ORGANIZATION FOR PARTICIPATORY

DEVELOPMENT
FINANCE

AND

ACCOUNTS OPERATIONS

ACCOUNTING POLICIES
Table of Contents
A

Accounting Policies

Standard Operating Procedures

01

Budgeting

02

Procurement

03

Fixed Assets

11

04

Advances & Deposits

16

05

Cash and Bank

18

06

Microfinance

24

07

Inter Fund Transactions

29

08

Financial Analysis

33

09

General

38

10

Adjustment of Deductions & surplus

amount

40

11

Internal Audit

41

12

Annual Audit

42

Appendices and Annexure

Accounting system

ORGANIZATION FOR PARTICIPATORY

DEVELOPMENT
FINANCE

AND

ACCOUNTS OPERATIONS

ACCOUNTING POLICIES

Organization for Participatory Development (OPD) prepares its

financial statements in accordance with International Accounting
Standards (IAS), as applicable in Pakistan on MFIs;
Following are the basic principles of accounting:
a)
b)
c)
d)
e)

Accrual basis
Conservatism and prudence
Materiality
Realization
Matching

Accrual basis of accounting means the accounting system, in

which transactions are recorded as and when they occur whether
cash received or not.
Conservatism and Prudence means recording financial
transactions such that assets, revenues, and gains are not
overstated and liabilities, expenses and losses are not
understated. It is intended to result in the fair presentation of
financial results.
Materiality items are those that may influence the economic
decision of a user. Material items should be presented separately
in the financial statements.
Realization requires that revenue be recognized in the
accounting period it is earned, rather than when it is collected in
cash.
Matching principles requires that expenses should be reported
on the Income Statement during the same period as the revenues
they generate.
2

ORGANIZATION FOR PARTICIPATORY

DEVELOPMENT
FINANCE

AND

ACCOUNTS OPERATIONS

ACCOUNTING POLICIES

Financial statements comprises of;

a) Statement of Financial Position (Balance sheet)
b) Statement of Financial Activities (income statement)
c) Statement of Changes in Financial Position (cash Flow
Statement)
d) Statement of portfolio
Statement of Financial Position (Balance sheet) is a
summary of the financial position at a specific point in time. It
presents the economic resources of an organization and the
claims against those resources. It comprises of Assets,
Liabilities and Equity.
Statement of Financial Activities (income statement)
reports the organizations financial performance over a specified
period of time. It summarizes all revenue earned and expenses
incurred during a specified accounting period. Income
statement can determine its net profit or loss (the difference
between revenue and expenses).
Statement of Financial Position (Cash Flow Statement)
shows where an institutions cash is coming from and how it is
being used over a period of time.
A cash flow statement classifies the cash flows into operating,
investing and financing activities.
Operating activities services provided (income-earning
activities).
Investing activities expenditures that have been made for
resources intended to generate future income and cash flows.
Financing activities resources obtained from and resources
returned to the
3

ORGANIZATION FOR PARTICIPATORY

DEVELOPMENT
FINANCE

AND

ACCOUNTS OPERATIONS

ACCOUNTING POLICIES
Owners, resources obtained through borrowings (short-term
or long-term) as well as donor funds.
Portfolio Report provides information about the lending and
savings operations of an MFI. It provides timely and accurate
data about the quality of the portfolio. It usually also includes
other
key
portfolio
performance
indicators
(e.g.,
outreach).Information usually includes:
Number and value of loans outstanding end of period
Total value and number of loans disbursed during the period
Average outstanding balance of loans
Value of outstanding loan balances in arrears, value of
payments in arrears
Value of loans written off during period
Portfolio aging analysis
Information on loan terms, loan officers, savings accounts
and balances, etc.
FIXED ASSETS

AND

DEPRECIATION

Fixed assets will be stated at cost less accumulated depreciation.

Depreciation will be charged on reducing balance method whereby
the cost of an asset is written off over its estimated useful life.
Depreciation will be charged on additions during the month while no
depreciation is charged on deletions. Maintenance and normal repairs
will be charged to income as and when incurred. Major renewals and
improvements are capitalized and any assets replaced are retired.
Gains or losses on sale or retirement of fixed assets will be included in
current years income and expenditure account.
MARK

UP ON

LOAN

Mark up on Loan from donors will be recorded on accrual basis.

REVENUE RECOGNITION
Service charges on Microfinance will be recognized on accrual basis.
Loan processing charges will be recorded on receipt basis.
GRANTS
4

ORGANIZATION FOR PARTICIPATORY

DEVELOPMENT
FINANCE

AND

ACCOUNTS OPERATIONS

ACCOUNTING POLICIES
Funds provided by donors to subsidize operating and administrative
expenses will be recognized as deferred Income when grant is
received and recognized income in accordance with the terms of
agreement and budgeting with the donors.
Funds utilized for acquiring fixed assets will be deferred and
amortized over the useful life of the assets.
LOAN LOSS PROVISION
Specific Loan loss provision will be provided monthly to maintain the
allowance for bad loans at adequate levels. The adequacy of the
allowance for loan losses will be determined by applying defined
percentages to the outstanding balances of principal amounts in
various aging categories as per specified rates, as shown below:
Allowance
In order to maintain the allowance for bad loans at adequate levels,
provisions for loan losses will be made every month on the following
basis
1-30 Days

10% of
balance

outstanding

31-60 Days

40% of
balance

outstanding

61-90 Days

65% of
balance

outstanding

91-180 Days

85% of
balance

outstanding

More than 180 100% of outstanding

days
balance

Write Offs
Loan losses will be charged on an annual basis.

ORGANIZATION FOR PARTICIPATORY

DEVELOPMENT
FINANCE

AND

ACCOUNTS OPERATIONS

ACCOUNTING POLICIES
Loans that is overdue for or more than 360 days will be written off in
accordance to write off strategy detailed in MFDP SOP.

ORGANIZATION FOR PARTICIPATORY

DEVELOPMENT
FINANCE

AND

ACCOUNTS OPERATIONS

ACCOUNTING POLICIES

STANDARD OPERATING
PROCEDURES
(SOPS)

ORGANIZATION FOR PARTICIPATORY

DEVELOPMENT
FINANCE
Issue:

03

Issue
Date:

AND

ACCOUNTS OPERATIONS
April 2nd 2011

Revision:

Second

1. BUDGETING
1.1. Policy
1.1.1.OPD programs/projects will have an activity plan for
achieving the desired targets/results assigned to it in
accordance with implementation plan with donors and
marketing research analysis carried out by OPD.
1.1.2.The plan will be reviewed regularly on quarterly basis and as
per need to ascertain progress made towards achieving the
desired targets as well as to keep the plan update.
1.1.3.The activity plan will be used as framework for forecasting
program or area budget estimates.
1.1.4.Budget functions of OPD will be overseen by the following;
Tasks

Implemented by

Preparation of program budget

estimates

Program Manager

Review,
finalization,
implementation, Monitoring, and
revision of budgets

Program
Internal
Manager
Accounts

Manager(s),
Auditor
&
Finance
&

1.1.5.BOD will approve annual budget.

