Sarvodaya Financial Manual 2016 by sarvodaya newspaper

Lanka Jathika Sarvodaya Sharamadana Sangamaya

Accounting Policies and Procedures Manual

01-105

Table of Contents Abbreviations CHAPTER ONE INTRODUCTION 1.1 About Sarvodaya 1.2 The Manual 1.2.1

Objective of the Manual

1.2.2

Authority and Scope of the Manual

1.2.3

Table of Revision

1.3 Organisational Structure

CHAPTER TWO BUDGETS 2.1 Outline of the section 2.1.1 Purpose of Budgeting 2.1.2 Roles and Responsibilities 2.2 Annual institutional budget 2.2.1 Budget preparation responsibility 2.2.2 Recognition of Income in the Budget 2.2.3 Capital Expenditure Budget 2.2.4 Key Points and Budget revisions 2.2.5 Expenditure not included in the annual budget. 2.2.6 Time line for Budgeting

CHAPTER THREE ACCOUNTING POLICIES AND FINANCIAL REPORTING 3.1 Outline of the Section 3.2 Basis of Accounting 3.3 Financial Reports 3.3.1 Income Statement / The Statement of Comprehensive Income 3.3.2 The Balance Sheet/ The Statement of Financial Position. 3.3.3 Cash flow Statement 3.3.4 Statement of Movement of Reserves 3.4 Financial Reports and Reporting Time Frame 3.5 Record Keeping Policies

CHAPTER FOUR MANAGEMENT OF BANK ACCOUNTS AND INVESTMENT IN FINANCIAL INSTITUTIONS 4.1 Outline of the Section 4.2 GENERAL 4.3 Authority to open/ close Bank Accounts and Investments in Financial Institutions 4.3.1 General Terms 4.3.2 Managing of Bank Accounts at Head Office Level 4.4 Management of Investments in Financial Institutions at Head Office Level 4.5 Managing of Bank Accounts at District Level 4.6 Management of Investments in Financial Institutions at District Level

CHAPTER FIVE REVENUE /INCOME MANAGEMENT 5.1 Outline of the Section 5.2 Roles and responsibilities in Revenue Management 5.3 Sources of Income 5.3.1 Membership fees 5.3.2 Donations 5.3.3 Farm Income 5.3.4 Interest Receivable 5.3.5 Rent Receivable 5.3.6 Hire of Auditorium/Halls 5.3.7 Hostel Fees 5.3.8 Canteen Income 5.3.9 Income Generating Projects 5.3.10 Other Income 5.4 Process 5.5 Credit Control 5.6 Printing and distribution of Temporary receipt books 5.7 Waiver of Income, discounts and dishonored Cheques 5.8 Refunds

CHAPTER SIX PAYMENTS AND EXPENDITURE 6.1 Outline of the section 6.1.1 Roles and Responsibility - Payments 6.2 Payment Procedure

6.2.1 Payment Vouchers 6.3 Petty Cash Funds 6.3.1 General Policies 6.3.2 Operation of Cash Payments Imprest 6.4 Advances 6.4.1 General Information 6.4.2 Authority for Advances 6.4.3 Settlement of Advances 6.4.4 Project Advances to units, districts and divisions

CHAPTER SEVEN PROCUREMENT AND DISPOSAL PROCEDURE 7.1 Outline of the section 7.2 General process 7.3 Meetings of the Tender board 7.4 Method of application for purchases through Tender Procedure 7.5 Methods of Calling for Tenders 7.6 Approval of Tender Documents 7.7 Refundable Tender/Bid Deposits and Security Deposit for Performance 7.8 Issue of Tender Forms 7.9 Receipt and Opening of Tenders 7.10 Scrutiny of Tenders 7.11 Consideration of Tenders 7.12 Technical Evaluation Committee 7.13 Acceptance of Tenders 7.14 Restricted Tenders and Quotations 7.15 Purchase of Spares for Machinery and Equipment 7.16 Purchases by Districts 7.17 Deviations from Tender Procedure 7.18 Purchase Procedure 7.19 General

CHAPTER EIGHT ASSET MANAGEMENT 8.1 Outline of the Section 8.2 Maintenance of Assets 8.3 Disposal of Assets

8.4 Writing off Assets 8.5 Taking Assets out of office premises

CHAPTER NINE TERMS OF REFERENCE OF THE MANAGEMENT FINANCE COMMITTEE (MFC) 9.1 Primary Objective 9.2 Membership and Attendance 9.3 Meetings and procedures 9.4 Duties 9.5 Reporting Responsibilities On financial matters

CHAPTER TEN TERMS OF REFERENCE OF THE MANAGEMENT AUDIT COMMITTEE (MAC) 10.1 Primary objective 10.2 Membership and Attendance 10.3 Meetings and procedures 10.4 Duties

CHAPTER ELEVEN INTERNAL AND EXTERNAL AUDIT 11.1 Appointment of Auditors 11.2 Rights and Duties of the Auditors 11.3 Tabling of Financial Statements 11.4 Internal Audit

CHAPTER TWELVE HUMAN RESOURCE â&#x20AC;&#x201C; SALARIES, LOANS AND TRAVEL 12.1 Outline of the Section 12.2 Monthly Salaries 12.3 Transfers and Promotions 12.4 Allowance for Part of a Month 12.5 Death or Resignation of an Employee 12.6 Statutory Contributions 12.7 Travel on Duty 12.8 Staff Loans

Annexure 01 - Change Request Form Annexure 02 - Payment authorization Limits Annexure 03 - Authorized Signatories Annexure 04 - Receipt Annexure 05 - Quotation format Annexure 06 - System Generated Invoice Annexure 07 - Cost Analysis Annexure 08 - Temporary Receipt Annexure 09 - System Generated Payment Voucher Annexure 10 - System Generated Bank Reconciliation Annexure 11 - Request for Payment Annexure 12 - Advance Request Annexure 13 - Advance Settlement Annexure 14 - Acknowledgment of Payment Annexure 15 - Requisition Form Annexure 16 - Bid Analysis Annexure 17 - Request for Quotation Annexure 18 - System Generated Purchase Order Annexure 19 - System Generated GRN Annexure 20 - Details of Vehicle hire Annexure 21 - Running Chart Annexure 22 - Vehicle Request Form Annexure 23 - Funding Request Form

Abbreviations LJSSS

Lanka Jathika Sarvodaya Shramadana Sangamaya

SSS

Sarvodaya Shramadana Society

SED

Social Empowerment Division

SRTS

Sarvodaya Rural Technical Services

MAC

Management Audit Committee

MFC

Management Finance Committee

Executive Director

D-FOD

Director/ Field operations division

Finance Director

Project Director

Financial Coordinator

OIC

Officer in Charge

GRN

Goods Received Note

Head office

Project Manager

SPC

Social Programme Coordinator

Programme Coordinator

Prog.M

Programme Manager

District Coordinator

Official Committee

EXCO

Executive Committee

RDM

Resource Development Manager

Head Quarters

General Secretary

Audit Committee

HOD

Head of Division/District

Management Committee

CIA

Chief Internal Auditor

HRM

Human Resource Manager

CHAPTER ONE INTRODUCTION 1.1 About Sarvodaya

Sarvodaya is Sri Lanka's largest people's organisation. In 1958, Sarvodaya

Shramadana

Movement was initiated as an education program aimed at enabling students and teachers to live and work with the most remote village communities in Sri Lanka to lend a hand and develop self-help initiatives. Within few years â&#x20AC;&#x153;service learning programmeâ&#x20AC;? had expanded into a fullfledged development movement in hundreds of villages, with the goal of a comprehensive and nonviolent social transformation. Over the last 50 years Sarvodya has become a network of over 15,000 villages; which provides comprehensive development and conflict resolution programs to communities. Sarvodaya organization includes, 26 district Centers and 9 Independent Units. Lanka Jathika Sarvodaya Shramadana Sangamaya (LJSSS) was incorporated by an Act of Parliament in 1972 to take over the Sarvodaya Shramadana Movement. LJSSS is a non-governmental, non-profit oriented and non political people's development movement. Thus this is gazetted as an approved charity under section 8(d) of the Inland Revenue act no. 28 of 1979. The main activities of LJSSS are in the field of Social, Technological and Economic Empowerment.

Sarvodaya In Sri Lanka

District Centers

Development Educational

Institutes

Resource Centres

farms

Multipurpose Centres

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1.2 The Manual This Manual of accounting procedures and policies is designed and developed to document, formalize and guide the Management and staff of LJSSS with all matters relating to Finance Management of the organization. Thus enhancing and ensuring accountability and transparency in all matters related to finance management. Over the years certain practices, procedures and policies have been sometimes informally and at other time formally developed and followed by LJSSS. This forms a very essential part of LJSSS and therefore a document, which captures these practices, policies and procedures, was required to ensure consistency and good practice. The manual would be used to communicate, monitor and control the financial activities of the entire organization.

The Lanka Jathika Sarvodaya Shramadana Sangamaya's Financial Management Policy and Procedure Manual provides the policies and procedures for all financial transactions which must be followed by all staff. In order to ensure that all financial policies are current and relevant, it will be necessary to modify and amend some sections of the policies and procedures or add new procedures to this manual. Any suggestions, recommendations or feedback on the policies and procedures in this manual are welcome. Employees are encouraged and requested to recommend any amendments or additions to this manual and the request should be made to the Finance Director by filling in the request form (Annexure 1-Change Request Form LJSSS/FMCRF/01). The Finance Director will discuss this at the management committee and put this forth for approval at the Official committee. 1.2.1

Objective of the Manual

4 To standardize the way Finance and accounting activities are carried out in order to ensure consistency.

4 To provide guidance to all staff for smooth execution of their roles and responsibilities in finance management.

4 To have in place an adequate system of internal controls that promotes a high level of compliance with the LJSSS policies and procedures.

4 To continuously review the internal control systems to be able to meet the challenges of growth.

4 To implement and maintain this system of control to assist LJSSS to carry out its activities in an efficient and orderly manner.

4 Ensure adherence to management policies, safeguard the assets, and secure the accuracy and reliability of all records.

4 This manual brings together those policies and procedures that relate to improving internal control structure and the accounting activities. 1.2.2

Authority and Scope of the Manual

4 The instructions contained in this manual are to be read in conjunction with the statutory provisions of relevant Acts and Financial Regulations governing the operations of Non profit organizations in Sri Lanka.

4 The instructions in this manual are under the general management and supervision of the Finance Director, but it is also the duty of all personnel, especially the Executive Director, Divisional Heads, Managers, District Coordinators and all accounting officers to take care that these instructions are observed. All officers concerned with the collection, disbursement and safe custody of LJSSS money or 4 other LJSSS property, are required to observe these Accounting policies and procedures laid down herein which must be strictly followed. 1.2.3 Table of Revision Revision History and Approval

Revision no

Revision Date

Revised Section

Approved date

Signature

Name

1.3 Organisational Structure

The organization structure of LJSSS clearly defines the line of reporting and the line of delegation. At each point of this structure there is defined levels of responsibility in Finance management. This structure would help staff as well as other stakeholders of LJSSS to understand the different roles and responsibilities of each position and individuals.

Organisational Structure

Finance Management Roles and Responsibilities Task

Responsibility

Authorisation

Preparation of Annual Budget

Official committee

Preparation of Project/ Divisional/District Budgets

PD/Divisional/ District Heads/D-FOD

FD/ED

Payments

Refer Annexure 2 - Payment authorization Limits LJSSS/FMASL/002

Payment Requests

Unit/Divisional Accountant/ PM/PC/SPC-Person concerned

Unit/Divisional Head/DC

Payment Vouchers

Finance Unit/FC

ED/FD/DC

Petty Cash

Cashier/Accountant/FC

Unit head/FD/DC

Purchase requisitions

Unit/Divisional heads/DC/PC FD/FC/PD/D-FOD -Person concerned

Bid Analysis Form

Unit/Divisional heads/DC for open quotations, Secretary of the Tender board for sealed quotations

FD/ED/D-FOD for open Quotations Tender board for Sealed Quotations

Goods received notes

Person in charge in accounts/FC

Finance Unit/DC

Issuing of Receipts

Cashier/FC./Finance unit

Signing of cheques

Authorised Signatories â&#x20AC;&#x201C; Annexure 3 - Authorized Signatories LJSSS/FMAS/003

General Advance Requests

Unit Heads/DC

Finance Director/FC

Programme Advance Requests

Person carrying out the activity and who would be needing the money.

