3. Finance structure

Checklist

Ensure that the financial structure is adequate and able to meet emergency demands.
Comply with applicable internal controls.
Promote cross-training to ensure staff back-up when necessary.
Separate duties to avoid any one person having complete control over a transaction.
Ensure that the core finance structure accounts for the necessary roles.
Ensure that finance staff understands their roles and responsibilities.

This section provides the minimum requirements for the financial structure to be deployed in an emergency operation. The primary assumption is that this recommended core structure will expand/contract in size, and in providing services to ensure that it accommodates:

growth in the programme portfolio
complexity of donor reporting and accounting requirements
an increase or decrease in demands from internal and external customers.

It is the responsibility of the CO leadership team and CARE International Members to ensure that the financial structure is adequate and responsive to customer demands, and that it complies with applicable internal controls. This is achieved by hiring competent staff-preferably with solid CARE experience-with the proper training, and by helping staff members to fully understand their roles and the importance of those roles.

Team leaders and financial staff members should also embrace cross-training to ensure that there are always back-up persons available when someone is out. Encouraging feedback on how things could be done differently will allow people, working together on a daily basis, to come up with ideas to streamline and improve operations. Keep an open mind but always be mindful of why controls were put in place, and determine if the changes being recommended will provide the protections for which the controls were initially designed.

3.2.1 Separation of duties

The general principles that govern effective separation of duties can be summarised as follows:

separate custody of assets from accounting
separate authorisation of transactions from custody of related assets
separate duties within the accounting function
separate operational responsibility from record keeping responsibility.

The term ‘separation of duties’ implies that one person’s work serves as a complementary check on another’s. This definition covers the concept that no one person should have complete control over any transaction from initialisation to completion. Having adequate separation of duties has a major impact on ensuring that transactions are valid and recorded properly.

Adhering to all these principles may not be possible due to resource limitations or other considerations. In these cases, the risk resulting from inadequate separation of duties should be assessed to ensure that the level of exposure is acceptable to CO management. In many cases, compensating controls exist to reduce risk. In other cases, additional resources may need to be sought to increase controls.

3.2.2 Roles

The core financial structure should provide for the following:

Approval-The person who reviews a transaction for accuracy, validity, appropriateness and proper authorisation. The approver determines if a transaction should continue. For some types of transactions, there may be more than one approver.
Authorisation-The person responsible for authorising a transaction, such as purchase requisitions, purchase order, journal voucher, payroll and payroll adjustments. Special attention must be given to ensure that the correct accounting information (including references to donor budget line item number) and documentation is provided.
Cashier-The person who receives cash or cheque payments on behalf of CARE from employees and/or other external parties.
Data entry-The person responsible for entering a transaction into the Financial Information System.
Ledger reconciliation-The person who reviews and reconciles the general ledger every month to identify errors or discrepancies, and either resolves them or brings them to the attention of supervisors.
Financial reporting-The person responsible for ensuring quality and completeness of financial data that is submitted to the office/location where consolidation takes place.

3.2.3 Responsibilities

The following table presents the recommended separation of responsibilities consistent to the roles and principles of separation of duties:

3.2.3.1 Separation of responsibilities

Task	Responsible	Approved by	Authorised/ reviewed by
Control of cash floats	Finance Officer	Senior Finance Officer	Team Leader
Recording cash disbursements/receipts	Finance Officer	Senior Finance Officer	Team Leader
Custody of cash, issuing and receiving cash	Cashier	Senior Finance Officer/Team Leader	CO Finance Manager/Controller
Physical cash counts	Senior Finance Officer	Country Director/Team Lead
Commodity/non-food Contributions in Kind (CIK) accounting	Commodity/ non-food CIK Accountant	Senior Finance Officer	Team Leader
Financial reporting to consolidation office	Senior Finance Officer	Country Director/Team Lead	Country Office Finance Manager
Documentation filing and safekeeping	Senior Finance Officer	Country Director/Team Lead	Country Office Finance Manager

The following are the recommended job descriptions that relate to daily financial and accounting tasks:

Finance Officer:

Receive payment requests and advance payments/settlements. Review and verify supporting documentation (for completeness and applicability), and ensure that account codes are consistent with the donor coding instructions.
Process cash float requests and replenishment, and monitor settlement as per cash management and disbursement procedures.
Keep a ledger of cash floats, and regularly report status to the Senior Finance Officer and Country Director/Team Leader.