1.2. Responsibility
1.2.1.Monitoring and review of budget will rest with the Finance.

1.3. Procedure
Process Overview
1.3.1.The budget process will involve the following major steps:

Development of a calendar of activities necessary to finish

the process and the schedule dates for compilation of each
step by respective PMs;

Development of preliminary estimates for use by the PMs

Standard Operating Procedures, Account & Finance

ORGANIZATION FOR PARTICIPATORY

DEVELOPMENT
FINANCE
Issue:

03

AND

Issue
Date:

ACCOUNTS OPERATIONS
April 2nd 2011

Revision:

Second

evaluating the reasonableness of the estimates;

The development and submission of budgetary estimates by

the PMs;

Compilation and review of budget estimates by Finance;

Presentation of budget document to the CE for adoption;

and

CE will present Budget in BOD for final approval.

Program Forecast
1.3.2.Basic planning and budget input data will be gathered for the
program forecasts by the PMs through:

OPD Vision and Mission

Demand;

Products;

Discussions with donor;

Program activity plan; and

Personnel requirements for the next year as discussed with

the Manager HR&A with the consultation of relevant
department head.

1.3.3.All program plans and budgets will be prepared by the PMs.

The forecasts will include:

Overview of planned activities and budgets;

Income and expenditure wise plans and budgets; and

Donors/partner.

1.3.4.The prepared plan and budget is mutually reviewed, discussed

and revision, if any with Finance, and accordingly will be
amended before its submission to CE who then will present in
front of BOD.
1.3.5.After review by the PMs and Finance, the reviewed budget
with plan will be distributed among concerned operational
departments.
Standard Operating Procedures, Account & Finance

ORGANIZATION FOR PARTICIPATORY

DEVELOPMENT
FINANCE
Issue:

03

AND

Issue
Date:

ACCOUNTS OPERATIONS
April 2nd 2011

Revision:

Second

Draft Annual Budget

1.3.6.Based on the plans, PM(s) will prepare budgets. Manager F&A
will assist during the compilation.
1.3.7.Draft annual plan and budget will be presented to BOD by CE
for final consideration and review before approval.
1.3.8.Manager F&A will review of preliminary program plans and
budget forecasts in coordination of PMs and CE.
1.3.9.The information supplied will be reviewed in terms of
accuracy, possible problems in implementing proposed
programs and reasons for substantial variations between
projections and cost incurred during previous years. As a
result:

The contents of the final budget will be finalized; and

The draft annual plan and budget will be revised, if

necessary.

Final Budget Document

1.3.10. After having been reviewed and revised as necessary,
Manager F&A will compile Draft Annual Plan and budget into a
Final Budget document. The document will include:

The comparison of planned activities and budgets of the

current year with actual achievement and income/utilization;

The highlights of the proposed budget in terms of program

expansion and planned activities;

An outline of problem areas which have not

reconciled/addressed within the current budget; and

A review of the budget increases, if any, caused by changes

and increases (such as salaries);

been

1.3.11. After having been compiled and approved by the BOD, the
final budget document will be submitted to CE for review and
recommendations.
1.3.12. A specimen of the Final Budget is attached as Annexure
FA-01.
Approval and Adoption of the Budget

Standard Operating Procedures, Account & Finance

ORGANIZATION FOR PARTICIPATORY

DEVELOPMENT
FINANCE
Issue:

03

AND

Issue
Date:

ACCOUNTS OPERATIONS
April 2nd 2011

Revision:

Second

1.3.13. CE will give final approval on the plans and budgets

forwarded by the BOD.
1.3.14. After approval by the ED, the annual plan and budget will be
distributed as follows:
1st Copy

Chief Executive

2nd Copy

PMs

3rd Copy

Manager F&A

4th Copy

File

Execution of the Budget

1.3.15. All departments under supervision of Internal Auditor IA will
be responsible for keeping track of progress against activity
plans and budget. This function will comprises:

Reviewing transactions for conformity with the planned

activities;

Assuring that no transaction occur unless approved in

accordance with budget and SOPs; and

Reporting activity status and budget utilization on

monthly/quarterly and annual basis on the specified
budgeting and reporting formats.

1.3.16. The progress being made towards objectives will be reviewed

and evaluated, on monthly basis by IA & Finance.
Monitoring and Control
1.3.17. To ascertain the progress being made towards the prescribed
objectives, an effective and efficient budgetary information
system will be established. The Financial Information
System will be capable of:

Providing management at all levels, on timely basis, with

accurate and relevant informative data on performance
towards each goal;

Comparative analysis of planned statistics with current

results; and

Standard Operating Procedures, Account & Finance

ORGANIZATION FOR PARTICIPATORY

DEVELOPMENT
FINANCE
Issue:

03

Issue
Date:

AND

ACCOUNTS OPERATIONS
April 2nd 2011

Revision:

Second

Supporting management in taking corrective actions,

wherever necessary, to lay down adequate and accountable
future plans.

1.3.18. Manager F&A will prepare the following reports (at the
minimum) based no the current information available on
monthly basis during the execution:
Reports

Purpose and Objective

Activity Status Report

(Drafted
by
respective PMs)

To analyze the progress towards

pre-set goals; and

To ascertain the response to certain

programs being implemented.

To analyze significant variances, if

any;
To obtain unencumbered program
balance.

Financial
Report
Annexure FA-02

1.3.19. Activity plans and budgets will be revised during the

financial year in order to adjust projections to meet changing
conditions. The potential budget revisions may be:

Budget
Expansions
Represent
enhancement
to
departmental/program base budget e.g. by adding new
budget line or increment in already apportioned budget.

Budget Contractions Represent deletion of budget line or

decrease in already apportioned amount.

Budget Transfer Represent transfer of funds from one

budget line to another.

1.3.20. Manager F&A will prepare Budget Revision Form

Annexure FA-03 and forwarded to respective PMs and CE
for authorization and approval.
1.3.21. The revision request reviewed by PM will be forwarded
Manager F&A who will forward to CE for final review, after
approval and the budget will be adjusted accordingly.

