1. Purpose of Policy

This policy document covers the receipts, disbursements, and record-keeping of donations, zakat, grants, and funds. Moreover, this policy will cover the accounting system, budget, financial reporting, payments, annual financial statements, and SWF’s tax policy. Furthermore, the policy defines the standard operating procedures (SOPs) for financial administration and control.

The purpose of this policy document is to present the finance-related policies and procedures that underpin the financial management system in place at Integrity Action and to ensure that the financial statements conform to International Accounting Standards (IAS), and International Financial Reporting Standards (IFRS), assets are safeguarded, guidelines of donors are complied with and finances are managed with accuracy, efficiency, completeness and transparency.

2. Version, Effective Date & Applicability

The version of this policy is 1.0 and is effective from 1^st January 2025 and defines instructions in the context of accounts and finance.

3. Accounts & Finance Department Organogram

4. Policy Description

This policy document will cover the following matters of SWF.

1. Donations, Zakat, Funds and Grants
2. Accounts

            III.          Finances

The following three sub-policies are to guide the above matters of SWF.

5. Donations, Zakat, Funds and Grants Policy

This policy guides the receipts, budgeting, utilization of funds, and internal control of donations, zakat, funds, and grants of SWF.

1. Receipt of Donations, Zakat, Funds and Grants

SWF receives funds from different sources by following steps:

1. Donations, Zakat, and Funds in Pakistani Rupees (Individuals/ Organizations).
   1. In the first step, SWF gives a Donor Detail Proforma (DDP) (Appendix A) to the individuals or organizations to take the details of the donor (Name, Address, Payment Method, Contact Number, Payment Date, Amount paid) and the bank details of SWF (Account title, bank name, account no and branch).
   2. The donor will fill out the DDP and submit it to SWF along with payment.
   3. The SWF accounts department files the donor details () in the Register of Donors and Donations (RDD) (Appendix B).
   4. Then account department will deposit the amount in the SWF official account in JS Bank and get the deposit slip from the bank.
   5. Then the deposit slips will be placed in the Register of Deposit Slips (RDS).
   6. Then the SWF accounts department issues a Receipt Voucher (RV) (Appendix C) and a Letter of Thanks (LOT) (Appendix D) to the donor.
2. Grants: SWF will only get grants from an official bank account.

• Grants from philanthropic organizations and individuals: SWF will get grants only in an official bank account.

1. Gifts: The gifts given to the SWF will be recorded in the Gift Book of SWF. Then the gift will be allotted to the concerned department of the SWF. No individual employee of the SWF will accept or utilize the gifts for personal purposes.
2. Budgeting Policy
   1. Project-Based Funds Budgeting Policy

• Donor Budgeting: The amount given to SWF from the donor for a specific project will be allocated by the SWF Budgeting Committee (SBC).
• The SWF Budgeting Committee will consist director of finance, a managing director, a donor (if the donor wants), and at least two directors of SWF.
• The SWF Budgeting Committee will prepare a budget for the project and then it will be implemented.
  1. Education-Based Funds Budgeting Policy
• Donor Budgeting: The amount given to SWF from the donor for education purposes will be allocated by the SWF Budgeting Committee (SBC).
• SWF Budgeting Committee will consist director of finance, a managing director, a donor (if the donor wants), and at least two directors of SWF.
  1. Utilization of Project-Based/ Education-Based Funds Policy

1. SWF uses donations, grants, and charities to fund its assigned project based on the recommendation of the SWF Budgeting Committee (SBC).
2. Utilization of Education-Based Funds Policy

• SWF uses donations, grants, and charities to fund its assigned project based on the recommendation of the SWF Budgeting Committee (SBC).

Donation Categories

Donations received will have the following categories

1. Donations
2. Zakat and
3. Grants/ Funds

Amounts received will be categorized in the above heads as per details given by donors in Donor Detail Proforma (DDP) and utilized as per policy.

Utilization of Funds

On the recommendations and approvals by the SWF Budgeting Committee (SBC), funds are allocated to the following standard heads

1. Student Tuition Fee,
2. Books/ Stationary,
3. Student Uniform,
4. Student Transportation,
5. Student Health and
6. Social Welfare.

1. Internal Auditing

SWF is in its initial stages and does not have an internal audit department for the time being.

6. Accounts Policy

6.1.            The Accounting System

A practical accounting system of Salt Range Social Welfare Foundation (SWF) consists of the following:

Account Heads of Donation Received

1. Donations,
2. Zakat and
3. Grants

Account Heads of Donations Disbursed

1. Student Tuition Fee
2. Books/ Stationary,
3. Student Uniform,
4. Student Transportation,
5. Student Health and
6. Social Welfare.