ED/FD/DC/FC

Advance Settlements

Person Taking The advance

PC/FC/FD

Task

Responsibility

Authorisation

Salary Advances

Finance

Unit heads/FD/DC

Staff Loans

HR/FC

ED/FD/DC

Tenders

Unit/Divisional heads/DC

Tender Board for sealed quotations

CHAPTER TWO BUDGETS 2.1 Outline of the section

This section administers and governs all matters related to the preparation of budgets, both annual budget for the organization as well as programme budgets. This outlines the formats to be used, different levels of responsibility and the information requirements for the preparation of budgets. 2.1.1 Purpose of Budgeting

4 It helps to develop realistic financial plans that would facilitate the allocation of resources based on LJSSS activity priorities.

4 Provides a control tool to ensure that spending is as planned and facilitates the investigations where there is a significant difference.

4 Effectively supports the improvement of the annual business plan and it's periodic review.

2.1.2 Roles and Responsibilities Responsible officer Finance Director

Description Issue approved guidelines to all relevant staff for the preparation of budgets. Including assumptions and institutional priorities. Initiate and facilitate a discussion regarding the process and plan for annual budgeting.

Accounts Officers

Prepare current year to date financial data with projections for year-end totals.

Documents

Budget codes Exchange rates Spreadsheet formats Budget format

Meetings and Discussions

Current year actuals

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Responsible officer

Description

Heads of Divisions and districts

Submit divisional/units budgets in the right format and on time

Finance Director

Budget Negotiations with all the heads of divisions and districts.

Heads of Divisions and districts

Revise the budget on agreed feedback

Finance Unit

Headed by the FD prepare the draft LJSSS annual budget consolidating all divisional and district budgets

Documents l

Departmental draft budgets

Amended/ Revised budget

Draft Institutional Budget.

Finance Director

Forward the draft Budget for Approval to the Official Committee

Approved budget

Finance Director

Distribution of the approved Budget

Shared approved budget with all relevant staff

Finance Officer and Finance Coordinators

Enter the budget to the Computer generated budget. computerized system Submission of the same to FD

Unit/Divisional and District heads

Once the budgets are approved and finalized, ensure that all expenses are within budget.

Budget Vs Actual Comparison. -Variance report

Finance Unit

Headed by the FD ensure that the budgeted targets are inline. Report significant variance and record lessons learnt

Institutional budget Vs Actual report with notes for variance and requests for amendments if required.

2.2 Annual institutional budget LJSSS shall have an institutional budget for each financial year. 4 The Budget should be approved by the Official Committee at least two weeks prior to 4 the commencement of the related financial year. During and after the preparation of the budget the following should be kept in mind. 4 4 Organization's Vision and Mission 4 Organizational Objectives 4 Policies 4 Targets 4 Sources of Finding When Preparing the budget the following personnel will contribute 4 4 Head's of each department 4 District Coordinators 4 ED The annual budget after approval by the Official Committee shall be forwarded to the 4 heads of divisions and District coordinators. 2.2.1 Budget preparation responsibility Each Department/section is responsible for preparing their draft budgets. 4 These should be submitted to the Finance Director three months prior to the relevant budget 4 year. These should be reviewed and revised as necessary by the senior/top management, and 4 consolidated by the Finance Director. When reviewing the following should be ensured; Unauthorized increase or Change in the Cadre are not made. 4 Changes in salary scales are not made which is beyond the accepted and authorized 4 structure of LJSSS. Provision is made only for legitimate expenditure, which is foreseen and is absolutely 4 necessary. The provision is realistic and is not significantly over or under estimated. 4 The draft budget would then be produced to the Official committee for approval. 4

It is the responsibility of the Finance Director to ensure that the budget is submitted on time 4 for approval. 2.2.2 Recognition of Income in the Budget Income or Funding sources when preparing the budget should be categorized based on the following headings; 1. Membership fees 2. Foreign funds; a) Restricted b) Unrestricted 3.Local funds; a) Restricted b) Unrestricted 4. Fixed Deposit Interest 5. Dividends 6. Independent Units (Operations) 4 District Centers 4 Independent Units 7. Resource Development 4 Rent Income 4 Hall and Hostel fees 4 Canteen Income 4 Farming Income 8. Other income 2.2.3 Capital Expenditure Budget The Capital expenditure requirements should be included when preparing the divisional/ district budgets. This should be categorized under the following headings; Acquisition of Fixed Assets 4 Replacement of Fixed Assets 4 These should be further categorized under; Land and Building 4 Furniture and Fitting 4 Motor Vehicle 4 Plant, Machinery and equipment 4 Office equipment 4 Tools and Implements 4

2.2.4 Key Points and Budget revisions

4 Approved budget will be circulated to all heads of Divisions and District Coordinators. 4 Expenditure should always be within the budgeted figure. 4 If any expenditure is expected to exceed the annual budget allocation the officer responsible should notify the head of division or District Coordinator who should report this to the FD.

4 FD after discussion and negotiation together with the ED will consider the revised request and obtain approval accordingly.

4 The Official committee should approve these Budget revisions. 4 If there is definite savings available under one budget line in the same district or division then this savings could be transferred to another budget line where it is expected to be higher than anticipated.

4 In such instances ED can at his discretion approve the changes. 4 On approval of the ED provisions made under one Capital item can be transferred to another with in the same division or district.

4 However with the approval of the FD each division and district can allocate a certain sum of money for unforeseen and unexpected yet unavoidable expenses.

4 This would be categorized as reserves and the amount would be decided by the FD during the finalization of each Divisional and district budgets.

4 FD will finalise the amount in consultation with the heads of each division and or district. 4 These reserves should only be used for strictly unavoidable expenses. 4 The head of the unit or division prior to incurring the expense should approve such expenditure. 2.2.5 Expenditure not included in the annual budget.

4 Expenditure not itemized and specifically provided for in the annual budget should not be authorized or incurred without the approval of the ED.

4 Any expenditure which was unforeseen at the time the budgets were prepared and which is urgent and absolutely necessary to ensure the smooth function of the project or operations, may be incurred with the sanction of the ED on recommendation of the FD.

4 This is if the expense exceeds the reserves budget.

2.2.6 Time line for Budgeting

4 30th November - FD will circulate all required information and formats to each Unit/district. 4 30th December – 1st Draft of the budgets should be sent to HQ by all units/Districts th 4 30 January – Completion of all negotiations and Final budget would be sent to HQ

4 End February – HQ finance division will complete consolidating the budgets 4 Mid March – Approval from the OC will be obtained. 4 20th March – FD will share the approved budget with the respective unit/District 4 End of March – Complete feeding the budget into the Sage 50 Finance package.

CHAPTER THREE ACCOUNTING POLICIES AND FINANCIAL REPORTING 3.1 Outline of the Section This section outlines the general accounting policies and Financial reporting practices currently used at LJSSS. Being a non-profit organization working for the betterment of society, these policies and practices are essential to LJSSS to ensure accountability and transparency to its stakeholders. This section defines the policies and practices in;

4 Basic accounting 4 Financial Reporting

3.2 Basis of Accounting Lanka Jathika Sarvodaya Shramadana Sangamaya maintains and reports financial data using the Sri Lanka accounting standards. All Financial statements are prepared in accordance to the Sri Lanka accounting standards. While considering the accounting treatment LJSSS also refers to accounting standards for small and Medium organizations in Sri Lanka. Statement of recommended practices for non-profit organizations in Sri Lanka, issued by the Institute of Charted Accountants in Sri Lanka is also used as a guide when preparing Financial Statements. In order to comply with National and International standards of accounting the following concepts are reflected;

4 Accrual Concept LJSSS adopts accrual based accounting. That is recording expenditure and income when it becomes due. i.e. in some cases before the associated cash flow takes place. However project accounts are maintained on cash basis for ease of report as most donors require cash based finance reports.

Matching Concept 4 Based on the assumption that related period costs are expensed as incurred and matched against related revenue for the relevant period. Recognition Concept 4 Is based on the assumption that revenue is recognized only when exchange of transactions have occurred. NOT when revenue is anticipated or assured. Historic Cost Concept 4 Assets and Liabilities of the organization are recorded at the acquisition value and not Market value. However Assets are revalued from time to time to meet the standards. Going Concern Concept 4 Is based on the assumption that the organization will have a long life. i.e. The organization will continue to function in the foreseeable future. Materiality Concept 4 Is based on the assumption that an item is material if it's inclusion or omission would influence or change the judgment of a reasonable person's review of the financial statements. Non cash transactions 4 Going by the accruals based accounting non-cash transactions such as Depreciation, Provisions, and Bad debts etc. are recorded. These non- cash transactions have a monetary value and contribute to the business unit's financial position.

3.3 Financial Reports At Lanka Jathika Sarvodaya Shramadana Sangamaya the following financial statements are prepared by HQ for the annual institutional audit

4 Income Statement/The statement of Financial Activities/Comprehensive income Statement.

4 Balance Sheet/ The Statement of Financial Position 4 Cash flow Statement Movement of reserves 4 Notes 4

3.3.1 Income Statement / The Statement of Comprehensive Income This statement reports the operating performance during the time period. It records all the income and expenditure of the organization during the period, both cash and non-cash transactions. This statement presents the financial outcome of the organizations operating activities for a given period and allows managers to monitor the performance of the organization. 3.3.2 The Balance Sheet/ The Statement of Financial Position. The statement gives a snap shot of the organization. It records the current values of the organizational assets and liabilities. The Balance sheet gives and overall view of the Financial Position of the organization at any given point of time. 3.3.3 Cash flow Statement This statement presents all the receipts and payments of the organization. Cash flow statement is based on cash transactions only. This gives an idea about the liquidity of the organization. 3.3.4 Statement of Movement of Reserves Unlike in a private company for a non-profit organization this statement is of significance since non-profit organisations and NGO function with many donations. NGO's also have a responsibility to be transparent and accountable to all it's stakeholders. This statement clearly shows the different fund balances of LJSSS and the movements between funds and transfers from funds which would then give an year-end balance. All Restricted funds will be accounted for separately by LJSSS as this is more transparent. Unrestricted funds will be at the discretion of the Official committee.

3.4 Financial Reports and Reporting Time Frame 4 Operating with many branches, units and districts, Reviewing and monitoring the financial performance of LJSSS is of high importance for LJSSS.

4 Therefore Head office as well as all the units, branches and district offices, should prepare the following financial reports monthly.

4 Adhering to the given time frame will be monitored closely and any necessary actions would be taken if there are delays.

If the accounts and statements are not submitted to HO at the given time period, 4 preparation of finance reports by head office would get delayed and this could have a significant impact on the project monitoring and the financial performance of LJSSS.

Report

Deadline for Districts and units

Project Finance Report

Two weeks prior to the deadline as per project agreement

Variance Report

By the 10 of the following month

Unit/District Finance reports and HO finance report

Deadline for HO One week after receiving the finance report. (this will allow another week to do any necessary changes)

By the 15 of the following month

By the 10 of the following month

HO cash flow forecast

Not compulsory for Units and district officer however it is strongly recommended.

By the 10 of the Following month.

Bank Reconciliations

By the 10th of the following month

Trial Balance

By the 10th of the following month

Advance Schedule

By the 10 of the following month

Age Analysis â&#x20AC;&#x201C; List of Debtors and creditors generated from the system

By the 10 of the following month

By the 10th of the following month By the 10th of the following month

The above financial reports and statements would be submitted by units and district officer 4

to HO finance by the given deadlines and HO finance will submit it's reports monthly to the management committee.

