MANUAL

FINANCIAL PROCEDURES MANUAL

HUMAN ASSISTANCE FOR DEVELOPMENT INITIATIVE (HADI)
Financial Procedures Manual
Effective Date: [Date]
Version: 1.0
Approved By: Board of Directors / CEO

1. INTRODUCTION & OBJECTIVES

This manual establishes standardized procedures for all financial transactions to ensure:

  • Transparency, accountability, and integrity in financial management

  • Compliance with donor requirements and Pakistani law

  • Efficient use of resources for maximum program impact

  • Prevention and detection of fraud and error

2. ROLES & RESPONSIBILITIES

  • Board of Directors: Ultimate fiduciary responsibility; approves annual budget and audits.

  • Chief Executive Officer (CEO): Overall financial management accountability.

  • Manager Finance: Day-to-day financial operations, reporting, and compliance.

  • Budget Holders (Program/Department Heads): Responsible for budget execution within their departments.

  • All Staff: Responsible for adhering to procedures, submitting accurate documentation, and safeguarding assets.

3. BUDGETING PROCEDURES

3.1 Annual Organizational Budget:

  • Prepared by Manager Finance with input from all departments by November 30th.

  • Presented to CEO and approved by Board by December 15th for the upcoming fiscal year (Jan-Dec).
    3.2 Project Budgets:

  • Developed during proposal stage by Program Team and Finance.

  • Must align with donor format and include all direct and shared costs.
    3.3 Budget Monitoring:

  • Monthly Budget vs. Actual (BvA) reports prepared by Finance and shared with budget holders.

  • Significant variances (>10%) require written explanation and corrective action plan.

4. AUTHORIZATION MATRIX

(Financial authority must be in writing. Example below)

Transaction TypeUp to PKR 25,000PKR 25,001 - 100,000PKR 100,001 - 500,000Above PKR 500,000
Operational ExpendituresDepartment HeadManager FinanceCEOBoard
Capital/Asset PurchasesManager FinanceCEOCEO + One Board MemberBoard
Contract Signing (Consultants)Department HeadManager FinanceCEOBoard
Bank TransfersManager Finance + CEOManager Finance + CEOManager Finance + CEOAs per Board resolution

5. CASH MANAGEMENT

5.1 Petty Cash:

  • Maximum imprest level: PKR 30,000.

  • Held in a locked box; custodian is the Admin Officer.

  • Used only for small, urgent expenses < PKR 3,000 per item.

  • Replenishment: Requires fully documented vouchers, receipts, and approval.
    5.2 Bank Accounts:

  • Operated on dual signatory principle (any two of: CEO, Manager Finance, Board Treasurer).

  • Monthly bank reconciliations must be completed by the 10th of the following month.

  • Online banking access restricted to authorized staff with secure passwords.

6. PROCUREMENT & PAYMENT PROCESS (Linked to Procurement Manual)

6.1 Payment Requisition:

  • Initiated by requesting department with completed Requisition Form, supporting quotes, and approval as per Authorization Matrix.
    6.2 Invoice/Payment Processing:

  • Finance verifies: (1) Valid purchase order/contract, (2) Goods/services received note, (3) Original invoice, (4) Proper approval.

  • Payments processed within agreed credit terms.
    6.3 Payroll:

  • Prepared by HR, verified by Department Heads, approved by Manager Finance and CEO.

  • Disbursed via bank transfer where possible.

7. ADVANCES & EXPENSE CLAIMS

7.1 Travel Advances:

  • Maximum 80% of estimated Travel Daily Allowance (TDA) and other costs.

  • Settlement: Within 7 days of trip completion with a detailed expense report and original receipts.
    7.2 Staff Expense Claims:

  • Submitted monthly on the Expense Claim Form with original receipts.

  • Personal expenses are not reimbursable.

  • No receipt, no reimbursement (except approved per diem).

8. ASSET MANAGEMENT

  • All non-consumable items > PKR 10,000 in value are tagged and recorded in the Fixed Asset Register.

  • Annual physical verification by Admin & Finance.

9. FINANCIAL REPORTING

  • Monthly: Management accounts (BvA, Balance Sheet, Cash Flow) to CEO/Board.

  • Quarterly/Annually: Donor financial reports as per agreement.

  • Annually: Statutory audit by external, reputable auditors appointed by the Board.

10. DOCUMENT RETENTION

All financial documents (vouchers, invoices, bank statements, contracts) must be filed systematically and retained for a minimum of 7 years after project closure or as per donor requirement.

Annexures: Requisition Form, Expense Claim Form, Petty Cash Voucher, Advance Form.


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