Standard Operating Procedures, Account & Finance

2. PROCUREMENT
2.1. Policy
2.1.1.All Procurements will be made after approval of competent
authority as prescribed.
2.1.2.Selection of method of procurement will be based on the
estimated value and nature of goods/services.

2.2. Responsibility
2.2.1.Procurement Committee will be responsible to ensure that all
the procurement functions are performed in accordance with
the policies and procedures.

2.3. Procedure
2.3.1.The person requiring the goods will prepare Requisition
Form Annexure FA-03.
2.3.2.Concerned PM will approve the Requisition Form and will
forward it to Admin & Finance for further action.
2.3.3.In case of availability of the required items in the stock, Admin
will issue the items to the requisite and record the same in
memorandum stock register.
2.3.4.If the required items are not available or out of stock, Admin
will initiate the procurement process.
2.3.5. Admin

with consultation of Finance will work out the

estimated cost of items to be procured and the availability of
budget.

2.3.6. CE may delegate (on need basis) the approving authority

power for procurement in specific project (s).

2.3.7.This Form will be sent for the approval of competent authority
as follows:
Type

Estimated Amount

Approving Authority

Capital items

All

Chief Executive

Revenue
items

Exceeding PKR 2,500

Chief Executive

Up to PKR 2,500

Program Manager

2.3.1. Tax deduction

2.3.2.1.1. Withholding income tax should be deducted from a resident

person in Pakistan and is not considered a non-resident. Tax
should be deducted (as per Govt. tax schedule) at the time of

payment and it shall be deposited in the Government Treasury

within seven (7) working days. The National Tax Number of
the vendor/service provider should be obtained and should be
mentioned in the Tax Payment Receipt form. In case where
supplier/ service provider has failed to furnish a tax exemption
certificate, a note is to be placed on the relevant invoice and tax
exemption certificate statement obtained from the supplier for
record purposes.
Tax deductions should be processed through preparation of
Income Tax Challan Forms through E-filing for total tax
amount deducted from the suppliers/ service provider. A copy
of the Challan Form shall be handed over to Accounts who
forwarded it to the supplier (s)/ service provider through the
mail/electronic

mail

or

handed

over

to

the

authorized

representative, after obtaining due acknowledgement of tax

deposited from the bank. A quarterly statement under the
Income

Tax

Ordinance

2001

should

be

prepared

and

submitted to the tax authorities in the concerned Enforcement

within fifteen (15) days after the end of each quarter. Similarly,
annual statement should be prepared within three months after
the closing of Tax Year i.e. June 30 th for its submission to the
office of Income Tax.

2.3.2. Gifts/Favoritism from Vendors/Counterparts

2.3.2.1.

No OPD employee may request or accept commissions, rebates,

tips, gifts, loans or any other payment favor from anyone who
does or is planning to do business with OPD.

2.3.2.2.

Any offers of the above which indicate the seeking of favored

treatment should be reported to the CE. Acceptance of the
gifts/favors may cause dismissal from service.

2.3.2.3.

However, there may be times when vendors, counterparts, or

program participants may want to show a token of appreciation
for our relationship, assistance, etc.

2.3.2.4.

Gift shall not be received or given to counterparts or other OPD

staff members which have a value above PKR 500.

The sole

intent of the gift shall be the establishment of or preservation of

good will. All gifts received of this nature must be reported to
the CE or his designate. The CE will decide the appropriate
disposition of the gift received.

Method of Procurement
2.3.8.Method of procurement will be determined on the value of
items to be procured.
Value

Method

Up
to
2,500

PKR

Local Procurement

Up
to
5,000

PKR

Request for Quotations (without letter)

Above
15,000

PKR

Request for Quotation / Proposal (with

letter)

Local Procurement
2.3.9.Goods will be procured by taking three verbal quotations and
recording prices and other terms and conditions on
Comparative Statement Annexure FA-04.
2.3.10. Comparative Statement will be prepared and verified by
Manager HR and Admin.
2.3.11. Goods will be procured from the supplier quoting the lowest
rate and matching the goods specification as per Requisition.
2.3.12. Admin will inspect the procured items and will record the
same in memorandum stock register.
2.3.13. Suppliers bill/Invoices and Goods Receiving Note (GRN) will
be forwarded to Finance department for disbursement and
recording.
Formation of Procurement Committee
2.3.14. Procurement Committee will carry out all procurements
above PKR 5,000.
2.3.15. Committee will have at least four members as follow:

Manager HR and Admin

Manager Finance and Accounts

PM(s)

Additional Procurement Procedures

2.3.16. Procurement Committee will perform additional procedures
in accordance with the terms agreed with the donor when
goods are either partially or fully financed by donor.
Request for Quotation / Proposal
2.3.17. For procurement below PKR 15,000, at least three quotations
will be obtained from the market.

2.3.18. For procurement above PKR 15,000 Request for

Quotation/Proposal Annexure FA-05 will be sent to
suppliers. At least three responsive quotations will be required
to initiate the procurement process.
2.3.19. All the quotations received will be recorded on Comparative
Statement. The committee will review the following:

Price quoted;

Suppliers previous record and performance;

Ability of the supplier to render satisfactory service; and

Factors keeping in view of OPD needs.

2.3.20. Procurement Committee will select the supplier based on

above mentioned factors.
2.3.21. Committee will record the reason on the Minutes for
Procurement Committee. All members will sign the minutes. CE
will give his final approval on the recommendation of
Procurement Committee.
2.3.22. Admin will maintain and track the record of local vendors in
Vendors Directory.
Purchase Order
2.3.23. Purchase Order Annexure FA-06 will be issued to the
successful supplier. Purchase Order will be signed by CE or any
person designated by him/her for the purpose.
Hiring of Consultants
2.3.24. Procedure for Hiring of Consultants is described in the HR
SOP.
Receipt and Inspection of Consumable / Stationery Items
2.3.25. At the time of receipt of items, a PAID stamp will be affixed
on the bill by Admin ensuring the goods have been received.
2.3.26. A consumable item register will be maintained by the Admin
at their respective locations.
2.3.27. If items are found defective, these will be returned and
stamp will be affixed only on the accepted items.