HO will submit financial statements monthly to the official committee. 4

3.5 Record Keeping Policies Accuracy 4 At Sarvodaya substance is given prominence over form as we believe that accounting records must accurately and properly reflect the true substance in order for the statements to give a true and fair view. All transactions are recorded in a timely manner and in accordance to the regulations of the country and the Sri Lanka Accounting standards. Accounting Software 4 At LJSSS currently Sage 50 2015 version is used to record all financial transactions and to produce the relevant management information for decision-making. This software is installed at each unit and district officers and the FC's are expected to only use this system. This would ensure consistency in accounts amongst the various units and district officers. Chart of Accounts 4 Chart of accounts are created in the accounting software and inline with the management information requirements. All effort should be taken to ensure that the chart of accounts are consistent and facilitate the generation of reports that help decision making as well as statutory reports. Cost/Profit Centers 4 Sarvodaya operates through 26 district centers and nine independent units. In order for the management to have a sound understanding on the performance of each of these centers all revenue and expenses for each center should be recorded separately. Even though Sarvodaya is not profit oriented this is required to monitor and manage projects as well as to mitigate the risk of running out of funds and ensure the continuity of the Organization. Records 4 Following records are maintained in addition to the supporting documentations Cash records 4

4 Cash receipts â&#x20AC;&#x201C; Annexure 4 - Receipt LJSSS/FMRC/04

General Journals – System generated. 4 General Ledger – In the system 4 Subsidiary Ledgers – In the system 4 Programme advance records 4 Petty cash imprest records 4 Bank account records 4 4 Bank statements 4 Bank reconciliations – Annexure 10 – LJSSS/FMBR/10 4 Bank account and investment register Personnel Records 4 4 Contract 4 Compensation 4 Increments 4 Loans 4 Gratuity Registers 4 4 Fixed asset register 4 Register of Members 4 Crop Register 4 Hall hire register 4 Hostel hire register 4 Inventory Register Purchase Ledger 4

CHAPTER FOUR MANAGEMENT OF BANK ACCOUNTS AND INVESTMENT IN FINANCIAL INSTITUTIONS 4.1 Outline of the Section This section defines the scope of managing the bank accounts of LJSSS and investment of its resources. Even though LJSSS is not a profit oriented organization, efficient and effective use of funds are very important to Sarvodaya as a sustainability method. It is very critical to ensure that the available resources are optimized in order to sustain the organization during times of fund deficiencies and to ensure Sarvodaya is self-sustaining.

4.2 General LJSSS maintain different types of bank accounts and investments as noted below in both public and private licensed commercial banks incorporated in Sri Lanka. Types of Bank Accounts and Investments 01. 02. 03. 04. 05. 06.

Current Accounts Saving Accounts Money Market Accounts Short term fixed deposits Long term fixed deposits Treasury bills

4.3 Authority to open/ close Bank Accounts and Investments in Financial Institutions 4.3.1 General Terms Executive Council is the apex body that is authorized to open/close Bank Accounts and to take decisions related to Investments in Financial Institutions on behalf of LJSSS. In an exceptional situation, taking in to consideration the urgency, the Finance Director should recommend and advice the GS and ED with regards to the management of the bank accounts as well as the investments. With the approval of GS and ED opening/closing or any changes to the investments can be done. However, Finance Director should obtain covering approval from the OC through the GS, and present it to the Executive Council.

4.3.2 Managing of Bank Accounts at Head Office Level

4 Respective Unit Heads/ Project Managers/ Heads of administrative Units shall send a written request to Finance Director to open new bank Accounts or to close existing bank Accounts, where these are related specifically for their transactions.

4 The relevant units should ensure that all relevant documents are sent along with the written request to FD to maximize on the time. Documents such as application forms, signature cards etc. should be sent.

4 After reviewing the requests, FD will obtain the approval of ED and GS and present this to the Executive Council for approval.

4 Upon receiving of EXCO approval, Secretary to EXCO will prepare resolutions and submit to the financial officers of respective units/Districts.

4 Financial Officers shall prepare relevant bank documents and obtain the required authorized signatures.

4 Completed documents shall be submitted to the Bank and confirmed in writing to Head Office Finance Division.

4 Respective units should maintain a Bank Account Register with the following details and a Master Bank Account Register will be maintained by Head office Finance Division. 1. 2. 3. 4. 5. 6.

Name of the Bank Account Number Type of Account Authorized Signatories Names Minimum required balance to be maintained. Overdraft Limits (if any)

4 This updated register should be sent to head office Finance Division monthly (if there is any change to the register).

4 Head Office Finance Division shall handle all the accounts maintained by head office as per above guidance.

4 In order to change Authorized Signatories of Bank Accounts, Unit heads/ HQ Finance division shall fill a format provided by LJSSS and submit to Finance Division of HQ.

4 Based on the information on the form FD will present changes to EXCO for approval.

4.4 Management of Investments in Financial Institutions at Head Office Level Respective Business Unit Heads/ Project Managers/ Heads of administrative Units shall send 4 a written request to Finance Director to invest their excess funds or to withdraw existing investments. The relevant units should ensure that all relevant documents are sent along with the written 4 request to FD to maximize on the time. Documents such as application forms, signature cards etc. should be sent. After receiving requests, Finance Director will evaluate market conditions and recommend to 4 ED/ GS the best options to invest. The final decision to invest can only be taken by FD, ED and GS cooperatively. Subsequently, FD will present the proposal to Executive Council for its approval. 4 Upon receiving of EXCO approval, Secretary to EXCO will prepare the required resolutions 4 and submit to the financial officers of respective units. Financial Officers shall prepare relevant bank documents and obtain authorized signatures. 4 Completed documents shall be submitted to the Bank and confirmed in writing to Head 4 Office Finance Division. Respective units shall maintain an Investment register and a Master Investment Register shall 4 be maintained by Head office Finance Division. The Following information will be required in the Investment register; 1. 2. 3. 4. 5. 6. 7. 8.

Name of the Bank FD/ Treasury bill Number Investment Amount Interest Rate Investment Period Starting Date Maturity Date Authorized Signatories Names

The updated registers shall be sent to head office Finance Division monthly (If there is any 4 change to the register). Head Office Finance Division shall handle all investments maintained by head office as per 4 above guidance.

Return from all investments should be maximized as much as possible while ensuring the 4 safety of the investment. Therefore it should be reviewed regularly.

4.5 Managing of Bank Accounts at District Level Respective FC of Districts with the recommendation of DC shall send a written request to 4 open a new bank account or to close an existing bank account to the Finance Director through Director Field Operations with his/her approval. The relevant district should ensure that all relevant documents are sent along with the 4 written request to FD to maximize on the time. Documents such as application forms, signature cards etc. should be sent. After reviewing the requests, FD will present the proposal to Executive Council with the 4 approval of ED and GS. Upon receiving of EXCO approval, Secretary to EXCO will prepare resolutions and submit to 4 DC/FC of respective districts. FC shall prepare relevant bank documents and obtain authorized signatures. 4 Completed documents shall be submitted to the Bank and confirmed in writing to Head 4 Office Finance Division. Finance Coordinator shall maintain a Bank Account detail register with the following details. 4 1. 2. 3. 4. 5. 6.

Name of the Bank Account Number Type of Account Authorized Signatories Names Minimum Balance shall be maintained. Overdraft Limits (if any)

The updated register shall be sent to Finance Division of HQ monthly (if there is any change 4 to register).

4 In order to change authorized signatories of Bank Accounts, FC of the respective district shall

fill a format provided by LJSSS and submit to Finance Division of

HQ through Director Field Operations with his/her approval. Changes will be presented to EXCO by FD and communicated to the respective district.

4.6 Management of Investments in Financial Institutions at District Level Respective DC shall send a written request to invest their excess funds or to withdraw existing 4 investments to the Finance Division of HQ through Director Field Operations with his/her approval. The following information of three banks located in the surrounding area shall be provided to Finance Division of HQ along with the request. 01. 02. 03. 04.

Amount to be invested Period of Investment Bank Names Present interest rates

The relevant district should ensure that all relevant documents are sent along with the 4 written request to FD to maximize on the time. Documents such as application forms, signature cards etc. should be sent. After receiving the requests, Finance Director will evaluate market conditions and 4 recommend to ED/GS the best options. The decision can only be taken by FD, ED and GS in consultation with each other. 4 Subsequently, FD will present the proposal to Executive Council for its approval. 4 Upon receiving of EXCO approval, Secretary to EXCO will prepare the required resolutions 4 and submit to DC/FC of respective districts. FC shall prepare relevant bank documents and obtain authorized signatures. 4 Completed documents shall be submitted to the Bank and confirmed in writing to Head 4 Office Finance Division. FC of each district shall maintain an Investment register at the District office including the 4 following details. 1. 2. 3. 4. 5. 6. 7. 8.

Name of the Bank FD/ Treasury bill Number Investment Amount Interest Rate Investment Period Starting Date Maturity Date Authorized Signatories Names

This updated register shall be sent to head office Finance Division monthly (If there is any 4 change to the register).

CHAPTER FIVE REVENUE/INCOME MANAGEMENT 5.1 Outline of the Section This chapter outlines the efficient management of LJSSS income. The main sources of income for LJSSS are:

4 Membership fees 4 Donations and Funding â&#x20AC;&#x201C; Restricted/Unrestricted. (a) Foreign (b) Local

4 Interest Receivable 4 Resource Development 4 Farm Income 4 Rent Receivable 4 Hall and Hostel fees 4 Canteen Income 4 Tele Centre Income 4 Income generating Projects 4 Districts 4 Independent Units 4 Other Income

5.2 Roles and responsibilities in Revenue Management

Task

H/O person responsible

Branch person responsible

Membership Income Notifying members of due payment

At the AGM and when joining as new members

Records

Task

person H/O person responsible Branch responsible

Records

Collection of membership fees

Cashier/Field Coordinators and Unit heads

FC and DC

Receipt refer Annexure 4 - Receipt LJSSS/FMRC/04

Updating the membership register

Membership Register

Donations and Funding Issuing of Invoice to Donor

Finance

Finance/ FC

Invoice or request for funds

Notifying receipt

Finance Unit/ Cashier

Receipt

Finance

FC and DC

Inventory/ stock card Comparison of planned and achieved GS

N/A Updating the crop register with collection

DC/FC

Crop register

Sale of the productions

N/A

DC/FC

Crop register Price list Receipts

Updating the crop register

N/A

DC/FC

Crop register

Review of Pricing

Finance

FC/DC/SPC

Price list

General Secretary/ED/FD

N/A

Investment port folio

N/A

Investment Port folio

Investment Schedule

Farm Income Checking the productions from farm house

Investments Investment plan

Review of investment GS/ED/FD portfolio Interest calculations

Finance

Task

person H/O person responsible Branch responsible

Records

Staff Loan Maintenance of a staff loan Schedule

HR/Finance

Staff loan schedule

Calculation of loan interest

Finance

Staff loan schedule

Monitoring and controlling the rent receivable register

Finance

DC/FC

Rent receivable ledger

Collection of rent

Finance

Receipt

Review pricing

GS/ED/FD

DC/FC

Price list

Statement of rent receivable as at the end of the financial year

Finance

Rent receivable ledger reconciliation

Booking schedule for the hall

RD Manager/ Accounts officer

Schedule template

Invoicing and acknowledgement of payment

RD Manager/ Accounts Officer

Invoice Receipt

Updating the Hall hire register

RD Manager

Hall hire register

Review of pricing

GS/ED/FD

DC/FC

Pricing list

Booking Schedule for RD Manager hostel facilities

Schedule template

Invoicing and acknowledgement of payment

Invoice Receipt

Rent Income

Hall Income

Hostel Income

RD Manager/ Accounts Officer

Task

person H/O person responsible Branch responsible

Records

Review of Pricing

GS/ED/FD

DC/FC

Price List

Updating the hostel register

RD Manager

DC/FC

Hostel fee register

Finance Unit

Other Income Recording and maintenance of other income

5.3 Sources of Income 5.3.1 Membership fees

4 Membership fees can be of two type 4 Sangamaya 4 Deshodaya 4 These fees are recorded in the Register of Members of LJSSS. 4 Once membership fees are received it is marked in the register 4 A receipt will be issued for the fees received. (Annexure 4 â&#x20AC;&#x201C; Receipt LJSSS/FMRC/04) 4 Where membership fees are collected by the field officers other than HQ a temporary receipt would be issued. Mainly applicable to Deshodaya membership fees

4 All membership collections would be handed over to the FC by the field officer who would issue an official receipt from the system for individual members.

