FINANCIAL MANAGEMENT GUIDELINES OF THREE YOUTH POLYTECHNICS

MATINYANI YOUTH POLYTECHNIC
P.O. Box 996, KITUI


FINANCIAL MANAGEMENT GUIDELINES
FIRST EDITION – JULY 2005

This edition of the financial management guidelines was prepared by the following members of the Matinyani Youth Polytechnic Management Committee:

Mr. Stephen S. Mittau, Chairman
Mr. Justus M. Woie, Treasurer
Mr. Gabriel K. Kilonzo, Manager
Mrs. Alice Ngila, Parent Member

The Financial Management Guidelines were confirmed and authorized on July 11, 2005 by the Management Committee of Matinyani Youth Polytechnic for immediate implementation. It was also resoluted that these guidelines would be reviewed with community members at the Annual General Meeting held in December 2005.


TABLE OF CONTENTS
Introduction
Organization Structure and Sources of Funds
Accounting System
Accounting Procedure
Budgeting
Audit


1. INTRODUCTION
1.1 These Matinyani Youth Polytechnic Financial Guidelines shall guide all financial matters within the YP and will be available to all relevant staff and management committee members.
1.2 The purpose of these guidelines is to control the YP finances to avoid wastage, misuse and misappropriation of YP funds; to ensure funds are used as intended; to ensure continuity of the YP; to ensure transparency in the financial management of the YP and to become more prepared to attract donor and government funding.
1.3 The Management Committee shall refer to the guidelines in matters pertaining to the YP’s finances. A copy of the guidelines will be available at all times through the office of the Manager.
1.4 The guidelines will be subject to change by the Management Committee through an official meeting and following discussion and voting as described in the constitution.

2. ORGANIZATIONAL STRUCTURE & SOURCES OF FUNDS
2.1 Below is the organizational chart of Matinyani YP :
COMMUNITY



Ý
MANAGEMENT COMMITTEE



EXECUTIVE COMMITTEEÝ
SUB- COMMITTEES


Ý
MANAGER


SUPPORT STAFF
Ý
INSTRUCTORS
TRAINEE
REPRESENTATIVESÝ



Ý
TRAINEES


2.2 The sources of funds for Matinyani YP are as follows:
2.2.1 School Fees
2.2.2 Contracts
2.2.3 Government Grants
2.2.4 Harambee funds from community
2.2.5 Donors
2.2.6 Sales of goods produced at the YP
2.2.7 Other income generating activities

2.3 The funds of the polytechnic shall be used for the following purpose only:
1. Payment of salaries as in an approved annual and/or term budget
2. Payment of appropriate allowances as in an approved annual and/or term budget
3. Purchasing of tools, equipment and training materials as in an approved annual and/or term budget
4. Repair and maintenance as in an approved annual and/or term budget
5. Purchase of stationeries as in an approved annual and/or term budget
6. Purchase of adequate food and water supplies for trainees and staff as in an approved annual and/or term budget
7. Development of the polytechnic as per the priorities set by the M.C. as in an approved annual and/or term budget
8. Income generating activities as in an approved annual and/or term budget

3. ACCOUNTING SYSTEM
3.1 Non-Technical Setup
The following books and files will be maintained in Matinyani Youth Polytechnic:
1. Cash Book
2. Cash Analysis Book
3. Payment Vouchers
4. Receipt Books
5. Cheque Books
6. Petty Cash Vouchers
7. Asset Register
8. Income File
9. Bank statement file
10. Expenditure File
11. Annual and Budget File

3.2 Security Procedures:
1. All documents produced with the name of the YP will have a copy filed for reference.
2. All accounting documents will be locked up in the drawers safely.
3. All necessary steps will be taken to ensure that the office has good security such as strong doors and windows and always be locked when un-attended.

3.3 Filing:
1. All vouches will be numbered and filed accordingly. There will be distinction between internal and external vouchers.
2. Bank reconciliation statement, cheque stubs and copies of cash and bank books will be filed safely.
3. Withdrawal slips and banking slips will be correctly filed and stored safely.
4. Monthly reports will be filed chronologically and made easily accessible.

4. ACCOUNTING PROCEDURES
4.1 Responsibilities:
4.1.1 The manager will be responsible for the day to day smooth running of the youth polytechnic.
4.1.2 Before any payment is made, a payment voucher will be prepared; verified; approved and authorized.
4.1.3 Strictly the following four bank signatories will be authorized to sign cheques:
- Chairman
- Treasurer
- Manager/Secretary
- District Applied Technology Officer (DATO)
4.1.4 Authority regarding signing of vouchers will need to be shared between three people –
- the person receiving the funds
- the manager
- a witness
4.1.5 The manager will be responsible for ensuring that all assets of the YP are properly maintained.
4.1.6 The Executive Committee comprised of the Chairman, Treasurer and Manager will supervise the approved budget and ensure that it is appropriately followed.
4.1.7 Any officer of the executive committee appointed by the Management Committee will have the authority to conduct a random check of finances without prior notice.

4.2 Cash Handling:
4.2.1 The executive committee and a government officer in charge of polytechnics such as the DATO will be the authorized officers allowed to handle cash for the YP. In the event that an accounts clerk is employed, he or she will also share this responsibility.
4.2.2 The keys of the safe will be kept in custody of the manager.
4.2.3 When cash is received, an income voucher will be issued to the payor.
4.2.4 Cash book must be updated on a monthly basis.