3. FIXED ASSETS
3.1. Policy
3.1.1.Fixed asset purchased by OPD will be capitalized as per the
prescribed criteria.
3.1.2.Initially all assets will be recognized at cost of acquisition plus
other costs directly attributable to the acquisition.
3.1.3.Depreciation will be charged to income and expenditure
account by applying reducing balance method. Depreciation
will be provided by using the rates as prescribed.
3.1.4.Depreciation will be calculated and accounted from the month
the asset is available for use, while no depreciation will be
charge for the month the asset is being disposed off.
3.1.5.No asset will be taken out of the premises of OPD without
proper approval by CE Annexure Gate Pass Form.
3.1.6.Physical Stock Take will be carried out quarterly basis.
3.1.7.Fixed assets which are obsolete, worn out, or no longer
required will be sold, scrapped as considered appropriate by
the CE and/or BOD. Gains and losses on disposal of fixed asset,
if any, will be included in income and expenditure.

3.2. Responsibility
3.2.1.The safeguarding of fixed assets will be responsibility of
concerned manager and staff holding the asset. This includes;
ensuring

only

the

authorized

persons

use

that

asset,

safeguarding against theft and damage, and removal from the

premises with approval.

3.3. Procedures
3.3.1.Fixed Assets will be capitalize as per the following criteria:
Item

Description

Threshold

Nonexpendable

Items with unit cost of more than

PKR 5,000 and useful life of more
than one year.

Capitalize

Expendable

Items with unit cost of less than PKR

5,000 and useful life of less than one
year.

Do not
capitalize

Consumabl
es

Items that are consumed and

exhausted in a shorter time period
like stationery and office supplies.

Expense
out

3.3.2.The rates of depreciation for the different category assets are

as follow:
Rate

Category

(% per annum)

Land

Nil

Building

Nil

Office equipment

10%

Surgical equipment

20%

Computer equipment/Accessories

25%

Computer Software (intangible)

20%

Furniture and fixture

10%

Vehicles

20%

Receipt of Fixed Assets

3.3.3.All fixed assets received will be inspected by the Procurement
Committee.
3.3.4.In case assets are not in accordance with the requirements as
specified in the Purchase Order these will be returned to the
supplier for replacement.
3.3.5.After inspection, Goods Received Note Annexure FA-07
will be prepared by Admin for the fixed assets. GRN will be sent
to Manager for approval/verification and distributed as follow:
Original : To finance and accounts department.
Duplicate : To person inspecting the assets.
Fixed Assets Identification Number
3.3.6.Every fixed asset will be assigned a unique identification
number constituted as follows:
Donor
code

Location
code

Asset
type

Sequential
number

Acquisition Month &

Year

4 digits

2 digits

2 digits

4 digits

4 digits

3.3.7.Following abbreviations will be used for coding purposed for

identifying different categories of assets.

Category

Unique
Code

Asset

Land

LD

Building

BD

Office equipment

OE

Computer
Accessories

CA

Furniture and fixture

FF

Motor Vehicles

MV

Type

3.3.8.For location code initials of the specified location of the asset

will be used for periodic inspection of asset.
3.3.9.Admin will affix the unique asset identification number on the
asset under the supervision of Finance.
3.3.10. For transfer of asset to any department Asset Issuance
Form Annexure FA-08 will be used, prepared by the Admin
and approved by CE. The asset issuance form will be signed by
the recipient department manager. Asset Issuance Form will be
distributed as follows:
Original

Kept in records of Admin

Duplicate

To the concerned department

Triplicate

To Finance

Fixed Assets Register

3.3.11. Fixed Asset Register Annexure FA-09 will be
maintained by Admin for all fixed assets owned and held by
OPD.
3.3.12. Admin will update the Fixed Asset Register in the following
instances:

At the time of purchase of any new fixed asset;

At the time of disposal of any fixed asset;

Any subsequent capitalization of expenditures; and

Any write off.

3.3.13. Admin will review and counter sign the fixed asset register at
the end of each quarter.
Depreciation
3.3.14. Accounts and Finance Officer will prepare deprecation
worksheet and verify Journal Voucher at year end to record
depreciation for the year.

3.3.15. Depreciation worksheet and Journal Voucher will be checked

by Manager Finance and Accounts approved by CE.
Annual Physical Inspection of Fixed Assets
3.3.16. Annual physical inventory count of assets will be carried out
by a team comprising of the following members:

Finance; and

Admin

Repair/Renewal of Fixed Assets

3.3.17. Any fixed asset that requires repair/renewal will be sent to
repair after the prior approval of CE.
3.3.18. If it is found that asset declared is obsolete and not
repairable or a major maintenance expense is required where
costs for repair is more than the benefits to be realized from the
asset, the fact will be notified to Asset Disposal Committee.
Disposal of Assets
3.3.19. CE will receive signed request for the disposal of
defective/obsolete fixed asset from Asset Disposal Committee.
3.3.20. Asset Disposal Committee will comprises the combination of
any three of following members, designated by BOD:

CE

PM(s)

MF&A

Admin

3.3.21. On approval of the disposal, it is sent to the Admin for

initiation of the disposal process.
3.3.22. Admin will prepare Asset Disposal Valuation Form
Annexure FA-10 to record all proceedings in Minutes of
Disposal Committee. All members of Committee will sign the
minutes and sent for approval to CE.
3.3.23. After disposal of asset, Admin will update Fixed Asset Stock
Register with its disposal comments (date, amount).
3.3.24. Finance will calculate the gain or loss on the retirement of
assets, and record the gain or loss in books of accounts and
registers maintaining the accumulated depreciation verses
actual cost.

4. ADVANCES & DEPOSIT

OPERATING ADVANCE

4.1. Policy
3.1.1. Cash will be transferred to employees only for direct
programmatic expenditures,
such as training activities or the
procurement of goods and services where an immediate
purchase is necessary and the exact amount payable is not
known.
3.1.2. Issuances of cash to employees for transfer to sub-offices or
field offices.
3.1.3. Purchase of miscellaneous small items that cannot be
purchased through cheque.
3.1.4. In the absence of signatories the cash requirement for routine
office expense.
3.1.5. Operating Advance will be settled after the completion of
activity with in 3 days otherwise it will be adjusted against
salary of the particular employee.
TRAVEL ADVANCE
4.1.6. Cash will be issued to B employees in advance against their
proposed travel request duly approved by Chief Executive as
detailed in HR SOP.
4.1.7. Finance & Accounts Department will only consider those
travel requests which will be received before 24 hours of travel
in case of out station travel.
4.1.8. Travel Advance will be settled after the completion of activity
with in 3 days other wise it will be adjusted against salary of the
particular employee.
SALARY ADVANCE
4.1.9. Advance salary will be issued to employees only in the
situation of acute personal financial crises duly approved by
Chief Executive.
4.1.10. Salary advance shall be recovered in the same month
through the payroll.
4.1.11. Advance shall be issues to employees maximum 50% of total
salary after 15th of the month.