4 System generated official receipt would be sent to the individual members by the FC. 4 This would not be recorded as income in the financial statements of Districts. 4 This would be recorded as payable. 4 Districts would transfer the money to HQ monthly. 4 Once transfer is made this would be matched against payable and it is the responsibility of the FC to ensure that Membership fees payable HQ is zero at the end of each month.

4 The DC or FC will come HQ and produce a statement of all membership fees received with a copy of the receipts that were issued by each District office.

4 Based on these statements, HQ will issue an official receipt for the total sum of membership fees collected by each district. It would be the responsibility of the responsible cashier to issue a receipt and equally the Finance officer or coordinator from the relevant unit/district has the responsibility to request and demand a receipt from HQ.

4 In the HQ financial statements this would be recorded as an income. 4 This is recognized as funds during the period in which it is received.

5.3.2 Donations

4 Funds are received by both Foreign and local agencies to carry out a specific task or a programme, with a specific objective in mind. These would be classified as restricted Donations.

4 All such funds that are received will be recorded in the respective ledger. 4 This will be treated as a liability under restricted funds when recording in the financial statements until the related activity is carried out and the costs are incurred.

4 Once costs are incurred an equal amount would be transferred to the P/L as income. So that Income = Costs

4 All donations should channeled through head office to various units or District officers. 4 However depending on the circumstances and requirement the Official Committee can decide and give special permission for some of the District officers or units to obtain donations directly.

4 If such a special decision is taken this would be notified through a special circular by the ED. 4 This Circular should indicate all relevant information such as the period for which such special approval is granted, Maximum value, any special conditions etc.

4 HQ and districts can also receive general donations which are not earmarked for a specified task.

4 These would be recorded as unrestricted donation income in the respective accounts. 5.3.3 Farm Income

4 All income generated from the farm would be recorded in the Crop Register 4 Productions from the farmhouse should be compared with planned in order to take corrective measures if required.

4 Price of farm house productions are determined collectively by the divisional head or DC and FC.

4 Pricing will be reviewed at least annually in consultation and if need be even before. 4 HQ should be informed of any price revisions after the review 4 Price would be based on the market price prevailing. 4 A market price analysis should be studied based on which a decision can be taken.

5.3.4 Interest Receivable

4 Investment Committee will be responsible for investment decisions. The committee comprises of the GS, ED and FD at head officer level and DC and FC at District Level.

4 HQ Finance division should be informed of any changes to the investment portfolio of district centers.

4 At District Level the Investment committee will make a comparison of interests offered by each institute and the most secure yet one which offer a higher rate would be select.

4 Based on this selection a request would be made to head office investment committee and upon their approval the investment can take place.

4 All new investments should be approved by the EXCO. 4 Lanka Jathika Sarvodaya Shramadana Movement earns interest from the following; 4 Fixed Deposits 4 Treasury bills 4 Loan to Staff 4 The investment committee shall decide the amount, period and the service provider for these investments at head office and will review and approve investments proposed by District officers.

4 The FD should review the investment schedule monthly to ensure that; 4 The money is invested safely 4 The investment generates the best return with minimum risk. 4 The returns are received and accounted for routinely. 5.3.5 Rent Receivable

4 An Invoice should be raised for all rent receivable at least two weeks prior to the due date. 4 This Invoice should be a system-generated invoice. 4 This would be recorded in the rent receivable ledger. 4 Once invoice is raised this should be sent to the relevant person. 4 This would be the responsibility of the FC and or Finance unit. 4 When money is received an official receipt should be issued by the system. 4 This would be recorded against rent receivable ledger cancelling off the receivable entry and would be an income to the cashbook.

All cash receipts should be banked immediately. 4

4 Every month the Rent Receivable ledger should be reconciled by the FC and or Finance. 4 If there are any outstanding receivables this should be notified to the DC and or RDM, whose responsibility it would be to take required action. 5.3.6 Hire of Auditorium/Halls

4 Income from hiring the hall and auditorium shall be recorded in the Hall Hire Register. 4 This would be updated by the RDM, where there is not RDM this would be done by the DC. 4 Hall hire should be approved by the RDM. 4 Where there is no RDM at District level this should be approved by the DC. 5.3.7 Hostel Fees

4 Hostel Facilities are available at some of the districts and at head office. 4 All such hires at head office should be approved by the RD Manager. 4 The district coordinator will approve hostel hires at the district level where there is no RDM. 4 A Booking register will be maintained with the name of the district or head office. 4 Rates are approved and fixed by the GS,FD and ED at head office and at district level. 4 These rates are subject to an annual revision. 4 Annual revision would be done by a team which consists of D â&#x20AC;&#x201C; FOD,DC,FC and SPC at district level and by the ED,FD,GS and Resource Development Manager at HQ.

4 ED and FD should approve Price revisions done at District level prior to implementing the revisions. 5.3.8 Canteen Income

4 When LJSSS Hotel and Hall facilities are taken, Canteen Facilities could also be part of the Programme.

4 However this income should be identified separately along with the cost as well. 4 Payments for Canteen facilities should be paid to the Cashier or the FC and should not be collected at the canteen.

5.3.9 Income Generating Projects As a sustainability strategy LJSSS under takes income-generating projects. Income generating projects will support some of the organizational functions to be self-sustaining. Income generating projects are undertaken by: I.

Independent units These are units within the organizational structure that solely function based on the income generated by these units. These have specified activities for the year.

II. District Centers Some of the district centers are self sustaining, however they will have to carry out activities that are self sustaining as well as those that are assigned by HQ. Therefore these are not completely and solely independent. Since LJSSS applies a cost center approach to verify the costs and income generated by each unit and district it is also of importance to recognize the income by each unit and or district. 5.3.10 Other Income Other income consists of the following; Management fees/Contributions. 4 Photocopying charges. 4 Any other income generated from activities carried out by LJSSS which are not very 4 significant and regular.

5.4 Process 1. Quotations

4 For income such as hire of auditorium, halls and hostel facilities a quotation should be sent via email or fax or post when a booking is received from a client.

4 A Standard quotation format should be used (Annexure 5 - Quotation format LJSSS/FMQT/05)

4 The relevant authorized personnel should approve the quotation before it is sent. At this stage the authorized personnel would be giving formal approval to hire out LJSSS facilities.

2. Update relevant records All relevant records and registers should be updated when an income is foreseen and assured. 3. Advance payment Invoice

4 For the hire of auditorium, halls and hostel facilities an advance should be requested to confirm the booking.

4 An Invoice should be raised for 50 % of the total quotation as advance. 4 All payments should be made via a direct bank transfer, a bank deposit or cheque. In the event that this is not possible for the client cash payments can be taken.

4 This should be baked immediately. 4 It should be noted that LJSSS does not encourage cash based transactions to ensure transparency. Therefore all members of staff are encouraged to ensure that cash based transactions are minimized as much as possible. 4. Final Invoice

4 A final invoice will be raised with any amendments to the quotation as agreed with the client where relevant. (Annexure 6 - System Generated Invoice LJSSS/FMINV/06)

4 This Invoice would be based on the programme analysis sheet (Annexure 7 - Cost Analysis LJSSS/FMPAS/07)

4 The Programme detail sheet should be filled on for all porgrammes residential and non residential, even for a one day programmes.

4 For income which does not require a quotation, an invoice will be raised where relevant. 5. Issuing of a receipt for the relevant income

4 A receipt should be issued for all revenue types. (Annexure 4 - Receipt LJSSS/FMRC/04) 4 No cash should be obtained without a receipt. 4 This receipt would be a system generated receipt which is issued by the Finance unit/cashier or the FC.

4 These receipts would be serially numbered and checked by the Finance unit. 4 In the event that the FC at district level is not available to issue a system generated receipt, a temporary receipt could be issued.

These temporary receipt books will be issued by Head office and will be serially 4 numbered. All divisions and branches are required to only use the books issued by head office. 4 Use of any other receipt books will amount to fraud and disciplinary action will be taken 4 against the relevant person or branch/division. All temporary receipts should be entered into the system the following working day and 4 an original receipt raised. The original receipt should be issued to the party making the payment and the copy 4 retained at LJSSS. The original receipt should be issued with 7 working days. 4 In the event where the cashier and the finance coordinator are not one and the same the 4 finance coordinator should countersign the receipts. All Cash and cheques received should be recorded in the system each day and entered in 4 serial order. At the end of each day all cash receipts should be reconciled. 4 6. Cash receipts All cash receipts should be acknowledged by the cashier by issuing a receipt (Annexure 4 4 - Receipt LJSSS/FMRC/04 All cash receipts should be deposited to the bank immediately. 4 This cash should not be used for any other purpose. 4

5.5 Credit Control 4 As a general policy LJSSS does not encourage Credit terms when providing facilities or services. However in special circumstances credit sales would be consider and this would be subject to 4 approval from the ED, FD or the respective head of the District/Unit. The head of district or unit can approve up to a maximum of Rs. 25,000 while the FD can 4 approve up to a maximum of Rs. 100,000. ED can approve a maximum of Rs. 250,000.

Anything above Rs. 250,000 will be discussed at the management level and would be taken 4 up on case by case basis. All such credit facilities would require the approval of the MFC. All credit would be subject to a maximum period of 30 days. 4 If blacklisted for default of payment, further credit facilities would not be granted. 4

5.6 Printing and distribution of Temporary receipt books As a measure of control HO will print all Temporary receipt books. (Annexure 8 - Temporary 4 Receipt LJSSS/FMTRC/08) These receipt books would be serially numbered. 4 When Stocks are received from the printer, continuity of the serial numbers would be 4 checked by the finance unit. The opening and closing serial number would be entered in the receipt register. 4 Receipt books are issued by the Finance Officer at HQ to each of the district officers. 4 This would be done in sequential order so that HO clearly knows where the receipt books are. 4 Two temporary receipts books would be issued, one for the office and the other to take to 4 the field. The FC is Responsible for the temporary receipt book. 4 Therefore when receipt books have to be given to take to the field, the FC should update the 4 receipt register. Upon completion of the book a new receipt book is issued once the old one is returned to 4 HO Finance. All district officers would be issued two receipt books initially and upon surrendering the 4 used receipt book a new book will be issued for subsequent use. All issues and returns are recorded in the â&#x20AC;&#x153; Register of Counterfoil book. 4

5.7 Waiver of Income, discounts and dishonored Cheques Any waiver of income or discount other than the standard board approved rates requires the 4 approval of the ED as well as the FD up to a maximum of 15% of sales value. Anything beyond this would require the approval of the GS with covering approval of the 4 Official committee. If a cheque is returned by the bank, this should be notified to the client as well as the officer 4 responsible for coordinating with the client. Request should be made to settle the outstanding amount in cash. 4 Once a cheque returns future transaction based on cheques with the same client would 4 require the approval of the ED.

5.8 Refunds All Refunds should be approved by the FD. The FD should be satisfied that the refund is 4 genuine and is in order. The officer recommending the refund is responsible to ensure that: 4

4 The refund is in order by reference to the original document. 4 The parties named are those entitled to the refund. 4 The amount to be refunded is correct. A note to the refund is made in the relevant register â&#x20AC;&#x201C; Income register. 4

CHAPTER SIX PAYMENTS AND EXPENDITURE 6.1 Outline of the section This section of the manual governs polices and procedures related all cash outflow of LJSSS. This section covers the limitations and level of authority to incur expenditure for and on behalf of Sarvodaya. Procedures followed by both head office and branches are mentioned here. Some procedures change from branch to branch as some of the branch offices are self sustaining and these branches have been given far more authority and flexibility than some branches that are fully depended on HO. Based on the accounting concepts followed by LJSSS all expenditures are recorded in line with the accruals concept. 6.1.1 Roles and Responsibility - Payments

Task

H/O Person responsible

Branch Person responsible

Records

Power to incur Expenditure

FD/ED/Unit heads

Budget/Authorized signatories circular.

Payment request

Person in charge

Request for Payment form

DC/FC

Request for Payment form refer annex….

