INTERNSHIP REPORT

()( CHAPTER ONE: Int#od&ction

Doing internship is mandatory for the students of Department of Business Administration of Jahangirnagar University. Final and 8 th semester of BBA program requires internship which involves 3 months organi ational attachment for practical e!perience and " month time for report writing. As per norm this report is the fulfillment of the mandatory requirement for the evaluation process of the 8 th semester and internship program. #his report titled Financial Management of NGO: Case of ActionAid Banglades !it Com"a#ati$e %isc&ssions of P#actices in P#ofit O#iented Fi#ms' is the outcome of 3$months internship in the Finance and Administration Unit at the %ountry &ffice of ActionAid Bangladesh. #he topic is assigned 'y (yed )aushad Ahmed* (un (upport Accountant of ActionAid +nternational and former ,ead of Finance and Administration of ActionAid Bangladesh. During the internship period + was assigned with the -o's related to the Fund .anagement of the partners* and %ash .anagement (ection of Finance Department. + was under the direct supervision of .s. Jesmin Banu* ,ead of Finance and Administration of ActionAid Bangladesh. + have prepared this internship report with the mentioned topic* which was supervised 'y my academic supervisor .ohammad Farhad ,ossain* Associate /rofessor of Jahangirnagar University. ()()( O*+ecti$e of t e Re"o#t

#he o'-ective of the report is to 0now the financial management of )1&s as non$profita'le organi ation and also to present a comparative scenario of financial management of non$ profit and profit oriented firms. ()(), Sco"e of t e Re"o#t

#he scope is limited within the %ountry &ffice of ActionAid Bangladesh and especially within the Finance 2 Administration Unit of ActionAid Bangladesh. ,ere + mentioned a part of financial wor0s of ActionAid Bangladesh giving emphasis on their finance structure* accounting* auditing* 'udgeting* ta!ation* and performance evaluation 2 controlling of pro-ects in financial aspect. ()()Met odolog.

#he method is mainly discussion and sharing of information with staff mem'ers of AAB and review of their operational documents and manuals. AAB3s pu'lications have used to prepare this report. + also incorporated with ver'al suggestions of the staff mem'ers* which helped me a lot to enhance my 0nowledge. #he secondary sources for data collection were pu'lished annual reports* annual financial reports of AAB* electronic pu'lications of AAB and their

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country strategic paper. ()()/ 0imitations

/roper guidance from more professionals of similar sector could enrich this report and also could ma0e it more informative and compara'le. But their time constraints could not allow me to do that* which seemed to me a limitation to prepare this report. Another limitation is that* compara'le information is not availa'le in this report as + was only permitted to complete my internship in a single organi ation* i.e Actionaid Bangladesh. ()()1 St#&ct&#e of t e Re"o#t

#he report is divided into two main parts5 Pa#t (: O#gani2ational o$e#$ie! contains snapshot of ActionAid Bangladesh* functions of ActionAid Bangladesh* overall financial performance of AAB 6+n 7884 and 7889:* and AAB3s current state of operations and future direction.

Pa#t ,:

First portion of the "#o+ect "a#t is the introduction to the pro-ect. ActionAid Bangladesh3s Financial .anagement* Accounting (ystem* Budgeting* #a!ation* Auditing* /erformance ;valuation 2 %ontrolling of /ro-ects are the core chapters of this part. .a-or findings* recommendations and lastly conclusion are given to end the pro-ect.

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(), CHAPTER T4O: Sna"s ot of ActionAid Banglades

Action Aid is an international development organi ation wor0ing over 34 countries* with its head quarter 'ased in the United <ingdom and (ecretariat at (outh Africa. Actionaid Bangladesh 6AAB: is one of the five country programs in Asia and has 'een operating in Bangladesh since "=83. Four 'road thematic areas are main program intervention areas of AAB e.g. ;ducation* 1overnance* >ivelihood and (top ?iolence against @omen 2 1irls. Actionaid Bangladesh 6AAB: is registered with )1& Affairs Bureau of Bangladesh 1overnment under the Foreign Donations 6?oluntary Activities: Aegulation Aules* "=B8 vide registration no. FDCA )o$7"8* Date 7BC8DC"=89. (),)( 0ocation of ActionAid Banglades and ActionAid Inte#national #he addresses of ActionAid +nternational and ActionAid Bangladesh are as follows5

ActionAid Inte#national /ost )et (uite E 7D8 /rivate Bag F3" (a!onwold 7"37 Johanes'urg* (outh Africa

ActionAid Banglades Aoad noE"39* ,ouse noE8* 1ulshan$"* Dha0a$"7"7 Bangladesh

(),), Histo#ical *ac3g#o&nd of AAB (),),)( ActionAid Inte#national ActionAid was founded in "=B7 'y .r. %ecil Jac0son$%ole* a 'usiness man who 'elieved that 'usiness people should actively support charities* with the name Action in distress 6Aid: with the o'-ective to provide education* health support* and emergency relief to the poor children as service oriented activities. +n "=B= it changes its name to ActionAid and started to wor0 in 78 countries. (),),), B#ief isto#. @hen ActionAid was esta'lished in "=B7* its primary aim was to assist some of the world3s poorest children* firstly with primary education* and then with practical s0ills* which would help them 'uild a more secure future. +t soon learnt that providing primary education and training was not enough. +t was only the first step in 'uilding a program that will reduce poverty and ena'le children to have a 'etter future. By the

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end of the decade* its wor0 had e!panded to include long$term health* sanitation and agricultural pro-ects that would improve living conditions for children and their families. +n "=B8 it started its first pro-ect underta0ing integrated community development. +n "=BD it supplied emergency relief for the first time when ,urricane Fifi struc0 ,onduras $ funding food* clothing* medicines and tools for thousands of homeless people in 748 isolated villages. +n the same year in Bangladesh it also funded provision of 48*888 meals a day* glucose and medicines for the people of eight towns devastated 'y floods. From the mid seventies* the focus of its wor0 started shifting. From solely providing education it moved on to helping children and their families to 'ecome self$ supporting. By the start of the"=88s* its focus had shifted again to ensure it was tac0ling the root causes of poverty* not -ust the symptoms. #here are many comple! and inter$related causes of poverty. ,igh child mortality and malnutrition* high 'irth rates* low literacy rates* limited access to clean water and sanitation* health care and education* insufficient land to grow food and lac0 of credit to 'uy seeds and tools $ these are -ust some of the factors that can contri'ute to poverty. +t had learned that for its wor0 to 'e of lasting 'enefit* it needed to wor0 with whole communities to 'oost agricultural production* improve water supplies* gain access to 'asic healthcare and find new sources of income. /rograms in education* agriculture* health* water* s0ills training and helping people to organi e and access savings and credit were integrated so that each supported the other. +t also helped communities organi e themselves to challenge in-ustice and ensure they received their entitlements and as much assistance as they could from their own governments. (),)- Int#od&ction to ActionAid Banglades ActionAid Bangladesh 6AAB: started as a small operator in the coastal areas of Bangladesh in the district of Bhola in "=83 to manage disaster 'ut over the years its wor0 shifted more towards a rights$'ased approach. #his was one of the 0ey approach changes. AABGs current strategy is aligned with the poor and e!cluded people. +t emphasi es the agency and the action of the poor and e!cluded people as the primary engine of development to eradicate poverty and in-ustice from society of Bangladesh.

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A rights$'ased approach to development implies* as mentioned in "%(/ +++* recognition of the rights of people not only to fulfill their 'asic needs* 'ut also to treat them with equal dignity and reali e their creative potential and state o'ligations to create an ena'ling environment for assertion of their fundamental rights. +n the promotion of the rights$'ased approach to end poverty and in-ustice* the concepts of equality* citi enship and -ustice are critical. #his evolution has 'een the imperative of the empirical e!perience that the organi ation gained through its long and deep involvement in com'ating poverty and 0nowing its structural causes. Huestions of rights of women* e!cluded groups and the livelihoods of the poor and the marginali ed now occupy a front seat. At present AAB wor0s in 34 districts and has more than 788 local and community$'ased partner organi ations. @hile AAB sets its own strategy* it is an international organi ation with national accounta'ility. #he unity with ActionAid +nternational is in the common vision* mission and values* this ena'les AAB to ta0e a determined action in the fight to eradicate poverty and esta'lish equal rights. From its inception to the present times* AAB moved from the regional to the thematic approach in its wor0. ,owever the core values remain unchanged. #here are "7 ongoing pro-ects with ma-or donors and child sponsorship continues to 'e a ma-or source of fund. #he present %ountry (trategy /aper +++ of AAB focuses on I;quality* %iti enship and JusticeJ which sums up the core concerns of AAB3s wor0. A new %ountry (trategy /aper was initiated in 788D* which required operational changes to cope with new challenges. As a result* there has 'een a change from regionali ation to thematic programs 'ased on AAB3s learning* e!perience and history of wor0 for 'etter coherence. #he themes are now pursuing to achieve specific strategic o'-ectives and this has provided greater space to engage the partners and other actors 'oth at the local and national level. @ith stronger position at the policy ma0ing level* there is now increased synergy in AAB3s wor0 as it 'enefits from lin0ages across themes.

"

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(),)/ O#gani2ational O*+ecti$es5 Goals 6 St#ategic O*+ecti$es *. T emes5 Mission5 7ision5 and Co#e 7al&es of AAB (),)/)( O#gani2ational O*+ecti$es #he organi ational o'-ectives for AAB according to %ountry (trategy /aper +++ which is applica'le for the time period 7884$788= are presented 'elow. O#gani2ational o*+ecti$es acco#ding to CSP III #o promote effective organi ational culture #o promote ,uman Aesource Development system that continuously addresses the needs and updates the capacities of staff #o promote gender equity and equality #o nurture shared learning and esta'lish a system of 0nowledge management to promote institutional memory and greater synergy of wor0 %ommitment towards monitoring and evaluation for 'etter understanding for the changes in the lives of poor and marginali ed #o esta'lish national accounta'ility in light of internationali ation #o allocate resources at the optimum level for cost effectiveness and ensuring financial transparency #o raise sufficient resources and effectively manage the resources to 'e efficient* effective and transparent (),)/), Goals 6 St#ategic O*+ecti$es of AAB *. T emes Goal (: /oor and marginali ed people3s rights over their livelihoods are more secure St#ategic o*+ecti$es fo# ac ie$ing goal ( #o facilitate an ena'ling environment where poor and marginali ed people are a'le to e!ercise their right to sustaina'le livelihood through access to employment opportunities* and also a'le to claim their fair share from the institutions* capital and mar0et #o reduce vulnera'ility and ris0 to the livelihood of the poor and marginali ed from disasters #o increase access and control over natural resources and pu'lic services 'y the poor and marginali ed

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Goal ,: @omen3s rights are advanced for gender equality St#ategic o*+ecti$es fo# ac ie$ing goal , #o promote women3s right to self determination and create an ena'ling environment for their effective participation in social* political* economic and environmental dimensions #o create an ena'ling environment for practice of egalitarian gender relations and active citi enship 'y adolescent #o promote a culture of ero tolerance of violence against women

Goal -: Development of a society inclusive culture where diversity is cele'rated* equal citi enship e!ercised* and non$ discrimination is actively practiced St#ategic o*+ecti$es fo# ac ie$ing goal #o assert equal citi enship 'y those of diverse origins 'ased on ethnicity* language and religion #o promote an inclusive and 'arrier free society where ena'ling environment and conditions prevail for the people of disa'ilities #o promote active processes for inclusion of the socially e!cluded

Goal /: /eople3s movements for social and economic -ustice are strengthened St#ategic o*+ecti$es fo# ac ie$ing goal / #o promote the right to Iquality educationJ for the poor and marginali ed children #o promote pu'lic accounta'ility of the government* private sector and international development agencies that secures economic -ustice for all #o promote the right to quality health care for the poor and marginali ed

(),)/)- AAB8s Mission A confident and responsi'le nation* free from poverty and indignity* in which its citi ens can lead an active life of freedom and livelihood security. (),)/)/ AAB8s 7ision #o wor0 with poor and marginali ed women* men* girls and 'oys to eradicate poverty 'y overcoming the in-ustice and inequity that causes it.