4.2. Policy
4.2.1. Accounts will be responsible to maintain all sorts of advances.

4.3. Procedures
4.3.1 To avail any sort of advance for Expense Annexure FA-14
will be filled by the employee.
4.3.2 Only those requests will be entertained which will be
forwarded by PM and approved by Chief Executive.
4.3.3 In case of Travel advance Request (TAR), approved TAR form

will be submitted to Finance Department.

5. CASH

AND

BANK

5.1. Policy
5.1.1. New bank account for organization will be opened after the
prior approval of BOD.
5.1.2. All bank accounts will be maintained in the name of OPD.
5.1.3. Accounts will be maintained as per the requirement of
organization/donor.
5.1.4. Separate bank account will be
project/program carried out for donor.

opened

for

each

5.1.5. Bank account will be operated by at least two signatories

designated by BOD.
5.1.6. All payments exceeding PKR10,000/only MUST be paid
through crossed cheques or banking instruments.
5.1.7. Bank Reconciliation Statement of each bank account will be
prepared on monthly basis and SMT will verify the statement.
5.1.8. Bank account will be closed after the written approval of BOD.
5.1.9. The maximum amount of Petty Cash Imprest will not exceed
PKR25,000/only.

5.2. Responsibility
5.2.1. Finance and Accounts will be responsible
documentation relating to banking procedures.

for

all

5.3. Procedures
Bank Signatories
5.3.1. BOD will designate three signatories for each bank account.
The penal of signatories will be as follows:

Single Mandatory CE
Two Optional (PM and MF&A)

5.3.2.The list of signatories will be distributed as follows:

First Copy

Respective bank

Second Copy

Bank signatories

Third Copy

Bank file

5.3.3.Any change in the approved signatories will be made after

prior approval of BOD.
Signatories

5.3.4.Only one cheque book will be used at any one time for each
bank account.
5.3.5.Receipt and issue of cheque books to the authorized persons
will be controlled through Cheque Book Register
Annexure FA-11.
5.3.6.All cheques will bear the official stamp of OPD.
5.3.7.Custody of cheque books will be responsibility of Finance
5.3.8.All used and unused cheque books will be kept under lock
and key.
5.3.9.All particulars of the dispatched cheques will be recorded in
Cheque Dispatch Register Annexure FA-12.
5.3.10. Undelivered cheques will be retained for a period at the
end month and/or of thirty days which ever comes first.
Afterwards the cheques will be cancelled and retained in the
cheque book.
5.3.11. In case of lost cheque, bank will be intimated vide a letter
containing the particulars of the cheque to stop payment.
5.3.12. Used cheque books will be kept in the possession of
Finance for at least a period of three years.
Bank Reconciliation
5.3.13. Standing instruction will be given at the time of opening of
new bank account for dispatch of monthly bank statement.
5.3.14. Finance will receive the monthly bank statement from the
bank.
5.3.15. Bank Reconciliation Statements Annexure FA-13 will
be prepared by Finance up to 5th of subsequent month.
5.3.16. Finance Manager will be responsible for checking and
follow up of all Bank Reconciliation Statements. He will also
ensure that no item remains unidentified and unrecognized.
5.3.17. SMT will verify all Bank Reconciliation Statement.
Documentation Related to Bank
5.3.18. Bank file will be maintained for each bank. This file will
contain the following documents:

Copy of Account opening form;

List of signatories and changes thereof;

Detail of any other correspondence with banks.

5.3.19. All record relating to banks will be retained at least for a

period of three years in case of closing of the bank account.

Closure of Bank Account
5.3.20. Application for closure of any bank account will be
approved by BOD.
5.3.21. Manager Finance and Accounts will obtain final bank
statement and closure certificate from the bank and retain in
the bank file.
Disbursement
Payment to Supplier
5.3.22. Following documents will be received by Finance for
processing of payments to suppliers from Procurement
Committee.

Requisition;

Request for Quotation;

Quotations/Proposal received;

Comparative Statement;

Minutes of Procurement Committee;

Purchase Order along with terms and conditions;

Original Invoice/bill;

Goods Received Note.

5.3.23. IA will verify the supporting documents to ensure that:

Only good requisitioned were ordered;

Goods invoiced are actually received and entered in the

record;

Goods received are according to specifications as given in

the Purchase Order;

Arithmetical accuracy and contents of original invoice

Payment to Consultants/ service provider

5.3.24. Procedure for payment to consultants/ service provider is
described in HR SOP.
Rent
5.3.25. Rent will be paid as per agreement with the owner.
5.3.26. Finance will prepare cheque before the due date of
payment of rent cycle.

Advance for Expenses

5.3.27. Advance will be paid only for approved expenses.
5.3.28. Employee requesting the advance only for the approved
activities and will prepare Advance for Expense Annexure
FA-14. Advance will be used for This form will be approved
as follows :
Designation

Maximum Approval Limit

PM(s) or Manager
Finance
and
Accounts

If advance does not exceed PKR

3,000/-

CE

For advances greater than

3,000/-

PKR

5.3.29. Approval of the competent authority will be checked by

Finance and verified by IA to ensure the accuracy and
genuineness of all documents.
Utility Bills
5.3.30. Admin will collect all utility bills before the due date at
their respective locations and file them in a separate file.
5.3.31. Accounts and Finance Officer will ensure that all bills are
paid before the due date.
5.3.32. IA will verify that the payments were made accordingly.
5.3.33. CE will approve the payment for bills.
Traveling and Conveyance
5.3.34. Conveyance charges for inter city and outstation will be
paid based on approved travel authorization of the claimant.
5.3.35. Finance will receive approved TER with TAR from the
requesting person.
5.3.36. Finance will process the approved TER for payment with in
05 working days.
Final Settlement
5.3.37. Finance will receive approved Clearance, handing and
taking over and Final Settlement Form from HRD.
5.3.38. Finance will recalculate the amount due to employee in
respect of salary, provident fund balance, EOBI and adjusted
by any advance/employee loan already availed.
5.3.39. Manager Finance and Accounts will check the calculation.
5.3.40. The amount outstanding will be paid to the employee within
03 working days of the filing of form by employee.