Payment Voucher refer annex….

N/A

Payment voucher refer annex…..

Certifying a payment Line manager/ Unit Head request Raising a payment voucher

Finance unit

Checking a payment Accountant voucher Authorisation of payment

Authorised signatories Authorised signatories

Payment Voucher refer annex…..

H/O Person responsible

Task

Branch Person responsible

Records

Advance Request

Person Needing the advance

Advance Request form – refer annex

Certifying the Advance request

Line Manager

Advance request form – refer annex

Approval of Advance request

Programme coordinator/PD/ D-FOD

DC/FC

Advance request form – refer annex

Advance Settlement Person taking the advance

Person taking the advance

Advance Settlement Form – refer annex

Certifying Advance Settlement

Line Manager

Advance Settlement Form – refer annex

Approval of Advance Settlement

PC or D - FOD

DC/FC

Advance Settlement Form -Refer annex

Issuing of cheque

Finance

Cheque

Signing of Cheques Authorised signatories

Authorised signatories

Cheque

Issuing Petty cash

Person assigned petty cash responsibilities

Petty cash voucher - refer annex

Petty cash voucher

Person assigned petty cash responsibilities

Authorisation of PC FD

6.2 Payment Procedure 6.2.1 Payment Vouchers All payments must be supported by vouchers in the prescribed form and receipts must be obtained for all cash payments at the time of payment. Single payments for the same purpose cannot be split in order for the payments to be within certain approval limits. LJSSS will give prominence to substance over form.

6.2.1.1 Preparation of Payment Vouchers The following should be observed:

4 All payment vouchers must be numbered in sequential order. 4 All payment vouchers should be filed in numerical order immediately after payment has been made. Under no circumstances should vouchers be left unfiled in the office.

4 Payment vouchers should be processed through the computerized system. (Annexure 9 System Generated Payment Voucher LJSSS/FMPV/09)

4 If a voucher is cancelled this voucher should be crossed as cancelled and filed with the other vouchers. Under no circumstances should these vouchers be discarded from LJSSS records.

4 A cancelled voucher should be up dated in the system as well. 6.2.1.2 Particulars Required on Payment Vouchers

4 All payment vouchers should contain full details to explain the reason for the payment, and to show that the amount is correct and properly chargeable to the specified heading.

4 Payment vouchers must show some reference to the authority for the expenditure (e.g. supporting documents, minute, reference, contract number).

4 The cheque number and the date must be included in the payment voucher. 4 Bank account number should also be mentioned in order to make referencing easier. 6.2.1.3 Documents in Support of Payment Vouchers All documents in support of a payment voucher including invoices, quotations, agreements, ToR's, Loan requests, Advance requests and specific authorities must be attached to the payment voucher. The following should be observed:

4 Where applicable, vouchers must be fully supported by original invoices. Statements of accounts should not be accepted for payment purposes.

4 A payment request should be submitted where applicable by the relevant units Annexure 11 - Request for Payment LJSSS/FMRfP/11)

4 Should the original invoice be mislaid, a duplicate must be obtained and certified to the effect that the original cannot be traced and that payment thereof has not previously been made.

All payment vouchers, in respect of purchases must have the specified copy of Local 4 Purchase Order (Annexure 18 - System Generated Purchase Order LJSSS/FMPO/18) and Goods Received Note (Annexure 19 - System Generated GRN LJSSS/FMGRN/19), where applicable along with the requisition, request for quotation, quotations and bid analysis. In cases where purchases are made for cash, the receipt or cash sales slip must be 4 attached to the payment voucher. 6.2.1.4 Signature on Payment Vouchers The originals of Payment Vouchers must be signed by the person preparing the voucher, 4 Authorised in full by the responsible officer, countersigned for payment by the Unit heads and DC's. At District Level FC will sign for Prepared by, PC will sign for Certified by and DC will sing for 4 Approved by. However where there is not PC this should be left blank with a line and DC shall sign for approval. The signatures must be in permanent ink or ballpoint pen. 4 The signature of the responsible officer on a payment voucher certifies that the voucher is 4 correct in every respect. In particular, the person certifying the voucher is responsible for ensuring that: The services specified have been have been duly performed. 4 The rates charged are either according to contract or approved scales or fair and 4 reasonable. The amount is correctly chargeable to the budget code quoted on the voucher. 4 The computation and castings have been verified and are arithmetically correct. 4 The person named in the voucher is entitled to receive payment. 4 All proper deductions including the repayments of advances or other liabilities have 4 been

duly made.

The payment complies with Financial Regulations and any other laid down procedures. 4 6.2.1.5 Incorrect Payments No officer should sign a payment voucher or incur any charge unless he is satisfied that there 4 are sufficient budgeted funds available to meet the proposed payment. If the need had not been foreseen at the time of budgeting then a budget reallocation 4 (foregoing an item or more in the budget to cater for the new need) or a supplementary

budget must be made if this is possible.

4 Depending on the value and nature of expense and with the prior approval of the DC and unit heads some such unforeseen expenses could be allocated under reserves in the budget.

4 However if these are extra activities which is of significance to LJSSS it is advised to either revise the budget or to request for a supplementary budget.

4 Where an expense is not budgeted and the afore mentioned alteration or supplement budget options are not available yet the expense is absolutely necessary this should be brought to the notice of the Management. Where division of LJSSS is concerned head office should be notified.

4 Any Officer making, allowing or directing any disbursement without proper authority should be held personally responsible for the amount, and any officer whose duties require him to render accounts should similarly be held personally responsible for any inaccuracies in those accounts.

4 All material alterations in payment vouchers must be initialed by the certifying responsible officer.

4 The counter signatory for payment should satisfy himself as far as possible that proper authority exists for payment, and he/she should ensure that authority is quoted on the voucher itself. 6.2.1.6 Payments by Cheque

4 All payments must as far as possible be paid by crossed cheques drawn from the relevant LJSSS bank Accounts.

4 Cheques must be drawn in strict numerical order. 4 Where a cheque is cancelled for a valid reason or an error, the cheque should be crossed across and the cheque number of the cheque attached to the counter foil and the rest of the cheque to the voided voucher.

4 Cheques should be made out to the payee exactly as per the payment voucher. 4 Cheques are written for each voucher. i.e. One voucher per cheque. 4 â&#x20AC;&#x153;white-outâ&#x20AC;? amendments to any part of the voucher is not permitted. Any amendments must be done by crossing through the original entry and retyping or rewriting in the corrected entry. All amendments must be initialed by the cheque signatories.

When signing cheques, the following should be verified: 4

4 Payee on voucher/cheque stub/cheque and bill or request document are exactly the same.

4 Amount on voucher/cheque stub/cheque and bill or request document are the same. 4 Words and figures on cheque agree and date is correct. 4 Cheque has all necessary stamps/crossings etc. on it. 4 Correct cheque number is on the voucher. 4 Vouchers are properly authorised and stamped â&#x20AC;&#x153;paidâ&#x20AC;?. 4 Ensure that any prior cheque signatory/signatories have properly signed in all appropriate places. 6.2.1.7 Examination of Payment Vouchers All payment vouchers should be examined by the Finance and Accounts Department, and by Internal Audit, to ensure that the required documentation is present, and that the payment voucher is correctly coded, arithmetically correct and that budgetary provision has been made. The examining officer should initial the payment voucher and date it. 6.2.1.8 Lost Payment Vouchers If a payment voucher is lost, a replacement voucher must be prepared and must bear a certificate to the effect that the original has been lost, with an explanation of the circumstances & stating whether the payment has not been previously made or not. If made along with the payment date. If supporting documents are lost, certified copies must be provided. Losing of payment vouchers or supporting documentation display a lack of responsibility and diligence by the relevant staff member and the management can take this up at staff appraisal and or staff meeting as well. 6.2.1.9 Receipt for Payment Receipt for payment made in cash should be obtained at the time of payment. 4 For crossed cheques, if payment is collected in person then the relevant section in the 4 voucher should be signed. If banked the deposit slip should be attached to the payment voucher. When a payment has been made the officer who has made the payment should cross the 4 payment voucher with the LJSSS PAID stamp.

6.3 Petty Cash Funds 6.3.1 General Policies All payments made out of petty cash must be made in accordance with the LJSSS policy governing petty cash management.

4 Petty cash funds represent specified amounts of cash set aside to facilitate disbursements for relatively minor transactions that should be made in cash.

4 A petty cash imprest of Rs.25,000 is assigned for HO and Rs. 10,000 for Districts and Divisions 4 Petty cash payments are designed to reduce workload in acquiring and paying for small value purchases. The maximum authorization should not be more than the designated amount unless exceptional circumstances exist.

4 Maximum limit per transaction for petty cash would be: 4 Head office - Rs. 3,000 4 Districts - Rs. 2,000 4 The Head of Finance and Accounts is responsible for determining the necessity for establishing petty cash funds, controlling the petty cash funds outstanding, and maintaining petty cash funds at the minimum balances required for the purpose intended.

4 Each petty cash fund should be the responsibility of a single person who should be the only one having access to the fund.

4 Cash funds must have adequate safeguards relative to the size of the fund. In general, the fund should be maintained in a locked box or cabinet with access limited to one person.

4 Petty cash vouchers should be prepared in ink and signed by the person receiving the reimbursement from the fund.

4 Original receipts must accompany vouchers to support expenditures, except for minor items for which receipts are not reasonably obtainable. In such instances a justification should be given on the voucher.

4 An authorized individual other than the petty cash custodian must approve expenditures and advances for expenditures prior to disbursement.

4 The recipient of petty cash is required to sign a petty cash voucher and provide supporting documentation when claiming.

4 The custodian is responsible for the preparation and reconciliation of petty cash payments. 4 Capital expenditure should not be made through Petty cash irrespective of the amount. Only expenditure in the form of Revenue expenditure should be carried out. 6.3.2 Operation of Cash Payments Imprest

4 When the imprest is issued, a cheque for the amount of the imprest is drawn, and a petty cash account in the general ledger is debited.

4 The imprest holder should sign for the receipt of the imprest. 4 The imprest holder should maintain a petty cash book, showing all receipts into the imprest and all payments out of it. Payments should only be made out of the imprest on the basis of properly certified cash payment vouchers.

4 The imprest holder should retain the payment voucher. 4 Periodically, the imprest holder should claim for reimbursement of the imprest when it reduces by about 75%. The amount claimed should be the amount paid out of the imprest, as supported by imprest payment vouchers. Re-imbursement should be by cheque following the cheque payment system. This payment should be coded to the various codes shown on the imprest payment vouchers.

4 The imprest holder should be personally responsible for the imprest advanced to him/her. He/she should be responsible for balancing it each day, to ensure that retained cash and payment vouchers total to the imprest amount. The imprest must be kept in a locked cash box in secure accommodation. The Maxium amount that can be held as petty cash imprest, the maximum amount that can be paid per transaction and all such details will be notified to all through a circular by the FD. This circular should be attached to this manual when it changes from time to time.

6.4 Advances 6.4.1 General Information

4 Advances refer to all sums, which are disbursed to officers to meet anticipated official expenses, the exact amounts of which are not known.