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(),)/)1 AAB8s Co#e 7al&es #hroughout ActionAid the following values are maintained form the common 'asis to help in designing all organi ational policy and practice. ;ach person in ActionAid has the right to e!pect to 'e treated and the o'ligation to treat others according to these principles implicit in organi ational values. AAB will actively* e!plicitly and continuously invest in 0eeping its values alive. Mutual Respect: ActionAid recogni es the innate dignity and worth of all people and the value of diversity. Equity and justice: ActionAid will ensure that every person* irrespective of se!* age* race* colour* class and religion has an equal opportunity to e!press and utili e her or his potential. Honesty and transparency: ActionAid will 'e accounta'le for the effectiveness of their actions and open in their -udgments and communications with others. Solidarity: ActionAid3s only 'ias will 'e a commitment to the interest of the poor and powerless. Courage and conviction: ActionAid will have the courage of our convictions to 'e creative and radical* without fear of failure* in pursuit of ma0ing the greatest possi'le impact on the causes of poverty. Independence: ActionAid will 'e independent of any religious or party political affiliation. Humility: ActionAid recogni e that they are part of an alliance against poverty and so* in their presentation and 'ehavior* they will demonstrate humility. Efficiency: ActionAid will manage their organi ation in the most cost effective and efficient manner possi'le in order to ma!imi e the impact of the resources that are dedicated to their ultimate o'-ective of eradicating poverty. Excellence: ActionAid will try and attain the highest standards in their wor0 with a

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view to esta'lishing ActionAid as a world leader in terms of the quality of the their development wor0. Proximity: ActionAid will ta0e decisions as close to their consequences as possi'le. (),)1 Inte#national o#gani2ational st#&ct&#e of ActionAid @ith its head office in U<* Actionaid has three regional offices 'ased in Asia* Africa and >atin America in the world to operationali e its wor0 in the poorest countries in the world. #he ,ead office primarily comprised of the following units5
Ta*le (: Inte#national o#gani2ational st#&ct&#e of ActionAid

Name of t e de"a#tment Ma#3eting de"a#tment

P&#"ose +t assigned to manage and raise funds for the organi ation. +t has diversified funding sources* starting from regular giving income from sponsors to huge grants from large donors* e.g. DF+D* ;uropean %ommission* Ford Foundation etc. #he unit is assigned to lo''y the international agencies in the arena of formulation of policies in education* food rights* tied aid* emergency response* ,+?CA+D(* trade issues* etc. +n addition to that it is also involved in the 'uilding partnership with glo'al agencies. +t maintains the glo'al accounts lin0ed with income from +t the also alliance partners the to +# e!penditure to the country where it is operating. maintaining infrastructure of the organi ation.

Polic. s&""o#t &nit

Finance &nit 6 IT &nit

#he regional offices with the same functions as a'ove are maintaining the lin0ages 'etween the country program and the head office.

()- CHAPTER THREE: F&nctions of ActionAid Banglades

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%ommon wor0 approaches followed in AAB form a strong 'asis for their unity. AAB is committed to creating a diverse wor0force that positively ac0nowledges the differences e!isting 'etween people$ such as se!* gender* race* age* ethnic origin* caste* class* color* 'elief* nationality* ,+? status* se!ual orientation* disa'ility* education* social 'ac0ground etc. #hese differences may lead to differences in attitudes* e!periences* and ways of thin0ing* 'ehaving* communicating and wor0ing. AAB reserves the right to add other categories to this list and will apply this principle in all aspects of organi ational practice. AAB recogni es that a diverse wor0force leads to 'etter organi ational performance* improved productivity. #his chapter gives the detailed description of various functional units of AAB* it3s logo 2 slogan* and organogram. ()-)( Identit. 6 Reso&#ces Mo*ili2ation +A. Dept. through its three unique functions of (ponsorship* /artnership Development and +dentity hope to create a cohesive and winning team environment to achieve a cost$effective funding 'ase for AAB through hori ontal team wor0 as well as interlin0 AAB3s local and national issues and identity with other development sta0eholders. +t also hopes to create wider space for shared learning and 'est practices through regular flow of information 'oth from its local partnerships as well as AA+ %ountry /rograms. ()-)()( S"onso#s i" ". Aights Based Approach and its outcomesCimpacts more tangi'le to the supporters in its telling of the reports 7. %reating opportunities for supporters to move on from 'eing donors to 'ecoming active supporters of the social movements. 3. %apacity 'uilding of the staff of partner organi ations to ensure the real and organi ed program information from the field D. Arranged communication training for Development Area 6DA: staff ()-)(), T e Identit. 9nit ". #he identity of AAB is rolled out through information and case stories of their wor0 pu'lished in newsletters* 'rochures* information pac0s* identity materials 6 such as posters* leaflets* greeting cards* year planners etc:* photographs* media and news articles 6 'oth national and international:* participation in national and international programs and e!hi'itions* the we'site and the intranet.

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7. +dentity produces social messages in the print media and regularly follow up with the media on programmatic involvements as well as continue dialogues on a regular 'asis. 3. Develops partnerships with educational institutions to promote future leadership in the development sector and to familiari e the young leaders of tomorrow a'out wor0 in development. D. (hares localCnational issues in the international forums through electronic media* we'site and e!ternal pu'lications and regular communications update I#he Asia UpdateJ 4. /roduce television and radio spots on priority sectored issues 9. /roduces items for enhancing AAB3s +dentity through video documentation B. Developing media strategy for 'etter professional lin0ages and capacity 'uilding of grass roots level -ournalists 8. 1ives active support to local and international campaigns ()-)()- Pa#tne#s i" %e$elo"ment ". /artnership Development Unit started with the inception of +dentity 2 Aesource .o'ili ation Department 6+A.: of AAB 6&ct.788":. (ince then /artnership Development initiated a process of developing a structured fundraising system with strategies* policies* donor relationship* systems of archiving* contract management and overall capacity of official and non official fundraising* etc 7. /artnership development deals with official funding and relationships with 'ilateral and multilateral donors* trusts* foundations 2 corporations. 3. /artnership Development unit also closely wor0s with the DA and pro-ect partners to 'uild their fundraising capacity D. /artnership Development unit critically engages itself with donors to influence 4. /artnership Development unit wor0s 'oth with internal and e!ternal entities

Fig&#e (: O#ganog#am of IRM %e"a#tment

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Head Head S"onso#s i" S"onso#s i" Pa#tne#s i" %e$elo"ment Pa#tne#s i" %e$elo"ment

Identit. Identit.

Assoc. Assoc. %oordinator %oordinator &fficer &fficer

Assoc. Assoc. %oordinator %oordinator

Assoc. Assoc. %oordinator %oordinator

Assoc. Assoc. &fficer &fficer Assoc. Assoc. &fficer &fficer ()-), Finance and Administ#ation

Assoc. Assoc. %oordinator %oordinator

AAB finance and administration unit wor0 together. #he main responsi'ilities of finance department are5 ". Financial management 6/lanning* Fund management* .onitoring 2 %ontrolling: 7. Financial accounta'ility 3. +nternal controls D. Aecording financial events 4. Audits 9. Budgeting and planning B. #reasury management 8. Aeporting financial information =. Financial efficiency measurement "8. %apacity 'uilding of Finance (taff mem'ers of AAB and at partners3 end @or0 done 'y a ten 6"8: mem'er team of dedicated and e!pert staff mem'ers under the leadership and management responsi'ilities of ,ead of Finance and Administration. #eam contains different level of staff mem'ers* i.e .anager* Deputy .anager* &fficer* Associate &fficer. (etting (trategic Direction done 'y Board of #rustees and +nternational Directors. #he core responsi'ilities of Administration department are5

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". Assisting in organi ing +nternational 2 national meetings* seminars* wor0shops* training courses and pro-ects related events including administrative and logistics support 7. /rocessing visa 2 tic0eting* maintaining petty cash *coordinating and monitoring wor0 of support staff* 0eeping an inventory record of all properties* supervising office equipments and maintenance 3. /rocuring and purchasing equipments* reviewing vouchers and requesting for payments related administrative functions* ensuring office safety* security and cleanliness* ma0ing arrangements for travel and accommodation D. ;nsuring and 0eep functioning the communication systems of the office 6internal 2 e!ternal: 4. ?ehicle management and provide vehicle support to field visit and different events Fig&#e ,: O#ganog#am of Finance 6 Administ#ation 9nit

Head of Finance and Administ#ation Head of Finance and Administ#ation

.anager .anager Administration Administration

.anager .anager Finance Finance

&fficer &fficer Administration Administration (upport (upport (taff (taff

Deputy Deputy .anager .anager

&fficer &fficer

Assoc. Assoc. &fficer &fficer

()-)- H&man Reso&#ces 6 IT ". (taff recruitment as per need 7. /lacement of staff 3. %onfirmation of regular staff* e!tension of pro'ation period D. /reparing ;mployment /olicy* %onsultant 2 &utsourcing /olicy* ?olunteer /olicy* +nternational (econdment /olicy 4. /reparing -o' description of each personnel 9. /erformance appraisal of the staffs B. Arrangement of staff capacity 'uilding* staff retrenchment* staff leave* staff leaving a

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-o'* staff medical 'enefits. 8. .anagement of smooth and uninterrupted +(/ service =. /lan* organi e and procure +# items as per need Fig&#e -: O#ganog#am of HR 6 IT 9nit