4.3 Petty Cash
4.3.1 Petty cash amount will not exceed a total of Kshs 2,000. This amount will be replenished on surrender and approval of appropriate receipts.
4.3.2 Manager will handle petty cash vouchers while the Treasurer will be responsible for verifying the same.

4.4 Imprest
4.4.1 If a member of the MC or a staff member need to travel or purchase an item solely for the YP, he/she will use an imprest form available from the manager to request any funds.
4.4.2 The imprest form will need to be accompanied by a budget before the request is considered.
4.4.3 The imprest amount will not exceed a total of Kshs 1,000.
4.4.4 All receipts to support the imprest amount will be surrendered within 48 hours after the activity or else the funds will be recovered from the person responsible.
4.4.5 If the old imprest has not been cleared, no new imprest request will be considered.
4.4.6 The issuing of imprest will be contingent upon the availability of funds within the youth polytechnic.

4.5 Daily Cash Procedures
4.5.1 All cash will be receipted at the time it is received. The person making the payment will be issued an appropriate receipt.
4.5.2 Before any payment is made by the YP, an appropriate payment voucher will be prepared, verified, approved and authorized.
4.5.3 All debtors will need to submit an invoice before any payment is made.
4.5.4 The manager will record all daily transactions in appropriate books and report to the Executive Committee on a monthly basis and the MC as requested but at least once per term.

4.6 Monthly Procedures & Reporting
4.6.1 The manager shall prepare monthly financial statements and report to the Executive Committee.
4.6.2 The accounts will be closed and reconciled on a monthly basis.
4.6.3 The cash book, cash analysis book and all other files will be organized and updated monthly.
4.6.4 The manager will monitor the approved term and annual budgets and ensure that expenditure does not exceed budgeted amounts.

4.7 Termly Procedures & Reporting
4.7.1 The manager shall prepare termly financial statements and report to the Management Committee.
4.7.2 The manager will monitor the approved term and annual budgets and ensure that expenditure does not exceed budgeted amounts.


4.8 Annual Procedures & Reporting
4.8.1 The financial year of Matinyani YP starts on January 1st and ends on December 31st every year.
4.8.2 The manager will prepare an annual financial report, approved and verified by the Executive Committee and present to the Management Committee.
4.8.3 The Executive Committee of the YP shall present the annual financial report to the community members and all other stakeholders every year at the Annual General Meeting.
4.8.4 The manager will monitor the approved term and annual budgets and ensure that expenditure does not exceed budgeted amounts.

4.9 Purchasing
4.9.1 Purchasing will be conducted by the manager as per the approved budget and witnessed by a staff member. All purchases will be verified by members of the Purchasing sub-committee of the YP’s Management Committee.
4.9.2 Every purchase must be supported by an approved budget and appropriate receipts and payment vouchers.
4.9.3 No purchases may be made using petty cash vouchers.
4.9.4 The Executive Committee of the YP will conduct random checks on the purchasing records and goods purchased to ensure full accountability.

4.10 Stores
4.10.1 The store room will be the locked room where all excess YP equipment and tools will be kept safely.
4.10.2 Archival files from previous years will also be stored in this room for future reference. No records from the past seven years may be eliminated.
4.10.3 An inventory of all tools, equipment, furniture and other assets will be conducted once a year. This will include assets in the store as well as in the workshops.
4.10.4 The inventory will be conducted by the manager and instructors along with appointed members of the Management Committee. The asset inventory will be presented to the Management Committee for verification and approval.

4.11 Payroll
4.11.1 The payroll will be prepared by the manager and approved by the executive committee. If an accounts clerk is hired, this responsibility will be handed over to the accounts clerk.
4.11.2 The person receiving the salary payment will sign the payroll voucher and the treasurer will verify the payment.
4.11.3 All allowances requested by employees of the YP will be previously approved by the MC and adequately documented with supporting documents such as receipts.
4.11.4 The appointment letter for each employee will be filed and referred to as required.
4.11.5 All cheques must be signed by the authorized signatories.


4.12 Asset Register
4.12.1 All the assets of the YP including tools, equipment, furniture and all immovable and movable assets must be recorded in the asset register.
4.12.2 An annual asset inventory will be conducted by the manager, instructors and appointed management committee members.

5. BUDGETS
5.1 At the beginning of each year, an annual budget will be prepared and reviewed by the MC.
5.2 At the end of each year, the annual budget will be reconciled with actual numbers by the Manager and the difference presented for analysis and discussion by the MC.
5.3 At the beginning of each year, a term budget will be prepared by the Manager and reviewed by the MC.
5.4 At the end of each term, the term budget will be reconciled with actual numbers by the Manager and the difference presented for discussion by the MC.
5.5 The trial balance will be prepared on a monthly, termly and annual basis by the Manager.
5.6 Income and expenses balance sheet will also be prepared regularly.

6. AUDITS
6.1 INTERNAL AUDIT
The MC shall appoint a Finance Sub-Committee to conduct an internal audit of the YP’s finances. Each of the above mentioned books and reports will be carefully examined and recommendations will be made to the manager, staff and MC based on the findings of the audit.

6.2 EXTERNAL AUDIT
6.2.1 Since the YP is handling public funds, an external audit will be conducted once per year.
6.2.2 The MC will solicit the services of a qualified public auditor.
6.2.3 The findings of the external audit will be presented to the community and all other stakeholders during the Annual General Meeting.
6.2.4 All recommendations of the auditor will be followed up by the manager and the MC.