4 All such requests should be made using an Advance Request Form. (Annexure 12 - Advance Request LJSSS/FMARF/12)

Only a maximum of two advances are allowed per person. Unless at least one advance is 4 settled another advance cannot be issued. Maximum advance that can be requested is Rs.50,000 per advance per person. If for any 4 reason this exceeds special approval must be obtained. All advances must be accounted for afterwards, by producing receipts/certificates for sums 4 paid, and the retirement of any balances. An Advance Settlement form (Annexure 13 - Advance Settlement LJSSS/FMASF/13) 4 should be submitted along with bills etc. Advances are short term, and must be accounted for promptly. 4 No LJSSS money shall be made use of for any private unauthorized purpose whatsoever. 4 Officers are strictly prohibited from advancing or lending any money for which they are 4 answerable to LJSSS, except in accordance with these Financial Regulations. Accountants are prohibited from charging payments to an advance account unless 4 authorized so to do in accordance with these instructions. 6.4.2 Authority for Advances All advances must be approved by the concerned supervisor & Finance Director or 4 Coordinator. Only a Maximum of Rs.50,000 must be obtained as advances. Any Advance over 50,000 4 would require the approval of the D - FOD and FD. This applies to Districts and Divisions as well. Application for advances must be made on the official approved form (Annexure 12 4 Advance Request LJSSS/FMARF/12) The application form shall include a brief budget for the particular activity that is to be 4 carried out. This budget should be within the original allocation and this should be checked both by the 4 person requesting and the line manager who is approving the advance. Where an advance is taken and the programme gets postponed or cancelled then the 4 advance should be settled immediately. Once settled the money should be banked immediately. 4

However if the programme is postponed and rescheduled to happen within 1 week, The 4 Money could be left at office under lock and key. The advance could be handed over to the Finance officer by making a note on the advance 4 request itself mentioning, since the programme got postponed and is rescheduled to happen with in the next week, advance of ……. ( mention the amount) is returned to the finance officer. The Finance officer should sign acknowledging receipt and the person taking the advance 4 should sign confirming the amount and handover. Under no circumstances should this money leave office for any other programme nor should 4 it be kept with the staff concerned until the programme. Closer to the programme when the advance is needed, the finance officer will hand over the 4 cash to the person concerned by cancelling the note on the advance request with a red pen. The Person taking the advance should sign again mentioning the following. “received Rs……. for ………. (Programme) on ……. (date) sign. This should be counter signed by the Finance Officer. 4 6.4.3 Settlement of Advances

4 Person requesting the advance is responsible to settle the advance with in the given period of time.

4 All working advances should be settled within seven days of completion of the activity. 4 All general advances should be settled with seven days of taking the advance. 4 If the person concerned is not due to return to work within seven days then it would be seven days from the date he/she returned to office. This does not apply to general advances.

4 When a settlement is submitted, supporting documentation will be checked and accepted by the Finance department at HO or Finance coordinator at branches.

4 Settlement should be submitted in the official advance settlement form (Annexure 13 Advance Settlement LJSSS/FMASF/13)

4 Where it is not practically possible to obtain invoices or bills an acknowledgment of Payment form (Annexure 14 - Acknowledgment of Payment LJSSS/FMAoP/14) should be submitted.

4 For three wheeler costs and other vehicle hire charges a Vehicle hire form (Annexure 20 Details of Vehicle hire LJSSS/FMVHF/20) should be submitted.

4 Where the advance is more than the actual expenses then the balance money should be handed over to finance. A receipt should be issued for all money received through settlements. 4 If expenses are more than the advance the difference shall be reimbursed. 4 However where the expenses are more than the advance taken this would only be 4 reimbursed after proper justification and authorization by the relevant authorized personnel. Therefore where it is expected to exceed it is always best to get at least the verbal 4 authorization from the line manager before such expenses are done. Advances can only and solely be used to carry out LJSSS activities and for the planned 4 purpose. Any misuse of such advances can result in disciplinary action. Certain project specific advances can be negotiated with the D - FOD and the limits can be 4 set based on the project and it's nature. 6.4.4 Project Advances to units, districts and divisions When Projects are implemented with other districts and units, HQ will have to advance 4 project funds to carry out the relevant activities. These should be done using a Fund request form (Annexure 23 – Funding Request Form 4 LJSSS/FMFRF/23) Based on the approved project budgets for each district and or units the request form 4 should be filled out. This should be prepared by the Project Coordinator and certified by the DC and submitted 4 to the D – FOD at HQ. Upon reviewing the request D – FOD will approve transfer of funds and notify Finance. 4 Finance will transfer such funds within a week of approval. 4 When submitting the request form details of actual expenses up to the beginning of the 4 request period and planned expenses should be indicated clearly.

CHAPTER SEVEN PROCUREMENT AND DISPOSAL PROCEDURE 7.1 Outline of the section

This section defines the procedure that should be followed when purchasing goods or services for LJSSS. This section defines certain policies that have been developed over the years. Given the size of the organization and its island wide reach it is important that these policies are implemented in order to ensure a fair and just process when acquiring goods or services. Clearly defined procurement procedures will help to ensure transparency and accountability.

7.2 General process All supplies, services (including work, projects, constructions, installations, etc.) and sale of unserviceable/redundant assets should, as far as possible, be offered for public competition through the procedures given below. 1. Composition and Limits of the Tender Board (i). There shall be a Tender Board for the Sangamaya at Head Quarters. (ii). Tender Board will consist of: Treasurer Vice President Finance Director Technical Consultant Accountant

Chairman Tender Board Member Tender Board Member Tender Board Member Tender Board Secretary for Tender Board

(iii). The Tender Board shall evaluate tenders invited by LJSSS in the following manner: a)

Approve the award of a tender, if it does not exceed Rs.500,000;

b) Award of any tender exceeding Rs.500,000 but not exceeding Rs. 2,000,000 shall be recommended by the Tender Board to the ED for his approval; and c)

Award of any tender exceeding Rs 2,000,000 shall be recommended by the Board

for

the

Official

Committee

(OC)

for

their

approval

Tender

with

ED's

recommendation. This approval can be obtained at the OC meeting or via emails from OC members.

d) If tender board decides to obtain approval via email, this recommendation shall be circulated through email to OC members and OC members shall approve via emails. Approval shall be given within three days period. At least four members of OC (other than who are members of the tender committee) should approve via email for the authorization to be valid. e) If the tender board decision is not approved by ED or OC, the decision must be conveyed to the Tender board with reasons for non-approval (For future guidance). f)

Where the supply/service is of a specialized or non-routine nature, any officer of the Sangamaya who has the required knowledge may be co-opted to advise the Tender board.

7.3 Meetings of the Tender board i. The Chairman and three members of the Tender board should be present at a meeting of the Tender board. No decision shall be valid unless said quorum is present. ii. The agenda for each meeting of the tender Board shall be prepared by the Secretary to the Tender Board in consultation with the Chairman of the Tender Board. Each item on the agenda shall be supported by a document giving full particulars of the item to be discussed and a schedule of the tenders received when tenders have already been called. iii. The Secretary shall keep the minutes of the meetings and record the decisions and recommendations of the Tender board. iv. The minutes shall be read or circulated to all members of the Tender board and their concurrence obtained for the same. Until the minutes are prepared all members present will sign the chosen tender document to proceed with the action. v. The Tender board shall meet twice a month, provided there are matters for discussion. Casual meetings of the Tender board may be convened at any time for the consideration of any urgent matters after giving sufficient notice to the members of the Tender board.

7.4 Method of application for purchases through Tender Procedure (i). All the Tender Purchase Requests should be forwarded to secretary to the tender board with the relevant documents according to the Tender Purchase Request Format of LJSSS.

(ii). Following basic information shall be forward to the Tender Board, if the purchase is for specific project; a) Date of the commencement of the project, b) When the allocation was intimated to the project c) Date of the end of the project cycle, so that the tender board can take a decision on time. (iii). Respective officer in-charge of the project shall forward purchase requirements at the beginning of project and should ensure that the purchase requests are sent in a timely manner to the tender board to avoid unnecessary delays.

7.5 Methods of Calling for Tenders (i).

If the Tender board decides that Quotations from available registered suppliers are adequate (Technical Consultant shall be consulted to make a recommendation to the Board), quotations shall be called from registered suppliers of LJSSS.

(ii). Notices calling for tenders shall be given adequate publicity through newspapers approved by the Tender board for such notices, if the board decides that public notice is required. (iii). The notice may be brief but should contain essential information such as closing date and time, the tender deposit, and fee (if any) for the tender documents and the officer from whom any further information could be obtained. (iv). Letters calling for tenders or public notices or newspaper advertisements should be in the name of Chairman Tender Board.

7.6 Approval of Tender Documents (i).

The Head of Unit/District Coordinator shall prepare and submit to the Tender board for approval through the Secretary of the Tender Board, all documents relating to the requisition. If Tender board decides public notice is required, the Head of Division/District Coordinator shall forward those documents to the Tender Board inter alia: a) b) c) d) e)

The tender notice The conditions of tender The instructions to tenderers The form of tender The price schedule bill of quantities;

f) The form of bid bond and g) The form of the performance bond Head of unit/DC should also certify the estimated cost and that provision is available in the budget for the supply/service. (ii). The Tender Board shall examine the tender documents and approve the same with or without amendments. The Tender Board shall pay special attention to: a) b) c) d)

The data provided The adequacy of the period allowed for tendering The period for which offers are to be kept open is adequate and The quantum of the refundable tender deposit and the security for the performance of the contract.

7.7 Refundable Tender/Bid Deposits and Security Deposit for Performance (i).

Refundable tender deposits to be made before the issue of tender forms should not be unduly high.

(ii). Amounts should be decided by the Tender board base on the value and the nature of the supply. (iii). Deposits or guarantees for performance to be made before the final contract is entered into should be adequate without being excessive. (iv). A performance guarantee in lieu of cash deposits may be accepted from recognized banks. (v). The Tender Board may, in the case of tenders estimated to cost-over rupees one million, require a bid deposit to be furnished. The bid deposit may be paid in cash before the closing time for the tender or a bid bond from a reputed bank submitted along with the tender documents. If a bid bond is submitted, it should be valid for six months from the date of closing the tender or any other period decided by the Tender Board. When a bid bond is forwarded direct to the Sangamaya by the bank, it should be received before the closing of the tender.

7.8 Issue of Tender Forms (i).

Tender forms shall be issued to those who have paid the refundable tender deposit and fee (if applicable) approved by the Tender board.

(ii). The issuing officer shall initial and date the tender forms issued and also make a note on the top or reverse of the deposit receipt that the tender forms have been issued. (iii). A register should be maintained for the issueing of tender forms with the following particulars: (a) Tender for the supply/service of (name of tender) (b) The number and date of tender deposit receipt (c) The full name and address of the party to whom the tender form is issued (d) The date of issue (e) The telephone number and fax number (if any). (iv). Tender documents may be inspected free of charge by prospective tenderers. (v). Tender forms should not be issued to any person whose name appears on the list of defaulting contractors of the Sangamaya.

7.9 Receipt and Opening of Tenders (i).

Tenders shall be submitted in duplicate on the appropriate form for the tender, which should be enclosed in a sealed envelope addressed to the Chairman of the Tender board. The name of the tender should also be noted on the top left hand corner of the envelope.

(ii). Tenders may be submitted by the tenderers either through registered post, or they may personally deposit it in the tender box maintained at the office. (iii). The tender box should be so constructed as to prevent tampering with the tenders. The tender box should be fastened with two locks, the keys of which should be in the custody of the Chairman and Secretary of the Tender board. The tender box should be kept in the office of the Director Finance. (iv). On the appointed date and time, the tenders shall be taken out from the tender box and opened in the presence of two members of the Tender board. (v). The tenders shall be serially numbered and stamped with the office date stamp.

(vi). The officer opening the tenders and the officers present shall authenticate the tender documents with their initials. (vii). The tenderers or their representatives should be allowed to be present when the tenders are opened. (viii). The names of the tenderers or representatives present should be recorded. (ix). The names of the tenderer and the tendered value shall be read out for the information of those present, but the details of the make-up should not be furnished. (x). The tenders received shall be listed according to serial numbers, together with the names of tenderers and tendered values, and the list shall be signed by the officer opening the tenders and the officers present.

7.10 Scrutiny of Tenders (i).

Tenders or quotations received shall be carefully scrutinized and a detailed schedule prepared in ascending order of values.

(ii). It is necessary not only to check the arithmetical accuracy of the offer, but also whether the offer is complete in all respects and in conformity with the specifications and other conditions of the tender. (iii). All offers received should be reduced to a common basis to facilitate comparison. (iv). Offers in foreign currency should be converted to Sri Lanka rupees at the Central Bank official middle rate of exchange for the relevant foreign currency on the date of closing of the tender. (v). The 'remarks' column in the schedule should indicate any deviations from the specifications or other conditions of tender and in what respects, if any the tender is defective.

7.11 Consideration of Tenders (i).

The tenders shall be considered by the Tender board at a meeting and a final decision taken before the lapse of the period of validity of the tenders.