Head of HR 6 IT Head of HR 6 IT

%oordinator$+# %oordinator$+#

%oordinator$,A %oordinator$,A

&fficer &fficer

&fficer &fficer

Assoc. Assoc. &fficer &fficer ()-)/ Co&nt#. %i#ecto#8s 9nit %ountry Director3s 6%D: unit consists of %D3s unit* internal audit* monitoring 2 evaluation* reflects development and shared learning. #he responsi'ility of %D is ". #o re'uild and re$invigorate the organi ation and 'ring a'out sta'ility within the organi ation 7. #o deal with the negative pu'licity and other trou'lesome issues 3. #o spend time on mission level issues and to do field visits to understand the perspectives of the poor and marginali ed people that AAB wor0s for D. #o finali e various policies and pu'lish the %(/. 4. #o 'uild up the relationship with the partners as well as AAB3s donors. Fig&#e /: O#ganog#am of Co&nt#. %i#ecto#:s 9nit

Co&nt#. %i#ecto# Co&nt#. %i#ecto# Assistance Assistance to to %D %D

.onitoring .onitoring 2 2 ;valuation ;valuation

+nternal +nternal Audit Audit

Aeflect Aeflect Development Development

(hared (hared >earning >earning

()-)1 0i$eli ood Sec&#it. 6 Ris3 Red&ction #he goal of this sector is to ensure a more secure livelihood for the poor and marginali ed

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people. /romotion and strengthening of livelihoods* protection from disasters* access to and control over natural resources are the three themes in this sector. ()-); 4omen8s Rig ts 6 Gende# E<&alit. 1ender sensitivity and promotion of women3s right and equal access for women in all the programs and pro-ects are the primary focus of AAB. +t wor0s to advance women3s rights for gender equality* create an ena'ling culture to practice gender equality among youth and adolescents and prevent violence against women. ()-)= Rig ts 6 Social >&stice AAB wor0s for a socially inclusive culture where diversity is cele'rated* equal citi enship e!ercised and non$discrimination is actively practiced. #his sector includes three themes diversity and citi enship* disa'ility 2 ena'ling environment and social inclusion. ()-)? Social %e$elo"ment 6 Economic) >&stice AAB tends to strengthen people3s movements for social development and economic -ustice through ensuring quality education* economic -ustice and quality health care for all. #heir o'-ective is to promote pu'lic accounta'ility of government* private sector and international development agencies that secures economic -ustice for all.
Fig&#e 1: O#ganog#am of 0i$eli ood Sec&#it. 6 Ris3 Red&ction5 4omen8s Rig ts 6 Gende# E<&alit.5 Rig ts 6 Social >&stice and Social %e$elo"ment 6 Economic) >&stice 9nits

Secto# Head Secto# Head 0S 6 RR 0S 6 RR

Secto# Head Secto# Head 4R 6 GE 4R 6 GE

Secto# Head Secto# Head R 6 S> R 6 S>

Secto# Head Secto# Head S% 6 E> S% 6 E>

T T eme eme 0eade# 0eade# P#og#am P#og#am Office# Office# Assoc) Assoc) P#og#am P#og#am Office# Office#

()-)@ T e logo and slogan of ActionAid Banglades

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()-)@)( #he logo of ActionAid Bangladesh is5

()-)@), #he slogan of ActionAid Bangladesh is5

()-)(A O#ganog#am of ActionAid Banglades An organogram of ActionAid Bangladesh is attached in the following page.

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Fig&#e ;: O#ganog#am of ActionAid Banglades

ActionAid ActionAid Banglades Banglades

,ead$ ,ead$ +A. +A.

,ead$ ,ead $ Finance Finance and and Adminis Adminis tration tration

,ead$ ,ead$ ,A 2 ,A 2 +# +#

%D3s %D3s Unit Unit

,ead$ ,ead$ >iveliho >iveliho od od (ecurity (ecurity 2 Ais0 2 Ais0 Aeducti Aeducti on on

,ead$ ,ead$ @omen3 @omen3 s Aights s Aights 2 2 1ender 1ender ;quality ;quality

,ead$ ,ead$ Aights Aights 2 (ocial 2 (ocial Justice Justice

,ead$ ,ead$ (ocial (ocial Develop Develop ment 2 ment 2 ;. ;. Justice Justice

+dentity +dentity 2 2 %ommu %ommu nication nication s s

Finance Finance /artners /artners 2 2 capacity capacity 'uilding 'uilding

,A ,A .anage .anage ment ment

.onitori .onitori ng 2 ng 2 ;valuati ;valuati on on

>iveliho >iveliho od od /romoti /romoti on on

@omen3 @omen3 s Aight s Aight

Diversit Diversit y2 y2 %iti ens %iti ens hip hip

;ducatio ;ducatio n n

(ponsor (ponsor ship ship .anage .anage ment ment

Finance Finance /ro-ects /ro-ects

&rgani &rgani ational ational Develop Develop ment ment

+nternal +nternal Audit Audit

;merge ;merge ncy and ncyAis0 and Ais0 Aeducti Aeducti on on

Adolesc Adolesc ent 2 ent 2 Kouth Kouth

Disa'ilit Disa'ilit y y

;conom ;conom ic ic Justice Justice

Fundrais Fundrais ing and ing and %ontract %ontract .gt .gt

Adminis Adminis tration tration

+nformat +nformat ion ion #echnol #echnol ogy ogy

Aeflect Aeflect Develop Develop ment ment Unit Unit

)atural )atural Aesourc Aesourc es 2 es 2 /u'lic /u'lic (ervices (ervices

?iolenc ?iolenc e against e against @omen @omen

(ocial (ocial +nclusio +nclusio n n

,ealth ,ealth

(hared (hared >earnin >earnin g g

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()/ CHAPTER FO9R: O$e#all Financial Pe#fo#mance of AAB DIn ,AA1 and ,AA;E #he overall financial performance of AAB is measured 'y the total income it received* percentage of costs according to international themes* and trends of income 2 e!penditure. #he analysis of these data for the year 7884 and 7889 is presented in the following section. ()/)( Income miB #he total income for 7884 and 7889 was L 3.4= and L 3.=D million respectively. From this AAB has spent L 7.88 and L 7.=9 million as pro-ect cost for the year 7884 and 7889. #he percentage of income mi! was5
Ta*le ,: Income miB in ,AA1 and ,AA; Fig&#e =: Income miB ,AA1

Cea# Reg&la# gi$ing Ot e# #eg&la# gi$ing Pa#tne#s i" DofficialE Pa#tne#s i" Dot e#sE Ot e#s T#ansfe# in Total

,AA1 9"M 8.=BM 34M 7.39M 8.3"M "."3M "88M

,AA; D8.4"M "9.73M =.8"M "7.8BM 8.33M "3.84M "88M

Income mix 2005

2.36% 35% 0.31% 1.13%

61% 0.97% Regular giving Partnership (official Others Other regular giving Partnership (others !ransfer in

#he income from Aegular 1iving is high for 'oth the year 7884 and 7889. #he income from /artnership 6official: is high in 7884 'ut in 7889 the second highest position held 'y other regular giving. #he least income came from other source for 'oth the year as shown in the graphs.

/age "8 of 43

INTERNSHIP REPORT

Fig&#e ?: Income miB ,AA;

Income mix 2006
13.05% 0.33% 12.07% 9.#1% 16.23% Regular giving Partnership (official Others Other regular giving Partnership (others !ransfer in "#.51%

+n 7884 the income from Aegular giving and /artnership 6official: are higher from 7889 as shown in the a'ove graphs. #he income form &ther Aegular 1iving* /artnership 6others: and #ransfer in are higher in 7889 than 7884. ()/), Pe#centage of costs acco#ding to Inte#national T emes #he analysis according to the various international themes is the following.
Ta*le -: Pe#centage of costs acco#ding to Inte#national T emes in ,AA1 and ,AA; Fig&#e @: F of costs acco#ding to Inte#national T emes ,AA1

Cea# Food and &nge# 4omen8s #ig ts H&man sec&#it. Rig t to ed&cation Go$e#nance HI7GAI%S Ot e#s Total

,AA1 74M "7M 77M 78M BM 4M 7M "88M

,AA; 3"M 78M "8M "4M BM 4M DM "88M

/age "= of 43

INTERNSHIP REPORT

% of costs according to international themes 2005 5% 7% 2% 25%

2#% 22% $oo% an% hunger Right to e%ucation Others &o'en(s rights +overnance

12%

)u'an securit* ),-./,01

+n the year 7884 AAB had spent most in Aight to ;ducation #heme* 'ut in the following year it turned its policy and spent most in Food and ,unger #heme. #he second highest contri'ution of AAB was Food and ,unger and @omen3s Aights for 7884 and 7889 respectively.
Fig&#e (A: F of costs acco#ding to Inte#national T emes ,AA;

% of costs according to international themes 2005

5% 7% 2% 25%

2#% 22% $oo% an% hunger Right to e%ucation Others &o'en(s rights +overnance

12%

)u'an securit* ),-./,01

#he development wor0s of AAB for its international themes are higher in 7889 than 7884 in the themes li0e5 Food and ,unger* @omen3s Aights and &thers. +n ,uman (ecurity and Aight to ;ducation the costs are more in 7884 where in 1overnance and ,+?CA+D( themes it remained almost same for the 'oth year. ()/)- T#ends of income and eB"endit&#e in AAB #he following graph shows AAB3s last four years income and e!penditure pattern from year

/age 78 of 43

INTERNSHIP REPORT

788D to 7889 are given 'elow. ,ere we can see the e!penditures increased with incomes and in the year 7884 and 7889 the e!penditures were almost equal to incomes.
Ta*le /: Income and eB"endit&#e t#end D,AA/H,AA;E

+n 1B/ N888 Cea# Income EB"endit&#e ,AA/ D*3=D 3*D=7 ,AA1 3*3=9 3*7=9 ,AA; 3*B8D 3*B94

Fig&#e ((: T#ends of income and eB"endit&#e in AAB

Trends of income & expenditure
52000 "2500 "2000 32500 32000 22500 22000 12500 12000 500 0 200" ,nco'e 2005 Year 34pen%iture 2006

()/)/ S4OT Anal.sis of AAB #he (@&# analysis comprises of the organi ation3s internal strength and wea0ness and e!ternal opportunities and threats. (@&# analysis helps the company an insight of what they can do very important to identify the current position of the strategic analysis of the organi ation. ()/)/)( T e st#engt s of AAB a#e: 1ood organi ational culture of AAB. +ts young* energetic* sincere and s0illed wor0ers. #o attract donor ActionAid has priority over other companies 'ecause it spreads in D8 countries. ActionAid is centrali ed. (o each %ountry Director has responsi'ility to the head of ActionAid for reporting. ActionAid acts as pressure group for the 1overnment. 1ood organi ational culture of AAB.

