FINANCIAL MANAGEMENT SYSTEMS MANUAL - DRAFT. WSTF Financial... · 1.3 Structure of the Financial Management Systems Manual ... 4 Systems – to be inserted once Financial Management

FINANCIAL MANAGEMENT SYSTEMS MANUAL - DRAFT

FEBRUARY 2005

WATER SERVICES TRUST FUNDWATER SERVICES TRUST FUND

PWC

FINANCIAL MANAGEMENT SYSTEMS MANUAL - DRAFT

FEBRUARY 2005

WATER SERVICES TRUST FUNDWATER SERVICES TRUST FUND

PWC

MMIINNIISSTTRRYY OOFF WWAATTEERR AANNDD IIRRRRIIGGAATTIIOONN

TABLE OF CONTENTS

Page

1 Introduction .................................................................................................................1

1.1 Background.........................................................................................................1 1.2 Purpose of the Financial Management Systems Manual (FMSM) ............1 1.3 Structure of the Financial Management Systems Manual ..........................1

2 Financial Regulations and Policies......................................................................5 2.1 Financial regulations .........................................................................................5 2.2 Objectives of the accounting and reporting systems ...................................5 2.3 Significant accounting policies .........................................................................5 2.4 Policies ................................................................................................................5

3 Reporting, Structure of Accounts and Analysis Codes..................................8 3.1 Purpose...............................................................................................................8 3.2 Reports and data analysis requirements .......................................................8 3.3 Chart of accounts .............................................................................................11

4 Systems – to be inserted once Financial Management System is selected......................................................................................................................13

5 Budget Preparation Procedures..........................................................................14 5.1 Budget preparation procedures.....................................................................14 5.2 Annual estimates .............................................................................................14 5.3 Data Flow Diagram ..........................................................................................16

6 Cash Management...................................................................................................20 6.1 Purpose.............................................................................................................20 6.2 Receipt of money and recording of funds....................................................20 6.3 Payment procedures .......................................................................................20 6.4 Authorisation of payment for goods, works and services ..........................21 6.5 Bank and banking arrangements ..................................................................21 6.6 Cash flow forecast and investment of excess funds ..................................22 6.7 Data Flow Diagram (DFD) and Data Processing Instructions (DPI) ........23

7 Petty Cash Control Procedures...........................................................................28 7.1 Purpose.............................................................................................................28 7.2 Policy .................................................................................................................28 7.3 Description ........................................................................................................28

8 Travel and Activity Imprests.................................................................................34 8.1 Purpose.............................................................................................................34 8.2 Policy .................................................................................................................34 8.3 In country- out of station allowance ..............................................................34 8.4 Out of country subsistence allowance..........................................................34 8.5 Application for travels and activities imprests .............................................34

9 Payroll Procedures..................................................................................................39 9.1 Purpose.............................................................................................................39

9.2 Policy .................................................................................................................39 9.3 Description ........................................................................................................40

10 Fixed Assets System..............................................................................................43 10.1 Purpose.............................................................................................................43 10.2 Policy .................................................................................................................43 10.3 Data Flow Diagram (DFD)..............................................................................45

11 WSTF Accounting and Reporting Procedures................................................50 11.1 WSTF accounting policies ..............................................................................50 11.2 Reporting and data analysis requirements ..................................................50 11.3 Reports from benefic iaries and preparation of consolidated reports .......53 11.4 Project auditing arrangements .......................................................................53

APPENDIX 1: Structure of Accounts............................................................................54 APPENDIX 2: Accounting Forms ..................................................................................58 APPENDIX 3: Reporting Forms .....................................................................................71

PricewaterhouseCoopers Water Services Trust Fund 1 Financial Management Manual (Draft)

List of Abbreviations and Acronyms CB Cas h Book CBO Community Based Organisation CEO Chief Executive Officer CV Curriculum Vitae FMSM Financial Management Systems Manual GoK Government of Kenya GRN Goods Received Note LPO Local Purchase Order MTEF Medium Term Expenditure Framework MWI Ministry of Water and Irrigation NGO Non-Governmental Organisation PCV Petty Cash Voucher PS Permanent Secretary PV Payment Voucher WSTF Water Services Trust Fund


1 Introduction

1.1 Background The Water Services Trust Fund (WSTF) was set up under The Water Act 2002 as a mechanism for financing the provision of water and sanitation services to inadequately served areas. WSTF will manage funds received from the Government of Kenya (GoK), donations, grants and bequests from sources as outlined in the Act.

The objectives for which the Trust Fund was formed are:

• Providing financing and other support towards capital investment costs of providing water services to communities without adequate water services; Capacity building activities and projects which enable communities to plan, implement, manage, operate and sustain water services; The creation of awareness and dissemination of information regarding community management of water services; and Active community participation in the implementation and management of water services.

• Providing a mechanism for managing funding systems whose objective is to fund activities within the Water sector generally as may from time to time be assigned to it to manage.

1.2 Purpose of the Financial Management Systems Manual (FMSM) The p urpose of this manual is to provide a comprehensive documentation of the WSTF’s accounting and reporting procedures. It will be used as follows:

• as a training resource for staff either new or redeployed to the WSTF

• as reference material by existing staff in performance of financial management tasks

• by management and trustees of the WSTF in ensuring compliance with WSTF financial management policies and procedures

• by auditors, consultants and development partners who want to understand and/or evaluate WSTF’s financial management systems

1.3 Structure of the Financial Management Systems Manual The Financial Management Systems Manual (FMSM) is organised under three main sections as follows:

l The introduction

l Procedures and documentation

l Appendices

1.3.1 Procedures documentation

The procedures are grouped into a number of sections. In each section the following is provided:


l Purpose of the procedure and significant policy statements (where applicable)

l Description of the procedure

l Data flow diagrams and detailed instructions for the procedure

1.3.2 Appendices

The appendices to the Financial Management Systems Manual include:

l Accounts Structure

l Accounting forms

l Sample of Financial Reporting Forms

1.3.3 Flowchart Symbols Used

Connector

Process

Document

Decision

Computer Interface

Printer

File


1.3.4 How to use the manual

The manual is organised in sections of specific relevance to minimise the need for reference. For example, staff concerned with imprests may need only to read that section, while the finance staff may need to read the whole manual.

1.3.5 How to maintain the manual

The Finance Manager will be directly responsible for the update of this FMSM. However, all users may initiate improvement and changes. The FM will be responsible for ensuring that:

l Amendments to the manual are properly authorised and controlled

l The manual is kept up to date

l Sufficient copies are appropriately distributed in a timely manner.

l A change to the procedures manual could be prompted by:

− A change to existing procedures

− A deletion of existing procedure

− Addition of new or previously omitted procedure.

1.3.6 Distribution of the manual

A record of the holders of the manual showing the holder and the number of the manual shall be maintained.

1.3.7 Financial management and reporting

The principal sources of funding to WSTF are the Government of Kenya (GOK), development partners and other funding agencies and individuals. These sources have varying reporting requirements, all of which have to be met if maximum co-operation from all stakeholders is to be sustained.

To achieve this reporting WSTF has developed financial management systems manual to capture transactions at all levels. The accounting system is central and flexible enough to meet GOK and other development partners accounting and reporting requirements.

For the efficient conduct of the affairs of the WSTF the finance function will be organised as shown below:


Basic organogram of the finance function

The Finance Department headed by a Finance Manager supported by accountants provides regular financial management skills support to implementing bodies. It is responsible for financial reporting and finance mobilization strategies.

The Finance Department also supports the implementing institutions in their strategy formulation, planning and budgeting. It is also be responsible for all the WSTF financial operations and management and cash flow forecasts that will be used for request for disbursement from development partners and other contributors to WSTF.

Finance Manager

Assistant Accountant /

Cashier

Procurement Officer

Internal Auditor

CEO

Financial Accountant

Management Accountant


2 Financial Regulations and Policies

2.1 Financial regulations The FMSM addresses the following GoK regulations:

i. WSTF will be guided by the Trustees Act of the Laws of Kenya

ii. WSTF will strictly adhere to the requirements of the Public Audit Act, 2003 and the Exchequer and Audit Act (CAP, 412), Laws of Kenya;

iii. The Financial Year of the Fund shall be the period of twelve months commencing 1 st July to 30th June of the following year;

2.2 Objectives of the accounting and reporting systems The objectives of WSTF FMSM procedures are to:

• Provide accurate, complete, reliable and timely financial information to management to facilitate informed and timely decision-making

• Ensure effective control and security, and efficient utilisation of resources

• Provide reports to the GoK, donors and other stakeholders in accordance with agreed content, format and reporting period

2.3 Significant accounting policies WSTF will observe accounting practices acceptable to the Government of Kenya and where appropriate, specific accounting policies and reporting requirements as set out in the Memorandum of Understanding between the Trustees and the Donors.

It is a going concern that will report its activities and financial transactions over specified periods on the basis of generally accepted accounting practices. These will be modified as appropriate to address the requirements of the GoK and development partners.

2.4 Policies 2.4.1 Historical cost

Transactions shall be recorded at historical cost i.e. the exchange price on the date of the transaction.


2.4.2 Modified accrual accounting

Under the accrual concept revenue is recognized when earned and expenditure when incurred. WSTF will apply this principle as follows:

Revenue recognition

Revenue is recognized when funds are received both from the Government, other donors and other sources.

Expenditure recognition

Expenses will be recognised when incurred even though payment may not have been made.

2.4.3 Consistency

Consistent accounting methods will be applied and changes made will be reported and the effect on reported results disclosed in accordance with Generally Accepted Accounting Principles (GAAP).

2.4.4 Foreign currency transactions

The accounts of WSTF will be maintained in Kenya Shillings. Transactions denominated in foreign currency will be converted into Kenya Shillings as follows:

• transactions, including grants and donations received, which are expressed or denominated in a foreign currency will be converted into Kenya Shillings at the market exchange rate prevailing at the date of each transaction,

• foreign currency assets and liabilities will be converted into Kenya Shillings at the exchange rates prevailing at the balance sheet date, and

• exchange differences arising from the conversion of foreign currency balances will be dealt with through the income and expenditure statement.

2.4.5 Reporting in foreign currencies

Financial statements may be translated into a relevant foreign currency for donors who require such reports.


In this case:

• transactions and balances which are denominated in foreign currency or expressed in foreign currency shall be shown in the relevant foreign currency.

• all other income and expenditure in Kenya Shillings should be translated into the relevant foreign currency using the average exchange rate obtained from the exchange of the foreign currency during the period, and

• all assets and liabilities will be translated into the relevant foreign currency at the exchange rate prevailing as at the balance sheet date or reporting period.

2.4.6 Fixed Assets

Fixed assets are defined as all tangible assets with a life of three years or more and having a minimum value of Kshs 50,000 either individually or collectively. This may be reviewed and revised by Management as necessary. Fixed Assets will be capitalised, inventoried and controlled individually by assigning tag numbers and maintaining a detailed register combined with periodical physical checks.

2.4.7 Depreciation

The straight-line depreciation method will be used. This will allocate the cost of the depreciable asset uniformly over its expected useful life. The annual depreciation will be based on the full acquisition cost of the depreciable asset, net of its salvage value, as applicable. The rate will apply from the year of acquisition until it is disposed of/written off or until it is fully depreciated, whichever occurs first.

A set of office furniture purchased at a single point in time should be considered an asset for depreciation, even if individual items cost less than the minimum value for categorisation as an asset.

2.4.8 Stocks and stores (inventories)

Stocks will be valued at the lower of cost or net realisable value. Cost will comprise expenditure incurred in the ac quisition of these items.

Items in the stores will be tagged and their usage controlled through the use of store movement cards.

2.4.9 Funds disbursed to Projects

Funds disbursed to various water projects will be recorded as payments in WSTF accounting records. These payments will however need to be fully accounted for and supported with expenditure and project reports.


3 Reporting, Structure of Accounts and Analysis Codes

3.1 Purpose The purpose of the structure of accounts or a chart of accounts and analysis codes is to provide a framework for capturing and grouping data in a manner that will facilitate generation of the required reports. Its design depends on:

• The reporting requirements of the organization

• The accounting software on which the systems are based.

Below are the main procedures in the maintenance of the structure of accounts.