Senior Finance Officer:

Ensure collection/settlement of cash advances by executing the appropriate collection or settlement mechanism (payroll deduction, sending reminders, etc.), and report deviations to the Country Director/Team Leader and CO Controller, if applicable.
Ensure there is sufficient cash flow to meet current and immediate future obligations according to cash management guidelines, and minimise excess cash on hand and on local accounts.
Verify payment requests and cash float settlements for further processing. Ensure that supporting documentation is complete and sufficient to justify the purpose of the expenditures.
Ensure daily recording of invoices, cash receipts, payments and cash float settlements, and ensure that the running balances for cash, unpaid liabilities and cash floats are correct.
Review payments and cash float settlements, and ascertain that account codes reflect the donor line items coding restrictions to keep the number of subsequent adjusting journal entries to a minimum.
Review all commodity accounting entries and reports such as commodity status reports (CSR) and commodity loss reports, and request approval from the Country Director/Team Leader before submission.
Supervise the monthly and weekly close process, and ensure timely, complete and accurate submission to the consolidating office.
Perform weekly surprise cash counts on all cash on hand, including cash floats held at the office and in the safe. These cash counts must be countersigned by the Country Director/Team Leader.

Cashier:

Ensure the safekeeping of the cash and cash equivalents.
Keep a ledger of all cash and cash equivalents on hand.
Disburse cash based on approved payment requests.
Receive cash and issue the corresponding official receipt.
Report in a timely manner overages and shortages to the Senior Finance Officer and Team Leader.

Commodity accountant (food and non-food):

Compile, organise and ensure safekeeping of all commodity-related documentation for all of CARE’s food and other non-food CIK programmes.
Prepare commodity analyses and accounting entries relating to all food activities such as commodity receipts, end-use centres distribution and transfers between warehouses, warehouse stock balances, and in-country losses. Make the required entries into the corresponding ledgers.
Review vendor account statements, invoices and payments related to transport contracts and distribution, and ensure that these balances, invoices and settlements agree with the signed contracts. Prepare the payment request-including all appropriate supporting documentation and accounting information-and submit for payment.
In consultation with programme staff, facilitate/prepare commodity loss reports and indicate subsequent actions on the losses reported. If the losses are to be claimed from third parties, ensure that the appropriate collection method is undertaken, follow up on the collection efforts and inform the Senior Finance Officer, Country Director/Team Leader and programme staff on the progress made and the outcome of the collection efforts.

Country Director/Team Leader (finance-related tasks):

Authorise purchase requisitions, purchase order, journal vouchers, local payroll and payroll adjustments before these are processed. Pay special attention to ensure that the correct accounting information (including references to donor budget line item number) and documentation is being provided. Consult with programme/finance staff as needed.
Review/authorise CSRs for food and non-food commodities, and provide justifications and narratives supporting losses, distributions and stock balances.
Authorise cash requests and ensure that these include donor contract line item information, if applicable and consistent to cash budgets. Ensure that cash flow meets current and immediate future obligations according to cash management guidelines, and strive to minimise excess cash on hand and on local accounts.
Frequently review the composition and operation of the financial structure, and ensure that it is responsive to programme needs, and that those basic guidelines on separation of duties (section 3.2.1) and internal controls are observed.
In instances where basic internal controls are not possible, seek assistance from the Country Office/Head Office to implement the required compensatory controls.
Supervise and countersign weekly surprise cash counts.

Proper documentation of levels of authority by persons authorised to sign cheques, make disbursements and/or approve expenditures should be made on Annex 17.1 Authorised Signatory Limits Form. A form must be filled for each position holding signatory authority, and a specimen signature must also be recorded.