In GBP '000

/age 7" of 43

INTERNSHIP REPORT

/articipatory program development on need 'asis* which promotes harmony and goodwill with in the organi ation* in the communities where it wor0s and amongst the donors. ()/)/), T e !ea3nesses of AAB a#e: ?iolation of policy as per senior management instruction sometimes happened. )one is directly lia'le to anyone for hisCher duties. #he leader is all in one. (o negligence in service may occur. (ometimes* ActionAid is critici ed for not maintaining good relationship with )1& affairs 'ureau. @ea0ness in management system including un'alanced distri'ution of responsi'ilities* inadequate and inappropriate assessment and evaluation of pro-ects* lac0 of unity in management. ()/)/)- T e o""o#t&nities of AAB a#e: .ore scope of colla'oration with various government programs. 1reater colla'orative programs with other )1&s. Diversification of donor source. ;!panding activities in new areas and new fields of activities. #he policies are reviewed time to time* so there is lot of opportunity to adapt the policies with the changing demand of the world. ()/)/)/ T e t #eats of AAB a#e: ActionAid may lose donor fund if they don3t maintain good liaison relationship with donor organi ation. .ultiplicity of )1&s in Bangladesh. 1overnment policy change and 'ureaucratic nature of decision ma0ing lead to unequal e!change.

()1 CHAPTER FI7E: AAB8s C&##ent State of O"e#ations and its EB"ected F&t&#e %i#ection
/age 77 of 43

INTERNSHIP REPORT

%urrently AAB is operating in Bangladesh with a hope to eradicate poverty. AA has si! international themes. #hey are Food and hunger* @omen3s rights* ,uman security* Aight to education* 1overnance and ,+?CA+D(. &f that* in Bangladesh it gives most emphasi e on food and hunger theme. #he rationale of this* they are trying to enhance the livelihood of the marginali ed people of Bangladesh. ActionAid +nternational* which has 'een wor0ing in Bangladesh since "=83* is uniquely placed to address the development challenges that the people of Bangladesh will face in the coming years. &ver the past 78 years* AAB has esta'lished a trac0 record for wor0ing effectively with communities for their advancement and empowerment. (ince "==8* AAB has e!panded its partnership to include organi ations from vulnera'le locations throughout the country. +t has developed e!pertise in wor0ing with disa'led* development of adolescent programs.

#he special characteristics of AAB to promote and strengthen national leadership within an international organi ation* and its funding structure provide AAB with a unique opportunity to pursue the challenges faced 'y Bangladesh in the coming years through development of innovative grassroots programs and provide policy insights and directions. #his will provide AAB the strategic advantage. #hough* AAB faces some pro'lems in strategic and operational level. ()1)( St#ategic and o"e#ational iss&es facing AAB ()1)()( St#ategic iss&es Although AAB emerged as pu'lic 'enefit organi ations in advancing the interests of a 'roader community where a large num'er of men and women are marginali ed* vulnera'le to structural social in-ustice and victim of violation of human rights* their management practice does not show any line of accounta'ility to the community. #he lac0 of defined accounta'ility to the community 'lurs the downward accounta'ility of AAB 2 other )1&s and therefore creates accounta'ility gap. )1&s should have accounta'ility relationship 'etween their peer organi ations from the perspective of upholding the standard* value tradition and reputation from the sector. ,owever* the reality is that the norms around the sharing of good

/age 73 of 43

INTERNSHIP REPORT

accounta'ility practice are often a'sent and as a result )1&s frequently lac0 a common standard or accepted 'ehavior to hold each other to account. ()1)(), O"e#ational iss&es For an effective organi ation leadership* accounta'ility and transparency are needed. (o* AAB has to 'uild up leadership and develop inner strategies. AAB has to elect people in the 'oard view of changing the nation in a positive direction. #he strategic and operational issues that AAB is facing can 'e minimi ed 'y the following strategies and tactics5

()1), T e st#ategies and tactics &sed to co"e !it t em

Building responsive governance within the organi ation. Developing policy guidelines and manuals as open document. %oordination and creation of space for shared learning in terms of accounta'ility. Aegular revisit of the policies* values and norms in line with e!isting policies. .inimum standard setting for organi ational accounta'ility. /romoting self assessment with organi ational domain. Developing relationship with government officials. Dissemination of information at all levels. /ractice of participatory decision ma0ing process. +n case of preparation and implementation of policy the method should 'e sharing* involvement* and dissemination. /eer accounta'ility should 'e trust 'uilding* development of mindset a'out shared learning. Downward accounta'ility should 'e mind setting of su'ordinates* trust 'uilding and reducing dependency. Aeal partnership has to 'uild up with donor through local fund mo'ili ation.

/age 7D of 43

INTERNSHIP REPORT

,)( CHAPTER ONE: Int#od&ction to t e P#o+ect ActionAid Bangladesh is a leading +nternational )on 1overnment &rgani ation in Bangladesh. +n preparing this report financial management practice of AAB has ta0en among non government sector. #he study is 'ased on the three months internship program at the AAB. #he study is a'out the overview of the financial management practice of AAB. ,)()( O*+ecti$e of t e St&d. #hrough this study* + tried to attain the following o'-ectives5 /rime o'-ective of my study was to find out financial management of )1& #o reach in a comparative analysis of financial management of profita'le and non$ profita'le organi ation. ,)(), Significance of t e St&d. #his pro-ect titled IFinancial Management of NGO: Case of ActionAid Banglades !it Com"a#ati$e %isc&ssions of P#actices in P#ofit O#iented Fi#ms' was designed to present the financial management of )1&s in an easy and understanda'le way. + have selected this topic to present the financial management of non profita'le organi ation. As non profita'le organi ation has no profit motive* so how they organi e their income and e!penditure in their financial statements according to their organi ational o'-ective was my attempt to prepare this report. #he report is totally descriptive in nature. ,)()- Sco"e of t e St&d. #he scope of the pro-ect part is limited to the financial manuals of ActionAid and their financial reports only. Aeviews of their operational manuals are also used to prepare the report. Besides* te!t 'oo0s were used as supplementary when needed. A detailed list of them has mentioned in the 'i'liography. ,)()/ Met odolog. /reparing a report a'out the financial management of an organi ation is a difficult and complicated tas0 and no single method is appropriate for preparing the report. ;ffective research involves si! 'asic steps* shown in the following figure5

/age 74 of 43

INTERNSHIP REPORT

Fig&#e (,: Met odolog. of t e #esea#c

%efine t e P#o*lem %efine t e P#o*lem

Resea#c O*+ecti$e Resea#c O*+ecti$e

%e$elo" Resea#c Plan

Findings 6 Recommendations Findings 6 Recommendations

%ata Anal.sis %ata Anal.sis

%ata Collection

#he pro-ect title is Financial S.stems of NGO: Case of ActionAid Banglades DAABE !it Com"a#ati$e %isc&ssions of P#actices in P#ofit O#iented Fi#ms') #his is a descriptive research. #he ma-or purpose of this descriptive research is to descri'e the financial management of non profit oriented organi ations. ,)()/)( T."es of %ata #he report is mainly 'ased on 7 types of data$ () /rimary data ,) (econdary data ,)()/), Collection of %ata ,)()/),)( P#ima#. so&#ce of data /ersonal o'servation of the financial activities. +nterview with the officials of the ActionAid Bangladesh. ,)()/),), Seconda#. So&#ce of data Annual financial reports of ActionAid Bangladesh. /u'lished documents and reports. Aelevant @e'sites ,)()1 0imitations of t e St&d. (ome of the limitations faced while preparing this report are mentioned here5 #ime was the most important limitation in preparation of the internship report. #he program allotted only 3 6three: months for entire study* which disa'le many opportunities for a comprehensive study. Aelevant papers and documents were not availa'le sufficiently. +n many causes updated information were not availa'le. #he time schedule of AAB senior staffs did not allow me to discuss with them. But their opinion could ma0e this report so informative. +t seems a great limitation to me.

/age 79 of 43

INTERNSHIP REPORT

#he lac0 of e!perience of the researcher in this field may have 'ecome another limiting factor. ,), CHAPTER T4O: Financial Management of ActionAid Banglades A

#he core requirements of the financial management aspects of AAB include structure of finance unit* accounting procedures* recording of accounting information* 'udgeting* ta!ation* auditing* and performance measurement 2 controlling of pro-ects 'y finance section. ,),)( St#&ct&#e of Finance 9nit of AAB #he structure of finance department of AAB is as follows5
Fig&#e (-: St#&ct&#e of Finance %e"a#tment of AAB

(et (trategic Direction

Boa#d of T#&steesGInte#national Boa#d of T#&steesGInte#national %i#ecto#s %i#ecto#s

Co&nt#. Co&nt#. %i#ecto# %i#ecto#

HeadHFinance HeadHFinance and and Administ#ation Administ#ation Re"o#ting Re"o#tingand and Stat&to#. Stat&to#. Com"liance Com"liance Ca"acit. Ca"acit.B&ilding B&ilding

>eadership and management /lanning* controlling and reporting financial activities Pa.ment Pa.mentand andCas Cas Management Management

Ta*le 1: N&m*e# of Em"lo.ees in Finance and Administ#ation 9nit

Finance section
Head of Finance and Administ#ation DHOFE " /ayment and %ash .anagement 3 Aeporting and (tatutory %ompliance D 7 %apacity Building

Administ#ation section
Administrati ve &fficer " &fficer " Admin (upport (taff "8

,),), Com"osition of t e finance team

/age 7B of 43

INTERNSHIP REPORT

#he ,&F of the %ountry /rogram has the responsi'ility to manage the overall financial management of the country program. #he ,&F reports to the %ountry Director of the %/* who is appointed 'y the +nternational office of ActionAid +nternational. +n a'sence of the ,&F the %D is responsi'le of overall financial management and financial integrity of the organi ation. ,),),)( Pe#fo#mance5 standa#ds and ca"acit. *&ilding: #he team is responsi'le in capacity 'uilding of the partners as well as AAB in house staff. #he team engaged in appraisal and review of pro-ectsCpartners performance* review of performance +n addition to that they prepare different financial reports for AA+* Aegional &ffice and AAB .anagement 6as per requirement:* provide support during planning 2 'udgeting* developing policies 2 procedure and reserve management to ,&F. ,),),), Re"o#ting 6 stat&to#. com"liance: #his team is responsi'le for the overall reporting to internal as well e!ternal entities that is a part of the overall financial information system of the organi ation. #his includes providing e!penditureCincomeCcommitted e!penditure information to the 'udget holders of AAB* pro-ect reporting to the donors* pro-ect reporting to the )1& 'ureau* and reporting to the international offices. Finance uses financial software (U) for recording of all financial information* transaction* 'udget etc. #hey use another software named ?+(+&) 6?ersion 4: for reporting purpose. +n doing so* #eam mem'ers are involved with partner e!penditure chec0ing as well as providing feed'ac0 to them* monitoring the utili ation* reconciling partner e!penditure with (U)* finali ing contracts of partnersCthird parties and providing support in preparation of pro-ect proposal. #eam prepares final accounts of pro-ects of AAB and help e!ternal auditors to conduct e!ternal audit and meet audit queries. #eam also involved with providing support to internal audit and different donor audit. ,),),)- %is*&#sement and cas management: #his team is responsi'le to ensure timely payment to all third parties* including proper coding of the e!penditure and verification of the documents provided to them for payment preparation. #eam mem'ers are responsi'le to record transactions and reconciliation of the control account codes. #he team leader of this team will 'e responsi'le for treasury management of the %ountry /rogram. In "#ofit o#iented o#gani2ation5 generally the finance team is divided in three sections* such as Finance* /ersonal Accounts and %osting. Finance section handles all activities related to de'tors. +t is responsi'le for the payment of 'ills. /ersonal account section deals with salary payment* group insurance* foreign affairs and issues related with corporate heads. %osting section deals with the production cost and profit related issues. (o profit oriented organi ation3s finance team is 'road than non profit oriented organi ations finance team.

