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Budgeting and Financial Control
Financial Control
Control and record keeping

Insufficient financial control and record keeping may lead to a break down in service delivery, due to a lack of financial resources.

 

RESPONSIBILITY?

At a local authority level control systems are usually prescribed by the by-laws and ordinances. At privately owned facilities the systems may be determined by the owners or the board of control.

The implementation and management of financial controls and record keeping at a specific facility is the responsibility of the facility manager. He may do the following.

  • · Stay informed about all the projects that are run and planned by staff members.
  • · Do regular checks on expenditure to ensure that each project is completed within the approved budget.
  • · Make sure that the budget is spent on the items that were budgeted for.
  • · Accountability - have good control and recordings systems in place. Have the statement of accounts audited annually by an independent firm of auditors.
  • · Always have two people present when mail or tins containing cash are opened.
  • · Keys to the safe or petty cash boxes should be held by responsible people.
  • · Include your management committee in decision-making and keep them informed of the financial position of the facility with quarterly and year end reports.

CONTROL MEASURES

Petty Cash
Petty cash can become difficult to control if not recorded judiciously. Take care to use a petty cash book and easy to use claim forms rather than scraps of paper to ensure that discrepancies are avoided.

It is important to have cash available for buying small items like refreshment for meetings, milk, coffee, etc, for which it is impractical of issue a cheque.


EXAMPLE: Petty Cash Voucher


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Receipts

A receipt is a document which indicates the amount that was received. A receipt must be issued for every cash amount / cheque which was received at the facility.


Example: Receipt


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  • Always write receipts in duplicate. Hand one receipt to the person who pays you and keep the other copy in the receipt book.
  • Deposit amounts received as soon as possible into your banking account.
  • Receipts must be issued for membership fees, games fees, programme/ event fees, etc.
  • The money which was received must be reflected in the booking system of the facility. This will ensure that all the money received was reflected in the cashbooks and paid into the bank account.
  • It is very important that the amounts on the receipt balance with the amounts paid in.


EXAMPLE: Cashbook


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Invoices
An invoice is an account that you sent to somebody for services that they received from you e.g. people who owe you money, for instance for hiring a hall at your facility, are called debtors and they are invoiced. The people to whom you owe money for e.g. equipment bought, are called creditors and they will invoice you again for services offered.

Payments
All daily expenses / payment have to be noted in a book dedicated for this purpose. This system can be used when the facility has a small budget and if not many trasactions take place at a time . Petty cash expenses should also be reflected here.


Example: Budget Control


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  • Use one page/book for each of the different cost center (types of costs) for example wages, fuel, cleaning materials, specific events, etc.
  • Pay bills within 30 days to ensure the goodwill of companies whose services you use regularly, it may even entitle you to discount.
  • Refund out-of-pocket expenses by staff/ volunteers quickly.
  • Payments for time not budgeted may need finance committee approval.
  • Set limits for who may authorize such payments, e.g. bookkeeper-amounts up to R 100.00, manager – amounts upto R1000.oo, bigger amounts finance committee.

This system is basic but very effective if it is kept up to date. It requires the manager to keep the budget up to date on a daily basis to prevent over-expenditure. If the manager has access to a computer, this information could be captured there and be updated regularly.

Monthly / Quarterly Reports

It is important for the manager to prepare a monthly/quarterly budget report. This will assist in establishing certain trends regarding expenditure.


EXAMPLE: Budget report 


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The table gives the manager a summary of his total annual budget.

  • · The allocated budget is reflected in the first two columns. (A&B)
  • · This budget is then divided by four to get the expected expenditure per quarter.
  • · At the end of each quarter the expenditure up to that date is reflected in the actual expenditure column. This information can be obtained from the book/computer used for your daily checks.
  • · Possible problem areas can quickly be determined.
  • · After the first quarter the wages were within the budget. During the second and third quarter it showed overspending. This budget could for instance be for a swimming pool where the pool is used extensively during the second/third quarter due to good weather conditions. The pool staff worked overtime but during the last quarter there was no overtime, which balanced the total expenditure.
  • · The building maintenance budget was totally overspent during the first quarter. The example of the swimming pool could be used again, where the buildings at the pool needed repairs and maintenance before the season started, but little maintenance was necessary during the season.

The same system could be applied to monthly summaries for effective cash flow control..

Security
The manager should ensure that the cash is safely locked away until banked.It is advisable for the manager to keep the keys. Should anyone need to open the safe , the manager should be present.

Monies received should be paid into the facility’s bank account at least once a week.


Example: Bank Deposit Slip


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Stock Control

Keep a close check on the buying and issuing of stock. Make sure that all ordered goods are received. One staff member has to be tasked with stock control because slackness here may cause cash control problems for example:

  • · If 25 litres of paint has been ordered, the person must make sure that 25 litres are delivered. Should only 20 litres be delivered and one checks the delivery, the budget could be overspent because another 5 litres will have to be ordered to complete the job for which it was acquired. It is also important to make sure that the the correct stock is delivered.
  • · If 100 envelopes are ordered per box, the person must make sure that the delivered box does not contain only 50 envelopes.
  • · The third requirement is to control the issuing of your stock, for example fuel. The following system could assist the manager:
  • · Keep record of all your stock.
  • · Lock the storeroom and control access.
  • · Train your staff in the correct use of materials.
  • · Have staff and agencies utilising equipment sign for it on standard forms utilised just for this purpose.


Example: Stock Card


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The manager will be able to check the stock level at a glance.


Example:

Mr Jones took 60 litres of fuel on 13/10/80 for the ride –on. The ride –on can however, only take 20 litres in its tank. The extra 40 litres must therefore be accounted for. It is important to write up every single item issued and not only the total for the day.

Keep Statistics

The above – mentioned stock could assist the manager in keeping statistics on the spending pattern on stock. In the budgeting process it is required to estimate the number of items or volumes to be used during the next financial year. If there are no statistics available, it will be difficult to correctly estimate the requirements. The stock card could assist, as it will reflect the total number of items or volumes used during the previous financial period. It is therefore imperative that all stock items should have an issue card. 

A detailed analysis of all expenditure could assist in identifying possible savings without compromising on the quality of service delivery as well as evaluating the amount / time spent versus the impact made on the target group / community.


Useful hints

  • Compile and keep up to a list of required items throughout the year. When it is time for budgeting, you already have a shortlist of what must be included.
  • Keep copies of previous budgets, as it will assist you when compiling your new budget. If you requested during previous years but never had it approved, keep it on your wish list.
  • If you have to cut your budget, don’t decrease the budget for all the projects. Rather cut specific projects in total. This will ensure that you have enough funds to complete your priority projects in full.
  • Use your staff for the duties they have been trained for. If one of your staff members is a trained coach, don’t pay an outside coach to perform this duty.
  • The budget and financial record control functions are the lifeline of your facility. If you neglect these, it will definitely have a negative influence on your facility’s performance as well as the standard of your service.
End of Booklet

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Page last updated: 05/04/2012 .

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