Finance Policy

1. Introduction

READ FOUNDATION (Rural Education and Development Foundation) was founded in 1996 by a small group of social and environment concerned youths at Annavasal in Pudukkottai district. The trust was registered under the Government of India Trust Act and submitting the relevant documents with the Ministry of Home Affairs, Government of India regularly.
Read foundation has the vision to enhance sustainable livelihood to the poor in the community, rescue and rehabilitation of young women working in textile industries, empowering women in the community through education, skill training health camps and protecting the environment by using the natural resources.
This policy ensures proper financial systems and practices in the organization.

2. General guidelines:

– Budget Management should be transparent and accountable
– All project cost should be spent in line with approved budget
– All expenses should be accounted with appropriate supporting documents.
– All staffs should follow proper finance system and procedures.
– All staffs need to submit time sheet and individual report for justifying their salary cost in
the Budget

3. The Budget management

The board has full responsibility for the right budget management in the organization. The Executive Director is responsible for budget management, monitoring and implementation at Project level.
The Executive Director should ensure:
Transparency and accountability
In the beginning of the project year, the Executive Director will orient all projects staffs on budget line items and finance guidance.
He/she will ensure that there are no deviations and each cost has to be spent on particular budget line item only.
He/she will ensure that budgets are managed / spent without any duplication and misappropriation. In case of misuse, he/she will consider that as fraud act and follow regular process for investigation.
The Executive Director in consultation with accountant and key staffs will prepare a budget for each quarter and before sending to donor he/she will submit that for the approval of board members/ board.
The Executive Director will share the quarterly finance report with board members through email.
A budget variance (+5 or -5) chart will be prepared and submitted to board members in board meeting.
If there is any significant variation in budget, (10%) the Executive Director in consultation with board will write to Donor for prior approval.
He / she will present the same report in IDT bard meeting
He/she will get the guidance from board for better budget management and monitoring
All the rolling loans and saving amounts will be deposited in trust bank accounts. All the amounts will be audited.
The program person will maintain the records for the amount deposited and on each month he/she will submit the same report to Accountant and Executive Director for better monitoring.

The Staffing Appointment
The Executive Director is responsible for all staff requirement and conducting interview. The final decision will be done by Board members.
Eligibility:
The accountant should have proper qualification in Accounts Degree and with Additional qualification in Tally course.
At that time of interview he/she will submit the necessary course completion certificate to Executive Director. The duplicate copy will be documented in office.
The Accountant should have minimum work experience (minimum 3 years) in proper accounting systems and Tally operation.
Before induction of staff following procedures will be done
The vacancy will be advertised in a paper or through known source. The applicant must apply for the job through email or post to the Executive Director
Recommendations, direct or charity mode appointment are not encouraged fir this position. This position is filled based on proper interview, eligibility and skill assessment.
The applicant must appear for formal interview process .During the interview he/she should submit their recent degree certificate and Tally course certificate.
In case of working personals or gap in job. He/she should give explanation for the gaps and proper persons for reference.
In case if applicant is identified with fraudulent activity in previous organization or he/she given us falls information and joined in this post , will be immediately sent out without any notification.
3 months will be probation period and if the work is satisfied the contract will be continued for a year.

4.Guidelines for project personnel

For finance person
The finance person should ensure that the grant is used for the project purposes and as per approved budget. If there is any deviation take place the person should report to the Executive Director within 2 hours of time. He /she should ensure proper bills and vouchers for each payment.
There should not be any cash withdrawal above Rs.195, 000 from the Bank for programme expenses.(Reserve Bank of India’s maximum limit is Rs.200,000)
There should not be cash in hand above Rs.10, 000 as on 31 March, June, 30 September and 31 December.
There should not be any pending advances while closing the accounts quarterly, half yearly, annually.
Programme advance to staff should not be more than Rs.10, 000 as cash and maximum programme advance should be Rs.20, 000/- through bank.
Key staffs salaries should be paid through Bank only.
Honorarium for resource person above Rs.30, 000/- should have 10% Tax Deduction at source.
There should not be any excess cash withdrawal beyond the need of the project.
There should not be cash in and cheque payment for the same purpose.( For rent and it should be either in cash or cheque and not both.
Accounts statements with list of vouchers, supporting documents such as bills and invoices, cash withdrawal statement, bank statement should be maintained for every month
The finance person has to submit all expenditure records, bills and vouchers to the Executive Director before 10th of following month.
All bills and vouchers should be scanned and those documents should be protected on the computer. Based on donor request, any scanned bills have to be submitted to them.
Bank Reconciliation statement for every month should be maintained.
There should not be much deviation under allotted fund for each program activity.
Scanned copies of receipts for fund transfer from AAP/ donor along with Bank Advisory should be reported to AAP within 3 days from the date if receipt. The acknowledgement receipt has to be documented in office.
Funds received from AAP and others donors has to be updated in Ministry of Home affairs FCRA section on or before 15th January, 15 April, 15 July and 15 October every year and also in IDT website.
Annual financial Audit report should be submitted to AAP /Donor before 31 of July. In case of delay the Project Director should get permission for extension.
There should not be any huge cash withdrawal in the last 3 working days of March, June, September and December. Because it will make cash in hand, while closing accounts. All Income Tax return for the financial year should be filled before July every year.
Annual returns should be filled in FCRA website.(Well in advance ).
All Income Tax notices should be replied promptly in consultation with Auditor.
For Staff
There should not be self vouchers signed by staff for regular program expenses. The staff can use petty vouchers for the expenses below Rs.500. They should ensure that they get the signature of the recipient, who receives payment.
Staff cannot take advance for any special course. The payment will be made based on the invoice from the concern party or institute. The Accountant with the approval from the Executive Director should ensure that special course payment is transferred directly to the party through cheque / cash.
All travel forms should carry full details, including purpose, mode, tickets and time sheet.
The staff should ensure that they submit proper supporting documents before getting payments from the program in charge / Accountant.
Expenditure for trainings / events should carry list of participants with signatures and photos.
The finance person should ensure that the Resource Person sign TOR and Child protection form before undertaking the assignment.
Sub vouchers should be maintained for petty expenses without bills like auto fare and water bottle etc.
Once the program is completed the program in charge should ensure that the training report is submitted along with expenditures statement to the Executive Director with 3 days of the program.

