How to improve your organisation’s financial management
We applied for our first grant with AmplifyChange because their approach to sexual and reproductive health and rights (SRHR) was really similar to our vision and values at Dynamic Femmes.
Since 2016, we have received three Opportunity and two Strengthening grants to support our work on SRHR in Cameroon, which focuses on abortion. The last project we worked on was “Mobilisation within communities for activism around abortion, in the southern regions of Cameroon”.
We had a lot of interaction with the AmplifyChange team during the due diligence and pre-contracting phases, but also during the implementation phases of the grants, through online meetings and on-site monitoring visits.
Following the due diligence process conducted by the AmplifyChange Fiduciary Risk Team for our first Opportunity grant in 2016, several recommendations (special conditions) were raised, which we implemented to improve our organisation’s financial management.
The main recommandations were:
- Implementation of policies to prevent the risk of fraud and malpractices and conflicts of interest
- Implementation of framework policies, such as a Financial Manual, Human Resources, and Procurement policies
Following the implementation of these recommendations, we improved our internal processes and controls, which helped us to secure larger funding from AmplifyChange, through a Strengthening grant.
The Due Diligence process conducted by the AmplifyChange Fiduciary Risk Team for our Strengthening grant, as well as audit checks during the life of the grant, concluded the need of few additional improvements, below :
- Strengthening of internal controls, including a clear separation between the operational and governance functions in day-to-day processes (i.e., approval of invoices and payments)
- Implementation of tools such as accounting software, data management software or timesheets to help track and keep records of financial transactions within the organisation
- Implementation of processes to track indirect costs and allocate them per project
- A good filling system to ensure documentation is kept properly within the organisation and reviewed by the right person
The implementation of these recommendations made our financial management both more transparent and efficient.
- We are now able to manage our costs per project efficiently. For instance, it is possible for us now to track indirect costs and allocate them to each project the organisation is implementing.
- We have also significantly strengthened our internal controls. For instance, we have implemented a register tracking all income and expenses of the organisation before the data is entered manually by our Finance Manager into our accounting software SAGE SAARI.
These two improvements helped us a lot with the financial reporting processes to our different donors, including AmplifyChange, and also during donors’ audit checks and reviews.
We recommend implementing key procedures and controls which should be clearly documented in framework policies such as Finance, Human resources, or procurement policies.
We also recommend ensuring a good segregation of duties in the different approval processes and controls implemented by the organisation.
And to conclude, we highly recommend the implementation of monitoring tools to help the organisation to track and manage data and information on a daily basis.
From this experience we learnt that the implementation of, and adherence to, good and robust financial procedures and controls positively affects:
- good governance within the organisation
- the achievements of objectives
- staff development
- limitation of risks of internal conflicts
It also helped our organisation to forge credibility with our partners and donors. In a nutshell this experience has helped our organisation to grow!
When we started in August 1995, one of the strengths of AwazCDS-Pakistan was our effective and efficient utilisation of available financial resources. However, our system was centralised and every project manager had to get approvals from two tiers of management, i.e. project manager and finance manager, for every transaction and spend, even if the budget has already been approved.
Furthermore, at the time of reporting there were always some differences between project managers and finance managers due to, for example, overspending of project budgets or moving financial resources between projects, rather than keeping them solely for the project they had been allocated to. Thus, as a result of inefficient system and processes, our financial reporting was not streamlined and donors received different reports on project spend depending on who was submitting the report.
In order to address this inefficiency and the discrepancies in project spending, we revised our financial policies and practices by decentralising the financial approvals.
Now the project lead is responsible for the preparation, utilisation and reporting of their respective project budgets. If a project manager needs finances on temporarily basis, he/she should make a request to the other project manager instead of the central finance manager.
The project managers also approve the financial report to be submitted to respective donor and respond to the queries from the donor.
We achieved more transparency and accountability. Now the leadership sits with project team members instead of the operation or finance team members. Every project manager is responsible to use his/her project resources in effective and efficient manner. The practice of moving financial resources between projects has been stopped. As result, we now receive less audit and donor inquiries regarding the use of their resources.
One of the most important things we have learnt is to always allocate leadership to the project teams instead of operational and financial teams. The final decision about use of finances should be with a project manager or team lead. Operational and financial advisers and managers may have better understanding of the technicalities of budgeting and financial reporting, but they do not have an overview of the appropriate budgeting as per the needs of targeted communities and real beneficiaries of the project.
- Show trust in your colleagues by decentralising the financial powers down to project managers and team leads
- Do not use funds allocated to one project on a different project without involved the relevant project managers beforehand
- Always get the financial report approved by the relevant project manager before submitting it to the donors.
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