3.2 Reports and data analysis requirements

Formats of the required financial reports and management reports are provided in Appendix 3. To efficiently produce these reports, the accounting transactions need to be analysed in a number of ways, including:

• Expenditure categories and sub-categories

• Components and activities

• Source of funds

• Geographical location of projects

• Time frame – date and periods

• Cost centres

• Specific technology applied in water supply interventions

These dimensions of analysis are captured by a combination of both account and analysis codes. Brief descriptions of these dimensions are provided below.

3.2.1 Dimension 1: Expenditure categories and sub-categories

The expenditure categories for the WSTF will follow categories that will assist management control expenditure. The main groups are as follows:


The following will be the 3 main expenditure categories, from which other sub -categories may follow:

• Office Expenses

• Disbursements to Projects

• Project Management and Capacity Building Expenses

Office Expenses:

These would include those costs specifically incurred at the head office or any other WSTF offices and arising from office operations. A number of these expenditure sub-categories would include:

• Personnel emoluments • Motor Vehicle Expenses • Travel and Accommodation • Utilities • Telephone and Postal Expenses • Insurance (Non -Motor) • Board Expenses • Office Running Expenses • Staff Training Costs • Staff Expenses • Consultancies • Advoca cy and Advertising • Printing and Stationery • Bank Charges

Disbursements to Projects

These are those funds disbursed to projects which have been approved based on procedures outlined in the WSTF Operations Manual. Projects receiving funds will then be grouped into the following sub-categories based on the nature of the intervention:

• Water Supply Systems – including piped-gravity and piped-pumping schemes, open ducts, boreholes, shallow wells, rain water harvesting (rain water catchment), dams, pans etc

• Sanitation and Hygiene Promotion

• Training and Capacity Building


Project Management and Capacity Building

This category includes expenses incurred in supervision and co -ordination of implementation of projects which are ongoing at project sites. As the funded projects are envisioned to be demand driven, these expenses will be those incurred in backstopping by technical staff from the head office and would include:

• Travel and Accommodation

• Vehicle running and maintenance costs

• Printing, photocopy and stationery

• Consultancy services for 3 r d parties to carry out the supervision and co-ordination activities where deemed appropriate by WSTF management

3.2.2 Dimension 2: Components and activities

WSTF was formed for the purpose of providing financing and other support towards the capital investment costs of providing water services to communities without adequate water services and to provide a mechanism for managing funding systems whose objective is to fund activities within the water sector.

The key components and priority areas that WSTF will be engaged in seeking to fulfil the above objectives will include;

• Promotion of Water Supply Systems • Promotion of Sanitation and Hygiene • Training and Capacity Building The accounting system will have the ability to generate reports showing expenditure per component and priority area.

3.2.3 Dimension 3: Source of funds

Data may be analysed by the funding source at the transaction entry level to facilitate reporting by financier. Financiers include GOK and other donors or funding agencies.

3.2.4 Dimension 4: Geographic location of projects

Reports produced should enable management assess expenditure by geographic areas and by number of beneficiaries in those locations. Geographic locations may refer to Administrative Regions following from the various Water Service Boards or to Climatic Regions, with areas classified as either, Arid and Semi-Arid Lands (ASAL), High, Medium or Low potential. This will help management identify the cost per beneficiary served in different geographic locations.


3.2.5 Dim ension 5: Timeframe

Management reporting will be on a quarterly basis. Data will be analysed by date at the transaction entry level to facilitate generation of reports for various periods, including daily, weekly, monthly etc.

3.2.6 Dimension 6: WSTF units and cost centres

Data will be analyzed by WSTF Units and Cost Centres, which include:

• Finance & Resource Mobilization Department • Technical Appraisal Department – Nairobi , Central, Coast and Northern • Technical Appraisal Department – Lake Victoria North, Lake Victoria South, Rift Valley • Field Co-ordination Department • Administration and Human Resources Department • Sanitation and Hygiene • Institutional Development • CEO

The heads of different departments will be the budget holders for their respective departments / cost centres.

3.3 Chart of accounts The design of a chart of accounts normally depends on:

• The reporting requirements

• Data analysis and reporting compatibility of the accounting software on which it is based.

To meet the identified reporting requirements, the project accounting software will have a strong data analysis capability and a flexible report generator.

Based on the reporting requirements and operations of the WSTF, the account code will have segments as outlined below. A more detailed illustration of the Accounts Structure is provided in Appendix 1 .

The first segment will identify the Account Type as follows:

100000 for income accounts 200000 for expenditure accounts 300000 for assets 400000 for liabilities 500000 for capital accounts 600000 clearing account


The second segment will identify the Primary Expenditure Groups as follows:

10000 for Office Expenses 20000 for Funds Disbursed to Projects 30000 for Project Management and Capacity Building

The third segment will be the Cost Centre. These would include

1000 Finance & Resource Mobilization Department 2000 Technical Appraisal Department – Nairobi, Central, Coast and Northern 3000 Technical Appraisal Department – Lake Victoria North, Lake Victoria South, Rift Valley 4000 Field Co-ordination Department 5000 Administration and Human Resources Department 6000 Sanitation and Hygiene Department 7000 CEO

The fourth segment will identify the priority intervention areas. These include:

100 Ground Water Distribution 200 Surface Water Distribution 300 Rainwater Harvesting 400 Transmission Systems 500 Point Sources 600 Promotion of Sanitation and Hygiene 700 Training and Capacity Building

The fifth segment is the main account code. For Instance:

10 Printing, photocopy and stationery 20 Travel and accommodation 30 Vehicle running and maintenance costs


4 Systems – to be inserted once Financial Management System is selected


5 Budget Preparation Procedures

5.1 Budget preparation procedures WSTF has a role in the wider budget process through the influence of resource allocation to key priority areas and activities carried out by various stakeholders. WSTF will prepare its annual and quarterly budgets in accordance with the requirements of Government of Kenya. The Government of Kenya budget is prepared in the three-year rolling Medium Term Expenditure Framework (MTEF). The MTEF provides a link between budgetary allocations and specific measures /activities geared towards fulfilling the overall objective or theme of the budget.

5.2 Annual estimates

As outlined in section 3.2.1, WSTF will have 3 key types of expenditure, Offices Expenses; Funds Disbursed to Projects and Project Management and Capacity Building Expenses.

Head Office Expenses which will include personnel emoluments and office operation costs will be categorised as recurrent expenditure while funds disbursed to projects, project management and capacity building expenses will be categorised as development expenditure. Annual estimates for the WSTF will then be prepared in accordance with Treasury circulars.

5.2.1 Recurrent expenditure estimates for WSTF

These will be prepared by the various cost centre heads in consultation with the WSTF Finance and Resource Mobilisation Department. These estimates will be reviewed and approved by the CEO and Trustees and will then be forwarded to the Ministry of Water and Irrigation. These estimates will be prepared in line with the guidelines of the State Corporations Act CAP 446 and The Report of the Inter-Ministerial Task Force on The Delinking of the Water State Corporations of August 2004.

The submissions are scrutinised in line with the recurrent ceiling of the ministry and the resource envelope to the Trust Fund. Monitoring and Evaluation of the annual budget shall be done to rationalize further the available resources for different activities. It also acts as a remedy / check to over-expenditures and under-expenditures in the budgeting process.

5.2.2 Development expenditure estimates for WSTF

WSTF will prepare annual development expenditure budgets guided by the objectives it sets out in its Strategic Plans which will typically be based on a time frame of 3 to 5 years. Based on the identified priority technologies to be employed per geographic area, the intended number of people to be served and costs per beneficiary per identified technology to be applied per geographic area, annual development expenditure estimates may then be generated. The development expenditure budgets prepared in this way will assist the WSTF in resource planning.


For control purposes and expense rationalisation, Project Management and Capacity Building expenses will be computed as a percentage of funds to be disbursed to projects. Depending on the geographical location of the project and technology applied for water supply and sanitation delivery this percentage will vary. WSTF will develop rates following an outline as per the table below to assist it in budgeting.

Region Ground Water

Distribution

Surface Water

Distribution

Rainwater

Harvesting

Transmission

Systems

Point

Sources

Sanitation

and Hygiene

Training

and Cap

Bldg

Central

Coast

L. Victoria N

L. Victoria S

Nairobi

Northern

Rift Valley

It is also recognised that WSTF may receive funds in an ad-hoc manner not necessarily following its calendar year. As this is likely to be a key method of funds receipt, WSTF budget preparation processes should be flexible enough to adapt accordingly and assist management with human and financial resource planning.

Funds will typically be received in two ways: Funds allocated to specific projects; funds received and placed in the WSTF expenditure pool. Besides affecting human resource planning for monitoring, evaluation and technical support, specifically funded projects are not expected to have a major impact on the WSTF annual budgeting process.

Actual funding for disbursement to projects received for the year may differ from that projected based on firm commitments earlier received. The grading of project funding applications should be flexible enough to ensure that funding is then disbursed based on a rational system taking into account the ranking given to the application and geographic location of the project such as to fairly allocate funds to more projects if the funds actually received are higher than the commitments made and to fairly exclude projects if the funds received are less than the commitments made.

Development expenditure estimates will be prepared by activity and type as per the necessary work plans received from the various p rojects. These must be approved by the respective water Service Boards otherwise the Trustees will approve the projects where the Water Service Boards are not yet operational.


5.3 Data Flow Diagram The procedures are provided in detail below.

Heads of Departments


Finance Manager

• Finance Manager• CEO• Trustees

1. Staff within the various departments contribute towards the generation of annual expenditure estimates based on their annual work plans

2. The department / cost centre heads submit their expenditure estimates to the finance manager

3. Finance manager to consolidate expenditure estimates from the various departments

4. Finance manager to forward the consolidated organisational -wide expenditure estimate to the CEO and Trustees for review and approval

1.

2.

3.

4.

ResponsibilityProcedure StepsProcess Flow

WSTF Budgeting Preparation Procedures – Recurrent Expenditure



Finance Manager

• Finance Manager• CEO• Trustees

1. Staff within the various departments contribute towards the generation of annual expenditure estimates based on their annual work plans

2. The department / cost centre heads submit their expenditure estimates to the finance manager

3. Finance manager to consolidate expenditure estimates from the various departments

4. Finance manager to forward the consolidated organisational -wide expenditure estimate to the CEO and Trustees for review and approval

1.

2.

3.

4.



Departments / Cost Centres to prepare work plans for the year in consultation with Finance Manager

Annual Work plans and expenditure estimates submitted to the Finance Manager

Finance manager to consolidate the various work plans and expenditure estimates

Consolidated organisational-wide annual recurrent expenditure estimate

To 5

Organisation-wide expenditure estimates forwarded to CEO and Trustees for review and approval


• CEO WSTF• Chairperson WSTF

Finance Manager, CEO

5. The approved annual budget is then forwarded to the PS MWI for approval

5.



• CEO WSTF• Chairperson WSTF

Finance Manager, CEO

5. The approved annual budget is then forwarded to the PS MWI for approval

5.



Approved Annual Organisation-wide

Recurrent Expenditure Estimates

Approved Annual Recurrent Expenditure Estimates forwarded to PS MWI for approval

Approved Annual Recurrent Expenditure

Estimates / Budget

File Copy

From 4


Department Heads,Finance Manager



Finance Manager

CEO

CEO

1. The total number of the target population for the year is identified from the objectives outlined in the Strategic Plan.

2. The target population is divided into geographic areas based both on administrative regions and climatic conditions.

3. A per capita service cost rate is applied to the targeted population per geographic location. A percentage rate for project management and capacity building is also applied based on the value of projects selected for a geographic area.

4. A 1st Draft Development Expenditure Budget is developed

5. The 1st draft budget is circulated to the CEO and all department heads, discussed and agreed upon by the WSTF management team

6. The 1st draft budget is forwarded to the trustees for review and approval

1.

2.

3.

4.

5.

6.


WSTF Budgeting Preparation Procedures – Development Expenditure




Finance Manager

CEO

CEO

1. The total number of the target population for the year is identified from the objectives outlined in the Strategic Plan.

2. The target population is divided into geographic areas based both on administrative regions and climatic conditions.

3. A per capita service cost rate is applied to the targeted population per geographic location. A percentage rate for project management and capacity building is also applied based on the value of projects selected for a geographic area.