Compliance with Income Tax Laws

5.3.41. Manager Finance and Accounts will ensure the compliance
to provisions of Income Tax Laws regarding deduction and
deposit of tax at source.
Processing of Bank Payment Documents
5.3.42. Finance will receive approved supporting documents for
bank payment.
5.3.43. Finance will prepare the Bank Payment Voucher. Finance
Manager will check the same.
5.3.44. Income tax will be deducted on all taxable payments
according to the income tax Ordinance 2001. Tax deducted
from vendors/suppliers/service providers will be deposited
into Government treasury within 07 days as prescribed under
the Income Tax Ordinance 2001.
5.3.45. Cheque will be prepared after the approval and scrutiny of
Bank Payment Voucher and supporting documents
5.3.46. Cheque will be placed before the approved signatory for
signatures along with supporting documents.
5.3.47. Signatures will also be obtained on the counter folio of the
cheque book.
5.3.48. Finance will post the voucher in the respective ledgers and
Posted stamp will be affixed.
Petty Cash Imprest Procedure
5.3.49. For establishment of Imprest, Petty Cash Imprest Form
Annexure FA-15 will be used to nominate the imprest
holder and alternate imprest holder.
5.3.50. CE will nominate the imprest holder and approve Petty
Cash Imprest Form.
5.3.51. CE will also approve any increase or decrease in the
imprest limit.
5.3.52. Imprest will be utilized during the routine operations of the
OPD e.g. courier charges, POL, local traveling, office supplies
and maintenance, office stationary and on other petty
expenses.
5.3.53. Imprest holder will forthwith record all expenses incurred
on Petty Cash Closing Form Annexure FA-16.
5.3.54. Supporting documents of all expense will be filed and
Paid stamp will be affixed on all supporting.
5.3.55. Imprest holder will prepare Imprest Replenishment
Form Annexure FA-17 at the time of replenishment of
petty cash imprest along with imprest expense form, while for

withdraw of any sort of cash amount form bank he will

prepare Cash Withdrawal Form Annexure FA-17-A.
5.3.56. Imprest Replenishment Form and cash withdrawal form will
be checked by the respective PM and verified by Manager
Finance and Accounts. CE will approve the form.
5.3.57. Surprise cash counts will be conducted at least once a
month by IA.

6. MICROFINANCE
6.1. Policy
As detailed in MFDP SOP

6.2. Responsibility
As detailed in MFDP SOP

6.3. Procedures
Donor Funds
Receipt of Funds
6.3.1. Manager Finance and Accounts, as per agreed schedule with
donor, will prepare a request and get their approval by CE, after
approval sent that request letter to donor for release of funds to
OPD.
6.3.2. All banking or monetary instruments will be received, Manager
Finance and Accounts will be kept under lock and key until
deposited.
6.3.3. CE will forward the banking instrument to Manager Finance
and Accounts for deposit.
6.3.4. Finance will prepare Official Receipt as acknowledgement
verified by Manager Finance and Accounts and issue the same to
the donor.
6.3.5. Accounts and Finance Officer (A&FO) to prepare the deposit
slip for the instrument received and deposit it in the specified
bank account.
6.3.6. A&FO will prepare Bank Receipt Voucher and it will be checked
by Manager Finance and Accounts and attach copies of banking
instrument deposited and bank deposit slips along with it.
Repayment of Funds and Service Charges
6.3.7.A&FO will prepare a recalculation sheet of the principal and
service charges payable (including late payment charges if any)
and ensure that repayment is as per terms agreed with the
donors.
6.3.8.A&FO will prepare separate crossed cheques of principal and
service charges.
6.3.9.Manager Finance and Accounts will send cheques to the donor
with the approval of CE vide a covering letter.
6.3.10. The letter will contain the acknowledgment of receipt of
cheques.
6.3.11. A&FO will prepare Bank Payment Voucher checked by MF&A
and after getting it approved from the competent authority will

record it in books of accounts.

6.3.12. Letter of request, statement of account of OPD, recalculation
sheet, copy of cross cheques and acknowledgment of
repayment received from donor will be filed in donors file by
Finance.
Disbursement
Disbursement of Funds
As detailed in MFDP SOP
Processing Fee
As detailed in MFDP SOP
Recovery
As detailed in MFDP SOP
Receipt of Recovery
As detailed in MFDP SOP
Monthly Recovery Report
As detailed in MFDP SOP
Adjustment / Repayment Operational Subsidy
As detailed in MFDP SOP
Reporting
Identification of Provisioning Requirements
6.3.13. At the end of each month, MF&A will receive a copy of
overdue report from PM for the overdue portfolio falling in
different ageing periods.
6.3.14. Slab rates as specified in the accounting policy section will
be used for providing provision on loans for different aging
periods.
6.3.15. Amount that is overdue for greater than five days will be
taken to calculate the amount of provision as per defined
percentages.
Monthly Recording of Provision
6.3.16. As detailed in MFDP SOP
Portfolio Report
As detailed in MFDP SOP
Periodic Progress Report
6.3.17. Donor may require any statement, format and reporting
frequency to assess the performance of micro finance
operations.
6.3.18. Any such statement required by the donor regarding the

microfinance operations relevant to A&FO will be prepared by

MF&A and reviewed by PM(s).
6.3.19. MF&A will request for the collection of relevant data from
the concerned persons in microfinance operations.
6.3.20. Finance will prepare the report.
6.3.21. After review by PM(s), reports will be dispatched to donors.

7. INTER-FUND TRANSACTION
7.1. Policy

Inter-Fund Activities are transactions made by one project on behalf

of another project within the same office or the sub offices. The InterFund Accounts have been established to account for reimbursable
borrowing by one project form another project.

Such borrowing should be done ONLY to relieve a temporary cashflow shortage in a particular project. The Inter-Fund Accounts are
NOT to be used for non-reimbursable transfers (i.e. commitment by
donor and later on not received) of funds between fund/projects.
There is a prohibition against borrowing from donor project monies
for OPD own funds or funding for OPD own projects.

Any outlays of cash made by project A on behalf of Project B must

be repaid to A by B. In reviewing the Inter-Fund Activity, and
REMEMBER

At every month end, the Inter-Fund Receivable (Asset Account)

incurred by Project A must be balanced (offset) by the Inter-Fund
Payable (Liability Account) established for project B. Therefore, the
net amount between the inter-fund accounts of the entire project
accounts should be zero for each month wherever possible.

7.2. Responsibility
7.2.1 MF&A will be responsible for inter fund transactions, and
A&FO will prepare Inter fund Transfer Form verified by MF&A
and approve by CE.

7.3. Procedure
Inter-Fund Activity between Two Bank Accounts
In this procedure, funds are temporarily borrowed by a project whose
monies are deposited in one bank account from another project whose
monies are deposited in another bank account. This is a cash
transaction; it is a physical transfer of cash.
Borrowing from any Government Grant funds is prohibited.

Borrowing by a donor & project in excess of the balance still

available for conversion by that donor & project is
prohibited.