(ii). The Tender board shall have power; a) To accept any tender or portion of a tender

b) To accept portions of more than one tender c) To reject all or any tenders d) To direct that fresh tenders be invited when all tenders are rejected or to make alternative arrangements for carrying out the service e) To authorize purchases or services from any State Corporation or Government Institution without calling for tenders or quotations, if the prices are fair and reasonable. f)

The Tender Board shall, in every case, record the reason for its decision.

(iii). The tenders shall be compared with the cost estimate and if all tenders received are excessively high, the Tender board should reject all the tenders and take action as per (d) above. (iv). The Tender board should, under normal conditions, accept the lowest, tender (or the highest in the case of a sale) which complies with all conditions, specifications, etc. of the tender. (v). The Tender board could recommend the acceptance of a tender which is not the lowest (or highest in a sale) in special circumstances. The Tender board should give reasons for such recommendation and submit the award for approval by the Official Committee.

7.12 Technical Evaluation Committee (i). A Technical Evaluation Committee shall be appointed to evaluate tenders that are in excess of rupees one million or tenders of a specialized nature, even if they are below rupees one million. (ii). The Technical Evaluation Committee shall be appointed by the Official Committee. The committee may consist of officers from LJSSS or from any other recognized institution. (iii). The Technical Evaluation Committee should submit its report on all the tenders received under confidential cover to the Chairman of the Tender board within a reasonable time. However, the Technical Evaluation Committee should ensure that the report is submitted before the validity of the offers expires. (iv). In the absence of a Technical Evaluation committee, the Tender board may, if it considers necessary to do so, obtain a report on the tenders received from an institution such as the Ceylon Institution of Scientific and Industrial Research or Sri Lanka Standards Institute.

7.13 Acceptance of Tenders (i).

The final decision of the Tender board shall be notified by the Secretary of the Tender board to the respective officers responsible for the supply/service within seven days of the decision.

(ii). As soon as the decision of the Tender board is received, the officer concerned should send a 'Letter of Award' or a 'Purchase Order' to the successful tenderer by registered post. (iii). Action should also be taken to sign a formal contract, where necessary. (iv). The refundable tender deposits and/or bid deposits shall be refunded as soon as the successful tenderer has signed the contract and complied with the tender conditions. (v). The name of the successful tenderer and the value of the accepted tender, may be notified to unsuccessful tenderers at the discretion of the Tender board

7.14 Restricted Tenders and Quotations (i).

The Tender board shall, with the approval of the Official Committee invite suppliers of goods and services required by the Sangamaya to register themselves with the Sangamaya in respect of each calendar year.

(ii). The Tender board may restrict the issue of tender notices to all suppliers who are registered with the Sangamaya, when it is essential that the goods required should be of the highest quality or involve a high degree of specialization. (iii). The Tender board may, in special cases, where it is known that the number of available suppliers is limited or where the high quality of goods is of importance, authorize the issue of tender forms to selected firms. Thereafter, the normal tender procedure will apply. (iv). In the case of purely local services (such as transport, wharf clearing, tailoring, supply of sand, bricks, etc.) tenders and quotations should be restricted to Sri Lankans and Sri Lankan firms.

7.15 Purchase of Spares for Machinery and Equipment (i).

Spares which are available on open tender should be purchased by following normal tender procedure.

(ii). Spares which are obtainable only from the manufacturer or his local agent should be

purchased after obtaining quotations from these two channels of supply i.e. manufacturer and local agent.

7.16 Purchases by Districts (i).

The District Coordinator is authorized to obtain urgent services or supplies up to a limit of Rs.10,000 without obtaining Tender board approval when compliance with tender procedure would result in loss to the Sangamaya. DC should follow the tender procedure as far as is possible. In any case, he should obtain quotations, preferably under sealed cover, and the prices paid should be fair and reasonable. In all such purchases the responsibility will be on the officer concerned.

(ii). The District Coordinator may also deal with any purchase in excess of Rs.10,000, but not exceeding Rs.50,000 by obtaining quotations locally and forwarding to FD with recommendations. The FD may approve the recommended quotation or any other quotation, which is considered to be more suitable. FC shall thereafter forward a purchase order in favour of the approved supplier. (iii). The District Coordinator shall submit these documents to the supplier and collect the goods. (iv). In following the above instructions the officer concerned should not split the tender to be within the amounts. He/ She should certify that the purchase is not a part of one singular purchase. (v). If found guilty for breaking up a purchase to ensure this is within authorization limits, disciplinary action will be taken.

7.17 Deviations from Tender Procedure (i).

In urgent and exceptional circumstances when appreciable loss may be caused to the Sangamaya by the delay in following normal tender procedure for obtaining supplies/services, or when tender procedure is not appropriate due to the specialized nature of any equipment or service required by the Sangamaya, the authorities listed below may authorize deviations from normal tender procedure up to the limits specified: Limits

Authority District Coordinator

Up to Rs.15, 000 per order but not exceeding Rs.30,000 per month

Finance Director

Up to Rs.150,000

Executive Director

Up to Rs.250,000

(i).

The full reasons for the deviation from tender procedure should be recorded in writing.

(ii). In following the above instructions the officer concerned should not split the tender to be within the amounts. (iii). He should certify that the purchase is not a part of one singular purchase.

7.18 Purchase Procedure (i).

The FD shall originate all purchase orders in respect of supplies/services approved by the Tender board.

(ii). The Finance Coordinator shall originate purchase orders for supplies/services approved by the District Coordinator. (iii). All services which are of a recurrent nature such as transport services, wharf clearing, etc. should be obtained on tender. (iv). Spares, stationery and, other items of regular use should be purchased quarterly, biannually, on tender.

7.19 General (i).

The FD shall maintain a register of defaulting and blacklisted contractors/suppliers.

(ii). A monthly statement or purchases approved by the District Coordinator shall be submitted for the information of the Tender board. (iii). The statement should show the name of the supplier, nature of supply, and the value of the order. (iv). The units or divisions that were informed of the tender decision to commence action must report to FD that the work or purchase was completed according to tender decision. (v). FD should from time to time inform the tender board that such tenders had been successfully completed. This will prevent deviations made by units on the decision. (vi). Any emergency situation like disaster situations or when the compliance with tender procedure would result in a loss to sangamaya, General Secretary / Executive Director is authorized to obtain urgent services or supplies and subsequently said purchases should be submitted to Official Committee through General Secretary for covering approval.

CHAPTER EIGHT ASSET MANAGEMENT 8.1 Outline of the Section This section details the maintenance of LJSSS assets, which are of a significant amount. These procedures are required to ensure that LJSSS resource are used with care and efficiency. LJSSS being an institute that has a vast reach within Sri Lanka, with many units and branches across Sri Lanka it is essential to ensure that all divisions and units follow the same procedure and that assets are maintained and monitored carefully.

8.2 Maintenance of Assets 4 All LJSSS assets should be inventoried under fixed assets and those that are not capitalized under fixed assets should be maintained in an inventory register.

4 All assets should be coded and these codes should be marked on the asset. 4 Fixed assets will be recognized at historic cost and depreciated over its useful economic life. 4 The Management may from time to time decide to revalue the assets in line with the Sri Lanka Accounting Standards.

4 The Official committee would approve this. 4 Annually Fixed asset verification should be carried out. This is the responsibility of the person assigned by the management team.

4 It is the responsibility of the Official committee to assign someone to manage the fixed assets of the organisation, from managing the register, coding etc.

4 If there are any breakages this must be explained by the person using the asset. 4 Breakage costs due to wear and tear will be born by the organization. 4 Where Fixed assets are bought from Donor funds a Donation certificate should be obtained from the donor at the end of the project period to take this under Sarvodaya assets.

8.3 Disposal of Assets When assets are disposed approval should be obtained from the official committee where 4 the total value of assets to be disposed exceeds Rs.50,000 Anything below this value can be disposed with the Management committee approval. 4 All transactions should be arms length transactions and any conflict of interest should be 4 indicated. Asset register should be updated accordingly. 4 Sales revenue should be banked immediately and shown as income from disposal of fixed 4 assets.

8.4 Writing off Assets Any fixed asset that is beyond use should be written off. 4 The Official committee should approve this. 4 Fixed asset register should be updated accordingly. 4 This should be reflected in the financial statements as well. Should be shown as loss of 4 disposal if the asset is not fully depreciated or revalued.

8.5 Taking Assets out of office premises When LJSSS assets are taken out of office this should be notified to the person in charge of 4 assets. He/She should mark in a register the name of person taking the asset, date, Purpose, the 4 asset taken, return date and the condition of the asset. Signature of the person taking the asset should be on this register. 4 When the asset is returned, the condition of the asset should be assessed and this should be 4 marked on the register and signed by both the person in charge and the person returning the asset. Person take the goods out of office or the one using the asset will be taking full responsibility 4 to return the goods in the same condition that it left the office. If any item is lost this should be replaced by the person taking the item out of office or using 4 the asset.

CHAPTER NINE TERMS OF REFERENCE OF THE MANAGEMENT FINANCE COMMITTEE (MFC) 9.1 Primary Objective The primary objective of the Management Finance Committee (MFC) is to assist the Management Committee (MC) in overseeing the financial position of LJSSS, prioritizing of payments, evaluating of revenue sources, discussing the sources of financing the cash deficit and re-investing excess funds, designing the financial risk management strategy, policy and treasury management strategy, reviewing and approving major financial transactions on behalf of the MC and provide recommendations to the MC.

9.2 Membership and Attendance 4 The Committee consists of MC Members. At all times the Committee shall consist of the Executive Director, Finance Director, Field Operation Director and at least two other members of MC.

4 Executive Director shall be appointed as the Chairman of the Committee. 4 The Committee may request any relevant member of management or an external advisor to attend and address the meetings of the Committee either regularly or by invitation. Secretary

4 The Finance Director shall act as the Secretary to the Committee. 4 The Finance Director shall have permission to bring his/ her secretary or accountant as recording secretary to committee. Quorum

4 The quorum necessary for the transaction of business shall be three members, one of whom must be the Executive Director or the Finance Director.

9.3 Meetings and procedures i.) Frequency of Meetings

4 The Committee shall meet twice a month. 4 Any member of the Committee can request a meeting, if he/ she considers it as necessary. ii.) Notice of Meetings

4 The Secretary will give notice of the meeting to all the members. iii.)Minutes of Meetings

4 The Secretary shall minute the proceedings of all meetings of the Committee. 4 Minutes of Committee meetings shall be circulated promptly to all members of the Committee and, once agreed, to all members of the MC.

4 The Finance Director will, where appropriate, report to the MC on the proceedings of Committee meetings.

9.4 Duties 4 Assisting the Management Committee (MC) in overseeing the financial position of LJSSS. 4 Prioritizing of payments. 4 Evaluating of potential revenue generating sources and give recommendations to maximize the output.

4 Managing cash deficit. 4 Periodic review of LJSSS's annual budget and feedback on any amendments required. 4 Managing of short-term and long-term investments. 4 Periodic reviewing of financial performance of Income Generating Units and provide directions and targets.

4 Designing the financial risk management strategy, policy and treasury management strategy. 4 Provide recommendation to MC.

9.5 Reporting Responsibilities On financial matters 4 The Committee shall make recommendations and report to the MC on a regular basis. 4 The Committee has a responsibility to ensure the reliability of the information forwarded to the MC.

CHAPTER TEN TERMS OF REFERENCE OF THE MANAGEMENT AUDIT COMMITTEE (MAC) 10.1 Primary objective The primary objective of the Management Finance Committee (MAC) is to discuss issues recognized through internal audit report and resolve those issues internally and help Head of Division/units (HOD) to correct existing issues and to prevent any possible issues in the Future. Development of internal policies and controls for the smooth running of operations and implementation of decisions which have been taken by the Audit Committee (appointed by Executive Council).

10.2 Membership and Attendance 4 The Committee consists of MC Members. At all times the Committee shall consist of the Executive Director, Finance Director, Field Operation Director, HR Manager, Legal Manager.