4. A 1st Draft Development Expenditure Budget is developed

5. The 1st draft budget is circulated to the CEO and all department heads, discussed and agreed upon by the WSTF management team

6. The 1st draft budget is forwarded to the trustees for review and approval

1.

2.

3.

4.

5.

6.



WSTF Strategic Plan

Total No. of Target Population Identified

Target Population divided into

Geographic Regions

Per Capita Service Cost Rates applied to

Target Population

1st Draft Development Expenditure

Budget Developed

1st Draft Development Expenditure

Budget

1st draft circulated and

discussed

1st draft forwarded to trustees for review and

approval

To 7


Trustees

PS MWI

WSTF

7. The approved draft expenditure budget is forwarded to the PS MWI for review and approval

8. The PS MWI reviews and approves the draft development expenditure budget and may propose adjustments to be made

9. The final development expenditure budget is prepared and adopted

7.

8.

9.



Trustees

PS MWI

WSTF

7. The approved draft expenditure budget is forwarded to the PS MWI for review and approval

8. The PS MWI reviews and approves the draft development expenditure budget and may propose adjustments to be made

9. The final development expenditure budget is prepared and adopted

7.

8.

9.



From 6

Approved draft budget forwarded

to PS MWI

PS MWI reviews and approves draft budget or proposes adjustments

Final Development Expenditure Budget

Prepared

Development Expenditure

Budget


6 Cash Management

6.1 Purpose The purpose of the cash management system is to ensure that:

• All cash received is promptly and accurately accounted for and banked intact

• All payments are properly verified and approved before payment is made

• All vouchers and supporting documentation are properly stamped “paid” immediately after payment is done

• There is adequate segregation of responsibilities

• All cash transactions are properly captured by the General Ledger system

• Bank and cash reconciliations are done on a timely basis

• Cash requirements are forecast and surplus funds may be invested.

6.2 Receipt of money and recording of funds

Funds are received in the following ways:

• Direct transfers into WSTF accounts from the donors and other funding agencies. • Cheque /cash receipts from GoK and donors. • In the case of direct bank transfers, WSTF will receive a deposit advice from the bank to confirm

receipt of the funds. The bank advice will be used to raise a receipt. • When cash/cheque is received, an official receipt will be raised in triplicate immediately.

6.3 Payment procedures Payments will be made to:

• Contracted Parties implementing relevant projects • Suppliers of goods and services • Staff carrying out WSTF activities in form of imprests • Staff as salaries • Replenish petty cash


For all purchase/service and payment orders there shall be two authorised signatories. The Finance department will prepare payments upon the receipt of approved purchase orders, invoices and other supporting documents.

All cheques will be supported by a payment voucher and will be entered into a register before they are released. The register will show the name of the payee, the am ount, the cheque number and the date of collection (or despatch by registered mail and courier). All cancelled cheques will be stamped "VOID" and recorded in the cheque register with the word ‘CANCELLED’ in the payee space.

6.4 Authorisation of payment for goods, works and services

Official purchase orders shall be issued for all goods, works and services required in accordance with the WSTF procurement regulations. These regulations will be based on best practice, public procurement regulations and project donor procurement guidelines. For specific procurements being funded by a specific Development Partner, the WSTF procurement regulations and practices will allow GoK and /or development partners procedures to take precedence over any conflicting provisions in the WSTF regulations.

Local Purchase/Service Orders shall be in a form approved by the Finance Manager in liaison with the Administration and Human Resources Manager as well as the Procurement Officer.

The Procurement Officer shall control the printing and issue of such forms. The orders and copies thereof shall contain such information as the Procurement Officer in consultation with the Finance Manager and Administration and Human Resources Manager, require from time to time to ensure that there is an a dequate record of WSTF’s liability.

The Local Purchase/Service Order will be signed by two authorised officials as follows:

Finance Manager & CEO Kshs.5,000 – Kshs.1 Million Selected Trustee and CEO Over Kshs.1 Million Authorisation for payment levels and signatories are as follows:

Finance Manager Up to Kshs. 200,000 CEO Up to Kshs. 5,000,000 Trustees’ resolution Over Kshs. 5 million

6.5 Bank and banking arrangements The CEO on behalf of the Fund shall make all bank and banking arrangements with reputable banks only as approved by the trustees.

The cheque signatories will fall under two categories as follows:

Category A Finance Manager


CEO Category B WSTF Chairperson Two designated trustees All cheques must have 2 signatories with both Category A and B bei ng mandatory. Cheques shall only be ordered by any of the two signatories per mandate. The Finance Manager will make adequate arrangements for their custody.

Cheques in current use shall be entered in the register of accountable documen ts to be kept by the Finance Manager.

Bank reconciliations will be prepared not later than 10 working days after the previous end of month by the Accountant. The Finance Manager will ensure the reconciliation of all bank account balances to the cashbooks is done. Each bank reconciliation will be prepared by a designated accountant and reviewed by the Finance Manager (Evidence of the date of preparation and review must be indicated on each reconciliation). The WSTF CEO will randomly review the bank reconciliations from time to time.

6.5.1 Insurance

All cash in transit and petty cash held in the WSTF offices shall be insured against any form of loss. The level of insurance shall depend on the security measures put in place to minimise theft or any other form of loss.

Fidelity guarantee must be taken in respect of pecuniary loss as a result of infidelity of employees occupying declared positions in finance.

6.6 Cash flow forecast and investment of excess funds Cash flow projections will be prepared and the cash position reviewed in making cash management decisions. Surplus funds will be invested, according to the approved investment policy, while ensuring WSTF is liquid enough to make payments for its obligations in a timely manner.

The Finance Manager will be responsible for the preparation of cash projections (Weekly, monthly, quarterly) and any envisaged excess funds/cash will be invested in short term (Maximum 90 days) liquid and secure securities e.g. Government securities like Treasury Bills or similar investments. WSTF’s bankers will act as agents and/or advisors once investment decisions are taken by the Fund.


6.7 Data Flow Diagram (DFD) and Data Processing Instructions (DPI) The procedures are provided in detail below.

Finance Manager (FM)

Cashier

Cashier

Cashier

Accountant

Accountant

Accountant

1. Receive cheque or bank deposit advice, ensure it has been registered in the incoming mail register, and forward it to the Cashier.

2. Receive cash/cheque or bank deposit advice and raise an official receipt in triplicate. Send one copy to source of funds to acknowledge receipt. File a copy in the bank fi le and leave third as the book copy.

3. Bank cheques and cash received immediately, and not later than the end of the business day following the date of receipt.

4. Code the Official Receipt using the chart of Accounts and analysis codes.

5. Review Coding and approve for entry to Cashbook.

6. Update the Cashbook.

7. File official receipts and bank pay- in-slips, and vouchers in serial number order.

1.

2.

3.

4.

5.

6.

7.


Receipt and Recording of Funds

WSTF Cash Management Procedures

Finance Manager (FM)

Cashier

Cashier

Cashier

Accountant

Accountant

Accountant

1. Receive cheque or bank deposit advice, ensure it has been registered in the incoming mail register, and forward it to the Cashier.

2. Receive cash/cheque or bank deposit advice and raise an official receipt in triplicate. Send one copy to source of funds to acknowledge receipt. File a copy in the bank fi le and leave third as the book copy.

3. Bank cheques and cash received immediately, and not later than the end of the business day following the date of receipt.

4. Code the Official Receipt using the chart of Accounts and analysis codes.

5. Review Coding and approve for entry to Cashbook.

6. Update the Cashbook.

7. File official receipts and bank pay- in-slips, and vouchers in serial number order.

1.

2.

3.

4.

5.

6.

7.


Receipt and Recording of Funds


Funds Advice

Receive Chq /Advice

Raise receipt

Receipt

File

Pay -in Slips

Bank Funds

Assign Codes

Approve

Record

File

Funds from donors


Accountant

Accountant

Accountant

Accountant

Accountant

1. Receive Purchase orders/contracts as evidence of ordering goods.

2. Record LPOs as commitments and file in LPO number order.

3. Receive invoice and supporting Goods/Service Received Notes (GRN) and other documents. Review invoice against supporting documents and check calculations. Ensure it is certified for receipt of goods by end user or Administration.

4. Prepare Payment Vouchers if invoice is correct in all respects. Forward PV together with supporting documents to the Finance Manager. If not in order return to the Procurement Office or Administration as appropriate.

5. Review PV against supporting documents to ensure there is sufficient evidence of receipt of goods or services according to specific LPO or contract. Also review correctness of amounts on the documents and ensure PV complies with WSTF payment policies. Sign for review and forward to CEO WSTF.

1.

2.

3.

4.

5.


Making Payments


Accountant

Accountant

Accountant

Accountant

Accountant

1. Receive Purchase orders/contracts as evidence of ordering goods.

2. Record LPOs as commitments and file in LPO number order.

3. Receive invoice and supporting Goods/Service Received Notes (GRN) and other documents. Review invoice against supporting documents and check calculations. Ensure it is certified for receipt of goods by end user or Administration.

4. Prepare Payment Vouchers if invoice is correct in all respects. Forward PV together with supporting documents to the Finance Manager. If not in order return to the Procurement Office or Administration as appropriate.

5. Review PV against supporting documents to ensure there is sufficient evidence of receipt of goods or services according to specific LPO or contract. Also review correctness of amounts on the documents and ensure PV complies with WSTF payment policies. Sign for review and forward to CEO WSTF.

1.

2.

3.

4.

5.


Making Payments


Invoice LPO GRN

Update Commitments

Review Invoice

Prepare PV

PV

Approve PV

To 6

From Purchasing


Finance Manager

Cashier

Cheque Signatories

Accountant

Cashier

Accountant

Accountant

6. Sign PV to authorise payment and forward it together with supporting documents to the Cashier.

7. Prepare cheque and submit to the signatories.

8. Sign cheques and forward for recording and despatch.

9. Record details of signed cheques in the Cheque Despatch Register. Ensure that all cancelled Cheque are stamped ‘VOID’ and recorded in the Register with word ‘CANCELLED’ on the payee field. Ensure persons collecting Cheques enter their name, signature and identification numbers on the Register. Use Registered mail or Courier service for deliveries outside Nairobi.

10. Stamp the PV, invoices and supporting documents ‘PAID’. Record the payment in the Cash Book.

11. Review Cashbook journal and update General Ledger.

12. File PVs, supporting journal print out and documents in PV order number

6.

7.

8.

9.

10.

11.

12.


Finance Manager

Cashier

Cheque Signatories

Accountant

Cashier

Accountant

Accountant

6. Sign PV to authorise payment and forward it together with supporting documents to the Cashier.

7. Prepare cheque and submit to the signatories.

8. Sign cheques and forward for recording and despatch.

9. Record details of signed cheques in the Cheque Despatch Register. Ensure that all cancelled Cheque are stamped ‘VOID’ and recorded in the Register with word ‘CANCELLED’ on the payee field. Ensure persons collecting Cheques enter their name, signature and identification numbers on the Register. Use Registered mail or Courier service for deliveries outside Nairobi.

10. Stamp the PV, invoices and supporting documents ‘PAID’. Record the payment in the Cash Book.

11. Review Cashbook journal and update General Ledger.

12. File PVs, supporting journal print out and documents in PV order number

6.

7.

8.

9.

10.

11.

12.


From 5

Authorise Payment

Prepare Cheque

Sign Cheque

Stamp PV

Record Cheque

Update CB and GL

File

Cheque


Finance Manager

Accountant

Accountant

Accountant

Finance Manager

Accountant

Accountant

1. Receive monthly bank statements from the bank.

2. Agree the balance to the cashbook balance

3. Identify the reconciling items.

4. Prepare adjusting journals for the identified reconciling items.

5. Review the reconciliation and sign off

6. Process the journals in the accounts and adjust the cash book.

7. File copy of the reconciliation

1.

2.

3.

4.

5.

6.

7.


Bank reconciliation procedures


Finance Manager

Accountant

Accountant

Accountant

Finance Manager

Accountant

Accountant

1. Receive monthly bank statements from the bank.

2. Agree the balance to the cashbook balance

3. Identify the reconciling items.

4. Prepare adjusting journals for the identified reconciling items.


6. Process the journals in the accounts and adjust the cash book.

7. File copy of the reconciliation

1.

2.

3.

4.

5.

6.

7.