/age 78 of 43

INTERNSHIP REPORT

,)- CHAPTER THREE: Acco&nting S.stem of Actionaid Banglades

)on profit organi ations such as )1&s need accounting to record and account for fund received and dis'ursed. #hough they do not have a profit motive* yet they should operate efficiently and use resources effectively. #his chapter will give idea a'out the accounting principles of AAB* their accounting cycle* financial reports 2 statements* accounting equation of AAB* accounting policy and procedure* recording of accounting information* and software used in AAB 'y finance unit.. ,)-)( Acco&nting P#inci"les ,)-)()( %&al as"ect "#inci"le: Dou'le entry should 'e recorded in all ledgers. ,)-)(), Moneta#. "#inci"le: AAB uses Bangladeshi #a0a 6BD#: as its 'ased currency in all local financial reports. ,owever* the transactions incurring in other currencies such as U( Dollar 6U(D:* 1reat Britain /ound 61B/: should 'e recorded in the original currencies and translated into BD# 'ased on the accounting e!change rates for reporting purposes. ,)-)()- Consistent "#inci"le: #his principle regulates that all the accounting methods* 'oo0s and reports should remain unchanged until their financial manual is revised or communicated through memo and notice. ,)-)()/ Mate#ialit. "#inci"le: A transaction will 'e considered as material when its value equals to or is over 1B/ "*888 or U(D "*988 or BD# ""D*888. ,)-)()1 F&ll. disclose "#inci"le: All transactions must 'e recorded in the 'oo0s and 'e disclosed in all financial reports. ,)-), T e Acco&nting C.cle in AAB #he accounting cycle practiced in )1&s is almost same with accounting cycle of profita'le organi ation. #hey also contain 'oo00eeping and accounting steps.

/age 7= of 43

INTERNSHIP REPORT

,)-),)( Boo33ee"ing ste"s ". Aecord transaction in a -ournal. #ransaction means cash receipt and payment. 7. #ransfer amounts from various -ournals to general ledger. 3. %alculate whether sum of all de'it 'alances equals sum of all credit 'alances. ,)-),), Acco&nting ste"s D. /osting the cash ledger to the accounting software (U). 9. Analysis of data for reporting and preparing financial statements. ,)-)- Financial Re"o#ts AAB P#od&ce DFo#mal 6 Info#malE #o measure the overall financial performance of a country program each country program has to send their Annual Financial Aeport to AA+. #his report contains the following financial statements5 ,)-)-)( Statement of income and eB"endit&#e H #his include income from regular giving donation* income from partnership* net transfers in* transfers out* e!penditure 'y pro-ect* support* fundraising 2 government. #his statement shows the amount of money coming into AAB* how this money was paid out and any leftover money for a given period of time 6ie5 three months* one year* etc:.#his statement is equivalent of a /rofit and >oss (tatement for profit oriented organi ations. +n some )1&s this statement is called (tatement of Aeceipts and Dis'ursements. A sample of income and e!penditure statement is included in appendi! part 6#a'le ": ,)-)-), Balance s eetH #he 'alance sheet provides a picture of the assets* lia'ilities and capital reserves of AAB at a given point in time. A sample of 'alance sheet is included in the appendi! part 6#a'le 7:. #hese two statements in com'ination with more frequently generated performance reports can form the 'asis of financial reporting for AAB. Besides* the statements needed to support this two 'ase statement are as follows5 ,)-)-)- S&mma#. of mo$ements in #ese#$esH #his ta'le gives the summary of fund flow from different country programs and chec0 the reserve held at the end of the year. ,)-)-)/ EB"endit&#e5 income and #ese#$es *. %AH &pening reserve* e!penditure and closing reserve 'y each Development Area is shown here. ,)-)-)1 Financial "e#fo#mance meas&#es DFPM ta*leE $ +t shows the progress of the development wor0 in a year. +t is the 0ey ta'le to show accounta'ility to the trustees and donors.

/age 38 of 43

INTERNSHIP REPORT

#he reports AAB has to su'mit to AA+* regional office* %D* donors are mentioned 'elow5
Ta*le ;: Financial #e"o#ts of AAB

Re"o#t t."e Kearly financial report Annual report 2 ,alf yearly report %onsolidated Huarterly management report .onthly management report

To *e s&*mitted AA+ #o Aegional &ffice #o %D and Aegional &ffice #o the %D and every 'udget holder of the %/

/ro-ect financial report for the donor

#o the donor

,)-)/ Acco&nting E<&ation in AAB #he principal of accounting that is Asset O >ia'ility P &wner3s ;quity is also maintained in AAB. AAB uses accrual 'asis of accounting. #otal assets O De't to staffs* other country programs* income due from local contracts P cash at 'an0 and (# 'an0 deposit. #otal lia'ilities O Due to staffs* other country programs* deferred income on local contracts #otal assets$#otal lia'ilities O #otal equity. ,)-)1 Acco&nting Polic. and P#oced&#e ActionAid has Financial .anagement Framewor0 where accounting policy and procedures are esta'lished. #his involves the policies and procedures AAB should use to record and monitor financial transactions. +ts purpose is to help ActionAid5 . Aecord all financial transactions . .onitor and control e!penditures . (atisfy statutory reporting requirements . ;nsure timely and accurate financial and management reporting to donors and grant$ ma0ers #he core aspects of their accounting policy are a'out5 income* e!penditure* reserve* currency and e!change rate movement* fi!ed asset* depreciation method* lia'ilities* accrued income and e!penditure* and advance and pre payments. ,)-)1)( Income AAB receives its income as donation and contri'ution from individual donor or

/age 3" of 43

INTERNSHIP REPORT

institutional donor from Bangladesh or outside of Bangladesh in support of its activities ta0en under the %ountry (trategic /aper 6%(/:. &nly when the income has practical certainty of 'eing approved then it is reali ed in the accounts. .ain child sponsors are from U<* +reland* (pain* +taly and 1reece. For management purpose income is restricted according to the following group5 D%e$elo"ment A#eaE %A GP#o+ect le$el National le$el and 9nH#est#icted at co&nt#. le$el +ncome restricted at DA level is to 'e spent with sole purpose of the development of that particular DA with the e!penditure of supporting that DA. )ational level income is restricted to 'e spent at national level to support the DA level wor0 and to address the 'roader poverty issue. Un$restricted income is spent with the approval of the %D without having any restriction as said a'ove. +ncome from individual donor is classified according to the following structure received from the Alliance partners.
Ta*le =: Income allocation

Alliance "a#tne# U<C+talyC+reland 1reece (pain

%A le$el B8M 98M 88M

National le$el "8M "8M

9n#est#icted "8M D8M

F&nd#aising "8M "8M

)ote5 +ncome allocation is used after deduction of Alliance partner levy.

+ncome received from institutions is restricted according the o'-ectivesCactivities that have 'een agreed 'etween the donor and AAB. &nly the administrative levy is part of the unrestricted income if the said pro-ect has covered its all operational level e!penditure. ,)-)1), EB"endit&#e ;!penditure incurred must follow the internal control procedure set within the policy and in particularly follow5 ;!penditure should 'e included in the financial statements in accordance with the accruals concept i.e. recogni ing e!penditure in the period in which they incur. .ust 'e consistent with the intention of the missionCo'-ective of the organi ation. .ust 'e processed in accordance with the guidelines* policies and procedures.

/age 37 of 43

INTERNSHIP REPORT

;!penditure should 'e appropriately authori ed as guided 'y the e!isting Authority /rotocol and changes there in time to time. All e!penditures must 'e supported with appropriate supporting 6i.e. cash memo* challan Cinvoice* 'ills* claims* @or0 order etc.: ;!penditure only which are incurred for the organi ation will 'e included in the 'oo0s of accounts. ,)-)1)- Rese#$e Aeserves represent the capital of the organi ation* fi!ed and wor0ing* including short$ term resources. #he statutory reserve level will remain over the %ountry /rogram according to the 7AF.F guideline which will 'e not less than 7 months and not more than D months of planned e!penditure of the following year. ;very year the reserve level will 'e analy ed and reviewed 'efore annual 'udgeting and it would 'e ad-usted in the plans 2 'udget for the ne!t year. ,)-)1)/ C&##enc. and eBc ange #ate mo$ement Dealing with international institutions* and having an international presence AAB is e!posed to varieties of e!change rate and as a result is open to e!change rate gain or loss. #he policy of the %/ is to minimi e e!change rate loss through maintaining a 1reat Britain /ound sterling 61B/:. Foreign currency account and utili ing the e!change rate information received from #he ,ong<ong and (hanghai Ban0ing %orporation 6,(B%: and from the we'site www.oanda.com to translate foreign currency to local currency. ,)-)1)1 FiBed Asset Fi!ed asset are purchased and controlled to support the functions in order to efficiently manage the organi ation. Fi!ed asset are of two types5
Ta*le ?: T."es of fiBed asset

FiBed asset t."e %apital items )on$%apital items

Nominal $al&e A'ove or equal to L 4*888 or equivalent amount in BD# Below L 4*888 or equivalent amount in BD#

Economic life 3 years .ore than one year

,)-)1); %e"#eciation met od in AAB

ActionAid Financial .anagement Framewor0 /age 33 of 43

INTERNSHIP REPORT

Depreciation is charged to the income and e!penditure account in order to write up the cost of a fi!ed asset over its e!pected life. #his means that the cost of asset will 'e divided 'y the num'er of years of asset life to get the annual depreciation charge. %apital items are su'-ect to properly authori e* purchase* recorded* and accounted for* valuation and disposal. +t is also su'-ect to depreciation according to the following principle and depreciation of assets to 'e charged in straight$line method.
Ta*le @: %e"#eciation "e#iod of ca"ital items

ASSET FA;;,&>D /A&/;A#K &FF+%; ;HU+/.;)#

%ESCRIPTION Buildings owned 'y +nternational* AAB has property in Bangladesh %omputer ;quipment

O9TSI%E E9ROPE ActionAid "8 years no such 3 years 3 years

&ther ;quipment e.g. photocopiers* generators and any other equipment .&#&A ?;,+%>;( used in the %/ All .otori ed transport e.g. cars* truc0s

3 years

)ote to mention in case of depreciation5 Freehold land will not 'e part of depreciation. Full year depreciation charged in the year of purchase of an asset and nil in the year of disposal.