6.2.      The funding agreement

The funding agreement between the donors and NGO outlines all aspects regarding the project and should include the following:

1. Activities to achieve the deliverables
2. Funding of the project
3. Reporting on activities

1. Narrative report
2. Financial report

• Periods of reporting

1. Management of funding and procurement of goods
2. Stipulations in the budget regarding how the funding is to be applied

6.3.            The budget

The budget includes all planned activities listed by type of activity. It is a financial framework listing all activities and deliverables as stipulated in the agreement. Each line item in the budget indicates the costs which may be incurred for the specific activity.

Provision for administrative costs may include:

Bookkeeping fees

Audit fees

Telephone costs

Rental

Stationery

Other office costs

Salt Range Social Welfare Foundation (SWF) can transfer the overhead funds to a dedicated account named, for example, ‘SWF Own Funds’, pooling overhead funds from different projects. When transferring the overhead costs to an ‘SWF Own Funds’ account, that sum is entered as an expense in the records of the project in the month of transfer in one sum. The organization’s running costs which are not project-specific may be paid from the ‘own funds’ account. Funds remaining in this account may also be used to bridge periods when projects have been completed and new projects have not yet commenced, but running costs like rent, telephone, and insurance still have to be paid by the NGO.

Organization Budget:

The annual budget approval process is as follows:

1. Draft budget prepared by the Head of Finance in April;
2. The draft budget is reviewed submit for approval to the Audit Committee by the CEO;
3. The draft budget is approved by the Audit Committee for submission to the Board;
4. Final budget is approved by the Board before the start of the financial year to which it relates.
5. The original approved budget may be revised during the year. For example, in Q1 after the audit, adjustments may be required concerning timing differences across the year-end (e.g. receipt of donor disbursements).

Budget revisions must be approved by the Audit Committee. The budget must be broken down by month, by the donor, by restricted/unrestricted funds, and by fixed/variable costs. It must include a list of the assumptions made and the source of the information used. The budget is prepared on a cash basis. Performance against the approved budget is monitored monthly in the management accounts and reported to the Audit Committee quarterly.

6.4.      Bank account(s)

The bank account of SWF is maintained in JS Bank A/c # PK60JSBL9015000002163466, at its Bank Road Rawalpindi Branch.

Electronic transfers: The transfer request is signed by two signatories, as has been determined. The ED Finance authorized by Managing Director & CE does the actual electronic transfers. The transfer documentation is signed by the signatories who approved the transaction. For each project a separate sub-account shall be opened for the specific use of the donor’s approved budget and activities. Bank reconciliations shall be conducted on a monthly basis by the Deputy Director Finance and approved by the ED Finance & MD.

6.5.      Petty cash

The Deputy Director of Finance should have control over cash funds, have sole access to the cash, and assume responsibility for the reconciliation of the petty cash vouchers and the remaining cash funds. If the Financial Manager is in charge of petty cash, the Financial Manager is designated to supervise the petty cash operation at intervals. The handler of petty cash is responsible for the reconciliation of the petty cash funds and is liable for any shortages of cash. The key to the cash box remains with the person handling petty cash at all times.

1. The threshold for petty cash will be Rs. 5000, which will be withdrawn from the bank against a requisition duly registered in the Cash Book and signed by ED finance.
2. Cash is kept in a cash box in a secure, lockable cupboard or a safe
3. For petty cash payouts, proof of expense should be entered in the petty cash register.
4. The recipient of the cash signs the petty cash request form when receiving the cash
5. The transaction is finalized when proof of purchase (invoice or till slip) is handed to the Financial Manager of the petty cash and any surplus cash has been returned
6. The final amount paid, and the funds returned to petty cash, are noted on the petty cash request form

6.6.      Fixed Asset List

In the case of general purchases (stationery, refreshments, fuel, cleaning material etc.):

A purchase order is completed before the item is purchased;

The delivery note, confirming receipt of goods, is signed by the designated staff receiving the goods;

The invoice is approved by the Executive Director and Financial Manager for payment and signed, along with the payment request form and he or she indicates the relevant budget line item, and payment is made by bank or electronic transfer;

6.7.      Payments

Payments are usually made electronically by internet banking or in cash. The procedure for paying electronically by internet banking is as follows:

Payment of an invoice is authorized by the Financial Manager and the Executive Director signature and an indication of the budget line item on the invoice.