In the event that it is necessary due to a temporary shortage of cash

or installment is due in a project to borrow monies from another
project, the Executive Director may ask the Manager Finance and

Accounts to make an Inter-Fund Transfer. That is, the MF&A will

set up an Inter-Fund Receivable (for the project lending the cash) and
an Inter-Fund Payable (for the project borrowing the cash
The MF&A will first determine if the Inter-Fund Transfer will require
the moving of cash from one bank account to another bank account.
That is, if the monies for the two projects are held in two different
bank accounts, then cash will have to be physically moved from one
bank account to the other.
As this represents an actual cash transaction, the MF&A will prepare
Inter Fund Transfer Form Annexure FA-13-A issue a memo
approved by the Executive Director showing the reasons and amount
required for this inter fund. The AF&O than make a check, Wire
Transfer or Bank Draft, etc. from the bank account FROM WHICH the
monies are to be moved to establish the Inter-Fund Receivable in
the name of OPD bank account for the borrowing donor & project.
On this Disbursement Voucher, the A&FO will do the following entry
Debit the OPD Inter-Fund Receivable Project
Name/account No. &
Credit the OPD respective Bank Account
The A&FO must take care to include the project name or account no.;
it is the only means to track over time which borrowing projects owe
cash to this lending project.
Supporting documents are then attached to the Voucher and then
submitted with the check to the Chief Executive or his/her delegate
for review and signature.
The Chief Executive or his/her delegate approves the voucher after
review. And after approval the check will be deposited into the
borrowing bank account.
The A&FO must acknowledge the receipt of cash by the borrowing
fund/project or, in other words, the amount of cash received that will
have to be paid back. This is done via the preparation of a Receipts
Voucher; this receipt of borrowed cash will effectively establish the
Inter-Fund Payable. Once the check is deposited in the bank account
of the borrowing fund/project, the A&FO drafts a Receipts Voucher to
note the receipt of cash and the establishment of the Inter-Fund

Payable which will be liquidated only when the lending fund/project

is reimbursed.
On the Cash Receipts Voucher, the AO will:
Debit the OPD Bank Account
Credit the inter Fund Payable Project Name or Account
No.
The A&FO must take care to include the project name/account no. in
the vendor number; it is the only means to track over time lending
projects are to be reimbursed by this borrowing fund/project. This
effectively establishes the Inter-Fund Payable.
Supporting documents are then attached to this Receipt Voucher and
then submitted to the Chief Executive or his/her delegate for review
and signature. And after approval it will be filed as per the normal
practice of filing.
EXAMPLE:
Project A and Project B have separate bank accounts. The general
ledger account for the Project A bank account is Habib Bank Limited
A/C # 47101. The G/L account for the Project B is Allied bank Limited
A/C # 47105.
Project A needs Pak PKR 100,000 from Project B. The AO would, on a
Disbursement Voucher, record the following in the books of Project A:
Acct
Inter fund Receivable Project

Debit

Credit

PKR 100,000

B
Habib Bank Limited A/C #

PKR

47101

100,000

The AO would, on a Cash Receipts Voucher record the following in the

books of Project B:
Acct

Debit

Allied Bank Limited A/C #

PKR 100,000

47105

Credit

Inter Fund Payable Project A

PKR
100,000

And at the time of adjustment/repayment of this amount the same

entries will be reversed and booked in the respective ledger.
Inter-Fund Transaction with in Same Bank Accounts
In this procedure, funds are temporarily borrowed from one project by
another project. If monies for the lending and borrowing projects are
held in the SAME BANK ACCOUNT, then the Inter-Fund transaction is,
in fact, a non-cash transaction (cash is not physically being moved
between two bank accounts); the Inter-Fund Receivable and Inter-Fund
Payable should both, therefore, be recorded on one OPD Journal
Voucher.
On the Journal Voucher, the A&FO will, for the lending fund/project:
Debit the Inter-Fund Receivable Project A for
establishing the Inter-Fund Receivable &
Credit the Inter-Fund Payable Project B
It is very critical & sensitive that the A&FO should take extra care in
entering the appropriate project numbers in front of the account code.
This is the only way to track, over time, which borrowing projects owe
cash to which lending fund/projects.
Supporting documents are then attached to this Journal Voucher and
then submitted to the Chief Executive or his delegate for review and
signature. And after approval it will be filed as per the normal practice
of filing.

Inter-Fund Reporting
The Inter-Fund Payables & Receivable should be generated at the
month end to know the outstanding balances in the respective project
for adjusting those at the month end. The Manager Finance Accounts
will use this report to ensure that the total of these two reports are
equal.
All Inter-Fund Payables must be offset by an Inter-Fund
Receivable and net to zero at each month end wherever possible. This
report should be run prior to closing the current month to ensure the
required balancing of inter fund activity.

8. FINANCIAL ANALYSIS
8.1. Policy
Financial analysis for management purpose will be prepared at the
end of each quarter on year to date basis and for external reporting at
the end of each year.

8.2. Policy
IA and Manager Finance and Accounts will be responsible for the
preparation of financial analysis and Internal Audit Committee will be
responsible for review.

8.3. Procedures
Financial analysis will be required for the following management
decisions:

To manage the finances to achieve the strategic goals of the

institution;

To increase profitability;

To reach self-sufficiency/breakeven point;

Increase efficiency especially reducing the cost per client;

To calculate the optimum level of each different operational

expense including the cost of funds;

To manage the costs of human resources as part of overall

human resource management;

To deal with the effect of inflation;

For loan loss reserve policy;

For write-off and rescheduling policy; and

To undertake trend analysis and to compare

performance against planned performance;

actual

Four types of ratios will be calculated by IA to serve the above

purposes:
SUSTAINABILITY/PROFITABILITY RATIOS
Ratio
Return
(ROE)

Formula
on

equity

Adjusted return on
equity (AROE)

Return
(ROA)

on

assets

Average return on
assets

(Net operating income Taxes)

Average equity

(Adjusted net operating income

= Taxes)
Average equity
=

(Net operating income Taxes)

Average assets

(Net adjusted operating income

= Taxes)
Average assets
Operating revenue

Operational
sufficiency

self-

Profit margin

= (Financial
provision
expenses)
=

expenses
expense

+
+

Loan loss
Operating

Net operating income

Operating revenue
Adjusted operating revenue

Financial
sufficiency

self-

= (Financial expenses + Loan loss

provision
expense
+
Operating
expenses + Expense adjustments)