,)-)1)= 0ia*ilities As AAB is following the accrual 'asis of accounting* it is important that financial o'ligation to the third parties who have provided resources or to whom AAB is lia'le to pay 6e.g. ActionAid Bangladesh employee provident fund* ActionAid Bangladesh ;mployee 1ratuity Fund: is accounted in the local 'alance sheet in the accounting period in which the resources have 'een received and against whom e!penditure has 'een charged. +t should 'e paid in the following accounting period and 'e removed from the 'alance sheet simultaneously. #ransaction recorded as lia'ilities must 'e supported 'y sufficient documentation that esta'lishes the 'asis for their inclusion in the accounts. ,owever* any goods and services purchased 'y the %/ will 'e on payment on delivery 'asis. #he %/ must not have any agreement with any suppliers that require an interest paya'le in case of failure of terms and conditions for payment without written approval from the ,&F and %D. ,)-)1)? Acc#&ed income and eB"endit&#e Accrued income represents income due from localCinternational contractors with sufficient documents supporting the reali ation of the income with certainty for the

/age 3D of 43

INTERNSHIP REPORT

pro-ect activities already completed in an accounting year. #his income is categori ed to 'e received in the local 'an0 account of the %/. +ncome due from international donor for which the money is to 'e received in ActionAid +nternational office is not accounted for in the local account. During the year$end process* this needs to 'e informed to those offices in order to 'e incorporated in there accounts. +ncome due must properly recorded in the de'tor account.

+n order to accrue e!penditure* the goods or services to 'e received against the e!penditure must 'e received in the accounting period with the purpose of matching the e!penditure with the 'udget and for which payment has not 'een made. @hile considering the accrued e!penditure the followings are to 'e considered 'y ,&F5 @hat are the legal arrangement of the contract and how any disputes arising are to 'e settled @hether any entitlement to the funding requires a specific performance to 'e achieved 6a contract or performance related grant: @hether funds can 'e used for any of the purposes of the organi ation* or whether they can only 'e used for a specific purpose Accruals e!penditure should not 'e 'oo0ed in the accounts merely to show e!penditure utili ation against the 'udget for that specific period* unless the goods or services have 'een received in that specific period. @here the incoming resources are received in advance then ActionAid may not have entitlement to these resources until the goods or services have 'een provided. +n this situation* incoming resources received in advance should 'e deferred until ActionAid 'ecomes entitled to the resources.

,)-)1)@ Ad$ance and "#eH"a.ment

All payments in advance of the current period should 'e recorded as assets until receipt of the goods or services involved or until contract terms are met. #his e!cludes 1rants to /artners which should 'e e!pensed in the +ncome and ;!penditure Account. ,owever a separate ledger to 'e maintained to trac0 e!penditure against the advance made to the partners. Finance staff ensures that invoices are verified to identify areas where prepayments may occur. /repayments are considered a standard 'usiness practice for the following types of transactionsQ .em'erships and (u'scriptions* Aent* +nsurance /remiums*

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INTERNSHIP REPORT

/ayment to 1overnment Units and Aequired Deposits. &ther prepayments may 'e accepta'le only if it is cost 'eneficial. #he location* reputation and other characteristics of the vendor should 'e ta0en into consideration when ma0ing prepayments as it could have a 'earing on the a'ility to recover the payment if the vendor defaults in the delivery of the supply or service. ,)-); Reco#ding of Acco&nting Info#mation in AAB +n the cash payment section* when any advance is ta0en 'y an individual it is recorded as de'it. At the time of returning the remaining amount it is recorded as credit. All the e!penditure is recorded as de'it in the -ournal. #he transaction part of a sample %ash /ayment and Aeceipt -ournal in included the appendi! part 6#a'le 3 and D:. AAB maintains two types of vouchers. &ne is for payment and another one is for receipt. At the time of receipt the all the e!penditure is de'ited along with received amount. #he original amount that had ta0en as advance is recorded as credit as follows5 &nly payment up to "8*888 ta0a is paid in cash. /ayment a'ove "8*888 ta0a is paid 'y chec0. For preparing chec0 AAB use a software ,;FA1&) which is supplied 'y ,(B%. After preparing voucher the transactions again recorded in ;!cel which later converted into 3(U) software for further analysis. ,)-)= Soft!a#e 9sed in Finance 9nit of AAB ,)-)=)( S9N: (U) 6?ersion D: is accounting software used 'y most of %ountry /rograms of ActionAid. (oftware is fully equipped with lot of data recording and analy ing tools. #hrough (U) they can capture5$
3

(taff wise transactions 6training * advance etc:* /artner )1& wise transactions 6advance* e!penditure:* #hemeC (ector wise e!penditure DonorC funding country wise e!penditure ;!pense incurred on 'ehalf of other county program 2 vice versa Budget

(U) is specially designed accounting software for ActionAid which is fully equipped with lot of data

recording and analy ing tools.

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INTERNSHIP REPORT

,)-)=), 7ision: ?ision is reporting software. #hrough this AAB can further analysis the financial data recordedC processed through (U). +t also gives them the space to prepare report in time donor3s requirement. #hey also produce the internal management reports 6'udget and actual e!penditure: through vision. In "#ofit o#iented o#gani2ation and also in non "#ofit o#iented o#gani2ation5 accounting policies are esta'lished 'ased on the organi ation need. #he o'-ectives of accounting i.e. analy ing and interpreting financial information* preparing financial statements* conducting audits* designing accounting system* preparing forecasting and 'udgets* and providing ta! services are same. But it varies in its operational nature with the need of the organi ation whether it is profit oriented or not. For e!ample* most organi ations use a standard accounting software for accounting purpose. But it is not same in all organi ationsQ accountants choose the software according to their organi ation3s need. All )1&s require a financial management system* however* many small )1&s may only have an accounting or 'oo00eeping system. Accounting or 'oo00eeping are a su'set of financial management. +n )1&s* financial management systems can 'e 'ro0en down simply into administrative systems and accounting systems. Administrative systems assist all )1& managers in decision$ma0ing* planning* communicating* controlling and evaluating. Accounting system is concerned with identifying financial information* e!pressing the information in numeric terms and communicating this information to interested parties. An accounting system provides the framewor0 for wor0ing with financial information.

,)/ CHAPTER FO9R: B&dgeting of Actionaid Banglades

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Budgets have a crucial role to play in strong financial management. For 'udgets to 'e useful* they must 'e accurate and complete. #hat means that they have to 'e 'ased on a realistic assessment of the activities that )1&s e!pect to carry out and of how they e!pect to pay for them. An important internal control of financial management is the operating and activity 'udget. #his 'udget includes all monies approved in donor proposals and all activities planned for a given period of time 6prefera'ly the fiscal year of an organi ation:. #he line items in the 'udget should coincide with chart of account line items so that e!penses can easily 'e tagged to 'udget. +n AAB* 'udget done in accordance with its income. #hey follow ero 'ased 'udgeting. Using a ero$'ased 'udgeting and properly dealing with the difference from month to month allows AAB to gain total control over every money they spend. +f they spend less than planned during the year* they can easily redirect that money where they really want it instead of letting it misused through unfocused spending. #he parties involved in preparation of 'udget are sector head* finance department* and partner organi ation for partner 'udget. +mportant aspect of 'udgeting of AAB are their three year rolling 'udgeting process* 'udget responsi'ility and implementation* and yearly 'udgeting process.

,)/)( T #ee .ea#s #olling *&dgeting "#ocess AA introduced 3 year rolling plan in 7888 which ena'les each AA offices to have medium view on its program* organi ational and funding aspects. ,)/)()( Res"onsi*ilit. #he regional finance coordinator 6AF%: provides guidelines and ta'le formats annually. +n AAB* Asia finance coordinator provides these formats. #he ,&F is responsi'le to coordinate the process from providing guidelines to consolidating AAB 'udget ta'les and su'mit to the region. Budget holder is responsi'le to formulate the plan and 'udget for the area of herChis responsi'ility. Funding 2 fundraising head in colla'oration with the ,&F is responsi'le to prepare the funding plan for the whole organi ation. #he senior management team is responsi'le to review and approve the planC'udget as well as plan e!ecution.

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#he %D in consultation with the ,&F and other concerned line managers authori es supplement planC'udget and or ma0es any ad-ustment when and where necessary.

#he team leader of reporting and statutory compliance team is responsi'le to review the coding and import the 'udget into accounting software 6(U):.

,)/)(), Im"lementation #ime for planning5 (eptem'er every year for 3 year planQ )ovem'er every year for annual 'udget. #ime for approval within the country5 &cto'er every year. /rocess5 the ,&F in consultation with the %D and management team will issue guidelines for the process every year. A ma-or review 2 planning process involving larger sta0eholders will 'e underta0en once every 3 years. +n the years 'etween a minor review and read-ustment of the plan will 'e done. ,)/), Cea#l. *&dgeting "#ocess For the 'udgeting purpose each sector has given a 'udget range. #hen the finance section revises the 'udget and finally prepares it. After completion of the "P7 'udgeting process the reporting and compliance team will provide formatted 'udgeted e!penditure with codes 6for trac0ing e!penditure: to every units in the %/ in order to provide their plan of e!penditure across twelve months. #he final individual 'udget is approved 'y the %D of the %/ and a signed copy is circulated from the finance. After completion of the monthly 'udget* the 'udget is uploaded 'efore commencement of the 'udget year. P#ofitHo#iented o#gani2ations sell goods or service* so they have revenues and operating cost that must have to 'e 'udgeted. #hey prepare pro-ected income statements and 'alance sheets. )on profit oriented organi ations prepare cashflow forecast that tells them when receipts and payments will happen* 'ecause they cannot start spending money on the pro-ect 'efore they have actually received the cash. #hey also prepare partner 'udget for various pro-ects. (o the classifications of 'udgets for )1&s are5 Unit 'udget* %ashflow forecast* (alary 'udget* /ro-ect 'udget. Unit wise 'udget is their master 'udget 'ecause it includes costs* income* salary* and DAC non DA 'udget. ,)1 CHAPTER FI7E: TaBation of Actionaid Banglades

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#a!ation is the system of raising money to finance government. All governments require payments of money i.e. ta!es from people. But non profit organi ations do not have to pay any ta! for their income from grants. But the employees* who are wor0ing in there* have to pay ta!es for the incomes they received. .ost of the organi ations follow ta! deduction at source. #he suppliers ?A# are also deducted at the time of payment 'y accounts unit of )1&s. For the ta!ation purpose in terms of salary of employees of AAB it follows ta! deduction at income source. #he withholding of #a! and suppliers3 ?A# are descri'ed in the following section5 ,)1)( 4it olding TaB