5. Persons Eligible to withdraw cash from banks

Person 1:
The finance person is responsible to withdraw cash from bank.
Person 2:
The program in charge is responsible to withdraw cash from bank (In the absence of person 1)
Person 3:
The designed program coordinator is responsible to withdraw cash from banks (In the absence of above 2 persons)

6. Process before withdrawal

The board and the financial trustee is the ultimate authority to approve cash withdrawal and sign check.
Level 1 :
The program in charge will ensure that he/she provides proper fund request to, the Executive Director before any withdrawal.
The Executive Director should approve the specified withdrawal amount and he/she will ensure that, it is in line with approved budget and it is appropriate. All the above process will be done in mode of written / email. The copy will be documented in office.
Level 2 :
Once it is approved, the program in charge will prepare a Check approval request form for managing trustee. (The form will be included the information of who is going for withdrawal, purpose and the amount, date.
After preparing the request the program in charge will submit this request to board. Subsequently, the board will verify the details and approves the check with signature. If more clarity is needed, he / she will check with the Executive Director.
After getting signature the program in charge will submit this to Accountant for withdrawal. The Accountant will maintain register for all withdrawals.

7. Cash handling

Only the program persons are responsible to handle cash and they will keep report to their line the Executive Director.
Level 1:
The program in charge is responsible to handle program expenses (trainings, Tutor salaries, non personal cost and any other program expenses). He / she will make the payments and ensure proper supporting accounting.
Level 2:
The Accountant is responsible for handling Petty cash (Rs.2000).
This Petty cash will be used only for daily expenses of the project like (stationary, Postages etc). He / She will maintain separate book.
At the end of each day He / She will submit the book and balance money to board and will get signature in a register. In the absence of board, He / She will submit this to Program in charge.
The program in charge wills overseas the management of petty cash. At the end of each month the finance person will verify bills and accounts and will reimburse the amount for petty cash. Every month the Executive Director will verify the petty cash note.
Persons not involved in cash handling
For better monitoring and to ensure transparency the following person’s don’t involve directly in cash handling. However they are responsible for overall management and monitoring the budgets.
The Accountant will not handle program cash. However before accounting He /She will check each payments and supporting documents.
The Executive Director will not handle cash but He / She will do over all management and monitoring of each payments and records in line with approved budgets, programs and MOU.
The management (board members) will not handle cash but will ensure proper management of budgets in line with MOU and programs. The Executive Director will keep prepare a check list / flow chart to monitor the cash management.

8. General Financial reporting

Every year, the managing trustee will submit the Annual Audit report to board members for approval.
The finance person has to prepare the following reports / monthly or quarterly on time. He / She will report this in advance to the Executive Director for review. He /She will use the appropriate reporting formats for report preparation.
Minimum, financial reports will include:
– Expenditure against the agreed budget
– General ledger entries.
– A copy of bank statement showing money received.
– Rolling loan register – if applicable (for projects that provide that loans to the community)
– Lease bond / deposit register – if applicable.
– Monthly finance reports in tally – before 20th of every month. Quarterly finance reports submit to Executive Director – 10th of following months and updated assets list.
Fund request
Monthly: The program in charge will prepare fund request and send to the Executive Director before 27th of each month. Based on the approval from the Executive Director he / she will proceed in making payments.
Quarterly: The program in charge will prepare Quarterly fund request and send to the Executive Director before 7th of following month. The Executive Director will review the request and will send to donor before 14th of following month.
The Executive Director will submit the quarterly fund request copy to the board for approval.
If there is any variation (+ / – 10% ) the Executive Director with the consent of board will write to donor for permission.
Monthly Expenditure Statement
The program in charge will send the monthly expenditures statement to the Executive Director on before 4th of following month.
The Executive Director will review the statement and the supporting documents. After the review, within 3 days, he/she will send this statement for final accounting in tally. If there is any clarification he/ she will write to program in charge within a day and the PO needs to respond the details by end of following day.
The finance persons will prepare Tally report within 5 days from the approval. At the end of month the Executive Director will submit the tally reports to board.