Bank reconciliation procedures


Receive Statement

Agree to Cashbook

Identify reconciling

items

Prepare adjusting journals

Sign Off

Process account

File

Print-out



Finance Manager

Finance Manager

Finance Manager

Finance Manager

CEO and Trustees

Finance Manager

Finance Manager

Monthly:1. With assistance from

Finance, allocate planned expenditure to the approximate month of payment. In doing this consider timing of activity and payment policy.

2. Generate cash requirements forecast analysed by activity and expense type.

3. Prepare a projected cash inflow analysed by source of funds and discuss with CEO

4. Obtain approval of cash flow forecast from the CEO and transfer funds to operating accounts as appropriate.

5. Seek authority to invest surplus funds in accordance to WSTF’s surplus funds investment policy

6. Approve investment of funds in deposit accounts.

7. Prepare advice for funds transfer; obtain approval from cheque signatories and forward transfer advice to the Bank.

8. File copy of the forecast

1.

2.

3.

4.

5.

6.

7.

8.


Review of Cash position and Preparation of Cash Forecasts



Finance Manager

Finance Manager

Finance Manager

Finance Manager

CEO and Trustees

Finance Manager

Finance Manager

Monthly:1. With assistance from

Finance, allocate planned expenditure to the approximate month of payment. In doing this consider timing of activity and payment policy.

2. Generate cash requirements forecast analysed by activity and expense type.

3. Prepare a projected cash inflow analysed by source of funds and discuss with CEO

4. Obtain approval of cash flow forecast from the CEO and transfer funds to operating accounts as appropriate.

5. Seek authority to invest surplus funds in accordance to WSTF’s surplus funds investment policy

6. Approve investment of funds in deposit accounts.

7. Prepare advice for funds transfer; obtain approval from cheque signatories and forward transfer advice to the Bank.

8. File copy of the forecast

1.

2.

3.

4.

5.

6.

7.

8.


Review of Cash position and Preparation of Cash Forecasts


Payments timing

estimate

Generate Cash Requirement

Forecast

Project Cash-flow

Obtain approval

Surplus?

Seek approval

Approve investment

Process transfer

File To Bank

Bank advice

File

Bank statement

Forecast

From bank

NO

YES


7 Petty Cash Control Procedures

7.1 Purpose The purpose of the petty cash system is to ensure:

• The maintenance of sufficient amount of float to meet small cash needs • Safe custody of petty cash funds • Adequate controls over a petty cash held and petty cash payments made • Prompt and accurate processing, issuance, recording and accounting for petty cash.

7.2 Policy WSTF will maintain a petty cash float to meet small office expenses.

WSTF management will agree the float amount which will be monitored and revised, with approval of the CEO, when considered necessary.

Any payments in excess of Kshs 5,000 will be made by Cheque.

7.3 Description The Cashier will maintain an initial float of Kshs 50,000 for meeting small office expenses, and any other cash withdrawn for specific purposes has to be surrendered to the Cashier for proper accounting before the money is paid out. Petty cash will not be used for workshops, travel, per diems, allowances, fuel or salary advances.

Travel allowance and workshop imprest procedures are provided in Section 8. Funds for these activities will be advanced and accounted for using an Imprest Application Form and an Imprest Accounting Form.

Petty cash shall be securely locked up in a safe. The Cashier should ensure adequate security measures are in place while transporting petty cash from the bank and when accessing the safe to make payments.

The Finance Manager will conduct surprise petty cash counts to ensure petty cash is safe, used as intended and accounted for correctly. The count sheet shall be counter signed by both the Cashier and the person conducting the count and dated. Any discrepancies noted shall be reported immediately to the Finance Manager and WSTF CEO.

7.3.1 Request and payment of petty cash

Requests for petty cash will be made using a Petty Cash Voucher (PCV). Employees requiring petty cash will complete the form and obtain approval from the respective Head of Department. Heads of


Departments requiring petty cash will complete the form and obtain approval from the Finance Manager or CEO.

Once approved by the Finance Manager or Accountant, the PCV will be presented to the Cashier for payment. The recipient of petty cash will sign the PCV on receipt of the funds. The Cashier will retain the PCV in the petty cash box until the funds are accounted for with supporting documents.

7.3.2 Accounting for expenditure

Petty cash advances will be accounted for immediately after incurring expenditure. This should take place on the same day the petty cash a dvance is taken. Only in exceptional cases should petty cash be accounted other than on the day of disbursement. The petty cash holder will summarise the expenses, attach all the receipts and submit them to the Cashier. Any difference between the advance and the expenditure will be reflected on the PCV and surrendered to the Cashier. If more than the approved advance is spent, the person who authorised the expenditure will be required to approve the additional payment to the Petty Cash holder.

Un-surrendered petty cash should be recovered from the staff salary in the same month it was paid out.

7.3.3 Petty cash replenishment

The petty cash float will be replenished with the amount spent every time the balance falls below 25% of the float. The CEO, WSTF will appro ve any revision to this percentage. A properly analysed Petty Cash Replenishment Request Form will be completed to account for the float. This will be adequately supported by PCVs and expenditure receipts.

A payment voucher will be raised for the replenishment. The petty cash replenishment cheque should be reconciled to the petty cash expenditure. Any discrepancies noted should be investigated immediately and corrective action taken.

7.3.4 Cash reconciliation procedures

This will be prepared on a daily basis by the Cashier and supervised by the Accountant who will ensure that it agrees to the daily balances.

7.3.5 Data flow Diagram (DFD)

The procedures are illustrated below.


Petty Cash Applicant

Finance Manager orAccountant


Cashier

1. Fill in a Petty Cash Voucher (PCV) for the required amount of petty cash and forward to the to Section Head to approve.

2. Review PCV and ensure that:

• it is reasonable and/or adequately supported by valid documentation

• the purpose of the request (the activity, expenditure type and details) is clearly stated

• activity is within the approved work-plan and budget approved.

Approve petty cash voucher and forward to the Cashier.

3. Receive cash from the Cashier and sign for receipt

4. Hold PCV in petty cash box until funds are accounted for

1.

2.

3.

4.


Request and Payment of Petty Cash

WSTF: PETTY CASH CONTROL


Finance Manager orAccountant


Cashier

1. Fill in a Petty Cash Voucher (PCV) for the required amount of petty cash and forward to the to Section Head to approve.

2. Review PCV and ensure that:

• it is reasonable and/or adequately supported by valid documentation

• the purpose of the request (the activity, expenditure type and details) is clearly stated

• activity is within the approved work-plan and budget approved.

Approve petty cash voucher and forward to the Cashier.

3. Receive cash from the Cashier and sign for receipt

4. Hold PCV in petty cash box until funds are accounted for

1.

2.

3.

4.


Request and Payment of Petty Cash


Prepare PCV

PCV

Approve PCV

Receive Cash

Hold


Petty Cash Holder

Cashier

Accountant

Cashier

Cashier

Cashier

1. Support expenditure incurred with original receipts and sign each receipt at the back. Return the documents together with all unused cash to the Cashier immediately on return to office.

2. Attach all the original receipts to the PCV and ensure that relevant expenditure details (Activity, expense type and source of funds) are indicated. Indicate expenditure amount on the PCV and calculate difference between advance and expenditure.

3. Verify Petty cash expenditure.

4. Where there is a balance of unused petty cash, receive it and sign the PCV. Where the Holder spends more than advanced, pay balance after the person who authorised the advance approves the extra spending. Ensure the recipient signs the PCV for the additional payment.

5. Record petty cash expenditure in the Petty Cash Book.

6. File the petty cash vouchers sequentially in a box file

1.

2.

3.

4.

5.

6.


Accounting for Petty Cash


Petty Cash Holder

Cashier

Accountant

Cashier

Cashier

Cashier

1. Support expenditure incurred with original receipts and sign each receipt at the back. Return the documents together with all unused cash to the Cashier immediately on return to office.

2. Attach all the original receipts to the PCV and ensure that relevant expenditure details (Activity, expense type and source of funds) are indicated. Indicate expenditure amount on the PCV and calculate difference between advance and expenditure.

3. Verify Petty cash expenditure.

4. Where there is a balance of unused petty cash, receive it and sign the PCV. Where the Holder spends more than advanced, pay balance after the person who authorised the advance approves the extra spending. Ensure the recipient signs the PCV for the additional payment.

5. Record petty cash expenditure in the Petty Cash Book.

6. File the petty cash vouchers sequentially in a box file

1.

2.

3.

4.

5.

6.


Accounting for Petty Cash


Expense receipts

Submit expense receipts

Attach expense receipts

Verify expenses

Receive cash

differences

Update petty cash book

File

File

PCV

PCV

File


Cashier

Cashier

Accountant

Finance Manager

Accountant

Finance Manager

Accountant

1. Count the cash at close of business

2. Agree to petty cash book

3. Identify all the reconciling items

4. If misuse of petty cash noted then disciplinary action should be taken.

5. Where normal reconciling items pass adjusting journals


7. Process the account with any adjustments and file the reconciliation together with cash count results

1.

2.

3.

4.5.

6.

7.


Daily Cash Reconciliation


Cashier

Cashier

Accountant

Finance Manager

Accountant

Finance Manager

Accountant

1. Count the cash at close of business

2. Agree to petty cash book

3. Identify all the reconciling items

4. If misuse of petty cash noted then disciplinary action should be taken.

5. Where normal reconciling items pass adjusting journals


7. Process the account with any adjustments and file the reconciliation together with cash count results

1.

2.

3.

4.5.

6.

7.


Daily Cash Reconciliation


Count cash

Agree to petty cash book

Identify reconciling

itemsSerious?

YES

NO

Pass adjusting journal

Sign off

Process account

File

Take Action


Cashier

Accountant

Finance Manager

Cashier

Cheque Signatories

Cashier

Accountant

Accountant

Accountant

1. Prepare an expenditure report, the Petty Cash Replenishment Request (PCRR) detailing total expenditure each time the balance reaches replenishment level (25% Float).

2. Prepare a Payment Voucher for replenishment of petty cash. Attach the PCRR and supporting expenditure documents, and forward to the Finance Manager.

3. Check the PCRR to the original receipts. Review the payment voucher and ensure that the reimbursement amount equals the total of the expenditure receipts. Approve the replenishment

4. Raise Cheque for Replenishment and forward to cheque signatories.

5. Sign Petty Cash replenishment Cheque.

6. Replenish the float.

7. Update the General Ledger with petty cash expenditure as follows:

Dr Expense (various)Cr. Petty Cash.

8. Update the Cash book with the float replenishment payment by:

Dr. Petty cash Cr. Bank-main cashbook

9. File vouchers in PV Number order

1.

2.

3.

4.

5.

6.

7.

8.

9.


Replenishment of Petty Cash


Cashier

Accountant

Finance Manager

Cashier

Cheque Signatories

Cashier

Accountant

Accountant

Accountant

1. Prepare an expenditure report, the Petty Cash Replenishment Request (PCRR) detailing total expenditure each time the balance reaches replenishment level (25% Float).

2. Prepare a Payment Voucher for replenishment of petty cash. Attach the PCRR and supporting expenditure documents, and forward to the Finance Manager.

3. Check the PCRR to the original receipts. Review the payment voucher and ensure that the reimbursement amount equals the total of the expenditure receipts. Approve the replenishment

4. Raise Cheque for Replenishment and forward to cheque signatories.

5. Sign Petty Cash replenishment Cheque.

6. Replenish the float.

7. Update the General Ledger with petty cash expenditure as follows:

Dr Expense (various)Cr. Petty Cash.

8. Update the Cash book with the float replenishment payment by:

Dr. Petty cash Cr. Bank-main cashbook

9. File vouchers in PV Number order

1.

2.

3.

4.

5.

6.

7.

8.

9.


Replenishment of Petty Cash


Prepare PCRR

PCRR

Prepare PV

PV

Review PCRR/ PV

Raise Cheque

Cheque

Sign Cheque

Replenish float

Update GL

Update CB and PCB

File


8 Travel and Activity Imprests

8.1 Purpose The purpose of the imprest system is to ensure that:

• Imprest is issued for approved activities and expenditure types • Proper approval systems are adhered to in making imprests payments • Reasonable amounts are paid out as imprests • Imprest is promptly and fully accounted for with appropriate supporting documents • Travel and other activities requiring imprests are adequately planned for in advance.