#he team leader of payment and cash dis'ursement shall ensure that withholding ta! is deducted as envisaged in the Bangladesh statutory laws. #he ta! deducted shall 'e deposited to government treasury every quarter. (Che shall prepare statutoryCta! returns and get it approved from ,&F to 'e su'mitted to authorities. #he ta! heads are li0e salary ta!* ?A# on suppliers3 goods. #here is no any ta! imposed on )1& income as it is grant. +t is totally ta! e!empted. But recently Bangladesh government is thin0ing to impose ta! on the income from micro credit and other small income generated activities of )1&s. But AAB has no any micro credit scheme. ,)1), S&""lie#s8 7AT (uppliers3 ?A# is also deducted at source 'y payment and cash dis'ursement section of AAB at the time of payment. #a! is the largest income source for government. For this ta!ation has a crucial role in "#ofit o#iented o#gani2ation) #hey try to give minimum ta! and sometimes evade ta! so that they can en-oy most profit. #hey have to give ta! for 'oth the personal and corporate income. 1overnments impose many types of ta!es for which only profit oriented organi ations are entitled. @hen high ta! rates affect the 'ehavior of profit oriented firms to pay their corporate ta! 'y evasion* non profit oriented organi ations do not have any such impact. ,); CHAPTER SII: A&diting of Actionaid Banglades

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Auditing is the process inspection and verification of the accuracy of financial records and statements. /rivate 'usinesses and all levels of government conduct internal audits of accounting records and procedures. +nternal audits are conducted 'y a firm3s own personnel to uncover 'oo00eeping errors and also to chec0 the honesty of employees. An e!ternal audit is used to give the pu'lic a true statement of a company3s financial position. +t is made at least once a year 'y pu'lic accountants who are not regular employees of the organi ation. #he auditors ma0e sure that the organi ation has followed proper accounting procedures in its financial records and statements. #hey compare the current financial statements with those of the previous year to determine whether the statements are calculated consistently. +f they are not* they present a distorted picture of the organi ation3s financial position. #he auditors also inspect real estate* 'uildings* and other assets to see if their value is overstated. De'ts and other lia'ilities are chec0ed to see if they have 'een understated.

@hen the auditors are satisfied that the organi ation3s accounts are in order* they issue a statement certifying that they 'elieve the organi ation3s 'alance sheet* income statement* and records fairly reflect the organi ation3s financial condition. #he audit statement is then made pu'lic in the organi ation3s annual report.

>i0e profit and non profit oriented organi ation* in AAB 'oth e!ternal and internal audit is followed. #his chapter discusses the internal and e!ternal audit of AAB* audit terms of reference* ma-or areas covered 'y each audit* and the process of recruitment of an e!ternal auditor. ,);)( Inte#nal a&dit AAB internal audit function is completely independent of the finance function and is administratively reporta'le to the %D 2 functionally reporta'le to the (.# of the %/. #here core role include5 (trengthening the financial integrity of the organi ation. ;nsure compliance with internationalClocal policies and procedures.

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INTERNSHIP REPORT

%oordinates the outsourced audit to the third parties of %/. %oordinates the ris0 management of the organi ation. Update the (.# and local of the audit issues and follow up the recommendation with focal person of the %/. Inte#nal A&dits a#e #e<&i#ed fo#: %ountry programs and affiliates 6every 7 years: +nternational themes 6every 7 years: Aegions 6every 7 years: +nternational secretariat 6every 7 years: +nternational functions* li0e for international themes of AA. @hether planned e!penditure is utili ed for the adequate purpose. ,);), EBte#nal a&dit ,ead of Finance and Administration initiates the process through a circulation of #erms of Aeference 6#&A: of audit. %hec0ing or verification is done 'y (enior .anagement #eam and approved 'y the %ountry Director. #he purpose of e!ternal audit is to independently e!amine records* procedures and activities* and provide a legally valid report outlining the auditor3s opinion on the state of affairs. EBte#nal a&dits a#e #e<&i#ed fo#: ActionAid +nternational consolidated statutory accounts 6every year: Affiliates* associates and country programs 6as per local law: )1& Affairs Bureau 1overnment 'odies* #a! authority etc.

,);)- Standa#d te#ms of #efe#ence fo# an eBte#nal a&dit !ill incl&de: +n an audit the standard terms of reference are (cope of @or0* 1eneral %ontrol and %ompliance Aequirements* (pecial Audit Areas* Aeporting of Audit and Fees. Aeview of financial and management controls 6in countries this will include 'oth in country office and in at least " DACpartner organisations: +dentification of ma-or ris0 areas and a review of ris0 management Aeview of progress against strategyCstrategic plan. ,);)/ Ma+o# a#eas to *e co$e#ed in eac a&dit:
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INTERNSHIP REPORT

Asset control and payments Financial reporting* including management accounts* reporting to institutional donorsCsponsors etc* cost classification* performance measures 6including partners:* donor relationship management* revolving funds and savings and credit schemes 6if applica'le: &ther support functions* including local internal audit function 6if applica'le:* wor0 with partners and partner relations* information technology* compliance with local laws 6ta! etc:.

DA>/( core requirements* including how A>/( core requirements* processes and
standards have 'een implemented and includes appraisals* strategiesC strategic plans* e!ternal reviews* annual review and reflection processes* annual review and learning reports ,ow countriesCregions and themes have applied the principles of accounta'ility to sta0eholders especially to poor and e!cluded groups and their organisations. #his will include 'udget transparency processes* implementation of open information policy etc. Audit report depends on the #&A of the organi ation. +f e!ternal auditor is appointed to audit the financial statements of the organi ation then they report a'out that. )o ma-or difference 'etween the audit of profita'le and non$profita'le organi ation. &nly scope of wor0 may 'e different. Because in profit oriented organi ation auditors have to audit the inventory of the organi ation. In *ot "#ofit and non "#ofit o#iented o#gani2ations * internal auditing is an

ongoing procedure. #here is no any difference in the appointment procedure of an e!ternal auditor in profit and non profit oriented organi ations* only the regulating 'ody of that particular industry can affect in the recruitment of an auditor. +n case of )1&s e!ternal auditors should 'e from the approved list of )1& Affairs 'ureau and internationally reputed firm. ,);)1 T e "#ocess of #ec#&itment of an eBte#nal a&dito#:
D

Accounta'ility* >earning and /lanning (ystem /age D3 of 43

INTERNSHIP REPORT

,)= CHAPTER SE7EN: Pe#fo#mance E$al&ation 6 Cont#olling of P#o+ects in AAB PROCESS A9%IT ACTI7ITIES S&""o#ting %OC9MENTS "./re$audit preparations %hec0 audit #&A 6o'-ectives* scope 2 criteria: /lan audit Appoint audit team %ontact audit /repare wor0 documents +nitial document review 7.&nsite auditing activities %ollect evidence5 Documents* interviews* o'servations Audit team meetings Audit findings5 )on$complianceC issue of concern %onclusions Aecommendations %losing meeting
3.Audit

TOR, HR policy, Project Objectives, Project Logical Framework

Audit Plan

Audit uestionnaire

&pening meeting

!"ecklist, Register o# interviews, Register o# documents, Register o# observations

Findings

reporting

Aeport

Fianl Audit Report and $annagement Report

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/erformance evaluation is very important for the organi ational goal achievement. #his is true for 'oth profit and non profit oriented organi ations. Because it shows the gap 'etween the present and future position of an organi ation. /erformance evaluation is not directly involved with the financial management 'ut it has a close lin0 to financial activities. Donors are financing for the development pro-ects and actually whether their o'-ective is fulfilled or not can 'e measured 'y performance evaluation. ,)=)( Pe#fo#mance E$al&ation of P#o+ects in AAB For the evaluation of performances of any proposed pro-ect 'y the partner AAB organi es some field visits to evaluate the performance. After the field visit the visitor have to su'mit a report to the immediate supervisor. #he partner organi ation has to su'mit their financial report to AAB. All the e!penditures have to shown with appropriate supporting documents which ensure the e!penditure are properly utili ed. #he financial statements of partner organi ation are also monitored to evaluate their performance. AAB also evaluate the performance of the pro-ect 'ased on the #erms of Aeference 6#&A: of agreement.
Fig&#e (/: Ste"s of Pe#fo#mance E$al&ation of P#o+ects

Feasi*ilit. st&d. fo# monito#ing *. dono#

Ag#eement *et!een dono# and NGO

0ette# of Intent *. dono#

F&nd a""#o$al lette# *. NGO affai#s *&#ea&

J&a#te#l. financial and "#og#ess #e"o#t to dono# and NGO affai#s *&#ea&
/erformance ;valuation

7isit *. dono# and NGO affai#s *&#ea& and a&dit +n the a'ove figure* only the steps under the 'loc0ed area are maintained to evaluate performance of pro-ects in AAB.

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,)=), Res"onsi*ilit. fo# t e Cont#olling of P#o+ects #he controlling of various pro-ects is done 'y sector heads. #here are various themes under each sector. #he theme leader is lia'le to the sector head for the controlling of hisCher theme. For controlling of pro-ects the terms and conditions of agreement is maintained. Aegular field visit is done to see the activities of partners. #he theme leader is lia'le to the sector head a'out control of the pro-ect. For the controlling of pro-ects the authority matri! is as follows5
Fig&#e (1: Res"onsi*ilit. Mat#iB fo# t e cont#olling of P#o+ects

Co&nt#. %i#ecto#

Secto# Head

T eme 0eade#

P#og#am Office#

Associate P#og#am Office# Associate /rogram &fficer ,)=)- P#o"osed Pe#fo#mance Meas&#ement Reco#d S eet fo# Balanced Sco#eca#d AAB can improve its performance evaluation and control 'y using a standard evaluation technique. #he following is a proposed Balanced (corecard for measuring AAB3s pro-ects performance evaluation. #his 'alanced scorecard will measure the performance of any pro-ect from four perspectives. #hey are5 Financial perspective* /artner perspective* +nternal process perspective* and +nnovation 2 learning perspective. #he o'-ective of this Balanced (corecard is to ma!imi e the service provided to marginali ed people within the constraints of the availa'le finances. AAB will perform 'etter 'y using this Balanced (corecard in three aspects such as5 it will 'e a'le to provide 'etter service with limited funds* provide higher output and ma0e the pro-ect very adapting in nature with any change. Ta*le (A: Pe#fo#mance Meas&#ement Reco#d S eet fo# Balanced Sco#eca#d Ta*le (A)(: Financial Pe#s"ecti$e

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Meas&#e /urpose Aelates to #arget Formula Frequency @ho measuresR (ource of data @ho acts on the data @hat do they doR )otes and comments

4o#3 "#og#ess #o measure the percentage of wor0 progress within the allocated fund for this period. #he need to fulfill the pro-ect o'-ective #o provide ma!imum service with minimum fund )um'er of people participating in the pro-ect #otal fund spent F "88 #o 'e measured monthly* to 'e reviewed quarterly /ro-ect &fficer .onthly financial and field report of the pro-ect /rogram officer* Associate program officer ?isit field for monitoring* direct partners to use the resources efficiently* ensure financial transparency