ASSETS /LIABILITY MANAGEMENT

Ratio

Formula

Yield on gross loan

portfolio

= Revenue from loan portfolio

Current ratio

= Short-term assets

Average gross loan portfolio

Short-term liabilities
= Cash revenue from loan portfolio
Yield gap

(Net loan portfolio x Expected annual

yield)

Funding
ratio

expense

= Interest and fee expense on funding

liabilities
Average gross loan portfolio

Cost of funds ratio

= Interest and fee expense on funding

liabilities
Average funding liabilities

PORTFOLIO QUALITY RATIOS

Ratio

Formula

Portfolio
at
(PAR) ratio

risk

Gross loan portfolio

= Value of loan write off

Write off ratio

Adjusted
ratio

= Portfolio at risk (X days)

Average gross loan portfolio

write

off

= Adjusted value of loans write off

Average gross loan portfolio

Risk coverage ratio

= Loan loss reserve

Portfolio at risk X days

STAFF PRODUCTIVITY OR EFFICIENCY/PRODUCTIVITY RATIOS

Ratio Name
Loan
productivity

Formula
officer

Personnel
productivity (A)

Number of active borrowers

Number of Loan officer
Number of active borrowers
Number of personnel

Ratio Name

Formula

Personnel
productivity (B)

Average distributed
loan size
Average
outstanding
size
Operating
ratio

Number of active clients

Number of personnel
Value of loans disbursed

= Total number
during period

of

loans

disbursed

Gross loan portfolio

loan

expense

Cost per borrower

Cost per Client

Other expense ratio

Number of loans outstanding

Operating expense
Average gross loan portfolio
Operating expense
Average number of active borrowers
Operating expense
Average number of active clients
Other expenses
Average gross loan portfolio

9. GENERAL
9.1. Policy
9.1.1. The preparation, verification and approval of all the vouchers
will be as follow:
Prepared by

Verified by

Approved by

Accounts
and
Finance Officer

Manager Finance
and Accounts

CE

9.1.2.Financial Statements for management reporting purpose will

be prepared at the end of each month.

9.2. Responsibility
9.2.1. Finance Manager will be responsible for the coordination of
audit of annual financial statements of OPD.

9.3. Procedures
Vouchers
Following is the list of voucher used for recording of entry in accounts
ledgers:
Vouch
er

Description

Prepared:

JV

Journal Voucher

For non cash items of

Income/ Expense or for
Adjustment

BR

Bank
Voucher

Receipt

At the time of depositing

Cash/Cheque in bank

BP

Bank
Voucher

Payment

CR

Cash
Voucher

Receipt

CP

Cash
Voucher

Payment

At the time of issuance of

cheque/transfer
of
funds
from bank
When amount is received in
cash
When amount is paid in cash

Books to be Maintained
Books to be maintained at OPD:
Books of Accounts

Other Books

Bank Book

Vehicle Log Book

Cash Book

Expense Ledger

Fixed Asset Register

Advance/
Ledger

Payable Ledger

Petty
Cash
Ledger

Receivable

Imprest

Monthly
Vehicle
Consumption Report

Non Expandable Equipment

Maintenance Ledger

Consumable
Register

Attendance Register

Monthly Overtime Sheet

Register of Personnel usage

of Office telephone.

Fuel

Stationery

Closing Process
Accounts will be closed manually and FIS on monthly basis. Standard
monthly adjustments will include:
Depreciation;
Prepayment charge off; and
Accruals and provision.
Donor Reporting

Finance will prepare the required information and statements

for the donor as per the agreed formats.
Manager Finance and Accounts will verify the accuracy of the
reporting and will forward the same to CE for clarification.
On reconciliation by Manager Finance and Accounts and
reviewing by PM(s) the report will be sent to CE for
verification.

ADJUSTMENT OF DEDUCTIONS

&

SURPLUS AMOUNT

Deduction from Salaries

All other deductions such as EOBI, advances, employee loan and

taxation will be deducted from all employees regardless they are
getting salary from any donor funded projects or OPD own
account.
All these deductions will be drawn from donor funded projects or
OPD own account and deposited in separate account at the time
of disbursement of salaries. All deductions will be treated under
head.

Bank Profit & Project Surplus Amount

Bank profit from any donor funded program/project accounts will

be treated as an Income and transferred to the OPD own account

at the closing of financial year as per donor agreement.
Surplus amount in any donor funded project accounts which was
not claimed by donor will be treated as an Income and
transferred to OPD own account at the closing of project
period/financial year.

11. INTERNAL

AUDIT

11.1 Policy
11.1.1. Internal Audit (IA) will exclusively provide the internal audit
function within organization on monthly & quarterly basis.
11.1.2. IA will be given direct and ready access to, records, reports,
files, contracts, vouchers, and other documents, as they consider
necessary, for the proper conduct of their audits.
11.1.3. At the conclusion of every investigative assignment, IA will
submit a written report/findings to the Chief Executive
11.1.4. IA will ensure that financial and operating information is
accurate and reliable
11.1.5. IA will ensure the daily up-dating of accounts on manual and
FIS.
11.1.6. IA will provide professional assistance & guidance to Accounts
and Finance department when it is needed.
11.1.7. IA will ensure the practical implication of policies and
procedures on regular basis.

11.2. Responsibility
Internal Auditor will be solely responsible to initiate internal audit at
organizational and program level.

11.3. Procedures
11.3.1IA as per plan will conduct internal audit of accounts and field
units regularly.
11.3.2IA will produce internal audit reports/findings after every
visit/activity and submit to CE.
11.3.3IA will plan periodic audit activities at organizational level.
11.3.4IA will prepare analytical reports on Accounting & Financial
management.
11.3.5IA will conduct annual internal audit after closing the financial
year and submit their report/finding to CE.

12. ANNUAL OPD AUDIT

1.1. Policy
12.1.1. Annual Audit of OPD will be conducted within three months after the
closing of financial year by registered reputable audit firm, unless
specified by the Donor.
12.1.2. Audit of specific program/projects initiated as per the requirements
of project and instructions of donor.
12.1.3. Audit firm can not be repeated for more then three (03) annual
audits.

12.2. Responsibility
12.2.1. MF&A will be responsible to ensure annual audit as per policy and
correspondence with appointed audit firm for annual audit.

12.3. Procedures
12.3.1. MF&A will prepare consolidated financial reports within 20 calendar days
after closing the financial year and submit to BOD.
12.3.2. MF&A will communicate with appointed auditor/audit firm after the final
submission of consolidated financial reports.
12.3.3. MF&A and IA will be responsible to facilitate the auditor during audit
exercise.
12.3.4. After the completions of annual audit all accounting record will be stored in
a safe place for at least three years.