8.2 Policy WSTF will pay for travel and reasonable living expenses for employees on official business in accordance with guidelines and rates set out in the Terms and Conditions of Service. These details will be elaborated in a personnel policies and procedures manual, but in summary the expenses will be claimed as detailed in the sections that follow.

8.3 In country- out of station allowance Officers travelling on duty within Kenya and away from their duty station will be paid a per diem / Daily Subsistence Allowance (a flat accommodation allowance per night) at rates guided by government circulars to be issued from time to time.

Officers travelling on duty but not spending a night away from their duty station will be eligible for lunch and dinner allowance at rates also to be guided by government circulars issued from time to time.

Fuel and other incidental vehicle running costs will be based on the official expenditure receipts.

8.4 Out of country subsistence allowance This allowance will be paid as per agreed rates determined by the WSTF Management. All out of country travel allowances will be approved by the Chairperson of WSTF or by the Vice-Chairperson in the absence of the Chairperson.

8.5 Application for travels and activities imprests The respective budget holders for approved activities will review and approve local travel and activity imprest applications. All out of country activities must also be approved by the Chairperson of WSTF or by the Vice-Chairperson in the absence of the Chairperson.


The approved application shall be submitted to the Finance department at least one week (5 working days) before the date on which funds are required. Once an imprest is issued, it will immediately be posted to an interim staff imprest account of the individual taking the imprest.

8.6 Accounting for imprests

Imprests must be accounted for within 48 hours of return to office from activity in the field. No further advances will be made until previous ones are fully accounted for. An Expenditure Form will be completed in accounting for the imprest. The form is designed to facilitate analysis of the spending by activity and expenditure type, e.g. per diem, stationery, transport etc.

The imprest holder will obtain approval either from the Budget Holder or the CEO, WSTF before submitting the form to Finance Department.

Any amounts not spent will be surrendered to the Cashier when accounting for the imprest, and an official receipt issued. Similarly, officers who spend more than the amount advanced will be refunded the excess amount spent after they have accounted for the advance. The excess amount must be approved by the Department Head or CEO.

8.7 Unsurrendered imprest

Imprests that remain unaccounted for beyond the required period of return to office will be recovered from the employee’s salary in such amounts and over such period as the Finance Manager in consultation with the CEO, WSTF may consider appropriate.

8.8 Data Flow Diagram (DFD)

A diagram illustrating the sequence of processes identified above is illustrated below:


Applicant

Head of Department

Head of Department

Administration

Accountant

Accountant

Accountant

1. Complete and sign an Imprest Application Form (IAF) either for travel on WSTF assignment /conferences/ meetings or to undertake activities which are included in the approved work plan and budget for the period.

2. Review the IAF to confirm activity is within our work plan and budget for the period. Also check reasonableness of rates and quantities used. Approve, if satisfied and forward the IAF to the CEO.

3. Review IAF and if satisfied, authorise travel or activity. (CEO and Chairperson of WSTF may approve out of country applications)

4. If ticket or other procurement required, observe appropriate procurement procedures. Forward documents for payment to Finance.

5. Observe payment procedures to process payments.

6. Record the advance payment in the cash book. Also update the Imprest Ledger to reflect the debit on the imprest holder’s account.

Dr. Imprest Holder (specific)Cr. Bank/Cash.

7. File Documents.

1.

2.

3.

4.

5.

6.

7.


Travel and Activity Imprest Application

WSTF: IMPRESTS – TRAVEL AND ACTIVITY

Applicant

Head of Department

Head of Department

Administration

Accountant

Accountant

Accountant

1. Complete and sign an Imprest Application Form (IAF) either for travel on WSTF assignment /conferences/ meetings or to undertake activities which are included in the approved work plan and budget for the period.

2. Review the IAF to confirm activity is within our work plan and budget for the period. Also check reasonableness of rates and quantities used. Approve, if satisfied and forward the IAF to the CEO.

3. Review IAF and if satisfied, authorise travel or activity. (CEO and Chairperson of WSTF may approve out of country applications)

4. If ticket or other procurement required, observe appropriate procurement procedures. Forward documents for payment to Finance.

5. Observe payment procedures to process payments.

6. Record the advance payment in the cash book. Also update the Imprest Ledger to reflect the debit on the imprest holder’s account.

Dr. Imprest Holder (specific)Cr. Bank/Cash.

7. File Documents.

1.

2.

3.

4.

5.

6.

7.


Travel and Activity Imprest Application


Complete IAF

IAF

Review and approve

Review and sign IAF

Ticket purchase

To purchase of ticket

To payment procedures

Record imprestadvance

File


Advance Holder

Head of Department

Accountant

Accountant

Accountant

Accountant

1. To account for travel/activity imprest, fill in a Personal Expenditure Form (PEF) within 14 days of returning to office, to account for the imprest. Where a flat per diem is used, show the number of nights actually spent and rate applied. For fuel and other activities attach supporting expenditure documentation and forward to the Head of Department.

2. Review expenditure report to ensure that all expenditure items are supported by valid receipts/vouchers. Approve and forward to the Finance Section.

3. If there is a difference between imprest and expenditure observe payment procedure to make additional payment and receiving procedure to record funds surrendered.

4. Ensure expenditure is assigned to the correct account codes and correctly analysed by activity codes, cost centre and financier codes.

5. Record the expenditure to debit the expense accounts and credit staff imprest account

Dr. Expense (various)Cr. Imprest Holder. Also record cash

balance paid or received Back as appropriate.

6. File documents.

1.

2.

3.

4.

5.

6.


Accounting for Imprests


Advance Holder

Head of Department

Accountant

Accountant

Accountant

Accountant

1. To account for travel/activity imprest, fill in a Personal Expenditure Form (PEF) within 14 days of returning to office, to account for the imprest. Where a flat per diem is used, show the number of nights actually spent and rate applied. For fuel and other activities attach supporting expenditure documentation and forward to the Head of Department.

2. Review expenditure report to ensure that all expenditure items are supported by valid receipts/vouchers. Approve and forward to the Finance Section.

3. If there is a difference between imprest and expenditure observe payment procedure to make additional payment and receiving procedure to record funds surrendered.

4. Ensure expenditure is assigned to the correct account codes and correctly analysed by activity codes, cost centre and financier codes.

5. Record the expenditure to debit the expense accounts and credit staff imprest account

Dr. Expense (various)Cr. Imprest Holder. Also record cash

balance paid or received Back as appropriate.

6. File documents.

1.

2.

3.

4.

5.

6.


Accounting for Imprests


Complete PEF

PEF

Review PEF

Imprest = Expense ?

YES

NOTo payment

Analyse expenditure

Record

File


Accountant

Finance Manager

CEO

Accountant

Accountant

1. Monthly generate an aged unsurrendered imprest report and forward to the Finance Manager.

2. Review the unsurrendered report and notify individuals with unaccounted for imprests. Obtain authorisation from the CEO to deduct unaccounted for imprestsfrom staff member’s salary.

3. Approve the imprest recovery schedule.

4. Recover unaccounted for imprests through the payroll once approval is received from the CEO.

5. File Reports.

1.

2.

3.

4.

5.


Unsurrendered Imprests


Accountant

Finance Manager

CEO

Accountant

Accountant

1. Monthly generate an aged unsurrendered imprest report and forward to the Finance Manager.

2. Review the unsurrendered report and notify individuals with unaccounted for imprests. Obtain authorisation from the CEO to deduct unaccounted for imprestsfrom staff member’s salary.

3. Approve the imprest recovery schedule.

4. Recover unaccounted for imprests through the payroll once approval is received from the CEO.

5. File Reports.

1.

2.

3.

4.

5.


Unsurrendered Imprests


Generate report

UnsurrenderedImprest Report

Review report

Approve to deduct

Deduct

File


9 Payroll Procedures

9.1 Purpose The purpose of the payroll system is to ensure:

• Complete and accurate data capture and payroll processing

• Production of all required reports in a timely manner

• Employees are paid in accordance with letters of appointment

• There is adequate security over payroll data

• Statutory and voluntary deductions are properly accounted for and remitted to the appropriate authorities

• Payroll expense is forwarded to the General Ledger system.

9.2 Policy

WSTF will issue appointment letters to all newly employed staf f and the payroll processing will be in line with the Terms and Conditions of Service of each category of staff.

The Finance Department shall not make payroll changes without the express authority of the Finance Manager.

Tax will be deducted on all taxable pay in accordance with relevant tax law.

WSTF will comply with local labour laws, regulations governing employment and provisions of specific employment contracts.

To avoid the risk inherent in carrying large sums of money and minimise the risk of loss of payroll frauds, all staff will be required to operate bank accounts through which their salaries will be paid. Cash cheques will only be used on a temporary basis to allow new staff adequate time to open bank accounts.

The payroll will be prepared on a monthly basis. The Finance Manager will ensure that this is prepared by the 20th of every month. Salary bank transfer instructions and the salary cheque will be forwarded to the bank on or before 23r d of every month to ensure salaries are credited to employee bank accounts before the end of the month.

Payroll reports (net salaries, statutory and non-statutory deductions) will be reviewed by the Finance Manager and verified by the Administration and Human Resource Manager. Once approved, they will be forwarded to the Chairperson for authorisation of payments.


9.3 Description This section only provides the payroll preparation procedures. Details on other personnel procedures will be included in the WSTF personnel policies and procedures manual.

For the purposes of payroll processing, the Finance Department will receive a Payroll Change Advice from the Human Resources Manager with the following employee details:

• Full name, • Payroll number (provided by the system/HR Dept), • Position, • Department, • Bank Name & Branch, • Bank Account Number, • Statutory registration numbers (PIN, NSSF, NHIF,ID), • Other registration numbers (Co-operative, HELB, etc), • Emoluments details, • The birth date. • The appointment date. On receipt of the Payroll Change Advice, the Finance Manager will review and sign it for processing in the payroll system. Staff advances shall be paid out in accordance with the provisions of the Terms and Conditions of Service.

The Finance Manager will ensure strict compliance with the law in regard to taxes and other statutory deductions. He will ensure that WSTF obtains all the pertinent information regarding statutory deductions and complies with them. Such information can be obtained from Kenya Revenue Authority, NSSF, NHIF, the print media (e.g. Kenya Gazette) etc. Penalties due to non-compliance resulting from the negligence of an officer shall be recovered from that officer.

It will be the duty of the Finance Manager to ensure recoveries are effected on a timely basis. Payroll reports (net salaries, statutory and non -statutory deductions) will be reviewed by the Finance Manager and verified by the Administration and Human Resources Manager. Once approved, they will be forwarded to the CEO, WSTF for authorisation of the payments.

9.4 Data Flow Diagram (DFD)

A diagram illustrating the sequence of processes identified above is illustrated below:


Administration andHuman ResourcesManager

Finance Manager

Accountant

Finance Manager


Finance Manager

Accountant

1. Update employee file with payroll changes and prepare a Payroll Change Advice. This could be for new staff, termination, change in salary or other payroll items. Forward to the Finance Manager.

2. Review and approve Payroll Change Advice for input into the payroll systems.

3. Input changes to payroll (new staff, pay change, termination etc).

4. Review payroll data and confirm correct input of changes.

5. Review payroll update report and if okay sign and return to Finance Manager. Indicate if there are amendments to be made.

6. Receive reports and if changes signed by Human Resources Manager forward to Accountant for filing.

7. File update reports.

1.

2.

3.

4.

5.

6.

7.


Updating Payroll Records

WSTF: PAYROLL PROCEDURES MANUAL


Finance Manager

Accountant

Finance Manager


Finance Manager

Accountant

1. Update employee file with payroll changes and prepare a Payroll Change Advice. This could be for new staff, termination, change in salary or other payroll items. Forward to the Finance Manager.

2. Review and approve Payroll Change Advice for input into the payroll systems.

3. Input changes to payroll (new staff, pay change, termination etc).

4. Review payroll data and confirm correct input of changes.

5. Review payroll update report and if okay sign and return to Finance Manager. Indicate if there are amendments to be made.

6. Receive reports and if changes signed by Human Resources Manager forward to Accountant for filing.

7. File update reports.

1.

2.

3.

4.

5.

6.

7.