9. Finance reporting structure

– The coordinator will report to program in charge on any financial transactions (daily).
– The finance person will report to program in charge on daily work. He / She will report to finance person I for preparation of reports vouchers and major dealings (daily/weekly/monthly).
– The program in charge will report to the Executive Director on fund request preparation, money dealings, reports etc.
– The finance person II will report to the Executive Director on cash withdrawals/ finance reports etc.
– The Executive Director will report all the above dealings to donor (weekly / monthly). He / She will report all the above process in a board meeting.

10. Fraud control

IDT does not tolerate fraud, wrong doing, corruption, bribery or other financial impropriety in any of its activities.
IDT has the process of investigation to deal with fraud issues. Once the issues are identified the Executive Director will make the initial investigation.
Within a day he / she will inform to the board and with the consent of managing trustee he / she will inform within 2 days.
After the initial investigation, he or she will form a team to make proper investigation. The report will be submitted to board and the issue will be settled with appropriate solutions. The copy of the report will be submitted to donor. All the investigation will be completed within a month.
IDT would get donor guidance, to settle project related issues.
Fraud incident reporting structure
Once, any payments or supporting document is suspected, it will be reported to the Executive Director within 24 hours. In case if the issue is about the Executive Director the person can report to managing board within 2 days.
The Executive Director will start the initial investigation within a day. Before starting the investigation he will report primary details to managing board. At the end 1, he/she will give formal report to board.
The Executive Director will inform the donor about the issue within 2 days.
Based on directions from board and donor, the Executive Director will commission a 3 members team, to investigate the matter.
All the above process will be completed within a month.
If the issue is about the Executive Director or key staffs, the matter will be discussed in IDT board and the decision will be taken.
Complaint process for staffs and community
The person can raise their complaint in writing or verbal are equally valid. Complaints can be made by phone, email or letter.
They can discuss the issue with a person, they trust and this person can make the complaint on behalf.
If they need any help and wish to remain anonymous, IDT will assist them to make a complaint by providing access to a third party or staff member not associated with the complaint.
When making a complaint, the person needs to provide as much detail as possible about the complaint and that person should explain the outcome, seeking to rectify this matter.
He / She should address the complaint to the Executive Director.

11. Procurement

Where projects involve purchasing goods or services, these should be procured through a fair, transparent and equitable procedure.
A minimum of two quotations should be sought for items of expenditure exceeding Rs.20, 000/-. It is necessary to find supplier to provide with good services.
The finance person should submit these details to the Executive Director before one week of the purchase. The Executive Director will verify the details and in consultation with board he / she will gave approval for purchase.
If the purchase amount exceeds the approved budget, the Executive Director will seek permission from donor from mail.
The Executive Director will prepare a check list to ensure, good service, quality and proper value of the goods.

12. Assets

All the assets purchased under project money should be entered in the Assets Register.
Assets purchased through the project remains the property of the project and are to be used for the implementation of this project only.
The Assets register should be updated upon procurement or disposal of an asset, and reviewed annually. Donor shall be notified of such assets procured through projects. It should be reported in each quarterly report and in each financial year report.
At the end of the project, the disposal or handover of Assets will be done based on Donor direction / permission.
Funds realized from the disposal of assets must be used to support activities, agreed on by donor and that should benefits disadvantaged communities.

13. Documents to be maintained in relation to finance

The finance person should ensure that finance records are maintained properly for future reference and auditing. The tally documentation is recommended.
Legal aspect
Registration certificates (trust, FCRA, IT)
Filling of FC-6/4, Income tax filling, TDS.
Donor’s requirements
Project proposal
Sanctioned budget
Project management
Grant receipts
Project specific Audit report & statements
Yearly organizational audit reports Narrative report.
Books of Accounts & Financial Records
Primary books
Cash book
Bank book (pass book, statement)
Subsidiary books
Ledger, salary, assets/inventory, stock/distribution, advance/settlement, bank reconciliation statement any other, updated vouchers files (cash, bank and journal), cash withdrawal records and Cheque issue details.

Finance monitoring tools and reports.

Budget vs. actual statements: Monthly / quarterly / half yearly/ yearly activity report and workshop / training / meeting report etc.
Organizational Governance: Minutes of the board / trust meeting list of trustees, managing trustee & treasurer bank signatories.