The Financial Manager completes the budget allocation form, and attaches the invoice and bank receipt to the budget allocation form

The invoice number, the date of the invoice and the project which funds the payment are clearly written on the budget allocation form in order to prevent double payment of invoices

6.8.      Monthly Summaries of Expenses

On this schedule all expenses are recorded for each budget line item, per month. In one column the budget according to the agreement is listed. In another column the differences between actual costs to date and the budget are indicated, appearing as under budget or over budget. This schedule is an important instrument of NGO to keep track of the progress of spending on a funding agreement.

1. Audited Annual Financial Statements

The ED Finance and Accounts must within one month of end of each financial year complete accounting books and submit them to the designated external auditor for preparation of an audit report. The External auditor must submit to the Board Members an audit report within 3 months. The External Auditor must be provided in a timely manner with all required information/documents by Financial Manager to ensure completion of the audit report in time. Each donor is supplied with a copy of the audited financial report.

1. Reporting to Donors

Intervals of reports will be as per the agreement between the donor and the organization. Reports will consist of a narrative and a financial report. The narrative report covers all activities completed for the reporting period, in detail. The financial report lists all expenses progressively during the period of the agreement. The reports, as shown in the appendices, are adjusted to cover the donor’s requirements. Sometimes, during the period of the project, it appears that certain activities cannot be carried out as planned, or are not as effective as expected, but could, with adjustments, achieve better results. Under such circumstances, the consent of the donor is to be obtained ahead of changes in the execution of the project. Should this require adjustments to budget line items, such changes are discussed with the donor as well. Only after written consent of the donor has been received NGO may adjust it to the program.

7. Finance Policy

It is imperative to have internal financial control mechanisms and policies in place. Internal accounting control comprises a series of procedures designed to promote and protect sound management practices, both general and financial. By following internal accounting control procedures,

Salt Range Social Welfare Foundation (SWF) will significantly increase the likelihood that:

Financial information is reliable, so that managers and the Board can depend on accurate information to make decisions,

Assets and records of the organization are not stolen, misused or accidentally destroyed; the organization’s policies are followed.

The Executive Director shall be responsible for overseeing the regularly implementation of policies and procedures. Due to the number of detailed requirements involved when an organization receives funding from a given donor, the Financial Manager of SWF will be entitled to review the specific regulations, requirements and compliance factors specific to that donor.

8. Miscellaneous:

The finance policy will further look after the following miscellaneous aspect related to organization

1. Payroll Policy
2. Management reporting to Executive Director and Audit
3. Cash flow management processes
4. Manage processes to record & reconcile expenses and provide regular monthly reporting
5. Expenditures remain within the budget
6. Expenditures are only for the purposes set out in the budget
7. Financial documentation, including quotations, invoices and receipts are collected and filed in an orderly manner.

 

9. Appendices

9.1  Appendix A

9.2  Appendix B

Register of Donors and Donations (RDD)

SALT RANGE SOCIAL WELFARE FOUNDATION – SRSWF
		REGISTER OF DONORS AND DONATIONS
		DONOR DETAILS
SNO	DONOR NAME	DONOR ADDRESS	TYPE OF DONATION (Cash/Kind)	AMOUNT (Rs)	DATE	PURPOSE
1	Brig Raja M Imtiaz ( R )	Askari XI	Cash	816,000	16-05-2024	Open Donation
2	Mr Muhammad Imran	Askari XI	Cash	293,500	16-05-2024	Open Donation
3	Mrs Memona Ahmed	Askari XI	Cash	210,000	16-05-2024	Open Donation
4	Miss Tanveer Imtiaz	Askari XI	Cash	200,000	16-05-2024	Open Donation
5	Mr Adnan Ali	Askari XI	Cash	50,000	16-05-2024	Open Donation
6	Miss Maria Ahmed	Askari XI	Cash	12,000	16-05-2024	Open Donation
7	Col Waqar Ahmed ( R )	Askari XI	Cash	25,000	16-05-2024	Open Donation
8	Brig Ghulam Shabir ( R )	Askari XI	Cash	10,000	16-05-2024	Open Donation
9	Brig Liaqat Ali	Askari XI	Cash	50,000	16-05-2024	Open Donation
10	Rizwanullah Taj	Askari XI	Cash	3000	16-05-2024	Open Donation

9.3  Appendix C

Receipt Voucher (RV)

9.4  Appendix D

Letter of Thanks (LOT)