Updating Payroll Records


Payroll change advice

Update employee file

Updated report

From personnel procedures

Review and approve payroll

update

Input new changes

Review new inputs

Review payroll update

Review report and forward

for filing

File


Accountant

Finance Manager

Administration and Human ResourcesManager

Finance Manager

Accountant

Accountant

Accountant

1. Generate payroll reports, including payslips, bank transfers, statutory and other deductions no later than the 20th of every month.

2. Review payroll reports, ensure errors noted are rectified, sign and forward to the Human Resources Manager.

3. Review Monthly payroll reports, sign and return to Finance.

4. Obtain signatories for bank transfer letter (same as cheque) and despatch to the bank for money transfer to the respective employee bank accounts.

5. Observe payment procedures to pay monthly statutory and other deductions.

6. Update the General Ledger with the payments by debiting the various expense accounts with the payroll related payments as follows:

ENTRIES TO GENERAL LEDGER:Dr. Payroll Expenses (various

accounts)Cr. Payroll Liabilities (various)ENTRY ON PAYMENTDr. Payroll Liabilities (various) Cr. Bank

7. File Documents

1.

2.

3.

4.

5.

6.

7.


Monthly Payroll Processing


Accountant

Finance Manager

Administration and Human ResourcesManager

Finance Manager

Accountant

Accountant

Accountant

1. Generate payroll reports, including payslips, bank transfers, statutory and other deductions no later than the 20th of every month.

2. Review payroll reports, ensure errors noted are rectified, sign and forward to the Human Resources Manager.

3. Review Monthly payroll reports, sign and return to Finance.

4. Obtain signatories for bank transfer letter (same as cheque) and despatch to the bank for money transfer to the respective employee bank accounts.

5. Observe payment procedures to pay monthly statutory and other deductions.

6. Update the General Ledger with the payments by debiting the various expense accounts with the payroll related payments as follows:

ENTRIES TO GENERAL LEDGER:Dr. Payroll Expenses (various

accounts)Cr. Payroll Liabilities (various)ENTRY ON PAYMENTDr. Payroll Liabilities (various) Cr. Bank

7. File Documents

1.

2.

3.

4.

5.

6.

7.


Monthly Payroll Processing


Run payroll

Review monthly payroll reports

Review monthly payroll reports

Net salary bank transfer to bank

Statutory and non statutory deductions to payment procedures

Update A/C system with payroll transactions

File

Monthly payroll report


10 Fixed Assets System

10.1 Purpose The purpose of the fixed assets system is to ensure that:

All assets are safeguarded by recording their details and monitoring their location, condition and usage

There is proper maintenance of a fixed assets register, appropriately designed to include all information necessary to properly record and control fixed assets

There is proper accounting for fixed assets.

10.2 Policy

10.2.1 Fixed assets

Fixed assets or plant and equipment refer to long lived assets acquired for use in the operation of an organisation. In the case of WSTF, these will include office equipment and computers, vehicles, furniture and fittings.

The cost of fixed assets will include all expenditures reasonable and necessary in acquiring the asset and placing it in a position and condition for use in WSTF’s operations. This will mainly include the cash outlay necessary in acquiring the asset plus any incidental costs (e.g. expenditures for freight, insurance while in transit, installation and any other costs necessary to make the asset ready for use).

On receipt, each asset will be verified and assigned a unique tag number and recorded in detail in the Fixed Assets Register. The Fixed Assets Register shall have the following information for each asset:

• Description of asset including model and serial number, • Date of purchase and cost, • The tag number, • Class and category of asset, • General and specific location. • Condition.

Management will ensure that independent physical verifications are regularly conducted. Any discrepancies will be investigated and corrective action taken.


10.2.2 Capitalisation Policy

Fixed assets with a minimum value of Kshs 50,000 individually or collectively and a life of three years or more will be capitalised and depreciation computed on these. Assets costing less than Kshs 50,000 will be expensed in the year of purchase and will be recorded in a stores register for control purposes. Small items like staplers and punches will be treated as consumables and controlled using a stores ledger card.

10.2.3 Depreciation

The straight-line method of depreciation will be used. This will allocate the cost of the depreciable asset uniformly over its expected useful li fe. The annual depreciation will be based on the full acquisition cost of the depreciable asset, net of its salvage value, as applicable. The rate will apply from the date the asset is placed into use until it is disposed off/written off or until it is fully depreciated, whichever occurs first. Sets of assets e.g. office furniture, purchased at a single point in time should be considered a single asset for depreciation, even if individual components of the set cost less than the minimum value for capitalisation.

The following rates will be used in computing depreciation:

Class Name Estimated Useful life Depreciation rate 1 Motor Vehicles 4 years 25% 2 Computer equipment 3 years 33% 3 Office equipment 4 years 25% 4 Office furniture & fittings 5 years 20%

10.2.4 Disposal of fixed assets

Disposal of assets will be effected only on the recommendation of the Finance and Procurement Committee and approved by the Trustees. Fixed Assets shall be disposed off after valuation and the disposal procedure shall be by open tender, public auction or private treaty (to members of staff). In all cases, the disposal shall be subject to a reserve price.

10.2.5 Control over fixed assets usage

Fixed assets usage will be controlled through the use of the following forms:

• Transport requisition form • Vehicle movement register (work tickets) • Fixed assets movement register • Authority for movement of fixed assets form.


10.2.6 Insurance arrangements

Insurance is a vital component of WSTF’s operations. Insurance should cover the following risks among others:

• Fire • Burglary • Motor vehicle insurance The CEO shall be responsible for effecting all insurance covers with reputable insurers on behalf of the Trustees. The CEO will negotiate claims and where necessary in consultation with other officers. Adequate insurance registers shall be kept and policy documents kept in safe custody by the Finance Manager.

10.3 Data Flow Diagram (DFD) A diagram illustrating the sequence of processes identified above is illustrated below:


End User or Headof Department

CEO

Finance Manager

Finance Manager

CEO and Trustees

Procurement

Stores/Appropriate Technical Expert

Stores

1. Raise and sign fixed assets purchase requisition.

2. Approve purchase if within approved work-plan and budget. Forward to Finance Department.

3. Check that requisition is included in the approved work-plan and is within budget. If not, return requisition to budget holder with an explanatory note.

4. If within budget indicate availability of funds and forward to CEO.

5. Approve purchase of fixed assets and forward to procurement.

6. Observe appropriate procurement procedures to select supplier and acquire asset.

7. Receive purchased item and inspect to ensure that the condition is satisfactory and is in accordance with the terms and conditions of the related purchase contract. If the item is technical in nature, get an expert to test and certify quality condition. Assign a unique tag number to the asset using the WSTF asset coding register and complete a Goods Received Note

8. Physically tag the fixed asset and forward copy of GRN, the invoice and relevant supporting documents to Finance Department.

1.

2.

3.

4.

5.

6.

7.

8.


Fixed Assets Acquisition, Recording and Depreciation

WSTF: FIXED ASSETS SYSTEMS USER PROCEDURES

End User or Headof Department

CEO

Finance Manager

Finance Manager

CEO and Trustees

Procurement

Stores/Appropriate Technical Expert

Stores

1. Raise and sign fixed assets purchase requisition.

2. Approve purchase if within approved work-plan and budget. Forward to Finance Department.

3. Check that requisition is included in the approved work-plan and is within budget. If not, return requisition to budget holder with an explanatory note.

4. If within budget indicate availability of funds and forward to CEO.

5. Approve purchase of fixed assets and forward to procurement.

6. Observe appropriate procurement procedures to select supplier and acquire asset.

7. Receive purchased item and inspect to ensure that the condition is satisfactory and is in accordance with the terms and conditions of the related purchase contract. If the item is technical in nature, get an expert to test and certify quality condition. Assign a unique tag number to the asset using the WSTF asset coding register and complete a Goods Received Note

8. Physically tag the fixed asset and forward copy of GRN, the invoice and relevant supporting documents to Finance Department.

1.

2.

3.

4.

5.

6.

7.

8.


Fixed Assets Acquisition, Recording and Depreciation


Raise requisition

Approve requisition

Check against work plan

Approve purchase

Forward to CEO if ok

Procurement procedures

Receive item and verify

GRN and Invoice

Physically tag asset

To 9


Accountant

Accountant

Accountant

Accountant

9. Receive Goods Received Note for the asset and invoice duly certified by receiving officer/stores.

10. Record the fixed assets in the register. Debit the correct code and credit bank account.

11. Review the fixed assets journal and post to the General Ledger. Print a journal for reference purpose.

12. File Journal and supporting documents.

10.

11.

12.


Accountant

Accountant

Accountant

Accountant

9. Receive Goods Received Note for the asset and invoice duly certified by receiving officer/stores.

10. Record the fixed assets in the register. Debit the correct code and credit bank account.

11. Review the fixed assets journal and post to the General Ledger. Print a journal for reference purpose.

12. File Journal and supporting documents.

10.

11.

12.


Update FAR with

acquisition

Update GL with

acquisition

File

From 8


Finance Manager

Accountant

Finance Manager

Accountant

Finance Manager

Accountant

1. Receive fixed asset disposal report from Administration. Review report and prepare a journal to record the disposal by:

Debit: Respective accumulated depreciation account

Credit: Respective fixed assets account

Debit/Credit: Loss or gain from disposal.

2. Update fixed assets register with disposal.

3. Review journal and post to update General Ledger Accounts.

4. Generate disposal report and print it.

5. Review report and sign.

6. File report for reference and audit purpose.

1.

2.

3.

4.

5.

6.


Recording Fixed Assets Disposals


Finance Manager

Accountant

Finance Manager

Accountant

Finance Manager

Accountant

1. Receive fixed asset disposal report from Administration. Review report and prepare a journal to record the disposal by:

Debit: Respective accumulated depreciation account

Credit: Respective fixed assets account

Debit/Credit: Loss or gain from disposal.

2. Update fixed assets register with disposal.

3. Review journal and post to update General Ledger Accounts.

4. Generate disposal report and print it.

5. Review report and sign.

6. File report for reference and audit purpose.

1.

2.

3.

4.

5.

6.




From administration

Disposal report and support documents

Receive disposal report

Update FAR with disposal

Update GL with disposal

Generate disposal report

Review disposal report

File


Accountant

Finance Manager

Finance Manager

Accountant

Finance Manager

Accountant

1. Periodically and prior to preparation of reports, run depreciation for the period.

2. Review the depreciation journal and post debit to depreciation accounts and credit to accumulated depreciation accounts in the General Ledger.

3. Select user defined depreciation report in the system and print it for the relevant period.

4. Prepare and print the Fixed Assets movement report for the relevant period.

5. Review periodical fixed Assets reports and sign them.

6. File reports.

1.

2.

3.

4.

5.

6.




Accountant

Finance Manager

Finance Manager

Accountant

Finance Manager

Accountant

1. Periodically and prior to preparation of reports, run depreciation for the period.

2. Review the depreciation journal and post debit to depreciation accounts and credit to accumulated depreciation accounts in the General Ledger.

3. Select user defined depreciation report in the system and print it for the relevant period.

4. Prepare and print the Fixed Assets movement report for the relevant period.

5. Review periodical fixed Assets reports and sign them.

6. File reports.

1.

2.

3.

4.

5.

6.




Run depreciation

Update GL with

depreciation

Print depreciation

report

Print FA movement

report

Review periodical

reports

File


11 WSTF Accounting and Reporting Procedures

11.1 WSTF accounting policies

11.1.1 Income

WSTF income will be recognised when funds are received. Funds will be received from the Government of Kenya and from donor agencies in the form of grants and donations. These funds will be pooled and recognized as income. Specific grants received from donors and allocated for specific purposes and not pooled will be recognised as other income.

11.1.2 WSTF expenses

Expenditure will be recognised when payments are made. WSTF beneficiaries and project implementers will report quarterly and activity progress reports will include expenditure reports. Expenditure incurred but not paid for will be treated as a commitment to pay. Other WSTF commitments such as purchase orders will also be monitored. All commitments will be reported under appropriate categories for budgetary control purposes.

11.1.3 WSTF assets

For reporting to GoK and other donors, assets will be expensed in full and the amount reflected in the income and expenditure report for the period in which they are purchased. For WSTF internal purposes, a memorandum balance sheet will be maintained in which fixed assets will be capitalised and depreciated over their useful lives.