4 Executive Director shall be appointed as the Chairman of the Committee. 4 The Committee may request any relevant member of senior management or an external advisor to attend and address meetings of the Committee either regularly or by invitation. Secretary

4 Internal Auditor shall act as the Secretary to the Committee. Quorum

4 The quorum necessary for the transaction of business shall be three members, one of whom must be the Executive Director or the Finance Director.

10.3 Meetings and procedures i.) Frequency of Meetings

4 The Committee shall meet once a month. 4 Any member of the Committee can request a meeting, if he/ she considers it as necessary.

ii.) Notice of Meetings

4 The Secretary will give notice of the meeting to the members. iii.)Minutes of Meetings

4 The Secretary shall minute the proceedings of all meetings of the Committee. 4 Minutes of Committee meetings shall be circulated promptly to all members of the Committee and concluded accordingly.

4 The Executive Director will, where appropriate, report to Audit Committee (AC)

10.4 Duties 4 Discuss the Internal Audit Reports and give recommendations to take corrective actions by HODs.

4 Advising of corrective actions to HODs and monitoring of post implementation actions in a timely manner.

4 Recommend preventive actions to HODs to mitigate possible future issues. 4 Development of Internal Policies and Controls to safeguard all the assets and Revenue sources.

4 Development of Internal Policies and Controls to make sure maximum utilization of resources.

4 Provide recommendations to the AC.

10.5 Reporting Responsibilities On financial matters

4 The Committee shall report to the AC.

CHAPTER ELEVEN INTERNAL AND EXTERNAL AUDIT 11.1 Appointment of Auditors (i)

The Executive Council shall appoint qualified Auditors to examine all accounts of LJSSS.

(ii)

The Executive Council also has the power to appoint recognized local auditors to audit the accounts of projects carried out in the districts, if the need arises.

11.2 Rights and Duties of the Auditors

(i)

The audit firm shall make a report to the members of LJSSS on the financial statements examined by them during their tenure of office. The financial statements shall be duly audited and certified by the Audit firm.

(ii)

The auditor has a right of access at all times to the books, accounts, vouchers and all documents and records of LJSSS which is considered necessary for the performance of duties.

(iii) The Auditor is entitle to require from the officers of the LJSSS such information and explanation as necessary for the performance of the duties of the auditor.

11.3 Tabling of Financial Statements (i)

A general meeting of LJSSS shall be held before end of December each year, on a date to be determined by the Executive Council.

(ii)

The Treasurer shall table the Financial Statements together with the Auditor's Report and the General Secretary the Annual Service Report at this meeting. The Balance Sheet shall be signed by ED and FD.

(iii) At the Annual General Meeting, a committee comprising of three persons shall be appointed to analyse and study the documents tabled at the meeting.

(iv) The committee shall have the power to obtain through the Treasurer all relevant information relating to the reports and Annual Statements of Accounts and shall submit its recommendations thereon to the Executive Council for necessary action, within one month from the date of the said Annual General Meeting.

11.4 Internal Audit (i)

All Queries raised by the Chief Internal Auditor (CIA) shall be referred to ED.

(ii)

The ED shall take suitable action where necessary.

(iii) All the queries shall be discussed at the Management Audit Committee (MAC) and send a reply to CIA within 14 days of receipt of the queries. (iv) If due to unavoidable circumstances, a reply cannot be sent within this period, an interim reply should be sent, and a final reply within 30 days.

CHAPTER TWELVE HUMAN RESOURCE â&#x20AC;&#x201C; SALARIES, LOANS AND TRAVEL 12.1 Outline of the Section This section covers all related policies and procedures that govern the expenses incurred on behalf of the human resource of LJSSS. This section covers areas such as Salaries, Allowances, Loans and travel on Duty. LJSSS operates through out Sri Lanka and has a human resource of over 400. Therefore it is important to have clearly defined policies and procedures to ensure equal treatment and to minimize disputes.

12.2 Monthly Salaries 4 All salaries would be decided based on the Salary structure of LJSSS. 4 The Official Committee will approve the salary structure. 4 The salary structure is subject to review in every 2 years 4 Salaries will be paid on the 25th of each month. 4 Salaries would be paid by a direct transfer to the respective account from the relevant District/Unit or by way of a crossed cheque.

4 For those who prefer an open cheque prior approval should be obtained. However a cheque will be drawn in the name of the employee with out account payee on it but the bearer would be crossed.

4 The officer in charge of each department or district will do the payroll on a monthly basis and in a timely manner.

4 This should be sent to H/O no later than the 20th of each month. 4 Based on the Payroll HO will transfer the required amount of money to each district or unit. 4 Where Salaries are paid by the respective units or Districts this is not required as the salary calculation and payment of salary will be done by the respective districts.

4 However Salaries thus paid should be sent to HO along with the monthly reports that are sent.

The FD and ED or District coordinator and district finance coordinator as relevant will 4 approve the salary schedule thus prepared. The HR Division will notify the FD of any retirements, resignations, deaths, dismissal or 4 vacation of post promptly. A copy of the pay slip will be given to the employee and another copy retained at LJSSS. 4 All Annual increments will only be based on the approval of the Official Committee. 4 The increments would be based on the salary structure and an annual appraisal. 4

12.3 Transfers and Promotions When an employee is transferred from one department or district to another the heads of 4 both the new department or district and the old should write to HR and FD stating the termination of employment from one division and the taking over of duties at another. Any Promotions to a higher grade/post should be issued by the ED with a copy to the FD and 4 HR. According to the effective date of new appointment the monthly salaries will be calculated. 4 i.e. The monthly salary schedule will be amended to reflect the required changes.

12.4 Allowance for Part of a Month When a staff member who is entitled for a monthly salary enters into service on a day other than the first day of the month or when the employee is on no pay leave, then the allowance payable would be a proportion of the monthly salary. i.e. It would be prorated according to the number of days worked. (30 days per month on average) Example: I. A is appointed on the 24th of March and is entitled for a monthly salary of 25,000 a month. No of day served in March (30-23) = 07 days Pay for March is (25,000/30)* 7 = Rs. 5,833.33 II. B is on no pay leave for 2 days in March. His allowance is Rs. 25,000 per Month. His Salary would be calculated as; No of days served in March (30-2) = 28 days Allowance payable for the month (25,000/30)*28 = Rs. 23,333.33

12.5 Death or Resignation of an Employee Where an employee leaves the service of LJSSS before the end of the month, all dues would 4 be paid up to the date of service. This would be calculated as per the example above. 4 When making the Payment any receivable to LJSSS would be deducted subject to the 60% 4 recovery limit. In the case of death while in service and before the monthly salary is drawn, the allowance 4 due to the employee up to and including the date of demise shall be calculated and paid to the widow, next of kin or person nominated by the employee. When making the payment all dues to LJSSS shall be recovered subject to the 60% recovery 4 limit.

12.6 Statutory Contributions LJSSS honors all statutory payments required by the government of Sri Lanka and the 4 respective laws. Stamp Duty Stamp duty payable by individual employee will be computed as per the regulation. 4 This would be deducted from the monthly salary. 4 The total stamp duty payable for a quarter in respect of all employees will be remitted to the 4 Inland Revenue before the 15th of the following month. EPF and ETF All employees of LJSSS are entitled for EPF and ETF irrespective of whether they are 4 permanent or casual. LJSSS will contribute 12% on individual monthly salary for EPF and 3% for ETF. 4 The Employee will contribute 8% as EPF. 4 This would be deducted from the monthly salary. 4

The total EPF of 20% (12% + 8%) would be paid to the department of Provident fund before 4 the last day of the following month. The total ETF (3%) will be paid to the trust fund before the last day of the next month. 4 Gratuity An employee who has served LJSSS for a continuous period of Five years would be eligible 4 for gratuity. Gratuity would be paid when an employee leaves LJSSS or dies whilst in service. 4 A half a month salary for each completed years of service will be paid to the employees who 4 are eligible for Gratuity. The half a monthly salary would be based on the last salary drawn from LJSSS. 4 Gratuity would only be paid for each completed year of service. 4 A gratuity provision would be made as per the requirements of the Sri Lanka Accounting 4 standards and the provisions of the Gratuity Act. The gratuity payable to an employee should be paid within 30 days of termination of 4 employment or demise. If the 30 day period is not met, LJSSS would have to pay a surcharge as per the act. 4 Gratuity thus provided would be maintained separately in an interest generating account 4 and the interest would be accumulated. End of each year the liability will be calculated and the deficit in the gratuity fund would be 4 transferred to this account. Gratuity funds cannot be used for any other purpose. 4 Granting of loans against the gratuity fund is not allowed. 4

12.7 Travel on Duty 4 All official travel required should be notified to Transport division. (Annexure 22 - Vehicle Request Form LJSSS/FMVRF/22) A vehicle running chart should be prepared for all official vehicles. 4 This would be the responsibility of the driver. 4

This should be handed over to head of transport on a monthly basis, who will certify and 4 hand this over to finance. Finance will allocate costs based on the running chart to projects and reconcile fuels cost. 4 If an employee of LJSSS has to travel to another location other than the duty station, actual 4 travel cost would be reimbursed. Such travelling costs include cost of transport, subsistence and lodging. 4 Transport cost will only be reimbursed if official transport was not provided. 4 Employees can travel by public transport and the actual cost would be reimbursed. 4 Once the requests are submitted to the transport division, the transport division will decide 4 weather or not to hire a vehicle. If it is required to hire a vehicle, this would be done by transport division through the 4 registered service providers. If an employee of LJSSS travels a distance from the place of work to another destination on 4 work, then the employee is eligible for subsistence allowance. Subsistence allowance will be based on the following maximum limits per person per day; 4 Tea Breakfast Lunch Dinner

Rs.150 Rs.250 Rs.300 Rs.300

These claims would be reimbursed based on actuals and should be supported by a valid 4 document. Meals would be subject to approval of the head of division. 4 These should be reasonable and not extravagant. The subsistence allowance will be limited 4 to a maximum of Rs.1,000 Per person per day. This will include all meals and other incidental expenses but is excluding accommodation. 4 If the limit is to exceed, post approval from the ED and FD is required. 4 Accommodation can be claimed if an employees is required to stay over night when on 4 official travel. LJSSS has a policy where employees are required to use LJSSS hostel facilities when they 4 travel out station wherever this is available.

4 Any direct costs or indirect cost incurred as a result will be paid directly to the division or district office by the head office. In the event where LJSSS hostel facilities are not available in a given area, then alternative 4 accommodation can be used. Such costs will be reimbursed on actual and should be supported by a valid bill from the 4 Hotel or Rest house. Accommodation reimbursements would be limited to a maximum of Rs.5,000 per night per 4 person. If for any reason this is to be exceeded prior written approval from the FD and ED would be 4 required. Depending on the urgency of the situation, post approval can be obtained immediately after 4 returning to work. At District and divisional level, prior approval from the District coordinators and Finance 4 Coordinators would be required.

12.8 Staff Loans Loan facilities are available for the LJSSS permanent staff. This would be eithr in the form of 4 Distress Loan or Special Loan Distress Loan A distress loan of a maximum of three times the monthly salary can be obtained. 4 This loan would be subject to an annual interest of 4%. 4 The maximum repayment period for the loan would be 10 months. 4 Both the Capital and the interest on loan should be paid back to LJSSS within a maximum 4 period of 10 months. Special Loan This special loan is granted under special circumstance and is limited to a maximum of 4 Rs.10,000.

There will be no interest charged on the special loan. 4 This should be repaid within a maximum period of 10 months. 4 General Procedure A loan request should be made using the official form. 4 To be eligible for a loan he or she should have worked for a continuous period of at least 4 three years. All deduction including Loan and EPF should not exceed 60% of total salary. 4 Every loan application should be signed by two Guarantors who have served LJSSS for over 4 three years. All loan applications at district level should also be approved by the D - FOD. 4 When an employee with an existing loan is transferred from one Division/District or unit to 4 another, a cheque should be drawn by the relevant division and the loan should be settled. The loan would be recorded in the new division as receivable from the relevant employee. 4 Until all exiting loans are settled a new loan would not be issued. 4 If for any reason the employee is unable to pay the loan or defaults payments, this would be 4 recovered from the guarantors. All subsequent changes to the staff loan policies or procudures would be notified to all staff 4 through a circular by the FD.