Organization and Management of ECDD Programmes

ORGANIZATION AND MANAGEMENT OF ECCD PROGRAMMES

Lesson 07: Financial management of ECCE Programmes

Other Financial Responsibilities of a director

The budget is the major tool used by the financial director for management of center finances, but balancing income and expenses is only one aspect of an overall ongoing financial system .The director has a number of continuing financial responsibilities all of which relate ultimately to the budget.

• Designing budget systems : Once the sources and the amount of income have been determined these facts must be written down along with the plan for spending. Small centers can use a very simple format. Many centers use budget codes or account numbers assigning a three digit number to each budget category and using separate number for each item within that category. For ex: if the budget item equipment is coded as 110 then the subcategories might be
  111 office equipment
  112 class room equipment
  113 lecture equipment
Similarly personnel might be coded as 510 with
511 salaries
512 social security
513 workers compensation Such a system enables the financial director to record transactions according to appropriate budget categories and ascertain quickly how much has been spent and how much remains in a given category. The director estimates receipts and disburse for the year month by month .The amount of cash expected to be in hand at the end of this month becomes the amount at hand at the beginning of the month.
• Ordering goods and services:With an approved budget in hand the director can begin the order supplies, equipment and services. The first step is to consult the person or people who will use the item or the services. Several methods of ordering goods and services are utilized depending on the nature of the purchase. Purchases are usually approved by the directors’ board or a committee. Smaller purchases are that routinely purchased or may be ordered from a wholesaler.
• Making payments: The director is responsible for making all payments. A center should immediately establish a checking accountant. So that payment for goods and services can be done promptly and safely. If the center is small there may be the temptation to pay expenses directly from cash income. In making payments it is useful to write the purpose of the cheque both on the cheque and in the records. It is also important to take advantage of discounts for prompt payment on quantity purchases and to avoid finance charges for late payment. Before paying for any item it is important to verify the items received to see that they are proper in quantity and quality and that the price on the invoice is correct. When one person carries the responsibility of making all payments and keeping all financial records fewer errors are likely to occur. There must be a specific place to store bills and specific time set aside for paying them.
• Recording transactions: Whenever a financial transaction occurs it should be recorded immediately in a specific form. Access to a personal computer makes it easy and provides readily available reports which show the financial position of the center on a weekly, monthly or daily basis.
• Voucher: An individual record of a transaction is called a voucher.
  Ex: A petty cash memo, receipt for tuition payment
• Ledger: A ledger is a backup account listing the amount of money that are added or deducted from each account by examining the ledger. The director can see the activity in each account.
• Handling petty cash: The director also regulates the cash fund and maintains sufficient cash to keep the system working effectively. This fund is usually small because serious losses by theft or carelessness may occur when large amounts are kept on hand. There are several ways to operate the petty cash fund. Each teacher may receive a specific sum of money to spend for the class room or the director may allocate a certain sum per staff member and present an appropriate receipt. All the expenditures should be recorded to the correct account.
• Handling salaries category: Once the budget is approved the financial director informs the personnel committee of the allocation for salaries. The committee may then begin the employment process in accordance with the personnel policies.
• Making reports: The director uses all the records to prepare monthly financial reports for the board of directors.
• Auditing: In most business including ECE centers an auditor scrutinizes the records annually. The director makes available to the auditor the ledger and the cheque book as well as cancelled cheques, receipts and invoices. The primary purpose of an audit is to enable an independent auditor to express an opinion on the fairness of the financial statements, their compliances with generally accepted accounting principles and consistency of the application rather than to examine every transaction as to establish that entry is valid. An annual audit not only protects the financial personnel of the center by making sure that their job is done according to the procedures but also protect the entire operation by ensuring that the use of funds is being recorded as planned.