11.1.4 WSTF balance sheet

WSTF accounting system will be cash based. A memorandum balance sheet will be prepared outside the accounting software to classify WSTF resources under investments (including fixed assets) and operations and show how these are funded.

11.1.5 Reporting

Sample formats of WSTF financial reporting forms are included in Appendix 3.

11.2 Reporting and data analysis requirements The WSTF accounting system will be designed to facilitate timely generation of periodic financial management reports. To efficiently produce these reports, the accounting transactions need to be analysed in a number of ways, including:

• Expenditure categories and sub categories • Components and activities • Source of funds


• Institution and units/cost centres • Location • Timeframe - date and periods. • Geographic location of projects A brief description of the identified analysis dimensions is provided below.

(To be developed upon discussion with WSTF team)

11.2.1 Dimension 1: Category of expenditure:

The Categories of Expenditure (COE) for reporting will be as follows:

• Office Expenses • Disbursements to Projects • Project Management and Capacity Building Expenses The above categories will be further broken down as follows:

Head office Expenses will include costs specifically incurred at the head office and arising from head office operations as outlined in section 3.2.1. A number of these expenditure sub-categories would include:

• Printing, photocopying and stationery • Workshops and Hire of facilities • Head Office Staff Training • Travel and Accommodation • Advertising and exhibitions • Utilities • Audit and consultancies • Bank charges and commissions • Vehicle running and maintenance costs • Repairs and maintenance-non vehicle • Insurance–non-vehicle • Other expenses -miscellaneous Disbursements to Projects

These are those funds disbursed to projects which have been approved based on procedures outlined in the WSTF Operations Manual. Projects receiving funds will then be grouped into the following sub-categories based on the nature of the intervention:

• Transmission Systems – including piped-gravity and piped-pumping schemes and open ducts • Non-transmission Systems – including boreholes and shallow wells, rain water harvesting (rain

water catchment), dams, pans etc • Sanitation and Hygiene Promotion • Training and Capacity Building


Project Management and Capacity Building

This category includes expenses incurred in managing projects which are ongoing at project sites. As the funded projects are envisioned to be demand driven, these expenses will be those incurred in backstopping by technical s taff from the head office and would include:

• Travel and Accommodation • Vehicle running and maintenance costs • Printing, photocopy and stationery

11.2.2 Dimension 2: Project components and activities

The main project components are based on the identified priority areas as listed in section 3.2.2. These will include the following: • Promotion of Transmission Systems • Promotion of Non-Transmission Systems • Promotion of Sanitation and Hygiene • Training and Capacity Building

11.2.3 Dimension 3: Source of funds

Expenditure reporting will also be done according to the following possible funding sources for the WSTF;

• GoK • Various donors

11.2.4 Dimension 4: Institution

Expenditure reporting and data analysis will also occur according to WSTF Units and Cost Centres, which include:

• Finance & Resource Mobilization Department • Technical Appraisal Department – Transmission Systems • Technical Appraisal Department – Non-Transmission Systems • Field Co-ordination Department • Administration and Human Resources Department • Sanitation and Hygiene Dept • CEO

11.2.5 Dimension 5: Timeframe


Beneficiaries of WSTF funding will be required to prepare quarterly and annual progress reports and end of project reports. WSTF management will consolidate these reports and will prepare quarterly and annual reports for presentation to the Trustees. A monitoring and evaluation report will be prepared by WSTF management half-yearly.

The copies of the consolidated reports will be forwarded to the Trustees and through the MWI to the GoK and other donors.

11.3 Reports from beneficiaries and preparation of consolidated reports All beneficiary projects will be expected to report on a timely basis to WSTF management. The minimum reporting requirements would include:

• Quarterly progress and financial reports • Annual progress reports • An end of project report WSTF management will consolidate all the reports received from the beneficiaries and produce consolidated quarterly and annual progress and financial reports. As WSTF head office will also produce quarterly and annual progress and financial reports, these will be consolidated with the quarterly and annual project beneficiary reports. Copies of consolidated reports are then forwarded to the Board of trustees and subsequently to the donors and to the GoK through MWI. The consolidated reports are a basis for audits and programme reviews by the Auditor General and other auditors appointed by the GoK, donors and WSTF Trustees.

11.4 Project auditing arrangements As outlined in section 11.3 above, a consolidated expenditure report will be prepared for all expenses incurred by WSTF annually and this expenditure report will be the basis of audits. WSTF accounts shall be audited and reported on annually by the Kenya National Audit Office or by an auditor in accordance with the Public Audit Act, 2003.


APPENDIX 1: Structure of Accounts

Detailed Structure of Accounts

100000 INCOME Pooled

Funds

GoK Donors Others Project

Specific Funds

GoK Donors Others 200000 EXPENDITURE 10000 Head Office

Expenses

Personnel Emoluments 1 Basic salary 2 House Allowance 3 Out-Patient medical

Allowance 4 Commuter

Allowance 5 Entertainment

Allowance 6 Leave Allowance 7 Overtime Allowance 8 Acting Allowance 9 Special Duty

Allowance 10 Payment in Lieu of

Leave 11 Casual Wages 12 Pension Payments 13 NHIF Payments 14 NSSF Payments 15 Disturbance

Allowance Motor Vehicle Expenses 1 Fuel Expenses 2 Repairs and

Maintenance 3 Insurance


Travel and

Accommodation

1 Local Travel 2 International Travel Utilities 1 Water 2 Electricity Telephone and Postal

Expenses

1 Fixed Phone Charges

2 Postal Expenses 3 Mobile Phone Costs 4 Internet Access

Costs Insurance (Non-Motor) 1 Property 2 Staff 3 Public Liability Board Expenses 1 Allowances 2 Insurance Office Running Expenses 1 Sundry Expenses 2 Repairs and

Maintenance Bank Charges 1 Charges on

Deposits 2 Other Bank Charges Staff Training Costs 1 Training Fees 2 Hire of Facilities Staff Expenses 1 Staff Welfare 2 Medical Expenses Consultancies 1 External Audit Costs 2 Legal Fees 3 Miscellaneous

Consultancies Advocacy and Advertising 1 Media

Advertisements 2 Promotional

Activities


Printing and Stationery 1 Stationery 2 Printing 20000 Financing to

Projects

Surface Water Distribution 1 Piped Gravity 2 Piped Pumping 3 Open Ducts Ground Water Distribution 1 Boreholes and

Shallow Wells 2 Rainwater

Harvesting 3 Dams and Pans Sanitation and Hygiene Training and Capacity

Building

30000 Project

Management and Capacity Building

Travel and Accommodation Vehicle Running and

Maintenance

Stationery and Photocopying Consultancies 300000 ASSETS Current

Assets

Bank Account 1 Pooled Funds

Bank Account 2 Specific Project Funds

Petty Cash Staff Debtors Other Debtors Fixed

Assets

Furniture and Fittings Motor Vehicles Computer Equipment Field Equipment Depreciation Furn & Fittings Depreciation Motor Vehicles Depreciation Computer


Equipment Depreciation Fi eld

Equipment

400000 LIABILITIES Suppliers 500000 CAPITAL

ACCOUNTS

Initial GoK Contribution

Surplus Carried Forward

600000 CLEARING

ACCOUNTS


APPENDIX 2: Accounting Forms

ACCOUNTING FORMS – Form WSTF AF1

PHONE FAXADDRESS

WATER SERVICES TRUST FUNDPHONE FAXADDRESS

WATER SERVICES TRUST FUND

DATENUMBERGOODS RECEIVED NOTE DATENUMBERGOODS RECEIVED NOTE

GOODS RECEIVED FROMGOODS RECEIVED FROM

COST CENTRECOMPONENT / ACTIVITY

EXPENSE CATEGORYITEM CODE



TOTAL

TOTALUNIT PRICEQTYITEM DESCRIPTION

TOTAL


DATESIGNAPPROVED BY

DATESIGNRECEIVED BY

INVOICE NUMBER

DELIVERY NOTE NUMBERPURCHASE ORDER NUMBER

DATESIGNAPPROVED BY

DATESIGNRECEIVED BY

INVOICE NUMBER

DELIVERY NOTE NUMBERPURCHASE ORDER NUMBER



PHONE FAXADDRESS



DATENUMBERPURCHASE ORDER DATENUMBERPURCHASE ORDER

NAME OF SUPPLIERNAME OF SUPPLIER





PLEASE SUPPLY THE FOLLOWING GOODS

TOTAL


PLEASE SUPPLY THE FOLLOWING GOODS

TOTAL


DATESIGNAUTHORISED BY

DATESIGNAPPROVED BY

DATESIGNREQUESTED BY

QUOTATION NUMBER AND DATE


DATESIGNAPPROVED BY





PHONE FAXADDRESS



DATENUMBERGOODS & SERVICES REQUISITION FORM DATENUMBERGOODS & SERVICES REQUISITION FORM

NAME OF STAFF REQUESTINGNAME OF STAFF REQUESTING





REQUEST FOR THE FOLLOWING GOODS / SERVICES

TOTAL

TOTALUNIT PRICEQTYITEM DESCRIPTION & PURPOSE REQUIRED

REQUEST FOR THE FOLLOWING GOODS / SERVICES

TOTAL

TOTALUNIT PRICEQTYITEM DESCRIPTION & PURPOSE REQUIRED


DATESIGNAPPROVED BY




DATESIGNAPPROVED BY





PHONE FAXADDRESS



DATENUMBERPAYMENT VOUCHER DATENUMBERPAYMENT VOUCHER

NAME OF PAYEENAME OF PAYEE





PAYMENT BEING MADE FOR THE FOLLOWING ITEMS

TOTAL


PAYMENT BEING MADE FOR THE FOLLOWING ITEMS

TOTAL


INVOICE NUMBERPURCHASE ORDER NUMBER


DATESIGNAPPROVED BY

DATESIGNCHECKED BY

DELIVERY NOTE NUMBERGOODS RECEIVED NOTE NO.

INVOICE NUMBERPURCHASE ORDER NUMBER


DATESIGNAPPROVED BY

DATESIGNCHECKED BY

DELIVERY NOTE NUMBERGOODS RECEIVED NOTE NO.



PHONE FAXADDRESS



DATENUMBERRECEIPT DATENUMBERRECEIPT





AMOUNTCHEQUE NO. AND DETAILSCASHRECEIVED FROM AMOUNTCHEQUE NO. AND DETAILSCASHRECEIVED FROM

DATESIGNRECEIVED BY

DATESIGNCHECKED BY

DATESIGNRECEIVED BY

DATESIGNCHECKED BY



BOOK VALUE

ACCUMULATED DEPRECIATION

COSTPURCHASE DATE

LOCATIONDESCRIPTION AND SERIAL NUMBER

ASSET CODE

BOOK VALUE

ACCUMULATED DEPRECIATION

COSTPURCHASE DATE

LOCATIONDESCRIPTION AND SERIAL NUMBER

ASSET CODE

DEPRECIATION RATEASSET CATEGORY

FIXED ASSETS REGISTER


DEPRECIATION RATEASSET CATEGORY

FIXED ASSETS REGISTER




Bank charges as per schedule No. vv

ADJUSTED CASHBOOK BALANCE

LESS:

TOTAL

Deposits made but not shown in cashbook as per schedule No. zz

ADD

BALANCE PER CASHBOOK

Outstanding cheques as per schedule No. yy

LESS:

TOTAL

Deposits made but not shown in bank statement as per schedule No. .xx

ADD:

Balance per Bank Statement Dated dd-mm-yyyy

Bank charges as per schedule No. vv

ADJUSTED CASHBOOK BALANCE

LESS:

TOTAL

Deposits made but not shown in cashbook as per schedule No. zz

ADD

BALANCE PER CASHBOOK

Outstanding cheques as per schedule No. yy

LESS:

TOTAL

Deposits made but not shown in bank statement as per schedule No. .xx

ADD:

Balance per Bank Statement Dated dd-mm-yyyy

BANK RECONCILIATION FORM


BANK RECONCILIATION FORM


YEARMONTHDATEACC. CODE

BANK ACCOUNT NUMBERBANK ACCOUNT NAME

YEARMONTHDATEACC. CODE

BANK ACCOUNT NUMBERBANK ACCOUNT NAME

DATESIGNAPPROVED BY

DATESIGNREVIEWED BY

DATESIGNPREPARED BY

DATESIGNAPPROVED BY

DATESIGNREVIEWED BY

DATESIGNPREPARED BY



CHEQUE PAYMENT REGISTER


CHEQUE PAYMENT REGISTER


SIGNATURE OF RECEPIENT

NAME OF RECEPIENT

AMOUNTDATEPAYEECHEQUE NUMBER SIGNATURE OF RECEPIENT

NAME OF RECEPIENT

AMOUNTDATEPAYEECHEQUE NUMBER



IMPREST / ADVANCE APPLICATION FORM


IMPREST / ADVANCE APPLICATION FORM


AMOUNT REQUESTED IN WORDS

IMPREST FORM NO.