Ta*le (A),: Pa#tne# Pe#s"ecti$e Meas&#e /urpose Aelates to #arget Formula Frequency @ho measuresR (ource of data @ho acts on the data @hat do they doR )otes and comments Pa#tne# "e#fo#mance #o measure the performance of the partner )1& #he need to trac0 the contri'ution of partner in the pro-ect o'-ective +ncrease the partner3s efficiency /artner3s output in the pro-ect #otal output of the pro-ect F "88 #o 'e measured monthly* to 'e reviewed quarterly /ro-ect &fficer .onthly financial report of the partner* Hualitative report of the pro-ect /rogram officer* Associate program officer ?isit field for monitoring* direct partners to use the resources efficiently* ensure financial transparency

Ta*le (A)-: Inte#nal P#ocess Pe#s"ecti$e Meas&#e /urpose Aelates to #arget Formula Frequency @ho measuresR (ource of data @ho acts on the data @hat do they doR Se#$ice <&alit. #o measure rate of improvement in service #he need to reduce waste* minimi e rewor0 Achieve a first time transfer of goods )um'er of goods processed to DA )um'er of goods purchased F"88 #o 'e measured monthly* to 'e reviewed quarterly Finance officer$/ro-ect .aterial requisition form* .onthly cash ledger Finance officer* Administrative officer ;nsure quality goods are purchased* give adequate logistics and
/age DB of 43

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administrative support )otes and comments Ta*le (A)/: Inno$ation 6 0ea#ning Pe#s"ecti$e Meas&#e /urpose Aelates to #arget Formula Frequency @ho measuresR (ource of data @ho acts on the data @hat do they doR )otes and comments
)ote5 From this four perspective* performance can 'e measured for other criterion* 'ased on the need of the pro-ect. #his BA>A)%;D (%&A;%AAD has prepared as a sample 'y which AAB can measure performance of its pro-ects.

Em"lo.ee de$elo"ment #o measure the improvement of the employee #he need to increase the employee effectiveness Achieve the pro-ect o'-ective "88M on time and if possi'le perform e!tra ordinary performance )um'er of employee participating in the training* and cutting 'etter in appraisal &nce in a year #rainer Appraisal su'mitted 'y the employee (ector head* ,A head %onduct the appraisal of the employee* ta0e necessary action for improvement

In "#ofit o#iented o#gani2ation5 generally performance is measured 'y ratio analysis. +n case of )1&s they measure their performance 'y the actual utili ation of pro-ect cost of total cost. #heir attempt is to minimi e the support and fundraising cost as well as ma!imi ing pro-ect cost with quality output. ,)? CHAPTER EIGHT: Ma+o# Findings

A profit oriented organi ation e!ists primarily to generate a profit* that is* to ta0e in more money than it spends. #he owners can decide to 0eep all the profit themselves* or they can spend some or all of it on the 'usiness itself. A non profit oriented organi ation is organi ed under rules that for'id the distri'ution of profits to owners. S/rofitS in this conte!t is a relatively technical accounting term* related to 'ut not identical with the notion of a surplus of revenues over e!penditures. (o* there e!ist lots of differences in the activities of these two types of organi ations. +n this chapter* how non profit differ from profit oriented organi ation and how their financial management differ is descri'ed. ,)?)( Ho! does a non"#ofit o#gani2ation diffe# f#om a "#ofit o#iented o#gani2ation ,ere are some of the differences 'etween a nonprofit and a profit oriented organi ation5

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@hen a profit oriented firm starts a 'usiness* it is for the financial 'enefit of its owners andCor shareholders. /rofit is the goal and the 'usiness pays ta!es on that profit.

A nonprofit entity has a mission that 'enefits the Sgreater goodS of the community* society* or the world. +t does not pay ta!es* 'ut it also cannot use its funds for anything other than the mission for which it was formed.

)onprofit organi ations can and do ma0e a profit* 'ut it must 'e used solely for the operation of the organi ation or* in the case of a foundation* granted to other nonprofit organi ations.

@hen a profit oriented organi ation goes out of 'usiness* its assets can 'e liquidated and the proceeds distri'uted to the owners or the shareholders.

@hen a nonprofit goes out of 'usiness* its remaining assets must 'e given to another nonprofit.

%omparing with profita'le organi ation AAB differs in the following areas as a non$ profita'le organi ation. ,)?), %iffe#ences *et!een t e financial management of non "#ofit o#iented and "#ofit o#iented o#gani2ation C#ite#ia Po#tfolio of In$estment P#ofit O#iented O#gani2ation Different lines of product or service* with the growth of the organi ation new product lines add. NonH"#ofit O#iented O#gani2ation Different development

pro-ects* with the growth of the organi ation idea of new pro-ect initiates* and possi'ility of getting funds

So&#ce of Income

%omes from sales or service.

from donors increases. All the income is grants from

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+ndividuals are always trying to increase income 'y strong* attractive* and promotional campaign. T."es of costs %osts are defined cost*

international

donor

and

sometimes from long term #heir promotional campaigns

costly and short term investment. are not vast. as %osts are defined as pro-ect costs* costs* support costs* costs* and and fundraising

operating manufacturing A&diting

service cost etc. 1overnance costs. .ost of the organi ations Both internal and e!ternal follow 'oth internal and e!ternal audit. But here audit wor0 area is vastQ li0e audit raw materials etc. #a! is assessed income audit is followed. But here audit is related of with transparency financial

of procurement* purchased statements* pro-ect wor0 etc. TaBation as per +ncome ta! of employees is

1overnment rule. From its assessed as per 1overnment government earns rule. From the income from is totally ta! revenue. As they have to pay grants also can en-oy some ta! re'ates* li0eQ e!cise duty* Pe#fo#mance financial acti$ities of import duty etc. t e /erformance is measured 'y service. Aatio analysis is the 0ey method to measure their financial performance.

ta! on their revenue* they e!empted. Deduct statutory #a! and ?A# from suppliers and vendors and deposit to 1overnment treasury /erformance is measured 'y e!penditure measuring to various financial themes. #heir 0ey method for performance is analysis of income and percentage of Acco&nta*ilit. Accounta'le to the customer* sta0eholders costs 'y themes. Accounta'le to the donor*

o#gani2ation in te#ms of total income from sales or

and partner and 1overnment. Forecasting and planning for and with e!penditure* and control* financial

1overnment. Res"onsi*ilities of financial Forecasting and planning for manage# sales* financial coordination and income*

and income

e!penditure investment and coordination decisions* dealing control* activities.

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INTERNSHIP REPORT

dealing Sections de"a#tment &nde#

with

financial %omparatively the area of wor0 is narrow 'ecause activities related to revenue accounting are not involved there. ;ach pro-ect has separate finance manager. Budget is needed mainly for income and e!penditure.

activities. finance .any sections are needed to carry out the activities of finance and a large num'er of employees are involved to perform the -o's.

B&dgeting

(ales 'udget is needed along with 'udget of e!penditure.

As the motive of the 'usiness is different in "#ofit and non "#ofit o#iented o#gani2ations* many distinctions can 'e found and this list will get longer if we further proceed. #he core aspect is same* 'ut it differs in practice. &rgani ations design their financial management practice according to the needs of the organi ation.

,)@ CHAPTER NINE: Recommendations and Concl&sion

#his chapter will tell the recommendations 'ased on findings of the researcher and also the conclusion of the report. ,)@)( Recommendations ". +n case of dis'ursing e!penditure AAB follows specific codes. #hese are helpful to trac0 the e!penditure with its 'udgeted range. #he whole AAB employees have to 'e much concerned a'out mentioning the codes at the time of su'mitting the 'ill. Finance unit may provide to all sector the ta'le of code of various e!penditures. (o the employees can write the code at the time of su'mitting the 'ill. 7. #he suppliers of AAB sometimes complained a'out the paya'le amount fi!ed 'y the finance department. #hey are not concerned a'out the ta!* vat amount which are deducted at source. For clear understanding of this finance section may deliver the printed copy of calculation of ta! to the suppliers.

/age 4" of 43

INTERNSHIP REPORT

3. #he staff mem'ers of AAB who are wor0ing in thematic unit* have no clear understanding of AAB3s Financial and Accounting policies and practices. AAB has to organi e more regular training to enhance their capacity. +t is important to have some understanding of finance to them 'ecause financial activities deal with all sections. AAB has to organi e more regular training to enhance their capacity. D. For evaluation of pro-ects there is no any standard format in AAB. #hey may follow a standard format for performance measurement prepared 'y an e!pert in that field. 4. %ost 'enefit analysis of programs for internal 'enchmar0ing needed to 'e esta'lished in AAB. +t would 'e helpful to esta'lish 'aseline performance and monitor favora'le and unfavora'le results. 9. AAB may use financial models for managing programs. Financial models can streamline the administration and monitoring of programs* standardi e the procedures* and customi e how performance should 'e evaluated. B. AAB has rich resources of pu'lications* 'ut those are not organi ed. A li'rary may form where 'oth interested parties and staff mem'ers can access to those. ,)@), Concl&sion #he )1& sector in Bangladesh is one of the most active in the world. (uccessive governments have developed effective partnership with them to improve services T such as microcreditCmicrofinance* non formal education* quality education campaign* health* nutrition* disaster management* social mo'ili ation etc. .ore than 74888 national and local )1&s and "48 international )1&s are contri'uting to different sector* especially* livelihood* education* housing* etc. ActionAid Bangladesh is an open* fle!i'le 2 innovative organi ation for the healthy growth of its program 2 activities. AAB has widely e!perimented 2 used a wide variety of participatory tools li0e report card methodology* participatory 'udget analysis* pu'lic hearing C citi en -ury* popular theatre* opinion poll* participatory video* reflect etc. Additionally* child space* cooperative mar0eting* pot song* adolescence program* #? program 2 anti traffic0ing video film made AAB a distinct one.

According to the recent %ountry (trategy /aper 6%(/ +++: ActionAid Bangladesh is going to

/age 47 of 43

INTERNSHIP REPORT

measure the performance of its o'-ectives. +t is promising the AAB plans to develop and introduce systems to register changes in the lives of the poor and marginali ed people. +f they are a'le to measure the performance successfully* then it will lead ActionAid Bangladesh to an ongoing process of success.

#he conclusion drawn from the findings 'ecomes very precise and o'vious. #he collected information a'out the financial management of ActionAid Bangladesh indicates few parameters on which deli'eration of -udgment can 'e done. )1& sector is recently critici ed fin the question of accounta'ility to the governments and civil society. From the financial point of view* it is very difficult to 'e hundred percent efficient in the e!ecution of the pro-ects. But auditors have a significant role for -udging the accounta'ility of the development wor0s operated 'y )1&s. @hether profit or non profit oriented* 'oth the organi ations have to 'e accounta'le to their sta0eholders and governments. )1&s can ta0e the glory of transparency 'y straightforward sharing of financial information to the interested parties.

/age 43 of 43