YES NO (Tick as appropriate)CURRENT OUTSTANING IMPRESTS?

DATE IMPREST REQUIRED

PURPOSE FOR WHICH IMPREST / ADVANCE IS REQUESTED. (Attach copy of budget and reference to approved work plan)

AMOUNT REQUESTED IN FIGURES

NAME OF STAFF

AMOUNT REQUESTED IN WORDS

IMPREST FORM NO.

YES NO (Tick as appropriate)CURRENT OUTSTANING IMPRESTS?

DATE IMPREST REQUIRED

PURPOSE FOR WHICH IMPREST / ADVANCE IS REQUESTED. (Attach copy of budget and reference to approved work plan)

AMOUNT REQUESTED IN FIGURES

NAME OF STAFF

DATESIGNAUTHORISED

DATESIGNAPPROVED

DATESIGNREVIEWED

DATESIGNAUTHORISED

DATESIGNAPPROVED

DATESIGNREVIEWED

SIGNEDNAME OF RECEPIENT

DATEAMOUNT OF FUNDS RECEIVED

SIGNEDNAME OF RECEPIENT

DATEAMOUNT OF FUNDS RECEIVED



IMPREST / ADVANCE ACCOUNTING FORM


IMPREST / ADVANCE ACCOUNTING FORM


IAF NUMBER

DATE

DATE

KSHSAMOUNT ISSUED

KSHSDIFFERENCE

KSHSAMOUNT ACCOUNTED FOR

NAME OF STAFF

IAF NUMBER

DATE

DATE

KSHSAMOUNT ISSUED

KSHSDIFFERENCE

KSHSAMOUNT ACCOUNTED FOR

NAME OF STAFF

DATESIGNAUTHORISED

DATESIGNAPPROVED

DATESIGNREVIEWED

DATESIGNAUTHORISED

DATESIGNAPPROVED

DATESIGNREVIEWED

SIGNEDNAME OF STAFF

DATEKSHSAMOUNT OF CASH RETURNED

SIGNEDNAME OF STAFF

DATEKSHSAMOUNT OF CASH RETURNED

NO

TOTAL

YES

RECEIPT ATTACHED?AMOUNTEXPENDITURE DETAILSDATE

NO

TOTAL

YES

RECEIPT ATTACHED?AMOUNTEXPENDITURE DETAILSDATE



PETTY CASH VOUCHER


PETTY CASH VOUCHER


DATE REQUESTEDPETTY CASH VOUCHER NO.

NAME OF STAFF

DATE REQUESTEDPETTY CASH VOUCHER NO.

NAME OF STAFF

DATESIGNAUTHORISED

DATESIGNAPPROVED

DATESIGNAUTHORISED

DATESIGNAPPROVED

AMOUNTPURPOSEDATE AMOUNTPURPOSEDATE

DATESIGNSIGNATURE OF RECEPIENT DATESIGNSIGNATURE OF RECEPIENT



IMPREST APPLICATION AND SURRENDER REGISTER


IMPREST APPLICATION AND SURRENDER REGISTER


NAME OF RECEPIENT

COMMENTSAMOUNT SURRENDERED

DATE OF SURRENDER

AMOUNT ISSUED

RECEPIENT CODE

DATE IMPREST

GIVEN

IAF NO. NAME OF RECEPIENT

COMMENTSAMOUNT SURRENDERED

DATE OF SURRENDER

AMOUNT ISSUED

RECEPIENT CODE

DATE IMPREST

GIVEN

IAF NO.



PETTY CASH REPLENISHMENT REQUEST


PETTY CASH REPLENISHMENT REQUEST


DATE REQUESTEDPC REPLENISHMNENT REQUEST NO.

NAME OF STAFF

DATE REQUESTEDPC REPLENISHMNENT REQUEST NO.

NAME OF STAFF

DATESIGNAUTHORISED

DATESIGNAPPROVED

DATESIGNAUTHORISED

DATESIGNAPPROVED

SUPPORTING EXPENDITURE RECEIPTS ATTACHED

AMOUNT REQUESTEDDETAILSDATE

SUPPORTING EXPENDITURE RECEIPTS ATTACHED

AMOUNT REQUESTEDDETAILSDATE

DATESIGNSIGNATURE OF RECEPIENT DATESIGNSIGNATURE OF RECEPIENT


APPENDIX 3: Reporting Forms

REPORTING FORMS – Form WSTF RF 1

Kshs

Kshs

Kshs

Kshs

Kshs

Kshs

Kshs

Kshs

Kshs

Kshs

Kshs

KshsPiped Pumping

KshsBoreholes & WellsNon-Transmission Systems

KshsRainwater Harvesting

KshsActivity Type 1Sanitation and Hygiene

KshsActivity Type 2

KshsAll ActivitiesTraining & Capacity Building

Consultancies

Vehicle Running & Maintenance

Travel & Accommodation

Kshs PROJECT MANAGEMENT & CAPACITY BUILDING

KshsPiped GravityTransmission Systems

Kshs FINANCING TO PROJECTS

KshsElectricity

KshsWaterUtilities

KshsInternational Travel

KshsLocal TravelTravel & Accommodation

KshsRepairs and Maintenance

KshsFuel ExpensesMotor Vehicle Expenses

KshsHouse Allowance

Kshs Basic SalaryPersonnel Emoluments

Kshs HEAD OFFICE EXPENSES

Kshs

Kshs

Kshs

Kshs

Kshs

Kshs

Kshs

Kshs

Kshs

Kshs

Kshs

KshsPiped Pumping

KshsBoreholes & WellsNon-Transmission Systems

KshsRainwater Harvesting

KshsActivity Type 1Sanitation and Hygiene

KshsActivity Type 2

KshsAll ActivitiesTraining & Capacity Building

Consultancies

Vehicle Running & Maintenance

Travel & Accommodation

Kshs PROJECT MANAGEMENT & CAPACITY BUILDING

KshsPiped GravityTransmission Systems

Kshs FINANCING TO PROJECTS

KshsElectricity

KshsWaterUtilities

KshsInternational Travel

KshsLocal TravelTravel & Accommodation

KshsRepairs and Maintenance

KshsFuel ExpensesMotor Vehicle Expenses

KshsHouse Allowance

Kshs Basic SalaryPersonnel Emoluments

Kshs HEAD OFFICE EXPENSES

REPORT DATE TOTAL PERIOD EXPENDITURE

KSHSREPORTING PERIOD

FINANCIAL REPORTING – CATEGORY OF EXPENDITURE




FINANCIAL REPORTING – CATEGORY OF EXPENDITURE




Kshs Per Capita CostTotal No. of Beneficiaries



Kshs Per Capita CostNo. of BeneficiariesKshs Activity Type 2



SANITATION AND HYGIENE

Kshs Per Capita CostTotal No. of BeneficiariesKshs TRAINING & CAPACITY BLDG

Per Capita Cost Kshs No. of Beneficiaries

Kshs

Kshs

Kshs

Kshs

Kshs

Kshs

Kshs

No. of Beneficiaries



Kshs

Kshs

Kshs

Kshs Per Capita CostRain Harvesting

Kshs Per Capita CostDams & Pans

Activity Type 1

Kshs

Kshs Per Capita CostBoreholes & Wells

Kshs NON-TRANSMISSION SYSTEMS

Per Capita CostNo. of BeneficiariesOpen Ducts

Per Capita CostNo. of BeneficiariesPiped Pumping

Per Capita CostNo. of BeneficiariesPiped Gravity

Kshs TRANSMISSION SYSTEMS







SANITATION AND HYGIENE

Kshs Per Capita CostTotal No. of BeneficiariesKshs TRAINING & CAPACITY BLDG


Kshs

Kshs

Kshs

Kshs

Kshs

Kshs

Kshs




Kshs

Kshs

Kshs

Kshs Per Capita CostRain Harvesting

Kshs Per Capita CostDams & Pans

Activity Type 1

Kshs

Kshs Per Capita CostBoreholes & Wells

Kshs NON-TRANSMISSION SYSTEMS

Per Capita CostNo. of BeneficiariesOpen Ducts

Per Capita CostNo. of BeneficiariesPiped Pumping

Per Capita CostNo. of BeneficiariesPiped Gravity

Kshs TRANSMISSION SYSTEMS



FINANCIAL REPORTING – PROJECT COMPONENTS & ACTIVITIES




FINANCIAL REPORTING – PROJECT COMPONENTS & ACTIVITIES


Kshs Kshs

AVERAGE PER CAPITA COSTTOTAL NO. OF BENEFICIARIESTOTAL EXPENDITURE

Kshs Kshs






FINANCIAL REPORTING – COST CENTRES




FINANCIAL REPORTING – COST CENTRES


CC1

%Printing & Stationery

%Postal Expenses

%Publicity & Advertising

%Consultancies

%Staff Expenses

%Staff Training Costs

%Bank Charges

%Office Running Expenses

%Board Expenses

%Insurance (Non-motor)

%Telephone Expenses

%Utilities

%Travel & Accommodation

%Motor Vehicle Expenses

%Personnel Emoluments

CC7CC6CC5CC4CC3CC2Allocation % CC1

%Printing & Stationery

%Postal Expenses

%Publicity & Advertising

%Consultancies

%Staff Expenses

%Staff Training Costs

%Bank Charges

%Office Running Expenses

%Board Expenses

%Insurance (Non-motor)

%Telephone Expenses

%Utilities

%Travel & Accommodation

%Motor Vehicle Expenses

%Personnel Emoluments

CC7CC6CC5CC4CC3CC2Allocation %

Field Co-ordination DepartmentCC4

CEOCC7Technical Appraisal Dept. – Non-Transmission SystemsCC3

Sanitation and Hygiene DepartmentCC6Technical Appraisal Dept. – Transmission SystemsCC2

Administration and Human Resource DepartmentCC5Finance and Resource Mobilisation DepartmentCC1

Field Co-ordination DepartmentCC4

CEOCC7Technical Appraisal Dept. – Non-Transmission SystemsCC3

Sanitation and Hygiene DepartmentCC6Technical Appraisal Dept. – Transmission SystemsCC2

Administration and Human Resource DepartmentCC5Finance and Resource Mobilisation DepartmentCC1

Cost Centre (CC) Key:



ASAL

HP

ASAL

ASAL

ASAL

HP

ASAL

ASAL

HP

HP

HP

ASAL

Kshs Per Capita CostNo. of BeneficiariesKshs District 23








WATER BOARD 3


Kshs

Kshs

Kshs

Kshs

Kshs

Kshs

Kshs




Kshs

Kshs

Kshs

Kshs Per Capita CostDistrict 12


District 21

Kshs


Kshs WATER BOARD 2

Per Capita CostNo. of BeneficiariesDistrict 3



Kshs WATER BOARD 1

ASAL

HP

ASAL

ASAL

ASAL

HP

ASAL

ASAL

HP

HP

HP

ASAL









WATER BOARD 3


Kshs

Kshs

Kshs

Kshs

Kshs

Kshs

Kshs




Kshs

Kshs

Kshs



District 21

Kshs


Kshs WATER BOARD 2




Kshs WATER BOARD 1



FINANCIAL REPORTING – GEOGRAPHIC LOCATION (Disbursements to Projects)




FINANCIAL REPORTING – GEOGRAPHIC LOCATION (Disbursements to Projects)


HIGH-POTENTIAL AREAS (HP)

ARID & SEMI ARID LANDS (ASAL)

GEOGRAPHIC REGION

KshsKshs

Kshs Kshs


HIGH-POTENTIAL AREAS (HP)

ARID & SEMI ARID LANDS (ASAL)

GEOGRAPHIC REGION

KshsKshs

Kshs Kshs
